Fixing Transit: The Case for Privatization

28 Pages Posted: 18 Nov 2010

Date Written: November 10, 2010

Abstract

America's experiment with government ownership of urban transit systems has proven to be a disaster. Since Congress began giving states and cities incentives to take over private transit systems in 1964, worker productivity - the number of transit riders carried per worker - has declined by more than 50 percent; the amount of energy required to carry one bus rider one mile has increased by more than 75 percent; the inflation- adjusted cost per transit trip has nearly tripled, even as fares per trip slightly declined; and, despite hundreds of billions of dollars of subsidies, the number of transit trips per urban resident declined from more than 60 trips per year in 1964 to 45 in 2008.

Largely because of government ownership, the transit industry today is beset by a series of interminable crises. Recent declines in the tax revenues used to support transit have forced major cuts in transit services in the vast majority of urban areas. Transit infrastructure - especially rail infrastructure - is steadily deteriorating, and the money transit agencies spend on maintenance is not even enough to keep it in its current state of poor repair. And transit agencies have agreed to employee pension and health care plans that impose billions of dollars of unfunded liabilities on taxpayers.

Transit advocates propose to solve these problems with even more subsidies. A better solution is to privatize transit. Private transit providers will provide efficient transit services that go where people want to go. In order for privatization to take place, Congress and the states must stop giving transit agencies incentives to waste money on high-cost transit technologies.

Suggested Citation

O'Toole, Randal, Fixing Transit: The Case for Privatization (November 10, 2010). Available at SSRN: https://ssrn.com/abstract=1710772 or http://dx.doi.org/10.2139/ssrn.1710772

Cato Institute (Contact Author)

Cato Institute ( email )

1000 Massachusetts Avenue, N.W.
Washington, DC 20001-5403
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Randal O'Toole

Cato Institute ( email )

1000 Massachusetts Avenue, N.W.
Washington, DC 20001-5403
United States

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