Tuesday, February 6, 2007

More on Privatization

A few posts back we noted the hint that the RTA was considering privatization of at least a portion of the region's public transit system. Such a move seems uncharacteristically bold of the RTA and the service board members (CTA, Metra, Pace) of the Moving Beyond Congestion initiative. After all, the CTA complained bitterly in its latest budget document (accessible here) about an arbitrator's failure to allow it to implement over $100 million annually in labor cost savings, yet the Moving Beyond Congestion folks have yet to propose any legislation that would allow the RTA and the service boards to address labor cost issues.

There is a wide range of privatization options and a wide variety of opinions about whether privatization makes sense. Here's just a sampling of a large literature on privatization:

The 1999 report by the Permanent Citizens Advisory Committee to the New York City MTA entitled "Privatizing MTA Services, Cost Savings or Political Buzzword?" is a good introduction to the issue. The report recommends against sweeping privatization, but identifies several situations in which privatization might work.

"A New Look at Urban Transit: Control vs. Market Approaches," is an article by John Due, a professor emeritis at the University of Illinois, Urbana-Champaign. He argues that the persistence of public transit being run by governmant monopolies in the face of determined calls by free marketeers for privatization suggests that the public really does prefer the current big vehicle/big streets natural monopoly model.

A highly critical article by Maria Tomchick on the privatization of British Rail.

A study by Neal Denno (National Transit Institute) and Martin Robins (Transportation Policy Institute) to the effect transit labor costs in the 1982-97 period did not grow abnormally. Labor cost savings are one of the highly-touted benefits of privatization. This study suggests that the opportunity for such savings may be overstated by the proponents of privatization.

Gary Becker/Richard Posner exchange on privatization of government assets.

Article by Professor Ian Savage entitled "Can Privatization Solve All of Chicago's Public Transportation Problems." The good professor seems to think so.

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