Privatize the New York City Subway System

[Via Garibaldi 8]

Privatize the New York City Subway System

 

22 HOURS AGORobert Fellner

 

A recent surge in breakdowns, delays and overcrowding at New York’s subway system — in conjunction with a steady stream of rate hikes — has left many New Yorkers fuming and seeking answers.

 

By citing proximate causes like record-high ridership, the New York Times attempted to provide those answers in last month’s column (Why is Subway Service in New York Getting Worse? May 27, 2017).

 

But these problems have been plaguing the systems for decades — indicating that their continuance stems from the system’s underlying, structural flaws, not a one-time spike in ridership.

 

For public transit systems like New York’s Metropolitan Transportation Authority , those flaws manifest as a “recurrent theme of mispricing, misallocated funds, suboptimal service and investment and inflated production costs,” according to the Brookings Institution’s Clifford Winston.

 

The most glaring example of misallocated funds at the MTA is their outdated signal system — which directs subway cars and governs how many can safely be in use at the same.

 

Despite having spent more than $100 billion since the early 1980s on infrastructure upgrades, the MTA’s signal system still uses technology from the 1930s!

 

Obviously such antiquated infrastructure is going to malfunction, but that’s merely a symptom of a much larger and more fundamental problem: That there is no incentive for the MTA to get better.

 

Need more proof? How about the fact that MTA officials don’t expect to modernize their signal system for another 50 years!

 

Does anyone really believe that a Google or Microsoft would ever allow their transit systems to reach such a state or act so sluggishly in making critical upgrades? (Yes, both companies operate their own small-scale transit systems for employees.)

 

Such chronic neglect of critical infrastructure is a feature of government control, not a bug — a finding echoed in a recent study which found that infrastructure spending at the MTA was roughly 90 percent below the level of its private peers.

 

This is because of perverse political incentives that encourage spending on projects that produce short-term results over less glamorous, long-term alternatives like infrastructure repair.

 

Take MTA’s plan to purchase 10 percent larger subway cars, for example. Expediting the adoption of a modern signaling system would seem to be a much better use of those funds, but that is unlikely to generate the hullabaloo and political grandstanding that comes with the unveiling of a new fleet of (slightly larger) subway cars.

Likewise, “because any future cost savings will only decrease the subsidies they receive,” Winston argues that transit systems like the MTA have failed to “explore operating innovations that could improve its service and financial performance.”

 

While private transit systems have owners who directly profit from such innovations, no such incentive exists in the public realm. So while there has been widespread adoption of technological innovations in transit systems overseas — the vast majority of which are privatized or deregulated — the MTA, and most US public transit systems, remain mired in stagnation.

 

But public transit doesn’t just underspend on key areas like infrastructure and technology, it also wildly overspends on production costs, which Winston blames on “ballooning bureaucracies and strong labor protections.”

 

At the MTA, these inflated production costs take the form of enormously generous pension and health benefits and a federal mandate that displaced workers be paid up to six years’ worth of salary and benefits upon termination.

 

A common argument against privatization — that typically occurs outside of academia — claims that allowing a private firm to operate a transit system would lead to monopolistic abuses.

 

But this view overlooks the much broader nature of transportation. The New York subway system must compete against automobiles, buses, trains, ridesharing services and even simply walking or bicycling. Thus, while a private firm would be the only subway in town, they would still have to compete in order to win customers’ patronage. 

 

After reminding us that all of American transportation was originally provided, operated and maintained by the private sector, Winston argues that the “overwhelming evidence of government failure” calls for a return to privatization, which would likely “reduce costs, improve service quality and accelerate technological change.”

And as privatization has become “almost the norm across the world” that is precisely what has happened — according to an Organisation for Economic Cooperation and Development (OECD) analysis, which reported that the “majority of empirical studies” found privatization reduced costs while increasing efficiency.

 

A few weeks ago, the Times reported that the MTA was struggling to balance the demands of increased ridership alongside the daily upkeep of exhaust fans — seemingly to support the argument encapsulated by the sub-heading: “When $100 billion isn’t enough.”

 

But where some see a sympathetic tale of woe that justifies more subsidies, others see a total and complete failure of a government agency to perform its most basic tasks at every turn. After all, aren’t these precisely the things a subway system is supposed to do in exchange for the hundreds of billions of dollars in subsidies and fares they receive?

 

At what point do we accept the plain truth staring us in the face?

 

“Increases in transit subsidies encourage inefficiencies to flourish and productivity to decline,” Winston wrote in summation of the vast academic literature on the subject.

 

Robert Fellner is the director of transparency research at the Nevada Policy Research Institute.

