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Thread: Scams in mass transit

  1. #1
    Cyburbian Dharmster's avatar
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    Scams in mass transit

    Wendell makes some good points about competively franchising transit service:



    Pittsburgh Tribune-Review

    Scams in mass transit

    By Bill Steigerwald
    TRIBUNE-REVIEW
    Saturday, October 28, 2006

    Wendell Cox's fancy title is international public policy consultant. But for anyone who needs facts, figures or strong opinions about public and private transit issues, Cox is the great go-to guru of transportation. His enemies will say he hates public transit. But Cox, who has worked with scores of state, local and national governments to build and improve transit systems, is a real radical. He actually believes that bloated public mass transportation monopolies like the Port Authority of Allegheny County should be run efficiently and rationally. Cox, whose Web site Demographia.com groans with geographic and demographic data from around the world, was at his office near St. Louis Thursday when I called him.

    Q: Youíve just been named head of the Port Authority of Allegheny County. Your pay is only $250,000 a year but you have absolute power to do anything you want to do. What do you do?

    A: Start competitively contracting the service. Now granted, if this happened and I were there, believe me, the afternoon I made such an announcement I would be out on my ear. Iím serious. You cannot believe how strong both the public transit unions and the bureaucrats are. Itís not just the unions. I understand the unions and their interest in preserving their empire. But the fact is, the public transit bureaucrats are just as bad as the unions.

    But thereís no reason why we canít contract out everything Port Authority does -- buses and light rail. Right now, for example, in Stockholm the entire system, including the subway, is contracted out. In London, the entire bus system -- 6,000 buses -- is contracted out.

    What we would do is basically offer the existing employees separation allowances and that kind of thing and convert the Port Authority system to a competitively run system. Port Authority would continue to determine the fares, to determine where the routes go, etc., as is being done very successfully in Denver, Stockholm, London, Adelaide, Perth and around the world. So this is not privatization per se. What it is is using the competitive market to provide virtually the same services that are being provided today.

    My guess in the case of Pittsburgh, knowing something about the Port Authority's cost structure, is that what you are doing today -- after the administrative expense of converting the system, which by the way would not be that much -- you would be looking at savings in the neighborhood of 40 to 50 percent. The payback period would be less than three years. Then you could take that money and either put it into something else or you could expand public transit service.

    Of course, no transit manager is interested in that. Iím serious. The whole bent of the transit industry in Europe and the United States is to maximize cost. They do not want to minimize cost; they want to maximize cost. They are not interested in saving money at all. Thatís why anyone who talks about a bigger role for public transit in the future doesnít have the slightest idea what he is talking about.

    Q: Basically, the Port Authority is the same size in terms of employees, number of buses and light-rail vehicles as it was in 1982. Plus its budget is bigger in inflation-adjusted dollars than it was then but it carries about 30 percent fewer riders today. Is that good?

    A: Thatís pretty good. Iíll tell you, itís hard to find performance that good in the transit industry.

    Q: Youíre being sarcastic, right?

    A: Iím being absolutely facetious. This is what the monopoly structure of public transit in the United States and Western Europe and Canada produces. There is no incentive to save.

    Q: Are Port Authority's peers in other cities equally afflicted?

    A: There are a few semi-success stories around. Denver, for example, which now contracts out 50 percent of its service based upon my legislation which passed in 1989 and has since been expanded, has actually increased its ridership rather substantially and theyíve reduced their costs. Theyíve also wasted a trainload of money on light rail, which has changed nothing. There are systems in Los Angeles that I was involved in establishing, where we basically took sections of the main transit operatorís structure and created new small transit districts. In the first year we did that we had savings of 60 percent and ridership has gone up substantially because theyíve taken the money and expanded service.

    Q: In the Wendell Cox-run universe, what would a perfect public transit system look like?

