Category: Studies
On Privatization
My post identifying the FRA as American passenger rail’s biggest nemesis drew a lot of links due to the relevance to Rep. Mica’s proposal to privatize the Northeast Corridor. So it is time to step back and ask in general which problems privatization could solve, and which problems are facing American rail travel apart from the FRA. The operating assumption here is that capitalism is not a magical thing that always works, but rather a system that solves some problems created by competing economic systems while creating others.
First, privatization can be done in two separate ways. In Japan, or in the US before 1971, railroads comprise both infrastructure and operations. They run their own trains on their own tracks, and negotiate bilateral trackage rights agreements when they need to access other companies’ tracks. They compete for passengers, but cooperate when necessary; for example, many Shinkansen trains run through the territory of both JR Central and JR West, but the change of drivers only takes a minute.
The other way to privatize, favored in Europe and by Mica, is to split track ownership and operations, on the model of airports (not owned by airlines) and highways (not owned by truckers). Tracks remain public, operations are contracted out to the highest bidder. Regional services in Europe require subsidies, so the highest bidder in this context is the one asking for the smallest subsidy. Depending on which country it is and whether the service is regional or intercity, the public entity controlling the track may fix the schedules and fares in order to guarantee seamless compatibility between different operators.
Both ways have subcategories – for example, in the first method, the government could provide zero subsidies (Hong Kong), minor subsidies for capital construction (Shinkansen construction in Japan, the electrification of the Northeast Corridor south of New York in the 1930s), or ongoing subsidies for operations (Metra, some US commuter lines until the 1970s or 80s). In the second method, the operators can be all private as in Britain, or they could be a mixture of private and state-owned as in France and Germany.
The competition in Japan and the US works, when the railroads have power. There is not much cooperation apart from bilateral agreements and trackage rights. Thus, while Tokyo’s Suica and PASMO are top-notch smartcard implementations, they are poor examples of fare integration; people can swipe the same card on any company’s lines, but transferring from one company to the other requires paying for a separate ticket. For travel between two different metropolitan areas’ companies, smartcards are compatible only based on bilateral agreements, even though all smartcards in Japan use the same FeliCa technology.
When the railroads are not in power, disaster can happen. This is not easily seen in Japan, where the largest cities have not undergone urban renewal or transit decline, but in the US, agency turf means competing for a shrinking customer base and making the customer experience worse.
Therefore, straight Japanese-style privatization requires modifications to ensure timetable and fare integration, and compatible rolling stock. Here, ironically, FRA regulations provided something positive, paving the way to make the Bombardier Bilevel Car a standard commuter rail coach, which different North American cities can lease from one another when necessary; this indicates that what is necessary is better regulations modeled after those of the UIC or Japan rather than a free-for-all.
The other issue with privatization is that one of its primary features, the pruning of marginal branch lines, can become a bug. Focusing on core products has led railroads to neglect markets perceived as marginal rather than try to improve them. Both France and Germany have neglected regional travel in order to look more profitable; although SNCF and DB are state-owned, they act like private companies. In Berlin the resulting deferred maintenance led to a total meltdown, in which three-quarters of the S-Bahn stock had to be recalled on a day’s notice; while German trains are for the most part all compatible, the Berlin S-Bahn is an exception because it was electrified earlier and uses a different voltage from the rest of Germany.
Even in Japan, this is visible once one notes that for JR East and West, the core products are both the Shinkansen and the Tokyo and Osaka commuter networks. All the rest on those networks is lumped together under “Other lines,” so that JR East’s reports do not distinguish the Sendai and Niigata commuter lines from legacy intercity lines. It’s perhaps telling that the fastest non-Shinkansen train in Japan is in Hokkaido, where tilting DMUs on curvy single track with a top speed of 130 km/h average 100 km/h between Sapporo and Hakodate.
Note that the regulations here are mostly irrelevant, except where they involve cooperation between different private companies. Bad regulations can exist both under a private system (e.g. the US before 1971) and under a public one (e.g. the US today); the same is true of good regulations.
