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This is a repeat of a Sunday Train that originally ran on 24 January 2010

Note that the statement is abbreviated for the title. The full statement is, a common carrier like a train, bus, or plane that running a profit based on passenger revenue while paying its full operating and capital cost is charging too much for its tickets.

The radical abbreviation of the title is in part because of the radical abbreviation of the lie that is commonly used as a frame. The lie is that a common carrier like a train, bus or plane that is paying for its full operating and capital costs out of passenger revenue ought to run a profit, commonly expressed as a charge of, "SERVICE_XYZ is losing money, it needs to be reformed!", which assumes that Service_XYZ is supposed to be making a profit.

And, of course, in the sense described above, if its a common carrier transport service, of course it shouldn't be making a profit. And further, if under the above conditions, if its making a profit, you're doing it wrong. In the sense given above, PROFIT=FAIL.

This is problematic under our economic system, because under our economic system, running a profit on the full cost of production normally means that you are free to continue without substantial outside interference, while not making a profit implies that you have to go cap in hand begging for money to operate. So if the main assertion is correct, we have a situation where you can be doing it wrong, and be free to continue, or be doing it right, and have to constantly beg for permission to continue doing it right.

The Services Provide by a Common Carrier Transport Service

A common carrier transport service provides multiple services.

  • The passenger taking the service receives a direct benefit
  • The passenger choosing an alternate means of transport receives an insurance benefit in the form of an available back-up means of transport in case the preferred alternative fails
  • In the US and most Western nations, common carrier transport services are more space-efficient than the most common semi-private private vehicle transport, the automobile, so the passenger taking the common carrier service is providing a congestion benefit to semi-private motorists
  • Common carriers normally operate with designated origin and destination points, which concentrates foot traffic and creates property value
  • When compared to semi-private automotive transport, common carrier rolling stock is normally far more intensively employed, substantially reducing rolling stock material overheads per passenger mile
  • These are in addition to the general external benefits of transport in permitting people to congregate, to the benefit of employers, retailers, and a wide range of service providers
  • These are also in addition to specific advantages or disadvantages of specific technologies, such as the intrinsic energy efficiency and aggregate labor efficiency of coupled vehicles operated in a train over uncoupled vehicles operated individually, and the high death toll of cars from, first and foremost, pollution and, secondarily, accidents.

The value of the common carrier ticket reflects the direct benefit to the passenger, and some but not all of the insurance value of the existence of the service. It cannot include congestion benefits, intrinsically experienced by those not taking the common carrier, and does not include any property value benefits.

The material efficiencies of use of the rolling stock would be captured in the capital cost of the system - except there are substantial material costs that we simply ignore. Handing a free ride, for example, to those dumping CO2 into the atmosphere despite the fact that they have done nothing to establish that it is safe to do so - is only one of the more egregious examples.

All common carriers offer intrinsic and automatic transport insurance benefits to users of alternative systems, and that benefit can only be partially captured in ticket prices. It is possible, of course, to charge a higher price to a person that bought a ticket closer to the day of departure, ordinarily presented to the passenger as a discount for buying the ticket a certain period in advance. However, it is not possible to distinguish between a specific transport need that arises close to the departure date and a need to switch to a back-up mode that arises close to the departure date.

So demanding that trains, buses, and planes fully "pay for" their full economic costs out of ticket revenues alone is always expecting passengers to pay for somebody else's benefit.

This should be no surprise: "user pays" more often than not is a shorthand for, "the poor sucker who has had the bad luck to be dubbed 'user' subsidizes the other beneficiaries". In reality, those on the public right of way may be using space freed by common carrier passengers, as well as using the self-insurance of a fall-back option, and if the common carrier transport is more energy and emissions efficient, using the fuel and CO2 dumping capacity freed up by the common carrier transport. ...

... And as they put their fellow citizens in the hospital at higher rates due to pollution and the inherent danger of having the majority of the population act as chauffeurs irrespective of their skill at or inclination toward engaging safe driving, the health sector capacity freed up by those relying on common carrier transport.

