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.