 

Source: https://mises.org/blog/privatize-new-york-city-subway-system

[Around the Horn]

Well sure, if you want to make it worse, go right ahead. 

[Via Garibaldi 8]

Well sure, if you want to make it worse, go right ahead. 

It's been under control of a public agency for years now and the system is rapidly deteriorating.  One of the main issues is bloated salaries and out of control costs. You get the union out of the picture, and get costs under control and who knows what can be achieved.  I guess the is supposedly too big to fail in some people's eyes, but I'd argue that they're too big to begin with.

[LTA1992]

Am always 50/50 when it comes to subway privatization. I mean, the way the Paris region does it seems to be very efficient and things work.

 

RATP is the operating authority.

STIF is the organization that handles planning and the acquisition of funds from various sources from private to public, including the French government.

 

The various communes thought the Grand Paris region also contribute funds to bring these projects to completion as well. They are just involved with the planning as the RATP and STIF.

 

The only real issue, I think, for that setup is the American mindset when it comes to public transport.

 

Also, and worse, is how money is handled in this country. The system here encourages spending above your means until you can't pay the loans, and you just get loaned more and more money. The cycle would eventually put us back here.

 

But those are just my thoughts.

 

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[Around the Horn]

It's been under control of a public agency for years now and the system is rapidly deteriorating.  One of the main issues is bloated salaries and out of control costs. You get the union out of the picture, and get costs under control and who knows what can be achieved.  I guess the is supposedly too big to fail in some people's eyes, but I'd argue that they're too big to begin with.

 

That's exactly what British Rail thought when they chose to privatize, and it was an absolute disaster.

[Via Garibaldi 8]

That's exactly what British Rail thought when they chose to privatize, and it was an absolute disaster.

As LTA noted, it's been done successfully elsewhere.  I don't think the status quo can continue.  We're pouring money into a system that has very little to show for it.  I think all options should be on the table.  

[Porter]

Well, maybe I was onto something after all. Why not make a public-private hybrid system?

[LTA1992]

As LTA noted, it's been done successfully elsewhere. I don't think the status quo can continue. We're pouring money into a system that has very little to show for it. I think all options should be on the table.

Well remember what I also said. The System (Federal Reserve System) encourages it. The MTA is no exception to that. From banks, to cities, and as of the 80s, the world. The status quo is going to continue. The people in charge are making too much money to stop sucking on that golden tit.

 

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[paulrivera]

I say we should privatize the buses. The subways are the "bread-and-butter" of the compared to the buses; I don't see Albany giving up the subway system. They might be willing to give up the bus system if the right person (or group of people) pressed them enough to do it.

[Around the Horn]

I say we should privatize the buses. The subways are the "bread-and-butter" of the compared to the buses; I don't see Albany giving up the subway system. They might be willing to give up the bus system if the right person (or group of people) pressed them enough to do it.

 

You mean like London privatized theirs? That could work.

[BreeddekalbL]

Privatizing is a bad idea for buses who is gonna get the contract veola with shoddy practices or first who understaff their services ?

[Around the Horn]

Privatizing is a bad idea for buses who is gonna get the contract veola with shoddy practices or first who understaff their services ?

 

Well, if its anything like London Buses, the MTA would still be very much in charge. 

 

"Transport for London's key areas of direct responsibility through London Buses are the following:

• planning new bus routes
• revising existing bus routes
• specifying service levels
• monitoring service quality
• management of bus stations and bus stops
• assistance in 'on ground' set up of diversions, bus driver assistance in situations over and above job requirements, for example Road Accidents
• providing information for passengers in the form of timetables and maps at bus stops and online, and an online route planning service
• producing leaflet maps, available from Travel Information Centres, libraries etc., and as online downloads.
• operating CentreComm London Buses' 24‑hour command-and-control centre based in Southwark

Bus operations All bus operations are undertaken under a tendering system in which operators bid for routes in return for a set price per route operated. Contracts are normally for five years, with two-year extensions available if performance criteria is met.^[4] Routes are set up, controlled and tendered out by Transport For London (TfL) and they provide day to day assistance via CentreComm which coordinates a large scale network of Network Traffic Controllers to help with any traffic issues that may occur. Operators provide staff to drive the buses, provide the buses to operate and also adhere to set TfL guidelines. Operators are then in return paid per mile that each bus runs, the pricing is announced on new tenders."

