June 4, 2011
Chinatown bus operator attempts to evade USDOT ban by changing names
For those who promote privatization über alles, consider the developing story in the East Coast. A wreck involving a so-called "Chinatown" bus (a private long-distance bus company which provides curbside service between major city's downtowns; often focused in Chinatowns and marketed towards Chinese communities) in Virginia resulted from driver fatigue, and the DOT ordered the bus company (which has a rather bad safety record) to suspend operations. (The driver was charged with manslaughter). Apparently, the bus operators then attempted to circumvent the DOT embargo by changing names--repainting their busses and doing business under a new name. This didn't fool the feds, who shut down the renamed operation and made it clear to the management that for now, they're out of the interstate motor transport business, under any name.
I'm not going to take advantage of this incident to claim that privatization is inherently bad. I don't believe that to be the case--there are plenty of examples of private transport companies which run safe operations (some voluntarily, and some in transportation sectors, such as air and freight rail, where government regulations are both strict and enforced). However, there are many who make claims that the private sector is inherently better.
It is often asserted that the crucible of competition will weed out the bad apples, and the heavy hand of government is not necessary. That, almost assuredly, is not the case. An all-too-common response to competitive pressures is not to improve product/service quality or operational efficiency, but instead to lower prices and cut corners. Many operations have razor-thin margins, and even a 5% drop in prices (attracting the same number of customers) can be the difference between making and losing money. And in many industries, the easiest way for a new entrant to break into the marketplace is to offer a low-cost alternative. But given that new entrants to a market often lack economies of scale that existing players have, the easy way to undercut the established competition on price (but still be profitable) is to--again--cut corners.
And a big problem with unsafe operations is that in many cases, customers don't have any way to determine whether an operation is safe. Customers can easily compare different lines' fares and fare policies, schedules, and amenities; but customers generally cannot tell when a driver has been running too long, or is improperly trained, or a vehicle isn't well-maintained--until its too late. And as this example shows, companies with poor safety practices that become public (or attract regulatory scrutiny) can often become reborn, simply with a website redesign and a new coat of paint.
In fairness, public operations can be pressured into cutting corners as well; particularly when the public simultaneously demands higher levels of service and lower taxes/fares. There are plenty of examples of public transit operators with embarrassing safety records (the Washington Metro comes to mind as an obvious example). But the point of this post isn't to bash pubic or private, its to demonstrate that elevating one above the other, as many partisans are wont to do, is often incorrect.
June 5, 2011 2:43 AM
Stephen Smith Says:
Do Chinatown bus operators – or DC Metro, for that matter – have per-kilometer fatality rates higher than that of private automobiles? (And if not, then why are you holding them to a higher standard?) Four people dying in one company's bus accident and nine people dying in a Metro accident – that doesn't actually sound like that much to me, when you consider how many people these things carry. Before we take this as an indictment of privatization (which, anyway, sounds like a bit of a stretch – clearly there is a regulation regime in place even though intercity bus service is privatized, and in this instance it seems to have worked!), I'd like to see some evidence beyond these two anecdotes.
And while surely there are information asymetries with regards to safety and Chinatown buses, your assertion that "customers don't have any way to determine whether an operation is safe" rings a bit hollow for this frequent Chinatown bus rider. For one, most customers are repeat customers, so they know from experience how jerky the ride is and about how fast the driver was going. Furthermore, those who are technically inclined can easily check what other people have to say about carriers on websites like yelp.com In fact, if you merely do a Google search for an operator (I just did one for "fung wah," a popular Boston-NYC operator), yelp.com's ratings for that company – in an easily comprehensible out-of-five-star format – show up automatically!
June 5, 2011 4:23 PM
Ron Swaren Says:
The public is going to be paying for a lack of discretion and safety in one way or another. I think the main criticism of public works, including transportation, is that they tend to get bloated with a lot of political interests. And this happens from vested interests throughout the political spectrum. For example, in highway construction there are vested interests all the way from the large corporate contractors, to the labor unions.
Unless a government is reducing costs to an insane and reckless level it has a right, as guardian of the people's funds, to seek and deliver the best value.
If something is apparently getting carried way beyond an established level of cost----re-examine it as a priority.
June 5, 2011 4:55 PM
An excellent set of questions, Stephen. (As mentioned previously, the blog Stephen writes for, Market Urbanism, is a fine read). As for private automobiles--you're entirely correct in that we don't hold private motorists to the same standard that we hold commercial drivers and motor carriers. Ignoring the technical training requirements for driving certain classes of vehicles; CDL holders are held to far higher legal standards than are private motorists. There are plenty of places in Oregon motor vehicle law where an traffic violation is classified as a more serious offense (i.e. a misdemeanor instead of an infraction) if committed by a CDL holder. While it makes sense to hold professional drivers to high standards, especially those hauling large numbers of people long distances or operating 20 tons of metal; a good argument that everybody should be held to that standard. (Of course, driving without a license or insurance is a common problem, particularly by repeat offenders who have no business being on the road; but one which is frequently exacerbated by the deplorable lack of options in some places. (It would be interesting to see a study comparing public transit quality with incidence of moving-violation recidivism).
At any rate, to repeat what is in the article, I'm not indicting privatization; I'm indicting the "privatizaton is inherently better" line of argument common among less thoughtful libertarians and conservatives, especially when grounded in utopian claims rather than empirical evidence. In particular, the market did not successfully weed out this particular operator--who simply tried to hang up a new shingle. Wherease "goodwill" is a valuable business asset, "badwill" is a liability which can be easily shed simply by reorganizing. Crowdsourced review services like Yelp are useful--though I often wonder what percentage of comments are written by actual customers. :)
Some types of unsafe operation may be obvious to passengers (though if you're already halfway between Atlanta and Richmond, and the bus is clearly being driven poorly, options are limited); OTOH many safety issues are simply not visible to passengers.
For the record, I'm not all that particular about public or private: I care about quality of service, and a good way to achieve that seems to be vigilant regulation by authorities which haven't been "captured" by the industry in question--authorities which have jurisdiction over (and independence from) public operators as well as private ones. Both types of operations have their advantages and disadvantages. Concerns I do have include the privatization of profits but socialization of losses--as noted in another thread, Rep. Mica and other GOP politicians have proposed privatizing the Amtrak Northeast Corridor (a profitable operation); but I'm pretty certain that private operators aren't interested in running the cross-country land-cruise routes.
June 5, 2011 8:17 PM
Chris I Says:
I think this is a textbook example of why safety regulations and agencies exist. I'm all for private operators, as long as safety is controlled. If you don't do this, it's pretty clear how quickly things will degrade. I've seen what a unregulated transportation market is like, and it's not pretty.
June 6, 2011 3:08 PM
al m Says:
When "profit" becomes the sole motivation for any endeavor, you can bet your bottom dollar (no pun intended) that the endeavor itself will take a back seat to the profit.
The tour bus industry has gone crazy lately with truly horrific accidents.
You can go through my archives of national/international bus news and see just how many horrible accidents there have been.
And if you look around the world, the for profit bus services are a true disaster, dozens die routinely in the third world.
June 6, 2011 9:10 PM
I don't care if transit is public or private. There's good and bad examples of both. Just make it safe, timely, and accessible either way.
Is that too much to ask for?