    A: Youíve got to competitively contract it. Now some people call that privatization, but itís like if the City of Pittsburgh were to contract out the garbage service. The service still remains public. The City of Pittsburgh is still in charge. It tells the garbage companies what to do. The point is, with respect to public transit, the Port Authority should be nothing more than a marketing operation. It should market the service. It should determine where the routes go. And it should determine budgets. You do not need probably 100 people to do the essential public functions of the Port Authority -- which is of course why this will never happen, because the purpose of public transit is to serve the employees of the transit system, not the community, which gets us back to why the whole idea that public transit has anything to offer to the community more than it is doing today is absolutely bogus.

    Q: You donít hate public transit, right?

    A: Precisely. As a matter of fact it was my motion in 1980 that created the funding source for the Los Angeles rail system. There are two problems with mass transit: One is that it is all about downtown. The latest data Iíve seen on downtown Pittsburgh from the Census Bureau is that somewhere in the neighborhood of 30 to 35 percent of Downtown work trips get there on public transit. On the other hand, if you go outside Downtown, youíre probably going to find it less than 5 percent. This is the case virtually everywhere around the world. If you go to Paris, youíll find 70 or 80 percent of the work trips to the downtown to the core being by public transit and out in the suburbs youíre going to find 15 percent.

    So public transit is about downtown. In fact, Iíve done about 30 presentations mainly in Australia and New Zealand in the last month and one of the things I do is basically tell people it is time to stop the exaggerations and the platitudes. The fact is there isnít a thing you can do to reduce traffic congestion anywhere in the community with public transit. The first reason is, youíre not going to get more people to downtown Pittsburgh on public transit; and secondly, anybody who rides public transit to work outside downtown Pittsburgh does so only because they do not have a car.

    Q: We just published the salary figures of the Port Authority and there were nearly 100 bus drivers making over $80,000 a year with overtime.

    A: Well, I bet if you look at the paratransit in Pittsburgh, the Access system -- which by the way may be the best paratransit system in the country and is fully contracted out -- Iíll bet there isnít a driver who makes more than $35,000 a year. The idea that bus drivers are making $80,000 is an absolute outrage and proves that the purpose of public transit is simply to move money to certain interest groups.

    Q: Have you heard about our North Shore Connector project, the $425 million-and-counting twin-tunnel under the Allegheny River for a light-rail extension from Gateway Center to the North Shore?

    A: What they should do with that $425 million is do a study and figure out what is the least expensive way to reduce the travel delay in Allegheny County. Itís doubtless with some sort of a road project. You could probably do 10 to 20 times as much good with a road project as you can with this tunnel project. Spending $425 million for a 1.2 mile light-rail extension is an absolute outrage. ...

    By the way, to give you an idea, these people have absolutely no shame. Where Iíve just been last week -- Delhi, India -- has built a metro light-rail system. The subsidy per annual passenger is 50 percent higher than the gross domestic product of the nation. That shows you how shameless it gets. And the transit people are there claiming theyíre getting a 30 percent return on investment. Weíre talking about stuff that should be sending people to jail. Itís just absolutely outrageous.

    Whatís going to happen in the long run is cities are going to find themselves with congestion getting worse and worse because they are not dealing with the problem. The problem is that traffic congestion gets worse. There is nothing you can do to reduce traffic congestion except provide more road capacity.

    Bill Steigerwald can be reached at bsteigerwald@tribweb.com or (412) 320-7983.


    Images and text copyright © 2006 by The Tribune-Review Publishing Co.
    Reproduction or reuse prohibited without written consent from PghTrib.com

  2. #2
    Cyburbian njm's avatar
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    He repeatedly touts the Stockholm subway as the poster child for privatization.

    My FIRST HAND experience can dispute this. Two of the three trunks (green/ red, 5 of 7 lines) are notorious for rush-hour stoppages. Not delays--stoppages. Cost cutting has meant that railcars that should have been retired remain in service, under the care of private organizations (Connex - general operator / Tågia, repair & maintenance contractor) that do not want to spend any more time fixing cars than they have to. The only thing that has led to widespread safety checks of the cars there have been the two or three fires over the last two years, and then it was only when the courts intervened.

    Privatization may save money, but when you have a full subway car going 60 mph 50 feet underground, maybe the cheapest operator isn't the best.

