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Any implication that public transition should be profitable is pernicious. If you look at a system like BART or the New York subway system, the system provides

Any implication that public transition should be profitable is pernicious. If you look at a system like BART or the New York subway system, the system provides value for the whole of the city and so everyone, notably employers, should pay for it. I think Strong Towns were the ones who noted that transit system expected to "pull their weight" get cut in every budget crunch and finally being gutted to total uselessness. It should simply be expected a public transit should be paid from state in one form or another.

colechristensen 6y ago
But why? When I commuted from Mountain View to the financial district, it was cheaper to drive by myself than to take public transit including the lifetime cost of my car. (not to mention being immensely more pleasant) I simply do not get the economics of public transit losing so much money. I get that I'm not paying myself a salary to drive the vehicle and that the roads I drive on are "free" and the railroad track isn't... but still one would expect the efficiency of rail and economies of scale to make up for this. Instead BART costs hundreds of millions of dollars per year more than received fares. I just don't understand.
- panta 6y ago
  When you consider the total cost of ownership (initial car cost, maintenance, insurance, storage, etc.), the cost per km/mile is way higher than the fuel cost. Also there are many externalized costs that are not taken into account when considering the bare cost of driving a car, just to name a few the environmental impact, the related healthcare costs (pollution kills more people per year than COVID), parking space, road infrastructure, car accidents, ... Some of these grow non linearly when reducing/eliminating public transport. (edited to add TCO considerations)
- donjoe 6y ago
  As you already mentioned: roads and gas is heavily subsidized. Politicians focus on building roads rather than public transport systems. The true costs of road infrastructure including parking, bridges, land use, public space usage, health system costs, economic losses due to wasting time while driving and more is just something no one dares to discuss. Once u start looking at all costs car traffic truly is responsible for, you'd have to immediately switch to another system such as... public transport.
- vishnugupta 6y ago
  I don't think public transits lend themselves to such "unit-economics" level individual centric analysis. There are many indirect second/third order benefits which I conjecture outweigh the primary benefit of transporting people from A to B. To name a few 1. They attract a section of population to the region who prefer public transit which in turn leads to more business. 2. A string of businesses spring up in/around intermediate stations. Then you have service businesses that support those; like restaurant etc., 3. It creates employment for thousands. 4. Cost savings w.r.t. parking space, reduced accidents etc., 5. It makes car ownership that much less of a requirement for jobs in the city. This is what I noticed in Amsterdam, Netherlands where car commute is considered almost as a last resort. Obviously there are other things that need to fall in place to make public transit work but I believe it on its own is quite beneficial. From the view point of an individual I don't doubt that economically car commute is perhaps cheaper than mass-transit, but I don't think think that's the goal of a public transit. The benefit to the society is at an aggregate direct and indirect.
brigandish 6y ago
> It should simply be expected a public transit should be paid from state in one form or another. Unfortunately, that often means it becomes a subsidy for the already wealthy. Not only are mass-transit systems more likely to be built in already wealthy areas, commercial and residential, (at least before other areas) it also increases land value. This leads to the true problem of non-state supplied transit, if a transit system truly has to bear its own cost then people - even wealthy ones - are far less likely to use it and will move to cheaper forms of transport like car, or you end up with a transit system for those who can afford it. Then you'll have the circular argument begin again about the need for affordable mass-transit, and so the only way to get it built is to get the state to pay for it and we end up with a better system overall but also an inequity in the system. You could say it was verging on corruption. This is why I would advocate a land value tax, as it attacks both parts of the problem, not just one favoured by statists. As someone of a more libertarian bent (and an admirer of Georgism), I do rankle somewhat at the implication exposed via the non-payment of tax, that the state in truth owns your land because they can kick you off, but everything has a trade off. Edit: typo
- CorrectHorseBat 6y ago
