The TWU acceded today to mounting pressure and went back to work and the negotiating table. "In the end, cooler heads prevailed," Mayor Michael Bloomberg said. "We passed the test with flying colors. We did what we had to do to keep the city running, and running safely." Thankfully, I won't need to beg fellow teachers for rides to and from school tomorrow.
The range of such gratitude should not extend much farther than that. The city of New York missed a prime opportunity to overhaul a corrupt transit and political regime. Pataki and Bloomberg failed in their test as trustees of the public that Reagan passed with truly flying colors some 20 years ago when he fired striking air-traffic controllers. Although Reagan fell short of privatizing, at least he took the first step. In contrast, New York officials succumb to an inertia of special interests that will only push taxes, fares, and political illegitimacy to levels further beyond the pale.
Unless we want to smother a critical New York infrastructure in corruption a la francaise, the public transit monopoly must end. We can begin by legalizing all forms of private competition. Auction off subway lines to the highest bidder. Those firms that can put such resources to the best use, will be those wiling to pay the highest price for them. The subways won't become a den of repression but one of opportunity. Transport will grow more efficient, as we arrive at our destination sooner for a lower price.
Privatized subways are feasible. They were primarily built and operated by private entrepreneurs. Despite heavy government regulation, private subways flourished to serve many diverse communities and commercial centers.
That is until Leviathan took over in 1940. Communist trade unions, led by transit chief Mike Quill, unified the lines under public control to allegedly earn economies of scale among other benefits. The government promised that if they controlled the transit system in New York, fares would never rise, the system would be "self-sustaining," meaning no tax dollars would be implicated, and riders would no longer be exploited by "greedy profiteers." Furthermore, the unionists claimed that transportation was too valuable of a resource to be entrusted to "animal spirits." They argued that public ownership would ensure no market fluctuations would ever block the arteries of the heart of American commerce (read: no strikes).
The public transit regime broke each of these shallow promises. Fares increased by thousands of a percent (in real terms), subsidizing taxes were imposed, and unions were gluttoned with absurd pensions that saddle MTA with an unfunded pension liability totalling $1 billion presently. This is not to mention the three strikes (1966, 1980, 2005) that have cost the city billions of dollars in foregone income (with much of this cost borne regressively). Gregory Beseiger shows that straphangers react to such state ineptitude by voting with their feet: "Subway ridership has declined by some 50 percent in the last half century, even though the city's population has remained about the same (7.4 million by the 1940 census compared to 7.3 million in the last census)."
If only Otis Redding was a New Yorker, because a change needs to come. At the very least we should look mimic the models for transit privatization that continue to yield rewards in London, San Diego, and Denver. The latter two cities have contracted out 35% of their bus routes successfully. Ted Balaker reports that competitive contracting has reduced operating costs from 20 to 51 percent, with savings of about 35 percent being the norm. A recent Transportation Research Board survey in California testifies to these benefits: approximately 80 percent of transit managers who chose contracting say they would stick with it a second time when asked if they had to do it all over again.
Perhaps the best analogy for New York, however, is London. The "Square Mile" outsources their transit system which, according to Baruch professor E.S. Savas, has almost halved costs in the first decade of contracting. Although unfortunately not fully privatized, city officials design routes and set fares, and invite potential operators to submit a requisite fixed annual subsidy to serve a number of routes on a three- to five-year basis. The holder of such rights keeps whatever profits accrued from the difference between their operating expenses and the fixed price financed by the government. This system creates incentives for the contractees to improve the services they provide straphangers or else lose their individual and institutional patrons. Moreover, since the operators would be owners, commuters never need to worry about strikes.
New York would do well to follow London's lead. To apply Kuhn's theory of "paradigm shifts," the incremental shift towards privatization constitutes the most realistic expectation of regime change. Government licensure should not be considered the ultimate plateau, but a navigational lock lifting cities like New York from the muck of tyranny to the high waters of liberty. The steady rise in privatization ought to continue until New Yorkers receive the services they deserve: an urban transportation system governed exclusively within the parameters of consent.