    Furthermore, the commuter rail system (pendeltåg) has been subcontracted for some time, and despite 'efforts' at the start of every new contract, frequent staff problems and aging equipment have plagued this setup as well. Granted, rail capacity is also a problem... but then according to Cox, investing in the infrastructure would just be 'outrageous.'

    Looking at the 'traffic changes' nearly every day includes numerous cancelled subway and commuter train trips due to 'train probelms'

    Don't get me started on Swebus, a private operator of about 1/3 of the buses there.
    What luck! A random assemblage of words never sounded less intelligent.

  3. #3
    Cyburbian
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    The studies on London have indicated that privatization both resulted in lower quality of service and, once the bills were tallied, cost -more- money than the public service had cost. There seems to be plenty of work left to do on service and route design to bring up service quality before you need to debate ownership structures too much.

  4. #4
    Cyburbian Dharmster's avatar
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    Quote Originally posted by JusticeZero View post
    The studies on London have indicated that privatization both resulted in lower quality of service and, once the bills were tallied, cost -more- money than the public service had cost. There seems to be plenty of work left to do on service and route design to bring up service quality before you need to debate ownership structures too much.
    London is really a hybrid. In the rest of the UK the bus market is essentially deregulated. As a result the service in London is the best in the UK. I believe that ridership increased by something like 1 million passengers over the last five years. Whenever I visit I notice the quality is quite good in London, which is a stark contrast to Manchester (I have relations in both cities).

  5. #5
    Cyburbian
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    Right, I think that's some of the studies I meant - comparing London to the areas fully deregulated. I'll have to look for the references.. *adds to the growing pile*

  6. #6
    Cyburbian jordanb's avatar
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    You can't seperate London from Ken Livingston, who has implemented perhaps the most ambitious pro-alternative transportation campaign of any big-city mayor of the world.

    The privatization of the london railroads has been such an unmitigated failure that even the torries (who implemented it) have admitted such. That might have been what Justicezero was thinking of.

    Interesting that Wendell is willing to put his money where his mouth is and take such a position at a transportation authority. From what I understand Pittsburgh is a town with a healthy downtown and relatively high transit ridership. I hope that once Wendell ruins that he'll be put to bed once and for all.
    Reality does not conform to your ideology.
    http://neighborhoods.chicago.il.us Photographs of Life in the Neighborhoods of Chicago
    http://hafd.org/~jordanb/ Pretentious Weblog.

  7. #7
    This is a problem that plagues all public institutions. Without a clear profit-making target, everybody tries to profit as much as they can from it. If it's "wrong" for the institution to turn a profit, that means it has a green light to spend as much as possible on any conceivable thing. There is just no form of rational economy possible.

    Cox has a very poor grasp of economics however,
    Quote Originally posted by Dharmster View post
    What’s going to happen in the long run is cities are going to find themselves with congestion getting worse and worse because they are not dealing with the problem. The problem is that traffic congestion gets worse. There is nothing you can do to reduce traffic congestion except provide more road capacity.
    If there's traffic congestion, it is because demand exceeds supply. Increase price until demand and supply are in balance, then once you know how much profit you're making, you decide whether or not to add capacity.

    That is the basic principle of economy.

    Quote Originally posted by njm View post
    Privatization may save money, but when you have a full subway car going 60 mph 50 feet underground, maybe the cheapest operator isn't the best.
    That's where you have to make the difference between privatization and outsourcing the service. To privatize means that you sell the whole system to a private enterprise. They then decide how much to invest, how fares are set, etc. Outsourcing is just hiring a private operator to run it, which is no different than outsourcing the concession stand to McDonald's.

    How much value has to be produced must be decided by the owner. Simply hiring the cheapest operator may mean you are getting the lowest possible value, and that's when the problems occur. If the system remains in public ownership, you are only adding one more agent trying to maximize his profit at the expense of the system as a whole. Instead of unions profiting, it's executives, but the system is not more productive.

  8. #8
    Cyburbian safege's avatar
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    It's amazing that Cox can take one fact, that transit systems try to spend the maximum on operating budgets with the help of union backing, and fill the rest with total distortions.