We should now step back and look at what enabled the success of the breakup of Japan National Railways, and the subsequent sale of its three constituents serving Honshu to private investors. Restructuring slashed the labor force, improved the quality of management, shut down lightly used lines, and erased the debt that JNR has accumulated to cover operating losses (for it was not subsidized, unlike Western money-losing railroads). It was done slowly, and the government helped find jobs for the displaced workers, which was easy since at the time Japan’s economy was booming. Subsequently, safety and punctuality increased.
The problems privatization solved, then, include operational inefficiency, political meddling forcing the operation of marginal lines, and labor problems. JNR not only was overstaffed, but also was represented by four separate unions, split along political rather than professional lines, ranging from centrist to communist. In the years before privatization, this was mitigated by reforms to both management and labor.
The experience of the positives of JNR privatization further shows that instead of shock therapy or PPPs, a slow reforming approach is required. The best practice is to do this slowly, like in Japan, and postpone the final decision until substantial changes have been made. A government that is too incompetent to run things by itself is also too incompetent to ensure privatization works for the public rather than just for cronies; at least some increase in the quality of government is required if privatization has any hope of success.
Quick Note on Air Pollution
Yesterday’s USA Today carried a story about a study from the Harvard Center for Risk Analysis coming up with a huge figure for excess mortality, 2,200 nationwide just from the extra gas consumption caused by traffic congestion. Such a figure is almost certainly too high.
On page 4, the study compares the costs of congestion in terms of wasted time, wasted gas, and excess mortality due to pollution. In 2020, the cost of excess mortality is given as just under $20 billion in the largest 83 urban areas. Since the total amount of fuel wasted due to congestion according to the TTI, on whose data the study is based, is about 3.5 billion gallons, this corresponds to more than $5 per gallon.
With this figure in hand, we can compare the study to studies of car pollution and not just congestion pollution. American studies tend to find much lower costs of pollution and lower percentages of pollution coming from cars than foreign studies, and foreign studies find costs in the $2-3/gallon range. For examples, see here for Toronto and compare with fuel consumption figures coming from carbon emissions figures in the same study; here for Sydney and compare with fuel consumption figures from here; and here for Auckland sourced to this New Zealand study and compare with these fuel consumption numbers. Note that in the US, such figures are considered high-end estimates – see anything on social costs by Mark Delucchi.
The most likely reason for the factor-of-2 discrepancy we obtain is funding sources. The study under discussion was sponsored by the transportation construction industry, and was conducted by a research institute that had ties to the tobacco industry in the 1990s.
The study’s content indeed suggests such interest conflicts. The methodology estimates pollution per unit of VMT; it could just as well have posted figures for total car pollution. And the conclusion, far from suggesting regulations or pollution pricing, is:
long-term policy alternatives for addressing congestion such as traffic management through congestion pricing, traffic light synchronization and more efficient response to traffic incidents, and adding new highway and public transit capacity.
Adding more transit capacity is reasonable, since it displaces car trips. But adding highway capacity means people drive more, which increases rather than reduces pollution. And nowhere does the study recommend a tax on gas, which is what causes this pollution in the first place. This is not serious public health research; it’s lobbying for construction.
Whither BRT?
The Institute for Transport and Development Policy has joined Brookings in publishing a completely pointless transit system ranking, this time focusing on the quality of BRT, the mode of transit ITDP advocates.