  >Unfortunately, that often means it becomes a subsidy for the already wealthy. Not only are mass-transit systems more likely to be built in already wealthy areas, commercial and residential, (at least before other areas) it also increases land value. Not necessary. I know of several examples where wealthy areas actively blocked mass transit because they only see it as a way to introduce poor people into their neighborhood. >This leads to the true problem of non-state supplied transit, if a transit system truly has to bear its own cost then people - even wealthy ones - are far less likely to use it and will move to cheaper forms of transport like car, or you end up with a transit system for those who can afford it If every transit system has to pay for all externalities then cars will not end up being cheaper than mass transit. Subsidy of mass transit is a way to correct for that. >As someone of a more libertarian bent (and an admirer of Georgism), I do rankle somewhat at the implication exposed via the non-payment of tax, that the state in truth owns your land because they can kick you off I really don't see the link between the state being able kick you off and paying taxes, nor do I see the relevance. The state being able to kick you of your land is a necessity for an effective government. How else would they be able to get anything build?
eandre 6y ago
It seems to me that it should be possible to operate a public transit system profitably if you assume a steady state, meaning no need to expand. But when cities grow, public transit systems must continually expand to continue to service the population which requires massive amounts of up-front capital, which each takes decades to pay back through rider fees.
- m_mueller 6y ago
  to provide some example to your point: https://asia.nikkei.com/Business/Transportation/Tokyo-Metro-tackles-87bn-global-market-with-IPO-in-mind https://asia.nikkei.com/Business/Transportation/Tokyo-Metro-... "The company recorded a net profit of 61 billion yen ($560 million) for the year ended March, up 0.6% from the previous year thanks to external factors such as the increase in foreign visitors to the Japanese capital. It posted revenues of 435 billion yen." I don't think there's something fundamentally different about Tokyo compared to other dense metropoles like NYC or London. Low density cities like LA might be a different story.
  - input_sh 6y ago
    > I don't think there's something fundamentally different about Tokyo compared to other dense metropoles like NYC or London. As others have pointed out, there is. It's about owning the land where you set up your stations. You don't make money on the tickets themselves, you make money by charging rent to companies in highly convenient locations. Some European cities do this on a smaller scale (like a shop or two right at the station), but nowhere near as much as they do in SE Asia.
    - m_mueller 6y ago
      I guess my point is, given that we know that this strategy works, why aren't more Western cities' transport companies/departments copying that model? Why not trying to buy up or lease property in strategic locations and converting them into malls integrated with a metro/train station? In Tokyo you often find nearby malls connected to the station by underground walkways - I'm sure there's also a business model to be had where a percentage of revenue goes to the transport provider if they connect stations in that way.
starfallg 6y ago
Maybe it's time to seriously consider the East Asian model where transit companies also operate as property developers. This pretty much ensures that cities are designed with mass transit at its core and mass transit construction is part subsidized by the market. That doesn't completely remove the need for public funding, just changes the dynamics so that it is more balanced. It also results in cities that organically grow with mass transit, making it an integral part of the infrastructure rather than an afterthought.
- pmyteh 6y ago
  The Metropolitan Line of the London Underground was partly funded on that model. They bought farmland, built out a commuter railway to it, then either built housing or sold land at a profit in order to get capital receipts to part-pay for the railway and customers to ride it in perpetuity.
  - rob74 6y ago
    Yup (see also https://en.wikipedia.org/wiki/Metro-land https://en.wikipedia.org/wiki/Metro-land). But that was before city planners in the West started catering almost exclusively to the automobile...
- lqet 6y ago
  Wasn't this model a reason for the decline of the US public transit system? I remember reading somewhere that in cities like LA, transit companies build little frequented lines to properties they themselves developed, just to drive house prices up. After the properties were sold, the companies lost interest in maintaining the lines, and the system quickly deteriorated.
csomar 6y ago
> Any implication that public transition should be profitable is pernicious. Really, or is it a failure of the western cities to run profitable, efficient and ,eh, clean transport networks. Japan, Hong Kong, Singapore are running private, profitable and efficient metros for a much cheaper fare than what other cities can do. The reality is that these massive infrastructure projects have turned into huge embezzlement schemes of public funds from different players (politicians, consultants, unions, etc...); and they are holding the public hostage: Otherwise, are you going to stop/disrupt public transportation?
- TazeTSchnitzel 6y ago
  Japan's systems were privatised after they were built. Would they be as successful if they were private from the beginning?
  - csomar 6y ago
    I don't think the success of private/public is a universal thing and probably depend on how low corruption the government is. A metro system has to be bootstrapped by the government at the end of the day, to be able to appropriate of some private lands you are going through.
  - pydry 6y ago
