This morning on my commute, I listened to a recent Econtalk in which Russ had Mike Munger on to talk about the political economy of public transportation (If you don't listen to Econtalk I suggest you start, Russ always has very interesting guests and has a particular talent for making sure the discussion is at all times accessible for a beginner but engaging for anyone who has studied economics).
Anyway, Mike's discussion centered around a recent visit to Santiago and their recent municipalization of the mass transit system. The discussion of the changes was fascinating, as it gave some insight into how our failing municipal system might be improved.
The previous system apparently had its own failures, at least, failures in the politicians' eyes. For one, their were more accidents because drivers were actually competing with each other for fares; when a bus driver saw a large group waiting at a bus stop, he wanted to be the first one there. Second, there was a lot of pollution, as the private bus companies tended to operate older, smaller buses. Third, there were different classes of service, so the more well off could ride in more comfortable buses which might offer coffee or a snack. All of these could be considered problems, although all could probably be addressed without doing away with the underlying private system, and I would say some are no problem at all.
However, there was one problem only municipalization could fix: profit. The system made a total profit of about $6 million per year (Santiago is a city of ~6 million). So, by eliminating private bus companies Santiago solved the problem, and turned it in to a public system which looses ~$600 million a year. This is not even the biggest problem.
The don't always stop. Bus drivers are no longer paid by the number of fares they take but by finishing their routes on time. If a bus driver sees a large crowd or is running late, his incentive is now not to stop at all. An empty bus on time is worth more to the driver than helping anyone get anywhere.
The buses don't go where people want to go. The buses used to run routes based on market signals of where people wanted to go. There was profit to be made by structuring more direct or otherwise convenient routes. Transantiago has set up the bus routes to feed its even more problematic Metro system, while previous private routes paralleled the Metro to give travelers an alternative.
Ridership is down. Because of the increased time cost of waiting, riding indirect routes, transfers and need to use the inefficient Metro, people are now taking their cars more often. This is a vicious cycle, as increased motor traffic further slows bus transport. However, to add insult to injury, while overall ridership is down, paid ridership is down further still (see the next point).
The city has introduced new buses which bring their own host of problems. For starters, the buses are actually wider than the average street in Santiago so while speed is down accidents still remain a problem. Additionally, the buses have 4 doors, but only one door for payment (think of the MBTA Green Line). Because drivers are paid on timeliness rather than fares, the driver has no reason to stop the bus to demand payment from those who slip on the back doors. This explains why ridership may not have dropped as far as fares show.
Listening to Mike's descriptions of the above, I was captivated. Surely the citizens of Santiago having lived under the more functional private system just a year or more ago would demand a return to the private system. They haven't. This was incredibly disheartening for someone who hopes we might bring about a little more privatization here. If you can't convince citizens to return to a better system fresh in their memory, how could you convince an American who has never known the better system?
They speculate that Chileans see the municipalization as having corrected the profit problem (A real problem in their minds), now they believe further planning is needed for these failures. Seems like a specific case of the generaly believed falacy, that the problem (whatever it may be) isn't a failure of government, but a failure of THIS government. That if we could just get the right lawmakers, with good hearts, and good ideas, they would legislate our way to a better world. Seems to me like Einstein's definition of insanity: doing the same thing over and over again and expecting different results.