I want to like ITDP for its BRT planning guide tome, but this BRT ranking uses random criteria, with bad weightings. Every system is ranked out of 100 points, with points divided into small criteria and subcriteria. On page 17, we see the following:
Off-vehicle fare collection 7
Multiple routes use same BRT infrastructure 4
Peak period frequency 4
Routes in top 10 demand corridors 4
Integrated fare collection with other public transport 3
Limited and local stop services 3
Off-peak frequency 3
Part of ( planned ) multi-corridor BRT network 3
Performance-based contracting for operators 3
Enforcement of right-of-way 2
Operates late nights and weekends 2
Operational control system to reduce bus bunching 2
Peak-period pricing 2Bus lanes in central verge of the road 7
Physically-separated right-of-way 7
Intersection treatments (elimination of turns across the busway and signal priority) 4
Physically-separated passing lanes at station stops 4
Stations occupy former road/median space (not sidewalk space) 3
Stations set back from intersections (100 feet min) 3
Stations are in center and shared by both directions of service 2Platform-level boarding 5
Buses have 3+ doors on articulated buses or 2+ very wide doors on standard buses 4
Multiple docking bays and sub-stops ( separated by at least half a bus length ) 3Branding of vehicles and system 3
Safe, wide, weather-protected stations with artwork (>/=8 feet wide) 3
Passenger information at stops and on vehicles 2Bicycle lanes in corridor 2
Bicycle sharing systems at BRT stations 2
Improved safe and attractive pedestrian access system and corridor environment 2
Secure bicycle parking at station stops 2
Those criteria are for the most part not bad, but they’re weighted wrong. Observe that off-peak frequency counts for only 3 points, the same as contracting out the operations. It’s actually worse: a system gets 1 point for having any off-peak frequency, even if it’s worse than 15 minutes; 15 minutes is enough for 2 points. Peak-period pricing, which is absent or all but absent from many well-run rail and bus operations around the world, gets 2 points. The core elements of BRT – level boarding, physically separated median lanes, off-board fare collection, signal preemption – have 36 points between them.
In first-world cities, BRT has two uses. One, lower-capacity, slightly lower-quality transit on corridors with less demand. Two, dedicated guideways that can branch out and make local stops in shared lanes in lower-traffic areas, on the model of Brisbane. The full-fat BRT in Guangzhou and Bogota cited by BRT proponents requires a lot of concrete and many operators, and is best-suited to a city with low labor costs.
Many of the features touted for BRT can and should be used for all buses. Off-board fare collection with proof of payment is practiced systemwide in such cities as Singapore, Paris, Berlin, Zurich, and Florence; in conjunction with multi-door boarding, this reduces bus dwell times and increases speed with zero investment in concrete. Signal priority can be practiced independently of all else. Physical separation of lanes requires barriers only a few centimeters wide, and can be done selectively on the most congested and highest-demand segments.
Buses can be great buses; they make bad trains. By all means first-world cities should increase frequency, procure better buses with low floors and more doors, make sure riders know which routes are frequent and which are not, and give buses dedicated lanes when necessary. But the focus on specially branded rail-like BRT only detracts from this goal.
In American cities, BRT is more often than not an excuse to not implement those features on local buses. In New York, not only does the MTA rule out proof-of-payment on non-SBS buses, but also backroom state legislative dealings banned bus camera enforcement of painted lanes except on a closed list of six SBS routes. All this while SBS service levels are comparable to those of local buses in Singapore and many European cities – in fact lower if those local buses have signal priority. This and not low scoring on an arbitrary rubric is what ITDP should have complained about.
Brookings Folly
People who have read Brookings’ awful report saying San Jose is the second most transit-accessible city in the US and New York the thirteenth already know not to trust what Brookings says. Even at the level of collecting facts, it seems to get service frequency wrong, making sprawling suburbs with hourly bus service look like they have service every few minutes.
So it’s not surprising that senior Brookings fellow Robert Puentes’ article about infrastructure in the Wall Street Journal is full of misunderstandings and frankly amateurish claims about US infrastructure problems. Puentes opens with a standard claim that “we do a great job of building new roads” (no mention of the Big Dig, Bay Bridge Eastern Span replacement, or proposed Tappan Zee replacement, each substantially costlier than undersea tunnels in Europe) but smarter investments are needed. He proposes the following:
1. Boosting exports. Puentes complains that US border crossings are congested, and hints that more are needed, for example the proposal for more bridges between Michigan and Ontario. He mentions some interstate cooperation as a solution, but never says anything about international cooperation, which is the real problem.