    They're successful because they own the land around the stations. This is where all the real money is made. In most other countries that land was sold off and somebody else (e.g. private equity) profits.
- Retric 6y ago
  Your facts are incorrect. Singapore's MRT subway lines are constructed and the assets owned by the Land Transport Authority (LTA), a government entity. Tokyo Metropolitan Bureau of Transportation (Toei Subway) is owned by the government of Tokyo. MTR Corporation Limited which runs Hong Kong's Mass Transit Railway (MTR) is a majority state-owned Hong Kong company (75.09%).
  - 6y ago
choeger 6y ago
Of course they need to be profitable. A working public mass transport system is the sine qua non of dense cities. Dense cities reap many economic benefits so naturally the cost of providing mass transportation must be weighed as well. It's outright unsustainable to ignore the cost sinks of cities as much as it is to ignore the cost sinks of suburbs or rural areas.
- igammarays 6y ago
  Of course they should NOT be profitable, because remote routes are not profitable to operate, yet it is in everybody's interest to prevent overcrowding and excessive density. Give me one example of a successful metro that was built on "profitability". It may become profitable in the end, but only because the initial intention was public service, not profit. This kind of capitalistic short-term thinking over long-term public interest is precisely what is wrong with America today.
  - choeger 6y ago
    "public service", my ass. The purpose of mass transit is to gather the cheap workforce from around the city so a banker can have their Starbucks coffee for about the same price as everywhere else, offices get cleaned properly, and millions of employees can waste hours every day rushing into their cubicles that have to be in some "representative" location so the CEO can jerk off with their golf buddies. The goal of ever denser cities is first and foremost to move the profits from the economic benefits of densification to rent seekers, in particular owners of ever scarcer real estate. Mass transit is a tool to make that possible. Mass transit is almost certainly profitable, if priced correctly. It enables massive value concentration. One could easily introduce a property tax on real estate to fund it. But right now the profiteers managed to argue that it is a "public good". As if square meter prices measured in the tenths of thousands of dollars are in any form normal. Just to make this crystal clear: No one would build a mass transit system to move around a few tourists or get the inhabitants from their apartments to the latest fancy restaurant. Mass transit exists to fill the city with a workforce it cannot or doesn't want to house properly.
mgerullis 6y ago
Here in Germany you will sometimes read about discussions on making public transport free, making it a completely public utility. I’d be more than happy to pay taxes for that.
- jariel 6y ago
  'Totally free' is usually a bad idea because the asymmetries inherent in the system are multiplied. The OP argument 'everyone uses it' is also not super rational argument either on it's face - we all 'use food' and 'water' but we pay for those - the former in market terms, and the later is socialized on some level but still paid for by individuals on a usage basis. 1) You'd be happy to have people in villages and in the countryside pay for your transportation, who wouldn't? It's not fair or ideal, to have some people's tax money pushed heavily into systems that don't benefit them. 2) When things are 'free' we tend to use them in a way that does not reflect their true cost. Imagine if toilet paper were 'free' for everyone. We'd probably use a lot more of it, unnecessarily so. The issue with metros is the intense capital costs and de facto monopoly status. If there were 20 metros too choose from we wouldn't even think of socializing them, you'd just have to 'pay for it' literally like everything else. The 'Strategic Advantage' in the metro is that it's actually a very efficient way to move people, but those efficiencies may not be realizable without subsidy. So instead of 'free' - a reasonable solution might be to subsidize expansion while requiring regular Ops to be paid for out of revenue. Some investment in urban facilities is warranted vis-a-vis the countryside due to the big upside i.e. a large bit of social/industrial gain can be had by government investment that could not be had otherwise.
  - mgerullis 6y ago
    > 1) You'd be happy to have people in villages and in the countryside pay for your transportation, who wouldn't? It's not fair or ideal, to have some people's tax money pushed heavily into systems that don't benefit them. I know this is not the case in the US but here, it is common to have public transport on the country side as well to some degree. Most villages have bus transport. Yes, there is a lot more in the city but it grows with density. > 2) When things are 'free' we tend to use them in a way that does not reflect their true cost. Imagine if toilet paper were 'free' for everyone. We'd probably use a lot more of it, unnecessarily so. I do not think there is such thing as an excessive/unnecessary use of public transport when the alternative is to use a car which pollutes the planet. I cannot imagine using the tram in cases where it would be unnecessary, but maybe thats just me. If it is in the interest of the people to get rid of cars, offering public transport at no cost is not so far fetched, considering the amounts of money we will have to spend to combat carbon in the air and are spending on road systems.
deleted 6y ago
[deleted]

