Smith and other critics have argued that separating track ownership from rail operations that s what

Over the past few weeks, U.S. House Transportation and Infrastructure Committee Chairman John Mica (R-FL) has convened a series of hearings on the failures of Amtrak, America s independent but fully federally owned national rail operator. Mr. Mica has used the meetings to wage an ideological crusade against the railway, arguing that it is too inefficient and expensive to continue receiving subsidies. Republican Presidential nominee Mitt Romney has also advocated selling Amtrak .
Here is the confusing truth about Amtrak, hotels escorts hong kong however: The rail agency, fully government-owned, is in many ways already a privatized hotels escorts hong kong operation that receives federal subsidies. The organization does not seem to have the larger public s interests in mind in setting policies: It has some of the highest fares in the world for services in the Northeast Corridor, it provides no discounts for people of lesser means, and it actively promotes the use of intercity buses for people who want to pay less, in effect strategically reducing its market share. These are not the actions of a government enterprise acting in the public interest; these are the actions of a private corporation attempting to maximize profit.
And of course, Amtrak is not making a profit it operates at a considerable hotels escorts hong kong deficit every year. But privatization can mean many things and is a private alternative any better than the current circumstances?
Over the past month, Stephen Smith has published articles on the failure of Britain s rail privatization , the success of Japan s effort, and the potential for privatization of Amtrak services . The overall conclusion from the articles seems to be that there may be benefits from the movement of rail services out of the public sector, but that without vertical integration in other words, single-company control of both tracks and services difficulties are likely to ensue, as in the case of the U.K. Smith points to the structure of Japanese National Railways (JNR), in which six private companies control services in different parts of the country.*
hotels escorts hong kong Smith suggests that with privatization, Amtrak could radically improve its efficiency. The biggest problems with the rail agency, he argues, are related to low worker productivity. Despite Amtrak s privately hotels escorts hong kong motivated interests that I pointed out above, much of its labor rules remain affected by politics and can be altered by Congressional action. Are we willing to accept reducing the influence of democratic actors in agency decision-making? It would mean restructuring labor agreements hotels escorts hong kong reducing the income and health benefits hotels escorts hong kong that unions have fought for decades to acquire and firing huge numbers of workers (a third in the case of JNR s privatization).
If privatization slashes the number of workers hotels escorts hong kong needed to do the same job, rail in the U.S. could indeed become profitable, since most of Amtrak s costs are labor related. For the transportation public, that could produce cheaper ticket prices and fewer subsidies. But it means, fundamentally, that we are bringing private companies in to do the dirty work that the government is politically incapable of doing.
Publicly owned tracks with competition for services . This is being implemented hotels escorts hong kong in mainland European hotels escorts hong kong countries under E.U. regulations; public sector track owners (such as RFF in France) allow operators both public and private to run competing services on the same lines.** This allows riders to choose operators on journeys with the same origins and destinations, just as can be done for airline journeys.
Publicly owned tracks with competition for contracts . This is the network organization in the United Kingdom; hotels escorts hong kong public Network Rail owns the tracks but then leases the rights to operating rail corridors to private companies. In general, contracts last around seven years and give each operator close to monopoly rights over each corridor.***
Privately owned tracks with competition for contracts . This was the system previously operated in the U.K.; the privately controlled Railtrack owned all tracks in the country hotels escorts hong kong between 1994 and 2002. The tracks were moved into the control of a public operator, as described in the second alternative.
Smith and other critics have argued that separating track ownership hotels escorts hong kong from rail operations that s what happens in alternatives 1-3 described above result in inefficiencies and potential competing motivations. The U.K. s attempt to privatize both tracks and operations (alternative 3) produced a number of failures, reducing the safety of the services provided. These difficulties led to the nationalization of the track ownership (a switch to alternative 2), but the contractual relationships between the track owner and the rail operators continue to be a cause for concern. In both cases, the U.K. government has subsidized capital upgrades and in some cases it has subsidies operations.