    Does he mention the automation of the N.Y. subway ? Why not ? Is he unaware of how cost savings are made by every other business ?

    I don't think so.

    The Seattle monorail had it's bid nearly finalized when the financing went up in flames. The payroll had assistants to the assistants, as well as job titles that were too creative for words. Canada can cut the payroll from the start with it's Skytrain, but can we do that ?

    And where was Skytrain ? Where is automation in all this ?
    Psychotics are consistently inconsistent. The essence of sanity is to be inconsistently inconsistent.
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  9. #9
    Cyburbian Dharmster's avatar
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    Jordan I hope you wouldn't get as selective with the facts as Wendell does at times. What the conservatives have said is that privatization of the infrastructure (tracks, signals, stations) was a mistake. They have stated that if they win the next election they would not reprivatize the infrastructure which is now controlled by not for profit Network Rail. On the other hand not too many peopel are consdiering renationalizing the network. Instead, the franchises themselves are being rationalized. Even the Labor government has been moving very slowly to reregulate the urban bus market outside of London which most reasonable people would say has to be done. It all comes down to money (the minute they announce their intent to reregulate the urban bus market, they'd have to start paying transitional subsidies or the existing operators would pack up and terminate service),

    Quote Originally posted by jordanb View post
    The privatization of the london railroads has been such an unmitigated failure that even the torries (who implemented it) have admitted such. That might have been what Justicezero was thinking of.

  10. #10
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    Cox is full of you know what

    New York City had private bus lines serving contracted out under the exact same scheme that he describes for many years, serving parts of Queens, Brooklyn, and the Bronx. I can tell you from personal experience that it was a unmitgated disaster of highest order. Broken down buses, long waits, overcrowding, safety issues. As many problems as the MTA here has, it was still providing superior service. Bloomberg finally ended the contracts in the last couple of years and put them under the control of the MTA. I wish we as a nation would realize that certain things are simply natural monopolies, and hence should be just left as public utilities. You simply can not generate competition for a mass transit service to provide any incentive for the owner with profit on his mind to run a good service.

  11. #11
    Cyburbian jresta's avatar
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    I can't believe this guy is still trolling for Cox.

    Riddle me this . . . how can you "privatize" a service or industry that doesn't make money?

    Transit systems don't make a profit whether they're run by private companies or not.
    It's a wealth transfer from taxpayers to politically connected individuals who fancy themselves CEO's of transit companies.

    Private operators squeeze "profit" from wages and operations. That means less of both and lesser quality everything.

    Theoretically taxpayers should pay less for the service or pay the same and get more service. Cox is from Missouri? Show me.
    Indeed you can usually tell when the concepts of democracy and citizenship are weakening. There is an increase in the role of charity and in the worship of volunteerism. These represent the ťlite citizen's imitation of noblesse oblige; that is, of pretending to be aristocrats or oligarchs, as opposed to being citizens.

  12. #12
    If there's a topic that Cox is an expert on, it's using print media, not transportation planning. He's a long-term consultant catering to the road construction lobby that mis-interprets statistics for a general audience, often releasing news releases and reports that disguise the actual author.

  13. #13
    Quote Originally posted by jresta View post
    I can't believe this guy is still trolling for Cox.

    Riddle me this . . . how can you "privatize" a service or industry that doesn't make money?
    From an economic standpoint, if something doesn't make money, it should not exist.

    But that's not exactly good news for the highway lobby either.

  14. #14
    Cyburbian jresta's avatar
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    Quote Originally posted by jaws View post
    From an economic standpoint, if something doesn't make money, it should not exist.

    But that's not exactly good news for the highway lobby either.
    Every government in history, elected or otherwise, had at least a general understanding that organized commerce can't function without a healthy (and often well guarded) infrastructure.

    One can say that roads, transit, and other public works don't make money but -
    making money in any commercial economy would be impossible without them.
    Indeed you can usually tell when the concepts of democracy and citizenship are weakening. There is an increase in the role of charity and in the worship of volunteerism. These represent the ťlite citizen's imitation of noblesse oblige; that is, of pretending to be aristocrats or oligarchs, as opposed to being citizens.

