Nationalise the railways!

[Sheilbh]

The bigger problem is that private actors are not going to invest for the long term or obviously for goals which do not go to the bottom line.  Transportation infrastructure is an important economic tool for governments to use to influence economic development and shouldnt be left to companies who have a limited investment horizon.

The rail infrastructure itself is owned by a state company. They did privatise it but that was a disaster (quite literally, the negligence of that company caused a couple of train disasters).

Jos's right. For a long time the view was that trains were just going to decline and that cars were the future so there wasn't a need for much investment. That's shifted quite strongly now. So we could do with a fair bit of investment in the infrastructure. But, sadly, I don't see that happening outside London anytime soon

Edit: Having said that obviously it's different in a small, heavily populated country than, say, Canada

Edit: In addition Jos is right that I think most of the rail franchises are owned by SNCF or Deutsche Bahn (just like the money we're paying French state-owned companies to build new nuclear plants ) and that the cost of subsidies and infrastructure is significantly higher than the money we were actually spending on British Rail.

[crazy canuck]

The bigger problem is that private actors are not going to invest for the long term or obviously for goals which do not go to the bottom line.  Transportation infrastructure is an important economic tool for governments to use to influence economic development and shouldnt be left to companies who have a limited investment horizon.

The rail infrastructure itself is owned by a state company. They did privatise it but that was a disaster (quite literally, the negligence of that company caused a couple of train disasters).

Jos's right. For a long time the view was that trains were just going to decline and that cars were the future so there wasn't a need for much investment. That's shifted quite strongly now. So we could do with a fair bit of investment in the infrastructure. But, sadly, I don't see that happening outside London anytime soon

Edit: Having said that obviously it's different in a small, heavily populated country than, say, Canada

Which is a good reason not to put the operation side in the hands of private actors.  Creating transportation hubs and operating out of those hubs at a loss during the early years are good ways of estabishing economic development outside of the existing major centre(s).  On a local scale that is what we did in Vancouver.  The hubs set up outside the city centre attracted a large amount of development and now the outskirts are the biggest engines a economic growth and development.

None of that would have been possible if operations were in the hands of private actors because until the development came those sections of line operated at a loss and now the government, through its crown corp that runs the whole thing, can take the money from the increased ridership and continue to develop the intrastructure.  It becomes a virtuous cycle of transportation infrastructure development.

Granted it is not perfect.  With infrastructure development in the hands of government and its appointees (both provincial and local government) there is no end to the squabbles about funding formulas and building priorities.  But it is a lot better than spending money on subsidizing a private operator who wont be contributing to the cost of further infrastructure development.

[MadImmortalMan]

The bigger problem is that private actors are not going to invest for the long term or obviously for goals which do not go to the bottom line.

The do try to get around that through contract provisions designed to encourage infrastructure investment and maintenance spending through things like reimbursements and fee-based service payments, but that usually just causes other problems and can be abused to get more money from the state than it would otherwise cost.

Honestly, the ones operating the rails need to also have the incentives to take care of it and expand it that ownership provides and also the restraint that the profit motive provides. It doesn't matter to me if it's public or private, whichever works best for that particular place, but it needs to have both of those factors or it will definitely be doomed in the long run.

[mongers]

Thread needs more Mussolini. 

[Razgovory]

I am sorry Tyr but that has to be the most naïve out-of-touch stuff I have read in a while.

Your stuff is pretty far out there as well.

No, you are a kook.

[Neil]

Jacob probably has the right of it.  While public enterprises can be victimized by corruption, it's important to maintain a culture of anti-corruption to keep them fresh.  Of course, in the age of mass media, where politics has become completely overtaken by the machine, it's hard to maintain that kind of environment.  Still, there's no sense in throwing the baby out with the bathwater, and some level of intervention is obviously required to prevent the brutal injustices of Tamas' laissez-faire.

[crazy canuck]

The bigger problem is that private actors are not going to invest for the long term or obviously for goals which do not go to the bottom line.

The do try to get around that through contract provisions designed to encourage infrastructure investment and maintenance spending through things like reimbursements and fee-based service payments, but that usually just causes other problems and can be abused to get more money from the state than it would otherwise cost.