 
What About Beneficiary Pays, Then?

So, what if we had a Beneficiary Pays system?

Those private users of a congested public resource like the public roadway would pay users of common carriers based on the relative space efficiency of that common carrier. So mass transit would get the most subsidy per seat, then various forms of light rail, then (actual) Bus Rapid Transit and Quality Buses, then shuttle buses. This payment would be for seats occupied over the load factor that has the same space consumption as the average private vehicle.

In our Petroleum Import Strategically Dependent nation, those private users of petroleum consuming vehicles would pay users of common carriers based on the relative petroleum consumption - the maximum subsidy to electric vehicles, then to high load factor trains, then to high load factor buses. This payment would be for seats occupied over the load factor that has the same petroleum consumption as the average private vehicle.

All private vehicle operators would, of course, pay for the existence of common carrier transport. This payment would be for the frequency of trips to distinct destinations.

And all property owners served by common carriers would pay a property tax to reflect the portion of their property value supported by the existence of the common carrier. Since it is dedicated transport corridors that have clearly discernable property value benefits, this payment would be distributed by the frequency of trips on dedicated transport corridors to distinct destinations.

 
Short Term Versus Long Term

Now, this is not a proposal for Congressional Action in 2010 [or 2013]. Just as the radical reactionaries who adopt the pretense of labeling as "conservative" the desire to destroy the gains of the Square Deal and the New Deal pushed both short term and long term messaging, we have to be able to push both short term and long term messaging. And this is part of the long term messaging:

  • ALL the beneficiaries should pay, not just the users

Heck, its short enough to twitter: "All who benefit should pay, not just riders" ... 44 letters. 20 characters for a bit.ly link and you still have 70+ characters for usernames, retweets, and additional remarks.

But short term, keep it in mind when arguing in favor of whatever funding source is being cobbled together to support feasibly ecologically sustainable transport by electric rail, rail that can later be upgraded to electric rail, and electric trolley buses ... throw it into the argument. "ALL who benefit should pay, not just the riders".

Oh, and don't forget the occasional "of course you want the system to make a profit - you are trying to take a free ride off the fares paid by the riders" if you get the mental inhabitant of one of the libertarian fantasy universe engaged in conversation.

Because if well run train system on a well-chosen corridor is running a profit - then cutting the fares and eliminating the profit would offer more benefit all around.

Originally posted to Sunday Train on Sun Oct 20, 2013 at 05:00 PM PDT.

Also republished by Climate Hawks.

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Comment Preferences

  •  When gas hits $7, people will be 'why haven't we' (24+ / 0-)

    ... just as they were when gas hit $5 in 2008, and just as they were when gas hit $1 in the early 70's (which was $5 in terms of purchasing power in 2013 dollars) ...

    ... its another Short Memory problem ...

    Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

    by BruceMcF on Sun Oct 20, 2013 at 03:41:45 PM PDT

  •  At the MAX station on Thursday (9+ / 0-)

    there were volunteers asking people if they had insurance, and pointing them to resources if they did not. It was the same MAX station were I first met now Senator Jeff Merkley. In a sense, the MAX stations have become the new town square in Portland

    On a side not, did you know that the script for Who Framed Roger Rabbit was originally planed as the third installment of Chinatown? One of the authors Jeffrey Price said, ""In Los Angeles, during the 1940s, car and tire companies teamed up against the Pacific Electric Railway system and bought them out of business. Where the freeway runs in Los Angeles is where the Red Car used to be." If you have not seen the movie. you should. If you do, imagine Jack Nicholson in the role of Roger Rabbit.

    “We can always count on the Americans to do the right thing, after they have exhausted all the other possibilities.” - Winston Chuchill

    by se portland on Sun Oct 20, 2013 at 05:34:45 PM PDT

  •  Externalized costs are easy to understand, but (4+ / 0-)

    It sounds like what you're describing here could be described as externalized benefits.