 

The various bus operators providing services under contract to London Buses operate a wide variety of vehicles, about the only immediately obvious common feature being their use of a largely red livery. However, London Buses in fact maintains a close control over both the age and specification of the vehicles. Particular examples of this include the use of separate exit doors, increasingly unusual on buses in the United Kingdom outside London, and, on double-deckers, the use of a straight staircase where most other UK operators specify a more compact curved staircase. Additionally, London Buses also specifies that vehicles operating in London use traditional printed roller destination blinds, whereas in most other parts of the country, electronic dot matrix or LED displays are the norm on new buses. These have been known to tear and get dirty quickly, however there have been improvements with LED Backlights and the 'SmartBlind' system installed on newer vehicles.

 

Because of London Buses' close control on the age of the fleet, it is very common for London buses to be cascaded by their owners to operations in other parts of the country after only a few years service.

 

Given that level of control, an operator like First or Veolia who tried to play games would be out of a tender pretty soon.

[Gotham Bus Co.]

 

This is because of perverse political incentives that encourage spending on projects that produce short-term results over less glamorous, long-term alternatives like infrastructure repair.

 

Politicians want shiny new things that will get their faces in the news. Nobody ever made headlines by changing a lightbulb.

[bobtehpanda]

Privatization only works if the underlying thing makes money. The subway, even if it was packed to the gills at all hours of the day, would never make money.

 

Privatization of subways as large as ours has been done exactly once, in London, and that resulted in such poor service that the Underground was renationalized.

[HenryB]

Privatization only works if the underlying thing makes money. The subway, even if it was packed to the gills at all hours of the day, would never make money.

 

Privatization of subways as large as ours has been done exactly once, in London, and that resulted in such poor service that the Underground was renationalized.

 

 

Actually, it works for "your profile pic" lol.

But in this case the company is like a real estate developer more than a transit operator.

[Union Tpke]

http://www.pcac.org/wp-content/uploads/2014/09/Privatizing-MTA.pdf

Report on Privatizing the MTA

[MHV9218]

It's been under control of a public agency for years now and the system is rapidly deteriorating.  One of the main issues is bloated salaries and out of control costs. You get the union out of the picture, and get costs under control and who knows what can be achieved.  I guess the is supposedly too big to fail in some people's eyes, but I'd argue that they're too big to begin with.

 

Yeah, this entire article is stupid and this proposal is terrible. I can't stand people ragging on 'bloated salaries' of public employees. You think that thoroughly middle-class transit workers putting in long-ass days for basic wages are the problem is the country? Try the massively wealthy undertaxed elite who could put it in 1% more and help save this system. But our coward governor will never tax them. The problem is never, ever the salaries of the middle-class. The problem is the structure that preserves the upper-class and the refusal to ever alter the system. There are eight thousand better ways to improve the MTA than this strategy, which has failed time and time again wherever tried.

 

I say we should privatize the buses. The subways are the "bread-and-butter" of the compared to the buses; I don't see Albany giving up the subway system. They might be willing to give up the bus system if the right person (or group of people) pressed them enough to do it.

 

Buses lose the most money of all, which is why when companies like Veolia vvv take over, they cut corners with service and safety to make ends meet. Will not work.

 

Privatizing is a bad idea for buses who is gonna get the contract veola with shoddy practices or first who understaff their services ?

 

Exactly.

[Via Garibaldi 8]

Yeah, this entire article is stupid and this proposal is terrible. I can't stand people ragging on 'bloated salaries' of public employees. You think that thoroughly middle-class transit workers putting in long-ass days for basic wages are the problem is the country? Try the massively wealthy undertaxed elite who could put it in 1% more and help save this system. But our coward governor will never tax them. The problem is never, ever the salaries of the middle-class. The problem is the structure that preserves the upper-class and the refusal to ever alter the system. There are eight thousand better ways to improve the MTA than this strategy, which has failed time and time again wherever tried.

Oh please, like you're part of the masses.  If I could stop laughing, I could perhaps take your comments seriously.

[RES2773]

Ever since the privatization of Nassau buses under Veola (now Transdev) I am skeptical of the notion that private services are better and more efficient. Now, a private system with heavy, and I mean HEAVY oversight by public officials? Maybe could work. Lots of bureaucracy that could be avoided. But also think about how much the cost would be even to transition over to that type of system. Idk.

 

 

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[Deucey]

Ever since the privatization of Nassau buses under Veola (now Transdev) I am skeptical of the notion that private services are better and more efficient. Now, a private system with heavy, and I mean HEAVY oversight by public officials? Maybe could work. Lots of bureaucracy that could be avoided. But also think about how much the cost would be even to transition over to that type of system. Idk.

 

 

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But it begs the question: is NICE horrible because of Veolia, or because Ed Mangano is a cheap bastard?

 

¯\_(ツ)_/¯

[RES2773]

But it begs the question: is NICE horrible because of Veolia, or because Ed Mangano is a cheap bastard?

