Privatizing the Trains
by Patrick Tucker
Rail service in Japan is rocketing forward, but the U.S. train system is at a
crossroads.
To recall the golden age of railroad is to return to a time when powerful steam engines
roared through quiet country fields, and when the whistle of the noon train pulling into
the station carried with it the promise of goods and news from afar. Rail transportation
remains important for U.S. economic and civilian infrastructure, as well as America's
cultural heritage. But the present state of U.S. rail travel is anything but idyllic.
In his new book End of the Line, former Amtrak public affairs spokesman Joseph
Vranich discusses the promise and perils that lie ahead for U.S. rail. Vranich sees the
innovative private and semi-private train systems of Europe, Asia, and Canada as positive
models for what rail systems can be. He also believes that the government-run, U.S. train
system [Amtrak] should be done away with.
The United States Government established Amtrak in 1970 under the Rail Passenger
Service Act, envisioning the organization as a way to consolidate and revitalize America's
steadily declining private rail lines. This public system is a failure, according to
Vranich, because it stifles free-market competition, is sustainable only through a
gargantuan annual outlay of public funds, and offers mediocre service.
"Scaling back and restructuring Amtrak to make it more relevant is [American
passenger rail's] only hope for the future," Vranich concludes.
He suggests that immediate privatization is the best option for the U.S. rail system,
citing the Central Japan Railroad Co. (CJR) as a model. "CJR's reorganization into
the private sector has given management extremely well defined goals," Vranich
writes. One illustration of CJR achieving such a goal might be the new N700 series bullet
train scheduled for commercial service in 2007. A bullet train for the new century, the
N700 will feature 14 motorized cars, an active tilt suspension system for maneuvering
corners at high velocity, and the capacity to run at a maximum continuous speed of 300
kph.
According to Vranich, the success of trains like the N700 is a direct result of free
market competition within Japan's rail service industry. "Another benefit of Japan's
railroad privatization has been an explosion in the research and development of advanced
train technologies, with many train designs reaching new performance standards," he
says.
Vranich points out that privatization of a national rail system can take several forms.
For example, a "franchised" system would allow a government like the United
States to specify service levels, quality standards, and ticket prices, but then allow
private companies to compete for contracts. According to Vranich, this model has worked
well in many parts of Europe, Africa, and South America.
Another option is "devolvement," or the transferring of operations from
federal to state and local authorities. In this scenario, each state would be in charge of
not only of its own commuter rails, but also its portion of the interstate rail system.
This option has been employed in Alaska with some success.
"With a motivated local management attuned to market forces, the Alaska Railroad
entered into partnerships with cruise ship companies to serve the leisure market,"
Vranich notes, "as a result, more passengers traveled on the Alaska Railroad than on
31 of Amtrak's 40 routes in 2003." Devolving or franchising Amtrak are two options
heavily favored by the Bush administration. In 2003, President Bush proposed to eliminate
Amtrak's federal budget.
Skeptics of privatization point out that devolving the U.S. train system will require
individual states (already cash strapped) to put additional money into maintaining and
improving rail lines.
"Devolvement could be the death knell for Amtrak's national network," Writes
David Briginshaw, editor in chief of the International Railway Journal, "If
a large number of states cease to be served by Amtrak [because they refuse to contribute
funds to maintain services], it could become difficult to get support in Congress for
passenger rail in the future."
Another option the United States could employ, in contrast to outright privatization,
would be to drastically increase federal funding and invest in a strategic long-term plan
for Amtrak. This plan would aim to upgrade the U.S. intercity rail network to make it more
secure and less expensive to maintain. A more ambitious plan would be to develop of a
faster and higher-capacity supertrain to rival the bullet trains of Japan.
Economist Lester C. Thurow discusses such a national rail project in his landmark book The
Future of Capitalism (Penguin, 1997): "If individuals are to have a builder's
mentality, then government must be active, visible builders. Deciding to beat the Japanese
and Europeans when it comes to having the best intercity high-speed rail network in the
world would be a good place to start."
Were the United States to develop such a train, and make its rail system easier and
less costly to maintain, it could then devolve or franchise the system to the private
sector. With a new and improved infrastructure already in place, a private firm looking to
get into the train game would face a much smaller initial investment, as well as lower
continual maintenance costs. That would help to ensure that states and towns are not
forced to disrupt crucial services to save money. An improved national rail system might
serve the public good by alleviating traffic congestion and greenhouse gas emissions, but
it remains to be seen whether these innovative ideas ever leave the station.
Source: The End of the Line: the Failure of Amtrak Reform and the Future of
America's Passenger Trains, by Joseph Vranich, AEI Press. 2004. 265 pages. $25. Order
online from www.wfs.org/bkshelf.htm.
