Some Things to Know About Intercity Transportation

Everyone is amazed at Japan’s HSR right?  Make sure to listen all the way to the end.

Yeah, that’s right, it is now privately owned and operated.  They subsidized it and then learned it would be more efficient to allow privatized operation.

Imagine that.  To improve efficiency none the less.  Maybe it is time that we re-learned what our history (in the US) would teach us.


  1. You know that they whack massive tolls on their motorways so in all considered its about the same price to take the train right? And that the government regulates fares?
    If intercity transport is profitable why don’t we see loads of private carriers? Intercity rail is very rarely profitable! And even when it is the risk is too great for most companies. If you privatised amtrak you would either lose the service or have to subsidise operation. Here in the UK we have to pay private companies SIX TIMES what the state owned company used to cost to run trains. HSR can be profitable, several of the TGV lines are. But why not let the state reinvest profits into more rail instead of letting some private company take the money away?


  2. That isn’t what the numbers actually show Tom. Aside from that the statistics are much in favor of your "partially" privatized trains versus the old mess that the British State had taken over when nationalizing the system.

    You at least have new trains, better utilized staff, and per service per dollar the equation is better. Might be a little more out of pocket but it is less overall when you realize it costs society less on the whole.

    In the US it is the same situation. Amtrak costs taxpayers about $1.5 Billion per year, before Amtrak the passenger rail cost taxpayers $0 direct dollars. That’s a pretty damn good trade off if you ask me. If passenger service doesn’t cover itself, maybe it should be rethought, for autos and everything else too. Sure we’d see reductions in demand, but that would be good for the economic stability, the environmental improvements, and logical usage of transport.


  3. I don’t find it that romantic either, I just find it performs vastly better than what we have now. The proof has been evident time and time again.

    Japan, England, and others have privatized their system and gained a large net benefit for the service and for the taxpayers. Germany & even France are working on doing the same thing because they realize the savings and increased service that is achievable.


  4. Adron wrote:

    [i]Japan, England, and others have privatized their system and gained a large net benefit for the service and for the taxpayers. Germany & even France are working on doing the same thing because they realize the savings and increased service that is achievable.[/i]

    This logic is acceptable if you don’t look at the process.

    All at one time had such heavy state involvement and protection that a private company would have never been able to lay track, much less get a train running.

    Japan had a private company make its upside from intensively developing its cities and government coordinating economic activities around keeping growth near the trains. And the density is not seen anywhere like it on Earth. Manhattan looks like Montana in comparison. It was those development rights that provided an endowment for fares to be reasonable and yet still profitable.

    Anybody, pro- or anti-, who wishes for passenger services to be self-sustaining on fares alone either is setting up for failure (pros) or wanting it (antis).

    Germany and France were state-owned enterprises, and weren’t ashamed of that fact. It took years before some of them turned a profit. When they did, the governments used their train services as a cash cow to pay for all those social benefits. The European states would have preferred to keep their systems public, but the EU insists on privatizing public services.

    The way a private train system would work in the U.S. would be to follow an airline model. Private operators use public infrastructure. The rails and stations would be publicly owned, and private operators would lease and pay into a custodian fund to keep up the publicly owned assets.

    We don’t have enough confidence into our government to do things right, and Americans would not tolerate the sort of development that allowed Japan’s system to be profitable.


  5. Point being, is it is privatized.

    We had a massive private rail system, but bankrupted it because of bad policy (the airlines helped a bit too). Either way, our non-privatized system will always be less than it can be. There isn’t any personal vested interest in all but the most interested individuals to do anything toward making it better, like many that read this blog and such. However, if we get regular people vested in this thing called transportation and they start paying attention, we’ll get real vested interest. The easiest and quickest way to do that is to privatize the industry under a system where it can succeed. If that means public rail ROW (I’d assume in ADDITION to the self sustaining freight system) that is shared and bid on for usage, then excellent. Let’s do it. Eventually they can pay fees and pay it off, the SNCF would easily be able to do that now, and it is an example of a decent model, albeit it too could be better privatized.

    … 🙂 yup.


  6. Britain’s first foray into privatized rail last decade was disastrous. The government had to take it back temporarily to get it ironed out, but I think it’s working.

    Why should good service be predicated on someone needing to wet his or her beak on the thing?

    GM and Chrysler were once private companies, too. It turned out the only thing those companies knew how to do was to make was a profit. And they can’t claim to do that anymore!

    Is that an extreme example? Yes, but it’s not something that you can call a triumph of the free market. In automobiles, at least right now, socialism won this round on points.

    One of the reasons why the Japanese gained a huge advantage in the reliability department was a strong vested interest in a viable industry on the part of the Japanese government. The government wanted the industries to be profitable, but it exacted a tribute by its policies. Japan, and later South Korea, had notoriously tight import controls, so the companies could have a huge domestic market while in turn negotiating favorable export policies. Second, the government put conditions on how it could use its revenues. The one relevant to product reliability is the requirement that revenues had to be reinvested in research & development.

    This R&D law was Japan’s equivalent of a make-work program. R&D is a big money pit, since the upside does not justify the cost/benefit ratio. It also made Japanese firms unattractive for investors (all those huge sales abroad were tempered by the government mandates on patriated revenue). The upside it did have is that it gave the carmakers a comparative advantage in foreign markets.

    We also don’t want to speak of it on the health care front, since that is what the American auto industry — from the execs to the workers — says makes cars uncompetitive costwise. So Japan’s trade-off in keeping researchers busy is balanced by adding expensive and less productive health care into the sticker price of every car.

    Japan ended up with the better end of the bargain.

    So is this going to mean that the private sector should never again be trusted with money? No. Does this mean the public sector will get it right? No.

    If our private sector is down, and our public sector is expected to be a lost cause, then what? Let’s come to the realization that Americans got to be successful on dumb luck alone since the end of World War II. The only thing we’ve been good at making is money. That impulse worked because Americans were drafted into a war against communism. I can’t use the word "social engineering," since it’s a right-wing shibboleth. We didn’t make money by being smart, but there were just enough brains to keep the system from collapsing. We didn’t make money by working hard, but we gained leisure time by allowing immigrants to do the worst jobs because they not only believed the Horatio Alger myth but also because they traded up to extreme deprivation from nothing. We didn’t make money through discipline, apart from what was required to keep getting paid.

    The system is out of order, and it doesn’t look like it can be fixed. Or maybe it can, but we just don’t realize it yet.


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