colechristensen 6y ago

But why? When I commuted from Mountain View to the financial district, it was cheaper to drive by myself than to take public transit including the lifetime cost of my car. (not to mention being immensely more pleasant) I simply do not get the economics of public transit losing so much money. I get that I'm not paying myself a salary to drive the vehicle and that the roads I drive on are "free" and the railroad track isn't... but still one would expect the efficiency of rail and economies of scale to make up for this. Instead BART costs hundreds of millions of dollars per year more than received fares. I just don't understand.

panta 6y ago
When you consider the total cost of ownership (initial car cost, maintenance, insurance, storage, etc.), the cost per km/mile is way higher than the fuel cost. Also there are many externalized costs that are not taken into account when considering the bare cost of driving a car, just to name a few the environmental impact, the related healthcare costs (pollution kills more people per year than COVID), parking space, road infrastructure, car accidents, ... Some of these grow non linearly when reducing/eliminating public transport. (edited to add TCO considerations)
donjoe 6y ago
As you already mentioned: roads and gas is heavily subsidized. Politicians focus on building roads rather than public transport systems. The true costs of road infrastructure including parking, bridges, land use, public space usage, health system costs, economic losses due to wasting time while driving and more is just something no one dares to discuss. Once u start looking at all costs car traffic truly is responsible for, you'd have to immediately switch to another system such as... public transport.
vishnugupta 6y ago
I don't think public transits lend themselves to such "unit-economics" level individual centric analysis. There are many indirect second/third order benefits which I conjecture outweigh the primary benefit of transporting people from A to B. To name a few 1. They attract a section of population to the region who prefer public transit which in turn leads to more business. 2. A string of businesses spring up in/around intermediate stations. Then you have service businesses that support those; like restaurant etc., 3. It creates employment for thousands. 4. Cost savings w.r.t. parking space, reduced accidents etc., 5. It makes car ownership that much less of a requirement for jobs in the city. This is what I noticed in Amsterdam, Netherlands where car commute is considered almost as a last resort. Obviously there are other things that need to fall in place to make public transit work but I believe it on its own is quite beneficial. From the view point of an individual I don't doubt that economically car commute is perhaps cheaper than mass-transit, but I don't think think that's the goal of a public transit. The benefit to the society is at an aggregate direct and indirect.

brigandish 6y ago

> It should simply be expected a public transit should be paid from state in one form or another. Unfortunately, that often means it becomes a subsidy for the already wealthy. Not only are mass-transit systems more likely to be built in already wealthy areas, commercial and residential, (at least before other areas) it also increases land value. This leads to the true problem of non-state supplied transit, if a transit system truly has to bear its own cost then people - even wealthy ones - are far less likely to use it and will move to cheaper forms of transport like car, or you end up with a transit system for those who can afford it. Then you'll have the circular argument begin again about the need for affordable mass-transit, and so the only way to get it built is to get the state to pay for it and we end up with a better system overall but also an inequity in the system. You could say it was verging on corruption. This is why I would advocate a land value tax, as it attacks both parts of the problem, not just one favoured by statists. As someone of a more libertarian bent (and an admirer of Georgism), I do rankle somewhat at the implication exposed via the non-payment of tax, that the state in truth owns your land because they can kick you off, but everything has a trade off. Edit: typo

CorrectHorseBat 6y ago
>Unfortunately, that often means it becomes a subsidy for the already wealthy. Not only are mass-transit systems more likely to be built in already wealthy areas, commercial and residential, (at least before other areas) it also increases land value. Not necessary. I know of several examples where wealthy areas actively blocked mass transit because they only see it as a way to introduce poor people into their neighborhood. >This leads to the true problem of non-state supplied transit, if a transit system truly has to bear its own cost then people - even wealthy ones - are far less likely to use it and will move to cheaper forms of transport like car, or you end up with a transit system for those who can afford it If every transit system has to pay for all externalities then cars will not end up being cheaper than mass transit. Subsidy of mass transit is a way to correct for that. >As someone of a more libertarian bent (and an admirer of Georgism), I do rankle somewhat at the implication exposed via the non-payment of tax, that the state in truth owns your land because they can kick you off I really don't see the link between the state being able kick you off and paying taxes, nor do I see the relevance. The state being able to kick you of your land is a necessity for an effective government. How else would they be able to get anything build?

