MTS proves Reason Magazine wrong

Akos Szoboszlay, President MTS

I was a Libertarian Party member and a subscriber to Reason Magazine. I believed, and still do, that if the free market were truly in place, that guideway transit, privately owned, unsubsidized, and non-polluting, would again become the dominant form of urban transportation. The hyprocrocy of both Reason Magazine, as shown below, and that of many Libertarians, who say nothing about automobile subsidies and some even support them, is astounding. I quit!

Reason Magazine made many outright false statements of fact in several articles. I brought this up in six letters and many phone calls over a two year period, mid 1989 to mid 1991. I even spoke to the Publisher, Robert Poole. His statement to me, as well as his staff's statements, were always the same: "We are working on it." In the two years span of my letters,they have not responded to any of my letters and not even rebuted any of my points proving them wrong. These six letters are copied below.

At the time, I was Vice-President of the Modern Transit Society. The purpose of posting this to the internet now is that I have found a web site from a "think tank" that has the same disinformation provided by Reason Magazine's articles. By placing them on the web, someone doing an internet search will find both Reason Magazines viewpoint and this web page. Let the reader decide who is telling the truth. For that to happen, this page needs to be posted.

Whenever a magazine prints an error, it has a duty to correct that error in another issue. I again ask Reason Magazine to rebute my statements or print a correction.

Aug. 22, 1989

Robert W. Poole, Jr.
Publisher and Editor
Reason Magazine
2716 Ocean Park Blvd., Suite 1062
Santa Monica, CA 90405

Subject: rebuttal to 4 articles, and course of action for corrections

Dear Sir:

Executive Summary

I am appalled at four articles that appear in the Aug/Sept 1989 issue.

Two of the articles, authored by Mr. Collins, 1) are filled with erroneous statements of fact, 2) make unREASONable statements, displaying a lack of logic despite its appearance in REASON, and 3) use emotionalism instead of REASON.

Three articles attack the very form of transportation that libertarians and REASON need to support: a private enterprise receiving no government subsidy. Moreover, the "Red Cars", which are specifically attacked, used tracks that were for the most part on the private property of the transit company! The alternatives to this form of ground transportation (that have been implemented in California to date) are:

(a) the present government operated and government subsidized mass transit systems, and

(b) the much larger government operated road system receiving even greater government subsidy.

The fourth article promotes government construction (including ownership and operation) of new roads with the implication that it should be subsidized.

For Mr. Collins' article, Who framed General Motors?, the following points are made:

Erroneous statements of fact

1) "[GM and others] did in fact purchase minority interests in the Los Angeles Railway". ---The correction is 'majority', the figure is 59%, and it is easily verified by checking the 1945 (or later) Moody's Public Utilities Manuals under the Traction section.

2) "[After the takeovers] LARy began replacing LA's "Red Cars" with [buses]" ---Throughout his article, Mr. Collins indiscriminately uses the terms "Los Angeles Railway (LARy)" and "Red Cars", a gross mistake. "Red Car" is a common term for the Pacific Electric Railway, which had 437 red cars. The LARy had 1042 cars, but they were yellow! Both companies were taken over by GM, but at different times (details in Conflict of Transportation Competitors, enclosed). Yet, Mr. Collins mistakingly thinks that Pacific Electric and LARy were one and the same. In this example, he states that one streetcar company "replaced" the streetcars of another company, an absurdity.

3) "By 1944, ... LARy was a lumbering, money-losing dinosaur." ---Very unlikely. Transit systems reaped hefty profits during the war years. Later in his article, Mr. Collins states that there was an increase in ridership to 250% from 1940 to 1945, which would have resulted in about the same increase in revenue. Mr. Collins would have been wise to check the annual reports of LARy if REASON didn't dissuade him from making such an allegation. Even prior to the war, the rail operations never lost money, but the bus operations lost money in most years. (Source: figures reported to California Railroad Commission, 1940).

4) "Streetcars simply could not meet the needs of a developing city" ---Of course they could. Many transit companies combined real estate development and streetcar/electric train service, including Pacific Electric and the Key System (officially the Railway Equipment and Realty Company).

5) "General Motors did not kill them" and "the legend ... of the conspiracy is exactly wrong" ---see article Conflict of Transportation Competitors for a fact filled rebuttal. In essence, GM destroyed both the efficiency of transit and its customer base. It transformed what were private companies, unsubsidized, into government operated (with typically 1/2 the cost efficiency of privately operated) and government subsidized operations.

UnREASONable statements

6) "Mismanagement, ... inflation, ... [made] streetcars obsolete" ---What do these two factors have to do with obsolescence of a certain technology?

7) "Streetcars [were] obsolete" and "GM ... wanted to save [mass transit]" ---Who is best qualified to know how to run a transit operation, with what technology, and to determine if streetcars are truly obsolete ? 1) Transit companies whose sole sources of profit comes from transit operations, 2) An automobile manufacturer, who benefits whenever a transit customer switches to becoming a car owner, or 3) Any of the authors of REASON Magazine ?

