Wednesday, June 29, 2011

Privatize or Nationalize High-Speed Rail? I wish I knew.

You have to watch what's happening with Amtrak to understand what will happen with high-speed rail.   Amtrak has become a political football, being kicked between the two teams of Republican "privatization" and Democratic  "nationalization." 

This article reflects on the British experience since they took their nationalized railroad system and privatized it.  (Remember Margaret Thatcher?)

Each side claims the other side's solution will cost the taxpayers more money. But the debate is conducted at the ideological level, with the Republicans proposing that everything in government except the military gets privatized.  (Although the military certainly has become far more private contractor-ized.) It's a version of government down-sizing.  

The Democrats, on the other hand, want to expand the role of government into as many social functions as possible; i.e. the 'Mommy State.'  Both viewpoints are highly exaggerated versions of what's been going on, more or less, for some time. 

The fact is that public mass transit, intra or inter city, has been government developed and subsidized for over fifty years, as private operators got out of that passenger moving business.  (I remember, as a kid, a trolley car system in our town that was owned by one guy who made lots of money off it. However, it was grossly mismanaged and corrupt.  Eventually, the city and then the county took it over.)

Let's just say that fully or partially "nationalised" or fully or partially "privatized" passenger rail is not the problem or the solution.  The solution that is absent in either case is that the people involved are not honorable or committed to public service.  To the contrary. Therefore, their self-serving agendas are designed to either enrich themselves as privatizing profiteers who provide campaign funding for their office holding supporters, or as government bureaucrats dedicated to empire building, croney politics and often less obvious self-enhancement.

Practically (rather than ethically) what is missing with either ownership/management model is adequate oversight, accountability and sufficient control for enforcement. 

What we are now watching in California is an unaccountable government agency, the CHSRA, run amok, like an autocratic Mid-Eastern government. There is no enforcement to bring them to task for their outrageous and flagrant misbehaviors.

If ever built, will this HSR rail system be turned over to Amtrak for operation, and therefore one mis-managed bureaucracy following another, with enormous cost overruns and endless massive subsidy drains on the taxpayers? Or will it be turned over to private enterprise, as in the UK, still a drain on the taxpayer pocketbook, but now providing government subsidized profits to share-holders and management?

I see no hope for either system benefitting all the rest of us.  Right now, if Amtrak takes over high-speed rail, either in the Northeast Corridor or in California, we will come to realize what a permanent enormous drain it will be on the state and nation to operate a highly subsidized white elephant, just as Amtrak has been doing since its formation.

Amtrak Privatization Foes Point To Britain
Updated: June 29, 2011

Opponents of a plan to privatize Amtrak are pointing to experiences in Great Britain, saying privatization would lead to layoffs, higher fares and poor service.

Two House Republicans are spearheading efforts to privatize the nation's passenger rail system - Rep. John Mica of Florida, chairman of the House Transportation and Infrastructure Committee, and Rep. Bill Shuster of Pennsylvania, chairman of the Railroads, Pipelines and Hazardous Materials Subcommittee.

Sen. Jay Rockefeller and Rep. Nick J. Rahall, both D-W.Va., are longtime supporters of using federal funds to support Amtrak's national railroad system.

Last week, Rockefeller warned that the Republican legislation would likely eliminate passenger train service in West Virginia, which serves cities including Charleston, Huntington, Montgomery, White Sulphur Springs, Hinton, Martinsburg and Harpers Ferry.

When Mica and Shuster proposed their legislation - the Competition for Intercity Passenger Rail in America Act of 2011 - on June 15, they cited the privatization of railroads in Great Britain, which happened in the early 1990s. The bill was formally introduced last Tuesday.

Mica and Shuster say their plan would reduce taxpayer subsidization of Amtrak, and hasten the development of high-speed rail.

But Gary Zuckett, executive director of West Virginia Citizen Action Group, called the proposal to privatize Amtrak using the British model "the wrong road to go down."

"British privatization ended up costing taxpayers there even more money, after the railroads went bankrupt, than the public subsidies cost before privatization," Zuckett said.

"Why are we proposing to go down the same road?" Zuckett added. "I agree with Congressman Rahall and Sen. Rockefeller that this is not a good idea. We need to support our rail system, not sell it off."
Reconnecting America, a Washington, D.C.-based think tank that advocates for transit-oriented development, is working to preserve Amtrak.

Today, heavily traveled, profitable rail lines in the Northeast help finance railroad lines in less populated areas throughout the United States.

"Very few, if any, of the long-distance lines will attract private sector funding," said John Robert Smith, president and CEO of Reconnecting America. "The focus on privatizing the Northeast Corridor will weaken the existing national system ... Removing the profitable Northeast Corridor from the current system of shared benefits deprives the rest of the nation's rail system of critically needed operating assistance."

In a report, Reconnecting America wrote that Mica's proposed changes were likely to "weaken or terminate the intercity rail connections that are the lifelines in small towns from Montana to West Virginia, as well as big cities such as Chicago and Los Angeles."

Zuckett said the plan would "allow private entities to cherry pick the profitable lines and leave the other ones to flounder."

"We need to keep Amtrak intact and support the whole system," he said. "It is good that profitable areas help areas like West Virginia and western states that really need rail service."

The legislation proposed by House Republicans to privatize Amtrak would put it on sale to the highest bidder in the private market.

Reconnecting America says the Republican-backed legislation would put at least 110,000 jobs at risk later this year.

The group also compared Mica's proposed legislation to what happened in Great Britain.

"The plan is very similar to the United Kingdom's attempt to privatize its rail network. Taxpayers had to bail out the infrastructure company and increase their annual subsidy to support the rail network," the group wrote in the report. "The system is now more expensive than before privatization."

Reconnecting America predicts private investors in the U.S. would show little or no interest in investing money in railroads anywhere outside the Northeast.

Amtrak has operated its rail system for more than 40 years sharing revenues between different regions in the country. As a result, Amtrak has political support from both conservative Southern Republicans and liberal Democrats along the Northeastern coast.

In Great Britain, Railtrack, the railroad infrastructure and maintenance company, went bankrupt after five years of private ownership.

"The taxpayer portion of passenger rail funding in the UK increased after privatization [and] proposed savings did not materialize," Reconnecting America stated in its report.

Earlier this year, Edward Wytkind, president of the AFL-CIO's Transportation Trades Department, told a congressional committee that British privatization had poor results.

"Fares jumped, severe layoffs were implemented, and maintenance and safety suffered," he said, adding that accident rates increased.

Last week, Rockefeller called Amtrak "a lifeline for our nation's communities - including many among the Cardinal and Capitol Limited lines in West Virginia - and is an engine of economic growth."

"Amtrak provides West Virginians with an affordable way to get between small communities and big cities," he said, "and the Republican plan would put it in jeopardy."

Reach Paul J. Nyden at

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