 

¯\_(ツ)_/¯

Ha ha, probably a mix of both. I want Ed outta here asap, I can't think of anything good he's done for transit. His issues with Long Island Bus seem relatively petty with what we've got now. His fault for lack of funding, but really I don't think Transdev has been allocating the money they do get properly. Their routes are also just a total mess now.

 

 

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[bobtehpanda]

Actually, it works for "your profile pic" lol.

But in this case the company is like a real estate developer more than a transit operator.

 

Yeah, the MTR is a property developer in a real estate market that is driven to insane heights by a developer cartel, so they don't really count.

[itmaybeokay]

My real question is "what core problem does privatization solve, and how does it solve them?"

 

Let's say we all woke up tomorrow and some corporation had purchased the subway system. The thinking is, there would be less mismanagement because of the "economic darwinism" aspect of a corporation - it would be in competition with all the other forms of transportation so it would have to compete to make money. 

 

But in order to generate profit or break even, the corporation would make several rather unpopular changes. 

 

1. It would raise fares until ridership dropped to manageable levels. 
   The subway struggles to keep pace with ridership. A company that cannot meet its demand will generally raise it's prices until demand starts to fall, because setting prices below that point does not generate additional profits as they cannot reach demand. 
2. Unprofitable lines and service times would be eliminated
   I assure you the 3-5 am subway does not even close to break even. They'd halt overnight service saying they need the time to make repairs. 
3. You'd probably see a zoned-fare system

Now these are just examples. 

 

Okay - well - lets say they weren't allowed to do that because there was government oversight. You have the board of the corporation appointed by the politicains - and now you have more or less exactly what we have now - a public benefit corporation with an appointed board chartered by the state. 

 

Allow me to be abundantly clear that I am not saying the current system is perfect and that no changes should be made. 

 

All I'm saying is pure privatization will have serious issues, and a public-private partnership seems too close to what we have now. 

 

Further, the source article has some huge issues with it's facts. It cites as a core example of financial mismanagement the "signal system from the 30s" and that there are "no plans to change it until 2050". 

 

While I agree that they would do well to take every measure to accelerate the process - CBTC is indeed in process, as it is installed on the canarsie line, soon to be live on the flushing line, and coming to QBL. They started on the isolated lines in an attempt to work the kinks out and learn about the implementation. There are indeed plans to change it, and I think the quote regarding 2050 was "at current pace, the full system will not be CBTC until 2050"

 

The author of the article seems to think that a signal system is a Video Game Console that you can buy a newer one, plug it in, and you're good to go. Its an unbelievably massive undertaking to replace the whole system, and I'm not saying there hasn't been mismanagement of funds, and I'm not saying they're going fast enough - but it's not like handing the reigns to Joe Shareholder would let a corporation come in and fix it overnight. 

 

Further - I found a copy of the Watson book the author uses to point to research that privatization is a good idea - that book, Last Exit  draws the conclusion that a TEST CASE for mass transit privatization is warranted in the US. I would have no problem with an experiment. The largest system in the country is not the place for that experiment. 

[FLX9304]

Oh please, like you're part of the masses. If I could stop laughing, I could perhaps take your comments seriously.

If you paid very close attention to what happened to the routes of the former LIB, now NICE, then you will know why privatization of the largest Transit Authority in the US is not for you.

 

The passengers at first look for a demand, so you get that bus service, not unless if you want it to stop in front of your doorstep.

 

Subway service must see an increase of service. You got construction projects that has yet to be done in which is hampering service levels from A to Z, & 1-7.

 

& another thing: the unions have the final say whether if it's good or not.

 

 

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[Via Garibaldi 8]

If you paid very close attention to what happened to the routes of the former LIB, now NICE, then you will know why privatization of the largest Transit Authority in the US is not for you.

 

The passengers at first look for a demand, so you get that bus service, not unless if you want it to stop in front of your doorstep.

 

Subway service must see an increase of service. You got construction projects that has yet to be done in which is hampering service levels from A to Z, & 1-7.

 

& another thing: the unions have the final say whether if it's good or not.

 

 

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I'm of the belief that partial privatization of the system could work if done right.  It's not as if the current situation is working so well, so the idea that government is working is a blatant lie.  The system is experiencing more delays than ever, and the infrastructure is deteriorating by the day.  If privatization could drive down bloated costs I say why not?  Some union workers are grossly overpaid and I think we need to eliminate certain "entitlements" to get costs down.  Looking at the private sector, raises are given based on merit, not how long you work somewhere, and that's how it should be done.  Those who work should be rewarded.  There's a good amount of laziness around being rewarded, and that's one of the problems.  Falsification of signal work and on and on...