The Ambassador Bridge carries 10,000 trucks and 4,000 cars per day; the Holland Tunnel, which has the same number of lanes, carries 90,000 vehicles per day. The problem with the bridge is the border crossing, not the infrastructure. Nowhere does Puentes say the US and Canada should build more border checkpoints or process people faster. If Michigan doubles the number of border control booths or halves the time it takes to process a vehicle, it’s equivalent to building another bridge, but at a vastly lower cost.
2. Getting greener. Puentes praises Obama for proposing to put one million electric cars on the road in 2015. Then he talks about charging stations and the need for national standards encouraging them. In reality, the US has 240 million cars on the road, so Obama’s proposal would, even assuming zero-emission electricity, cut car emissions by 0.4%.
On the subject of cars and transit, Puentes wisely mentions that the government funds roads more liberally, but instead of railing against highways to nowhere and high construction costs says “We need equal treatment of all possible transportation projects, so cities don’t have to give up on, say, transit systems that fit their needs and help us go green, just because they cost more than highways.” It’s not that there aren’t examples of severe waste; it’s that Puentes doesn’t seem to care.
3. Adding Innovations. This is a boilerplate blurb for electronic toll collection, bus tracking, and, of course, public-private partnerships. Individually the things proposed are not bad – they’re just the most important things. For mass transit, fare integration and tighter schedule adherence are more important, but were not invented here and involve messy fights with the bureaucrats Brookings represent.
The PPP part indicates what this is really about: kickbacks to technology companies, often defense contractors looking to diversify. Many US transit systems have a smartcard using vendor-locked proprietary technology; defense contractor Cubic is the top vendor. New York’s smartcard proposal is instead a kickback to credit card providers, which is slightly less bad because the standard is open but is still far behind best practices. The best practices do not involve PPPs – instead, agencies develop technologies in-house, or instead rely on open standards. Minimal collusion offers minimal opportunity for corruption.
4. Connecting Workers With Work. Here Puentes repeats his institution’s flawed study’s findings as if they’re universally recognized facts. He does not even say “According to a recent Brookings study” – people are supposed to know it like they know Pearl Harbor happened in 1941. Then, based on said study’s conclusions, he declares the problem is that the poor are disconnected from their workplaces and makes relevant suggestions.
Since the Brookings study got things wrong in the direction of too much transit accessibility, the suggestions are for the most part not bad. The problem is that he says nothing about the problems of connecting people to where they work. The biggest problem for metro area transit is that while downtowns are reasonably connected (e.g. downtown LA workers have a 50% transit mode share), secondary downtowns and suburban job centers are not.
The common theme of all the proposals is that they’re makework for the bureaucrats and consultants who are Brookings’ base. Adopting best industry practices is useless to Brookings fellows, because pointing out that Europe does it better also means that the consultants who should implement reform are European managers. In contrast, PPP means coming up with new standards and new ways of doing things; it’s attractive to government administrators as much as it is to the companies that get the contracts.
The interests of the riders are not the same as those of the service providers. That labor does not have the same interests as riders is clear, but management benefits from bloat just as much: if things run smoothly, managers can’t look like they’re continually saving the day. Thinktanks like Brookings represent certain interest groups, and Brookings’ interest group excludes transit users.
Fatality Numbers vs. Safety
On Streetsblog, they’re waving New York’s relatively high pedestrian fatality rate as evidence the streets are unsafe and much more can be done. The region’s pedestrian death rate is the 13th worst in the nation, about the same as Houston, which is supposed to be evidence of unsafe streets.
John Adams points out that in Britain, the pedestrian fatality rate today is one third what it was in 1922. The roads are much less safe than they were then, when they were narrow and traffic was slow, but there are so few pedestrians today that cars rarely hit them. As a result, looking at absolute death rates means nothing.