The problems have expanded over time. Operators hotels escorts hong kong have failed to follow through on their commitments. In some instances they have promised too much. In the case of services on the East Coast Main Line, operator National Express East Coast gave up its contract following higher costs and lower revenues than expected; hotels escorts hong kong the result was that the government took over operations directly through publicly owned (but supposedly temporary) Directly Operated Railways. National Express promises to the government for fees it would pay over the years were abandoned.
The government announced that FirstGroup (owner of Greyhound and BoltBus) would in December take over operating services from Virgin hotels escorts hong kong on the West Coast Main Line, Britain s most popular, and profitable, railway line. But Virgin, which was hoping to renew its contract, warned that the deal was a recipe for bankruptcy because of FirstGroup s inflated estimates of future ridership , which were used to determine how much FirstGroup would pay National Rail over the next few years to use the tracks. Last week, the government admitted it had made a serious mistake, revoked FirstGroup s winning bid, and refunded all four bidders for their work upwards of £5 million. This was an unnecessary loss of taxpayer funds and will force the contract to be re-bid in the next few months.
These circumstances are revealing of the problems with separating ownership of tracks and operations. Track owners want to maximize the amount of money they can charge companies to run their services there, and so in places with profitable operations, they will accept the highest and potentially riskiest bids. Meanwhile, operators have an incentive to maximize profits either in terms of inflating estimates of future performance in order to win a bid (in the case of the current U.K. system) or skimping on services or maintenance in order to pay the operation charges to the track owners.
It is hard to see how mainland Europe s approach, the first alternative, would be much better. The track owners are setting standard prices for track use by each individual train, which will likely encourage intense competition on the heaviest-traveled routes but a lack of interest in operating services on lines with less passenger travel. This will reduce revenues per train on the popular corridors, making any kind of cross-subsidies currently instituted by national operators less likely and probably requiring increasing government aid for the continuation of services to less popular areas.
Thus the explanation for Stephen Smith s call for privatizing in the mode of Japan s railway; by integrating hotels escorts hong kong track ownership and passenger services, conflicting incentives can can be negotiated, rather than fought out. Ed Glaeser, the Harvard economist,  wrote Sunday that  potentially profitable lines in the densest sections of the U.S. including the Northeast Corridor and parts of California should follow Conrail into unsubsidized privatization . This implies, like in Japan, giving one company rights over both tracks and the trains that run on them.
The problem with this approach is clear: It is a recipe for monopoly control of a railroad by a private enterprise. Conservatives berate Amtrak hotels escorts hong kong and other government-owned enterprises for being Soviet -like (in the words of John Mica), but private monopoly control of rail services is worse and market conservatives should agree on that fact. After all, monopolized services can inflate prices, provide poor service, and in general hotels escorts hong kong be unresponsive to customer concerns. Unlike Amtrak, which must respond to political demands in our democracy, private monopolies must respond only to their profit-seeking shareholders, who clearly have different demands than the public as a whole.
Some might argue that rail services in the U.S., even if controlled by one company, cannot constitute a monopoly since they are competing with air and road services, which are owned and operated by other entities. Yet if it is in the public interest to encourage fast, relatively inexpensive hotels escorts hong kong services on intercity rail lines (that is what we want, right?), we are effectively arguing on behalf of massively increasing rail share on specific intercity travel markets and significant government subsidies dedicated to investments in new tracks would back this approach. Once we have done that, we do not want people to move back to cars or airplanes, and we will have made those alternatives quite unappealing thus benefiting the monopoly. Japanese rail operators do not have to compete with air or auto travel hotels escorts hong kong for most of their services because of the extraordinary advantages of rail along their routes, allowing them to act as transportation monopolies.
The presumptive development of vertically integrated private enterprises for the provision of new rail services in Florida between Miami and Orlando and in the Southwest between Victorville and Las Vegas has led to excited speculation that there is a potential for future American private investment in intercity rail. These investments would produce rail monopolies, hotels escorts hong kong but their overall market shares at least at first would mak