Honestly, the ones operating the rails need to also have the incentives to take care of it and expand it that ownership provides and also the restraint that the profit motive provides. It doesn't matter to me if it's public or private, whichever works best for that particular place, but it needs to have both of those factors or it will definitely be doomed in the long run.

Agreed. If it was possible to create the economic conditions for private actors to have the incentive to do both then I wouldnt care either way either.  But I dont think that is possible.

I agree with you that trying to create contractual obligations requiring private actors to provide inventment and maintenance is difficult at best.  In my experience the private actor will do the minimum possible without running the risk of an outright breach that might entitle the government to terminate the contract for breach.  As a practical matter much of the profit margin in such contracts is extracted from these sorts of obligations.  In my view the public is better served by the government doing the work itself without the expense of building in that profit margin.

I have changed my view over the years on this issue.  I used to be a lot like Yi.  But with experience I have come to the view that when private actors are paid out of the public purse to carry out this kind of managment function all kinds of abuses occur.

I have no objection to government contracting out the construction contracts to create the infrastucture.  But when it comes to running the system and deciding where the resources should be spent this is one of the areas where governments are in the best position.

[crazy canuck]

With the government however you have awareness of the limited resources they're working with and efficiency and customer satisfaction is the only driving force.

I am sorry Tyr but that has to be the most naïve out-of-touch stuff I have read in a while.

Yes what you wrote about wringing out government money is true, but it is at least as much true for a 100% state-ran enterprise, probably more because they then have no real accountability. They just need to produce papers on those costs being necessary and they get their budget raised.

Maybe that is how they might do it in Hungary.  But I doubt even they would be so daft.

[Barrister]

Agreed. If it was possible to create the economic conditions for private actors to have the incentive to do both then I wouldnt care either way either.  But I dont think that is possible.

I agree with you that trying to create contractual obligations requiring private actors to provide inventment and maintenance is difficult at best.  In my experience the private actor will do the minimum possible without running the risk of an outright breach that might entitle the government to terminate the contract for breach.  As a practical matter much of the profit margin in such contracts is extracted from these sorts of obligations.  In my view the public is better served by the government doing the work itself without the expense of building in that profit margin.

I have changed my view over the years on this issue.  I used to be a lot like Yi.  But with experience I have come to the view that when private actors are paid out of the public purse to carry out this kind of managment function all kinds of abuses occur.

I have no objection to government contracting out the construction contracts to create the infrastucture.  But when it comes to running the system and deciding where the resources should be spent this is one of the areas where governments are in the best position.

You're missing out on the major reason why the private sector can be the better, cheaper option even with what you have said - unions.

If the government does something "in house" those employees are required to be unionized.  That means high wages, full benefits and pension, restrictions on firing people.  However once something is outsourced that is all out the window.  They can then hire the cheapest non-union workers at a significantly reduced rate.

[Sheilbh]

Canadian public sector's closed shop?

[crazy canuck]

You're missing out on the major reason why the private sector can be the better, cheaper option even with what you have said - unions.

Ok Yi. 

Are you seriously contending that a private actor will spend the billions required to upgrade transportation infracture just because being non union gives them a cost advantage on labour costs.

And btw BB, is there any major rail or transit company out there that isnt unionized?

[Neil]

Are there any non-unionized railway workers?  It seems to me that the railways have always stood high in the family of organized labour.

[Barrister]

You're missing out on the major reason why the private sector can be the better, cheaper option even with what you have said - unions.

Ok Yi. 

Are you seriously contending that a private actor will spend the billions required to upgrade transportation infracture just because being non union gives them a cost advantage on labour costs.

And btw BB, is there any major rail or transit company out there that isnt unionized?

The later is a fair point, but I was commenting more generally.

And besides, the private sector CP and CN do in fact seem to spend quite a bit on maintaining their rail infrastructure.

[crazy canuck]

And besides, the private sector CP and CN do in fact seem to spend quite a bit on maintaining their rail infrastructure.

That is because they own the infrastructure going back to the days when land was granted to them as an incentive to build the lines in the first place.  Those sorts of economic conditions cannot be replicated.  What we were talking about is creating an artificial contractual incentive for private actors who dont own the infrastructure to add to and maintain that infrastructure.  It just doesnt work very well.

[The Minsky Moment]

Well, that's obviously how it worked in the nationalized coal mines.

Customer service was outstanding.   When ordinary folk showed up they literally had coal thrown to them.