Even the Transportation for America study that Streetsblog links to doesn’t fully correct for it. It scales fatality rates based on the pedestrian commute share, which is better than nothing, but still fails to account the huge volumes of people in New York and other walkable cities who take mass transit to work but still walk a lot for their other trips. The proof is in the pudding: the study says Cleveland is the second safest metro area in the US for pedestrians, behind Boston and ahead of New York.
New York has a lot of street safety issues, but it’s still light years ahead of the rest of the US, except for small pockets in Boston, San Francisco, and other compact, walkable cities. The same is true for Manhattan within New York. Ignore complaints that the community board comprising the Upper East Side has the third highest pedestrian fatality count; it also has the third highest population, trailing two outer-urban CBs with fewer pedestrians. At this stage input-based measures such as traffic speed, sidewalk width, stoplight phasing, and the presence of a good street wall and trees are much better than any skewed output-based statistic.
As a corollary, bike lane opponents who complain about the large number of cyclist injuries on protected bike lanes are just as wrong (see here and scroll for comments). There are more cyclists on 9th Avenue than on pre-bike lane Prospect Park West; of course more will be injured. Counterintuitive claims about how bike lanes are less safe than mixed traffic are fun, but they aren’t true.
More on Driving vs. Transit Costs
Thanks to Elizabeth Alexis of CARRD for finding and giving me a link to the AAA’s methodology for computing driving costs, used in APTA’s flawed study about the high household savings coming from switching from driving to transit. The AAA methodology indeed assumes perfect rather than realistic maintenance and tire changing, and has elevated depreciation and warranty charges.
The full list of problems with the AAA methodology, according to Elizabeth:
You are spot on about the misuse of data. The AAA study is really misleading It represents the costs for someone who buys a new car from the dealer with the extended warranty, overinsures it, drives it for 5 years, buys a new set of tires and then trades it in to the dealer, getting totally ripped in the process. If everyone did this, the average car fleet would be 2 1/2 years old (instead of 9). The only thing this study tells you is that you should never buy a new car and that you are an idiot to do anything but buy used cars off craigslist.
They are also assuming:
1) You buy a new car every five years.
2) Even though you know you will sell the car, you buy the extended warranty.
3) You accept the dealer’s trade-in price (which is very low generally).
4) Even though you know you are going to sell it to the dealer for no money, you go ahead and put on a new set of tires right before doing so.
5) You buy insurance with really low deductibles.
6) Because on average you have a 2.5 year old car, your annual car tax and your insurance are very high (in most states, the taxes are based on the value of the car).
7) And you finance the car @ non-deductible 6% interest. It should be noted that most car loans are 3-5 years. So if you kept a car after it was paid off… this cost would go away.
A better study for the costs of driving was done by Steven Polzin, of the National Center for Transit Research, who also serves on “several APTA committees.” Using various government survey data, he finds an average saving of $3,600 from giving up a car; this is less than the cost of an average car, since households might give up the lesser used car or take more transit or drive the remaining car more. I encourage everyone to bookmark the study and refer to page 18 for comparative spending on transportation in the US versus the EU-15; it’s a difference of 19.5% of household budget versus about 14%. Any figures for world public transit leaders Japan and Switzerland will be appreciated.
How much does driving cost?
APTA has just come out with a press release touting large savings for households that do not drive but instead take mass transit. The average it claims is $10,000 per year per person nationwide; in some cities it’s higher, and Second Avenue Sagas seized upon the study’s claim of a $14,000 saving in New York.
The only problem: drivers in the US do not spend $10,000 a year, let alone $10,000 more than transit riders. The federal government has a detailed breakdown of household budgets, so that it can compute inflation rates accurately and set cost-of-living adjustments and monetary policy. The New York Times has a nifty graphic breaking down household spending as of 2008, and transportation was 18% of American households’ budgets, of which about 17% is on cars and 1% is on all other forms of transportation. Mean household income in the US is $68,000 per year as of 2009, so we’re talking about $11,560 spent on cars per household. There are on average a bit more than 2 cars per household in the US (246 million cars, about 113 million households), so we’re talking about $5,400 per car. Not $10,000.
