Should Transportation Systems Be Public Or Private?

In light of the recent sequester in Washington, I thought it might be interesting to think a little about the relationship between transportation systems and public policy. To what extent should the government manage and fund the design, operation, and maintenance of transportation systems? In one sense, it is a very philosophical topic, but it is also inescapably tied to the practical.

Let’s be clear right up front. I think many people, myself included, often fall into believing the idea that “private transportation system” means “cars” while “public transportation system” means “trains and subways.” This is not correct. For example, although the cars themselves are privately owned, the interstate highway system is most definitely a public roadway network, while much of the tracks that make up the Northeast Corridor are owned by the private, albeit heavily subsidized, company Amtrak.

The very nature of Amtrak as a publically-funded, for-profit corporation brings to light another interesting fact related to our topic – namely that in the vast majority of cases, transportation systems are not strictly “public” or “private,” but rather some combination of the two. The question, then, is truly not, “Should the government be involved in the transportation sector?”, but rather, “To what extent should the government be involved in the transportation sector?” What role should the government play? What should be its responsibilities? Hard to definitively answer – but interesting to think about.

The question of public vs. private is especially interesting due to recent events in Washington. Congress, along with the American people as a whole, is very much divided on the issue of the role of government, especially in the areas of economic and fiscal policy. As alluded to above, the recent standoff between conservatives and liberals regarding government spending and taxation lead to the budget cuts known as the sequester. In addition, as one ASCE blogger points out, “Congress will need to pass another continuing resolution (CR) before March 27 to keep the federal government funded.” Although this bill will almost certainly be passed, it is unclear what provisions it will contain with regard to new or maintained government spending on transportation. On top of all this, the federal government is expected to reach its debt ceiling (again!) by May of this year.

What does all of this have to do with transportation systems? Very simply, it takes a lot of money to construct and maintain a transportation system. At this point in time, the US federal government does not have a lot of money to spend on, well, anything really.

So we’re confronted with this problem, and several solutions present themselves.

  • Option 1: Enlarge the role of the federal government. Increase centralized planning, raise taxes, and encourage certain modes of transportation over others as a way to shape the future of the transportation system.
  • Option 2: Give the states more power over their respective transportation systems. (Note: This is similar to our current system.) Or, go even further and give more power to local authorities.
  • Option 3: Privatize the transportation system. Encourage companies to construct new infrastructure or take over responsibility for existing infrastructure using financial incentives or by decreasing existing regulations.
  • Option 4: Push Public-Private Partnerships. Invest in the development of a publically-subsidized, privately-run transportation system. The degree of privatization can vary to meet the needs of the area.

Each of these options has pro’s and con’s. In general, they are tied to the two extremes of entirely public vs. fully private.

An entirely public system gets its strength from its centralization. The government has (at least the potential for) more capital than private firms, and can therefore invest in large projects designed to meet future needs. In addition, it can more easily obtain the land needed for a project through the use of eminent domain. The government can also plan a uniform system for a large area, and is more able to plan around needs, rather than practically limiting constraints.

Despite all of its advantages, public systems have their fair share of problems. Government-managed programs are notoriously slow and not especially cost-effective. Because of the high levels of bureaucracy often present in government projects and the lack of financial pressure, there is often a lack of challenging, defined goals, insightful and revolutionary ideas, and visionary leadership. In a sense, too much oversight breeds a lack of effective oversight.

Private systems have their own challenges and drawbacks. Transportation systems, by their nature, call for extensive organizational and technological unity. If a transportation system is too decentralized, without any major players, it cannot adequately perform its primary function of effectively moving people and goods from point to point. For example, think of medieval Germany, where a trip up the Rhine involved stopping every few miles to pay a toll to some feudal lord (robber baron) in return for the right to pass through his section of river. Or, consider the many cases in which two transportation systems are geographically very close, but not connected due to poor planning and a lack of oversight. Increased financial concerns also mean that private companies may be hesitant to take on projects that are necessary to society, but may not be able to generate enough revenue to be self-sustaining or profitable. In addition, critics suggest that lack of government oversight may result in the endangerment of public welfare due to the implementation of cost-cutting measures.

Despite these drawbacks, private systems have a host of advantages over public ones. A private company’s efficiency in managing financial resources, manpower, and project time-scales is probably the greatest advantage of such an enterprise over its public counterpart. In addition, although the government has vast resources available to it for large-scale planning, private firms are generally more in-tune to the actual needs of society because they closely monitor the market, which is a rather good indicator of society’s needs and/or wants. While the government may have “experts” that can make recommendations (be they good or not) about what will be good for society as a whole and in the long run, for-profit companies do an excellent job at determining what society wants, and meeting that desire. Plus, as an added bonus, taxes decrease.

In many cases, the best option is to blend the two extremes of public and private. The exact organization can be determined on a case-by-case basis in order to maximize the benefits of each, while avoiding the drawbacks. Public-Private Partnerships may take a variety of forms. The system organization used perhaps most commonly in the US features government-subsidized companies responsible for system maintenance and operation. For example, many train, subway, and bus systems are operated by heavily-subsidized for-profit companies. However, in other cases, political opposition prevents the implementation of such systems. For example, efforts to turn control of the Pennsylvania Turnpike over to a private company failed when it was revealed that the company being considered (because it had the most competitive bid) was foreign-based.

All told, the question of public vs. private is not an easy one. Many complex factors are involved, both practical and philosophical. However, it is a question that demands an answer one way or another. If no answer is intentionally and specifically given by society, the government, and private companies, the result will be the continuation of the status quo. Fortunately, in our society, we as citizens and consumers have a say in deciding the future of our transportation system. So, if you want to change something, work to make it happen.






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