  15. #15
    Quote Originally posted by jresta View post
    One can say that roads, transit, and other public works don't make money but -
    making money in any commercial economy would be impossible without them.
    Well then they do make money. Economy only says that the people who make the most money from them should be the most eager to pay, and paying the most.

    The current system is building absolutely anything, anywhere for any reason, such that we don't know what makes money and what doesn't.

    A multimillion dollar bridge to an Alaskan island with a population less than one thousand does not make money.

  16. #16
    Cyburbian
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    Quote Originally posted by jaws View post
    A multimillion dollar bridge to an Alaskan island with a population less than one thousand does not make money.
    Yeah, that was pretty typical of what i've seen of Alaska planning. That is, experts look at the idea and decide that it's absolutely the worst idea they've heard of, discard it, and start doing a lot of work planning other things that are more effective and working out the best solutions. Meanwhile, some exceedingly remote politician turns around and chops their funding off at the knees to pigeonhole a big infusion of oddly allocated funds that can only be used for said idea. Every planner I talked to thought that the bridge across the inlet was one of the worst ideas they'd heard of, would force them to take planning back to scratch and would fiscally cripple their ability to do even basic maintenance for decades to come. And that was relatively the more sane of the two bridges, the one to the island was pure "what..the..f*..?!?" I seem to remember a similar pattern happening with the Abbott Loop extension to deal with the problems with Lake Otis and Tudor. Not counting the fact that research had shown that the Abbott Loop extension, while exceedingly expensive and controversial cutting across federal parkland etc., isn't actually along the path of any traffic patterns - people from the posh elderly Hillside aren't exactly beating down the doors to get to the pawn shops, college campuses, and inexpensive social services in Muldoon - they'd come up with some ways to connect up some arterials to link the traffic up well and distribute traffic. But of course that's not good enough, someone with no planning background has to earmark funds.

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    Cyburbian Dharmster's avatar
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    Ummm.. correct me if I'm wrong but those New York routes you use as an example were always privately run. That is different from taking a publicly run service and handing it over to a private contractor to operate. Denver's RTD contracts about 50% of its service and they have a good experience with it. In fact, when RTD's union struck the private routes continued to roll.

    Quote Originally posted by DoctorK16 View post
    You simply can not generate competition for a mass transit service to provide any incentive for the owner with profit on his mind to run a good service.

  18. #18
    Cyburbian Dharmster's avatar
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    You need to check your facts. Where there is competition between the private and public sectors in transit (San Diego and Denver) the operating costs are lower for the public operator when compared to similar systems with no competiton. Everyone is now talking about privatizing operations and maintenance of the transportation system not just transit. Here in Virginia, the state will soon have contracted all of its maintenance functions.I belive they call it best practices..


    Quote Originally posted by jresta View post
    .

    Private operators squeeze "profit" from wages and operations. That means less of both and lesser quality everything.

    Theoretically taxpayers should pay less for the service or pay the same and get more service. Cox is from Missouri? Show me.

  19. #19
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    What exactly different about taking a public service private and take a service that is generally public private. Those lines didn't lack for ridership, so it wasn't a demand issue. As for Denver, are they really saving any money in this private contractor deal or has more money through higher fares or subsidies from the city/state masking the financial picture?

    Quote Originally posted by Dharmster View post
    Ummm.. correct me if I'm wrong but those New York routes you use as an example were always privately run. That is different from taking a publicly run service and handing it over to a private contractor to operate. Denver's RTD contracts about 50% of its service and they have a good experience with it. In fact, when RTD's union struck the private routes continued to roll.

  20. #20
    Cyburbian Dharmster's avatar
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    Quote Originally posted by DoctorK16 View post
    As for Denver, are they really saving any money in this private contractor deal or has more money through higher fares or subsidies from the city/state masking the financial picture?
    The issue here is that the contractors in Denver and San Diego are either non unionized of if they are unionized better negotiators than the public sector. In the case of San Diego, they found the union at the public operator was actually willing ot work for LESS than the private contractor because they'd rather work for less and have it be a union job.

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