All Transportation is SUBSIDIZED, Always Has.

Like the title says, transportation is subsidized, but people don’t understand how it’s all subsidized nor understand that for the whole of civilization, it was subsidized. The reason why we don’t accepted this truth about this reality is because we hold onto the myth that it’s the private sector’s job to provide transportation services. To a certain extent this is true, but the infrastructure that the private sector uses to make money on was built and paid for by governments.

So how did we get here believing in the myth that it’s the private sector job to provide transportation services? It all started because of how public transportation started out here in the United States. At the turn of the 20th Century, the streetcar companies were popping everywhere and back then, if you provided a public service, you were a tax exempt entity. Well a Republican President Teddy Roosevelt (Which a statue of him sit at the Menger) did away with those transportation companies being tax exempt entities. Those companies where not there to earn a profit but to be what a shell company is today and to make the rich owner look good. The reason why those transit companies remained in private hands up through the 1960s is because it wasn’t until the 1950’s that inflation started to eat away at the ticket revenue that covered the cost of operations and maintenance.

So another question that I’m asked “are there any private companies providing transit services like VIA?” Yes there are and they’re located in Japan, Hong Kong, and much of East Asia but they don’t earn their profits by ticket fare at all. These companies are mainly Real Estate companies and they use their transit as a way to make their property more expensive and use the revenue from the developing rights from those properties to pay for the transit.

So let’s continue, remember all those passenger trains of the first half of the 20th Century? If you ever watch this History Channel show “Trains Unlimited” that came out in the late 90s, you would have learned that those passenger trains never made a profit. So you’re now asking “why did the railroads operated them?” One, they were forced by the Federal government through the ICC and nearly all of them had a Post Office Car that paid for these passenger trains. The last day of service of many of these private railroad passenger trains was usually the same day the Post Office contract expired.

So if you’re smart, you’ve got what’s going on here which is that in one form or another, the transportation was subsidized and is subsidized just like how your roads, your gas is subsidized so the cost to use your car is as low as possible. There’s a reason why our public transportation suck and it’s because we hold onto this nonsensical  belief that it’s the private sector job to provide these services. Yet you go all around the world, they don’t cling onto this nonsense. They understand that if you want it, you have to pay for it. Europe understands this, Russia understands this, Canada understands this, India understands this, and I could go on and on. If you want more bus service, you have to pay for it. If you want passenger trains, you have to pay for it. The rest of the world gets it, we don’t because people here in the United States believe in this nonsense that it is the private sector job to provide services and when this belief system is taken to it’s logical conclusion the inevitable solution to our transportation woes are private toll roads. Any who has lived in San Antonio for more than 20 years will know how unpopular private toll roads are yet these same people believe that it’s the private sector’s job to provide transportation services of VIA.

Now no doubt that many of my readers who are going disagree with me will point out how private railroads that haul freight makes billions of dollars a year, on how airlines make a profit and how bus companies make money too.  The truth is that without the infrastructure provided the by the government, they wouldn’t be around except in the big population centers.

The railroad tracks would not be made possible if it wasn’t for government proving the funding to lay down their rails.  These funding sources were mainly government backed loans and grants. Today if it wasn’t for the dredging of harbors by the Amy Corp of Engineers, railroads would be a thing of the past and that’s just one example for when a small regional railroad is going out of business and that railroad is vital to the small community it serves, the state will come in and bail out that railroad so it can continue to service that one customer that probably just receives three or four railcars a month. This is because at the end of the day, your profit as a freight railroad comes from hauling goods, not from providing switching services.

And before I get asked about Virgin Las Vegas rail plans and Brightline. For the record, Brightline was loosing money before they were purchased by Virgin and much of their funding is being provided by the states of Nevada and California.

Airlines are another subsidized industry for they wouldn’t be able to exist without the federal government providing air traffic control and paying airlines to serve unprofitable regional airports. Airports are government owned and although they get revenue from the airplane parking fees, concession fees and others, they don’t cover the entire costs of airports and air travel, especially small regional airports.

Outer Space:
Now let’s go out into space and point out how SpaceX and Blue Origins are owned by billionaires and those billionaires deep pockets fund the research that have lead to incredible achievements. Most people don’t know that when Elon Musk started SpaceX, Boeing and Lockheed Martin were consolidating their rocket services. As we go into space, a governmental body will be formed to create a space traffic control system and at first those services will be paid for by a fee on the goods and passengers going to and from space, but planetary governments will eventually end up funding those services.  This is because, just like today, an nations economy is based on international trade by having deep harbors, so to in the future your planetry economy is dependent on interstellar trade. Eventually fees won’t cover the cost of the underlying infrastructure if your planetary nation wants to be competitive in the interstellar economy.

Buses are the obviously subsidized form of transportation because bus companies provide their services on roads that are provided by governments. But many that would disagree with what I wrote thus far and will in the comments of this post will point out how competition in the intercity bus service here in Texas and everywhere else.  This has lead to lowered prices, but this comes at a cost, you can’t get a Greyhound bus to New Braunfels, Galveston, and the many small towns throughout rural Texas because once Megabus came to Texas, Greyhound, the main provider of intercity bus service cut much of the services to those communities and reduce service to the towns between the major cities in Texas. But wait, your ticket before Megabus cost up to $40 between San Antonio and Dallas. My response is yes, today your average ticket price is $16 dollars, but now the service to San Marcos is just four bus per day (2 in each direction) and cost more to get to San Marcos then it does to get to Austin, Houston or Dallas.

Local Transit/VIA
Now people who think that VIA is a waste of money also tell me that the reason for VIA sucking is because there’ is a lack of competition. Now VIA’s job isn’t to be competitive, but to provide reliable transportation services in the city of San Antonio. When private companies came into other cities to compete against their local transit services, those private alternatives ended up going out of business. Now we can get into alot of “what ifs” conversations about making VIA compete with another government entity. But if you read my last paragraph on what competition did to the intercity buses, then you would know that if it were to happen here in San Antonio, the bus services will be cut all around town and the only places that you could go to is everywhere between the Medical Center and Downtown along Fredericksburg Rd.

Ride Share/Driverless Vehicles:
Some people like to tout that Uber and Lyft are the solution to transit and the future of Unfortuantly if you believe that nonsense, then I recommend that you change your source for news for Uber has been in the news lately being reported that it can’t make money. One Toronto Suburb decided to used Uber to replace it’s fixed route bus service.  It became so popular, that they had to put a cap on the number of rides you could take per month, the opposite of what transit is suppose to do. In the end, ride share’s low user cost is due to the investors and once that investment money dries up, their prices will be to the level of the cost of a taxi cab ride. 

For the record, I will not mention driverless cars for we’ll discover that they cause more problems than it will solve and they’re not here yet. The main problems we’ll discover is that these driverless cars will cause an increase in traffic congestion, just like Uber and Lyft are doing right now. Urban transportation isn’t a mode problem or an app problem. It’s a geometry problem and we’ll discover when driverless cars take over just how little space we have available to get around.

Now I have a saying “those who know the cost of everything end up not knowing the value of anything” and the reason why I bring up this saying is because the conversation that we’re really having is about the cost of something, in this case the cost of transit and the value it brings in. But we don’t want to pay for it and we’re constantly measuring the value of what little we’re paying for by measuring how full the buses are, instead of the ability of being able to get to more places within 30 minutes without a car. And as long as we measure transit by the amount of empty buses going by, then in the end will get streets full of cars looking for parking.

My Next Blog post: “The Cost of Everything.” release date: Dec 13, 2019

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