eandre 6y ago

It seems to me that it should be possible to operate a public transit system profitably if you assume a steady state, meaning no need to expand. But when cities grow, public transit systems must continually expand to continue to service the population which requires massive amounts of up-front capital, which each takes decades to pay back through rider fees.

m_mueller 6y ago
to provide some example to your point: https://asia.nikkei.com/Business/Transportation/Tokyo-Metro-tackles-87bn-global-market-with-IPO-in-mind https://asia.nikkei.com/Business/Transportation/Tokyo-Metro-... "The company recorded a net profit of 61 billion yen ($560 million) for the year ended March, up 0.6% from the previous year thanks to external factors such as the increase in foreign visitors to the Japanese capital. It posted revenues of 435 billion yen." I don't think there's something fundamentally different about Tokyo compared to other dense metropoles like NYC or London. Low density cities like LA might be a different story.
- input_sh 6y ago
  > I don't think there's something fundamentally different about Tokyo compared to other dense metropoles like NYC or London. As others have pointed out, there is. It's about owning the land where you set up your stations. You don't make money on the tickets themselves, you make money by charging rent to companies in highly convenient locations. Some European cities do this on a smaller scale (like a shop or two right at the station), but nowhere near as much as they do in SE Asia.
  - m_mueller 6y ago
    I guess my point is, given that we know that this strategy works, why aren't more Western cities' transport companies/departments copying that model? Why not trying to buy up or lease property in strategic locations and converting them into malls integrated with a metro/train station? In Tokyo you often find nearby malls connected to the station by underground walkways - I'm sure there's also a business model to be had where a percentage of revenue goes to the transport provider if they connect stations in that way.

starfallg 6y ago

Maybe it's time to seriously consider the East Asian model where transit companies also operate as property developers. This pretty much ensures that cities are designed with mass transit at its core and mass transit construction is part subsidized by the market. That doesn't completely remove the need for public funding, just changes the dynamics so that it is more balanced. It also results in cities that organically grow with mass transit, making it an integral part of the infrastructure rather than an afterthought.

pmyteh 6y ago
The Metropolitan Line of the London Underground was partly funded on that model. They bought farmland, built out a commuter railway to it, then either built housing or sold land at a profit in order to get capital receipts to part-pay for the railway and customers to ride it in perpetuity.
- rob74 6y ago
  Yup (see also https://en.wikipedia.org/wiki/Metro-land https://en.wikipedia.org/wiki/Metro-land). But that was before city planners in the West started catering almost exclusively to the automobile...
lqet 6y ago
Wasn't this model a reason for the decline of the US public transit system? I remember reading somewhere that in cities like LA, transit companies build little frequented lines to properties they themselves developed, just to drive house prices up. After the properties were sold, the companies lost interest in maintaining the lines, and the system quickly deteriorated.

csomar 6y ago

> Any implication that public transition should be profitable is pernicious. Really, or is it a failure of the western cities to run profitable, efficient and ,eh, clean transport networks. Japan, Hong Kong, Singapore are running private, profitable and efficient metros for a much cheaper fare than what other cities can do. The reality is that these massive infrastructure projects have turned into huge embezzlement schemes of public funds from different players (politicians, consultants, unions, etc...); and they are holding the public hostage: Otherwise, are you going to stop/disrupt public transportation?

TazeTSchnitzel 6y ago
Japan's systems were privatised after they were built. Would they be as successful if they were private from the beginning?
- csomar 6y ago
  I don't think the success of private/public is a universal thing and probably depend on how low corruption the government is. A metro system has to be bootstrapped by the government at the end of the day, to be able to appropriate of some private lands you are going through.
- pydry 6y ago
  They're successful because they own the land around the stations. This is where all the real money is made. In most other countries that land was sold off and somebody else (e.g. private equity) profits.
Retric 6y ago
Your facts are incorrect. Singapore's MRT subway lines are constructed and the assets owned by the Land Transport Authority (LTA), a government entity. Tokyo Metropolitan Bureau of Transportation (Toei Subway) is owned by the government of Tokyo. MTR Corporation Limited which runs Hong Kong's Mass Transit Railway (MTR) is a majority state-owned Hong Kong company (75.09%).
- 6y ago

choeger 6y ago

Of course they need to be profitable. A working public mass transport system is the sine qua non of dense cities. Dense cities reap many economic benefits so naturally the cost of providing mass transportation must be weighed as well. It's outright unsustainable to ignore the cost sinks of cities as much as it is to ignore the cost sinks of suburbs or rural areas.

