From: borden@head-cfa.harvard.edu (Dave Borden)
Newsgroups: ne.general
Subject: Re: Drinking and the MBTA was Re: Sunday Liquor Sales
Date: 21 Dec 92 15:58:47 GMT
Reply-To: borden@m5.harvard.edu
Organization: Smithsonian Astrophysical Observatory, Cambridge, MA,  USA

In article <1992Dec17.175334.15005@linus.mitre.org> jclander@texas.mitre.org (Julian C. Lander) writes:
>In article <1992Dec17.153135.8027@dunsel.harvard.edu>, borden@head-cfa.harvard.edu (Dave Borden) writes:

>|> What this city should do is allow private bus lines to run at night, and in
>|> my opinion, in the daytime as well.  Why should the MBTA have a monopoly on
>|> mass transit?

>The monopoly exists essentially to save taxpayer money.  I know this sounds
>crazy, but let me explain.  (And there are a couple of points in the 
>argument with which it is possible to disagree.)
>
>First, you have to accept the proposition that the current extent of 
>public transportation and the current fares are appropriate for the
>area and the population.  Right now, the MBTA loses vast amounts of
>money, and the difference is made up by the cities and towns in the 
>MBTA district (and possibly by the state--I don't remember whether
>there is direct state funding).
>
>Now, you may assert that the MBTA's losses are through mismanagement, and
>that the same service level could be provided at the same fares by a 
>private company without loss.  I can't say that's not true, and, if it
>is, there may be a reason to make the MBTA private.  But I suspect it's

I don't propose making the MBTA private.  What I propose is simply to allow
private individuals and/or companies to run competing bus lines.  They would
be at a severe competitive disadvantage, because of the high subsidies which
the MBTA receives (I heard about 85 percent - is that true?), but people
could decide which line they wanted to take.  If someone wanted to run a bus
line that continued service all night, then people would take that bus line
after the T closed.  The point is that there is no justification based on
fundamental principles for not allowing someone to run such a bus line.

>This means that, if you follow my argument thus far, no private company
>can run a transportation system that matches the MBTA in service for the same
>fares and still make a profit.  So the company has two choices: either
>reduce service or raise fares.  You can decide that these are acceptable, 
>but they can just as well be applied to the MBTA.

If you count in the real fare, that is the fares collected plus the taxpayer
subsidies, there's no question that a private company could at least match
the MBTA's fares, and probably do better.  The only justification for the
subsidy is to discourage people from driving so much.  This is a worthy goal,
which is why I don't oppose the MBTA subsidy, but that doesn't mean
that private companies shouldn't be able to run bus lines as well.  Some
people would choose to use the private lines, even at a higher fare; they
should have that right, as the private sector should have the right to run
the competing lines.

>Now there are some services that a private company could run with a 
>profit.  For example, the #1 (Harvard-Dudley [or has it changed?]) 
>bus, which is almost always crowded.  I suspect that this single line
>makes a profit. 

>However, if a private company took over a profit-making line, the MBTA
>deficit would be larger, and the taxpayers would have more to cover.
>This is called cream-skimming.  In fact, the U.S. Postal Service is
>complaining about it: easy packages are being shipped more and more
>by private companies, and the USPS gets only those packages that are
>difficult and expensive to move.

Private companies are getting a larger and larger share of the package
market because they do a better job.  My mother never ships packages with
the US Postal Service because they're slower and less reliable than UPS;
I tend to use UPS as well, for anything that won't fit in an envelope.  I
would be pretty upset if government restricted the private shipping
companies in such a way that good quality shipping became unavailable or
more expensive than it is now.  If private companies are able to "skim the
cream" off of the US Postal services business, than good for them - it means
they're doing a better job in some way and providing something to the public
that the government is not able to do as good a job of providing.

>(The flaw in my argument has to do with the performance of a private
>company vs. the MBTA.  But I'm assuming, and I think it likely, that
>there is little difference.  I don't think a private company would
>have cheaper costs to that extent.)

My reasoning starts from a more fundamental premise - the premise that
government-based industries are no more entitled to special privileges, like
monopoly status, than private industries.  By outlawing private bus lines,
you ensure that everyone must drive, take taxis, or ride on the MBTA's
schedule.  There will be no bus service after the MBTA closes, period.  We
should keep the MBTA, at least for now, because it does work reasonably well,
but we should also allow competing bus lines to run, 24 hours if they want to.
The only people who stand to lose are employees of the MBTA.  That's
regrettable, but it's not a sufficient justification to outlaw competing bus
lines.  By the same reasoning, the only people who stand to lose by private
competition in the shipping, or even letter delivery businesses, are
employees of the US postal service.  It's regrettable that some people will
lose their jobs, but it's better for all of society that superior service
be available and that the taxpayer not be forced to prop up non-competitive
industries.

A related side-note: in communist China, all of the state-owned industries
are operating at a loss, and are taxpayer-subsidized.  The private sector,
on the other hand, is growing at a remarkable rate.

>Julian C. Lander
>jclander@mitre.org

   - Dave Borden
     borden@m5.harvard.edu