They say Millennials are rejecting capitalism and are drawn to socialism. It’s hard to imagine why, as nearly all the problems they face are caused by bad government policies, not selfish entrepreneurs.
This is most obvious in the field of transportation, where the public takeover of mass transit led to a 50 percent decline in productivity even as per capita transit ridership continued to fall. Yet proponents of socialized transportation argued that Europe was subsidizing their urban transit and intercity trains, so we should too. This took on special urgency as France and other countries built high-speed rail lines, creating an impression that the United States was somehow eating their technological dust.
Now, the New York Times admits the truth, which is that the French government-owned railroad, SNCF, is “heavily subsidized and deeply indebted.” Although such subsidies and debt are not supposed to exist under European Union rules, and the EU has even ordered member states to open up their railways to competition, SNCF has been particularly resistant to that policy.
Now French president Emmanuel Macron has decided to take on the SNCF unions, whose members receive “more generous benefits than almost any other workers, including a guarantee of early retirement,” says the Times. Not surprisingly, this has led to protests, strikes, cancellation of trains, and walkouts by allied unions such as air traffic controllers. Clearly, the French model for rail transportation was financially unsustainable, yet workers are unwilling to give up their privileges in order to fix the problems.
Currently, SNCF has debts of $55 billion. This doesn’t count at least $8.4 billion worth of debt that the government had previously absorbed into the national debt. Most of this debt came from building high-speed rail lines.
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Meanwhile, French trains carry less than 11 percent of freight, as more than 86 percent of freight is transported on highways. Those numbers are in sharp contrast to the U.S., where at least a third of freight goes by rail and less than 40 percent goes by truck (and I suspect a bad model has erroneously exaggerated the role of trucks).
American railroads are a model of capitalism, one of the least-subsidized forms of transportation in the world. They are profitable and do far more for the national economy than Europe’s socialized railroads, which mainly serve narrow elites.
Media reports suggest that Macron is losing his fight with the unions. Instead of arguing over pay, he should just privatize the railroad and let the unions deal with the new owners.
In any case, there are plenty of real-world examples of the failure of socialism, and plenty of examples of the success of capitalism. Next time a Millennial uses their smart phone, gets in a car, or places an order with Amazon, they should thank capitalism, while the next time they complain about high housing prices or disrupted transit services, they should thank government planners.
You wrote ” Instead of arguing over pay, he should just privatize the railroad and let the unions deal with the new owners. ” . Your kidding, right? No private company would be willing to absorb that much debt. Did you mean the French government assume the debt and then cut their losses and have an honest asset appraisal done on their existing rail system and then have companies bid on the system’s purchase? With those proceeds going against the debt? Even then I’m not sure they would get any bidders.
Yes, the nation would probably have to assume the debt to privatize it. Japan did that. Japan National Railway debt used the railroad’s land as collateral and the government thought it could sell that land to repay the debt. That didn’t work because the property bubble burst (perhaps because the country was going to put all that land on the market), but it might work in France.
In general, private operators can operate transportation at about half the cost of the government, so lines that cover half their costs or more should be privatizable.
The Antiplanner wrote:
Meanwhile, French trains carry less than 11 percent of freight, as more than 86 percent of freight is transported on highways. Those numbers are in sharp contrast to the U.S., where at least a third of freight goes by rail and less than 40 percent goes by truck (and I suspect a bad model has erroneously exaggerated the role of trucks).
No disputing the above.
The shares of goods transported by truck and trains is frequently a function of the value of same. Coal, for example, is relatively low in value, heavy to transport and an ideal product to ship by train.
Regarding France and trucks:
– Most trucks (or heavy goods vehicles, which seems to be the preferred term in Europe, HGV for short) may (by French law or regulation) not operate on most or part of weekends in France (details here).
– Most intercity freeways (or autoroutes, as they are called in France) are operated by private-sector toll concession companies, and the tolls on long trips (especially for trucks) can be considerable (discussion of car autoroute tolls details here). For example, the toll from Calais to Paris for a truck with three or more axles is about €65 (about U.S. $77 for about 180 statute miles).
– Germany does not toll passenger cars on its Autobahn network, but trucks must pay (details) on those and certain other federal highways.
Right-thinking progressives want us to give up our cars and take transit. So what happens when…
Not surprisingly, this has led to protests, strikes, cancellation of trains, and walkouts by allied unions such as air traffic controllers.
How’s that supposed to work? Do we just call up the office and say we won’t be in until the strike is over?
CPZ,
Maybe the reason why coal is low in value is because it is so cheap to ship. What makes things trainable is not their value but the ability to ship large volumes (preferably a whole train’s worth) from point A to point B. Trucks have the advantage when shipments are smaller — a carload or truckload at a time. The value isn’t really important. Those containers being shipped by train from the Port of LA to Chicago may be filled with diamonds or styrofoam — what makes them trainable is that a lot are shipped every day.
“It’s hard to imagine why, as nearly all the problems they face are caused by bad government policies, not selfish entrepreneurs.”
It is easy to explain why they call for socialism when you study the endless propaganda thrown at the younger people all the way through school and in movies and TV shows. Everyday, you can read a summary of a movie or show whereby “an evil, super powerful, super rich corporation” is doing something bad.
Not too many shows or movies about evil socialist governments like the people’s paradises such as Venezuela or Cuba which are reported in glowing terms (when something goes right) and are not mentioned at all (when something goes wrong.)
Propaganda works.
Yet you teahadi’s aren’t against socialism when it comes to roads, sidewalks, etc :$
“Highways are there regardless of economic conditions” -Randal O’Toole