    When someone makes a profit in part because they're shifting the costs to others (i.e.: dirtier air, fouled water, etc.), there's an obvious inequity. This seems like a mirror image of that, in which someone is not only obtaining a benefit for themselves, others benefit as well, even if they're not contributing to paying for it. Again, it's an inequity.

    A quick pass through google seems to suggest the word applied to this is an externality, and it can be positive (benefit) or negative (cost). Here's one link that seems pertinent:

    ....In a free market, goods with external benefits can often be under-consumed because the free market ignores the external benefit to others.

    Example of External Benefit.

    Cycling to work helps to reduce the level of pollution and congestion. Therefore other road users have quicker journey times and helps to reduce the level of pollution.

    A bee keeper produces honey, but as an external benefit, his bees help to fertilise nearby fruit trees.

    "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

    by xaxnar on Sun Oct 20, 2013 at 05:55:41 PM PDT

    •  Yes, the technical term in economics ... (6+ / 0-)

      ... is an external benefit, though in this essay I was more concerned with making the argument than teaching the jargon.

      Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

      by BruceMcF on Sun Oct 20, 2013 at 06:05:00 PM PDT

      [ Parent ]

      •  The idea of externiality is useful in itself (4+ / 0-)

        Cost, benefit - either way someone is getting a raw deal. Conservatives, libertarians, etc. seem to be predisposed to believe it's always them. So, when you talk about freeloaders ripping off others, you just might get their attention.

        It's part and parcel of the same kind of situation where food stamps, housing aid, etc. are actually subsidies to giant corporations - because it lets them underpay their workforce and the rest of us pick up the tab.

        "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

        by xaxnar on Sun Oct 20, 2013 at 06:33:58 PM PDT

        [ Parent ]

  •  In many Asian system, notably Hong Kong (2+ / 0-)
    Recommended by:
    wader, BruceMcF

    The carrier operating company owns (or has a perpetual lease) on stations and the commercial buildings above them. Thus, the collect rent and a share of the retail profits, which functions as a tax.

    I'm not sure if I totally agree with your zero profit model because enterprises, even so-called non-profits, have to operate, and in the case of transportation utilities, have to make long term investments in infrastructure and periodic investments in upgrading and/or replacing rolling stock and infrastructure. This is best done from a position of financial strength.

    Fares and profits can be regulated and operating companies public trusts (typically the case in Europe and Asia).

    Transportation companies forced to run too lean often run into the ground to the point they are no longer viable, at which point they need large investments to be salvaged (or simply die). Where does that money come from?

    •  The way we do it in our ... (4+ / 0-)
      Recommended by:
      wu ming, Egalitare, rwsab, koNko

      ... eternally money losing automobile transport system ... or at least what would be our eternally money losing automobile transport if we collected costs and revenues in the way we do with local transport ...

      ...is to segregate costs between hidden costs that are simply imposed in kind on others without money changing hand, direct subsidies and cross subsidies that are called investment and driven by the need to cope with the damage done by so-called private automobiles, and then profits in bits and pieces of the system could not occur without the hidden costs and subsidies-called-investment.

      So if it was to emulate the success of our automobile transport system at faking profit, it would involve gaining forms of dedicated cost coverage segregated from the accounting of the profit and loss of the system.

      Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

      by BruceMcF on Sun Oct 20, 2013 at 07:24:04 PM PDT

      [ Parent ]

    •  Note that in the Hong Kong system ... (1+ / 0-)
      Recommended by:
      koNko

      ... one of the substantial free rider benefits cited above are converted into a a revenue stream for the transit service.

      If at the same time there is less of a free ride for cars for other costs of the automobile transport system, for example with a substantial gas tax going into the general fund, there is also less free riding.

      Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

      by BruceMcF on Mon Oct 21, 2013 at 06:10:40 AM PDT

      [ Parent ]

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