At least it’s better than its shilling against a climate bill on the grounds that some of the carbon taxes it would raise from roads would not go to the Highway Trust Fund, to the point that it proposed an alternative that would raise less money for transit. But in either case, it cares less about a mode shift benefiting transit users and the environment than about lobbying for transit operators’ interests.
New York Provincialism, and the MTA’s Flawed Smartcard Report
New York’s MTA recently published a report proposing a next-generation payment system replacing the MetroCard. You can find it here: to read it, download it and add .pdf to the file extension. Sections 4-5 are the most relevant here.
The report is full of little facts about New York such as the number of transactions on each component of the MTA, but never once mentions case studies abroad – Hong Kong’s Octopus, Tokyo’s Suica and PASMO, or the many European cities that are happy with paper tickets. It uses factoids to intimidate more than to explain. For example, it repeats the fact that New York City Transit spends 15% of its revenue on fare collection, but never breaks it down to parts, does cross-city comparisons, or even estimates how much a smartcard system will save; the only purpose of the number is therefore to scare people into doing something.
Despite advertising its intention to save money, the MTA makes no mention of bundling smartcards with proof-of-payment, widely used way to speed up bus boarding and reduce train staffing levels, even with plain paper tickets. On the contrary, the report specifically mentions equipping commuter rail conductors (and not fare inspectors) with card readers, and only mentions inspectors in relation to Select Bus Service and the Staten Island Railway.
Even on the level of checking existing technology use, the report falls short. The MTA rates smartcard options as “medium-low” on “inter-modal interoperability,” on the grounds that they require card validators and card readers. In reality, card validators are cheap: in Singapore, they cost about S$950 per unit (about US$770); placing one at every bus stop and commuter train station and on board every bus door and commuter train door pair would cost $20 million, less than a tenth the cost of a smartcard implementation.
Similarly, the report rates internal transit smartcards’ lifecycle risk as “medium: mature technology, though standards are not.” The closest thing to truth in there is that there are two open standards, Sony’s FeliCa and a separate standard whose top vendor is NXP’s MIFARE, and the ISO chose the standard used by MIFARE over FeliCa (FeliCa was already in place in Japan and Hong Kong, so it still has the most users). In reality, both FeliCa and MIFARE date to the mid-1990s, making them older than the smartphone and broadband Internet.
The report mentions a foreign city exactly once: it says that “The technology risk is mitigated by Transport for London’s adoption of open payments, planned for 2012, and its role in advising the MTA and potentially sharing technology.” Optimistically, it means the MTA listens to other cities when they say what it wants to hear. Pessimistically, both cities are using each other to justify a prior decision. MTA Chairman Jay Walder, the primary proponent within the MTA of the credit card-based smartcard, worked in London until 2007 and was responsible for introducing the Oyster card.
And speaking of London, Oyster is bumpy at best. It is superficially similar to Hong Kong’s Octopus, down to the similar name, but in practice it is much more primitive. Octopus is licensed as anonymous electronic money (in a culture that according to Western stereotype is authoritarian and indifferent to privacy), generating additional profits to the MTR; Oyster is not, and the MTA report makes no mention of this possibility. Octopus comes in more forms than just a card – for example, there is an Octopus watch and an Octopus keychain, making tapping easier since the rider does not need to take out their wallet; Oyster does not, and when riders took out the chip to create a makeshift Oyster watch, TfL fined them even though they were not dodging the fare.
The MTA keeps underperforming because it doesn’t listen to other cities’ experience, unless it’s what it wants to hear. And this is perhaps the worst abuse, because here the person who’s leading the charge for reform in New York has a track record of screwing up abroad. New York has spent decades convincing itself that it is the best city in the world and needs to learn from no other, taking pride in its subway. The result has been a metro area transit mode share lower than that of European cities one tenth New York’s size. Walder speaks like a reformer who tries to change this, but the one time he’s proposing something concrete, it’s the usual New York provincialism.
Pedestrian Observations 