igammarays 6y ago
Of course they should NOT be profitable, because remote routes are not profitable to operate, yet it is in everybody's interest to prevent overcrowding and excessive density. Give me one example of a successful metro that was built on "profitability". It may become profitable in the end, but only because the initial intention was public service, not profit. This kind of capitalistic short-term thinking over long-term public interest is precisely what is wrong with America today.
- choeger 6y ago
  "public service", my ass. The purpose of mass transit is to gather the cheap workforce from around the city so a banker can have their Starbucks coffee for about the same price as everywhere else, offices get cleaned properly, and millions of employees can waste hours every day rushing into their cubicles that have to be in some "representative" location so the CEO can jerk off with their golf buddies. The goal of ever denser cities is first and foremost to move the profits from the economic benefits of densification to rent seekers, in particular owners of ever scarcer real estate. Mass transit is a tool to make that possible. Mass transit is almost certainly profitable, if priced correctly. It enables massive value concentration. One could easily introduce a property tax on real estate to fund it. But right now the profiteers managed to argue that it is a "public good". As if square meter prices measured in the tenths of thousands of dollars are in any form normal. Just to make this crystal clear: No one would build a mass transit system to move around a few tourists or get the inhabitants from their apartments to the latest fancy restaurant. Mass transit exists to fill the city with a workforce it cannot or doesn't want to house properly.

mgerullis 6y ago

Here in Germany you will sometimes read about discussions on making public transport free, making it a completely public utility. I’d be more than happy to pay taxes for that.

jariel 6y ago
'Totally free' is usually a bad idea because the asymmetries inherent in the system are multiplied. The OP argument 'everyone uses it' is also not super rational argument either on it's face - we all 'use food' and 'water' but we pay for those - the former in market terms, and the later is socialized on some level but still paid for by individuals on a usage basis. 1) You'd be happy to have people in villages and in the countryside pay for your transportation, who wouldn't? It's not fair or ideal, to have some people's tax money pushed heavily into systems that don't benefit them. 2) When things are 'free' we tend to use them in a way that does not reflect their true cost. Imagine if toilet paper were 'free' for everyone. We'd probably use a lot more of it, unnecessarily so. The issue with metros is the intense capital costs and de facto monopoly status. If there were 20 metros too choose from we wouldn't even think of socializing them, you'd just have to 'pay for it' literally like everything else. The 'Strategic Advantage' in the metro is that it's actually a very efficient way to move people, but those efficiencies may not be realizable without subsidy. So instead of 'free' - a reasonable solution might be to subsidize expansion while requiring regular Ops to be paid for out of revenue. Some investment in urban facilities is warranted vis-a-vis the countryside due to the big upside i.e. a large bit of social/industrial gain can be had by government investment that could not be had otherwise.
- mgerullis 6y ago
  > 1) You'd be happy to have people in villages and in the countryside pay for your transportation, who wouldn't? It's not fair or ideal, to have some people's tax money pushed heavily into systems that don't benefit them. I know this is not the case in the US but here, it is common to have public transport on the country side as well to some degree. Most villages have bus transport. Yes, there is a lot more in the city but it grows with density. > 2) When things are 'free' we tend to use them in a way that does not reflect their true cost. Imagine if toilet paper were 'free' for everyone. We'd probably use a lot more of it, unnecessarily so. I do not think there is such thing as an excessive/unnecessary use of public transport when the alternative is to use a car which pollutes the planet. I cannot imagine using the tram in cases where it would be unnecessary, but maybe thats just me. If it is in the interest of the people to get rid of cars, offering public transport at no cost is not so far fetched, considering the amounts of money we will have to spend to combat carbon in the air and are spending on road systems.

deleted 6y ago

[deleted]