Furthermore, Mr. Collins never even mentioned Pacific Electric's 334 electric trolley buses, nor Los Angeles Railway's 494 trolley buses. These were also liquidated by GM. Using the same illogical REASONing, these would also be obsolete just because GM, the competitor, determines them to be? Is Mr. Collins trying to fool REASON's clientele, or just himself ?

8) "During rush hour, riders were jammed together ..." ---yes, that will always happen unless demand pricing is used. What about automobiles being jammed together? This statement serves no logical purpose.

9) " ... in the slow moving cars" ---the "slow moving cars" were still faster than automobiles during rush hour in most instances, because the "Red Car rider", referred to in the sentence, travelled on private right of way.

10) transit "deliberately ran too few cars" ---Because transit has a very small incremental cost, this would not be a logical action of the transit company: making customers uncomfortable without realizing any appreciable cost savings. Yet, after the GM take-overs, this is exactly what did happen for the purpose of reducing the number of customers for transit, not to save costs (because revenue, proportional to the number of transit riders, was much more greatly reduced than any cost savings realized).

11) transit "ignored the safety of the public" ---streetcars and trains are the safest form of ground transportation. They also had numerous safety devices that automobiles and buses do not have to this day: the cowcatcher (see picture in article) so that pedestrians would not get run over, the dead man switch so that the streetcar or train would come to an automatic stop if the driver did not press a switch about every 20 seconds, the one-mile subway under LA built by Pacific Electric (completely avoiding street traffic), and signalling to keep the cars a safe distance apart. (Also see Is safety one of the traffic engineers' goals? in Conflict of Transportation Competitors.)

12) LARy "refused to build .. tracks into lightly populated areas" ---Maybe LARy thought it to be not in their business interest. But whatever the REASON, wouldn't forcing LARy to do so go counter to fundamental principles that REASON purportedly stands for?

13) "Streetcars operated under monopoly-like conditions and earned the enmity of the public" ---Sometimes streetcar companies competed (for example, the Key System vs. Interurban Electric Railway), but more important, there was always the other competitor: the automobile/road system. Without question, streetcars were less monopolistic than any other public utility.

14) "Facing a (streetcar) monopoly that was at best unmolested by government and at worst supported by it ..." ---He accuses the streetcar of monopoly, but at the end states, "The fact that [GM] used unsavory and monopolistic business techniques is quite beside the point." Why the double standard? Liquidating electric guideway transit forced most to use autmobiles, and most of these were manufactured by GM. This is the real monopoly, which he forgives. Streetcars never did have a monopoly, because of the existence of the competing, government owned, government subsidized road system used by automobiles (and previous to automobiles, horses), bicycles and pedestrians.

15) "When GM and the other auto interests bought into LARy [59% controlling interest], the new management turned to buses because they were much more flexible and mobile" ---If this is so, then why did LARy not do this on their own? Why did it happen only after the takeover and the forced change of management?

16 ) "The management turned to buses ... As a result, buses briefly attracted more riders, getting the average up to around 125 rides per person in 1945" [from the] "50 times per year" ..."in 1940." ---First, assuming Mr. Collins' figures to be correct, the increase in ridership to 250% was a result of wartime conditions, including gas rationing.

Second, contrary to Mr. Collins, the increase was not from converting to buses. The conversion to buses did not even occur until after 1945. There was not even an intent to scrap the streetcar system until May of 1945, at which time the board of directors was taken over.

Third, buses do not attract riders, again contrary to Mr. Collins, but actually discourage riders. Buses have diesel roar, diesel fumes, an uncomfortable ride (transmission jerk, engine vibration, swaying into bus stops), and less power (longer time to accelerate and go up hills). "Conversion" of LARy streetcars to buses was a tool for discouraging people from using transit. The subsequent "conversion" of Pacific Electric's Red Cars to buses had a further advantage for GM: Trains usually had exclusive rights of way that bypassed automobile congestion. "Conversion" guaranteed that taking transit would take longer than taking a car.

17) "General Motors ... wanted to save [mass transit] in order to maintain a market for its buses" ---A simple analysis of the cost of buses vs. automobiles, the life spans of both, the number of cars required to replace one bus (for each run of the bus, the bus gets reused) and the fact that GM (at that time) manufactured over 50% of the automobiles makes Mr. Collins' statement and lack of analysis unworthy of publication in REASON. Details in Conflict of Transportation Competitors.

Emotionalism instead of REASON

18) Transit patrons had a "nasty and brutish life" ---While most rural families owned automobiles, most urban families did not. All the larger cities had lower car ownership than rural areas. The urban dwellers could efford a car, but a car was not needed for most because most used streetcars. If these people's lives became "nasty and brutish" as a result of using streetcars, don't you think they would just buy a car?

19) The air inside streetcars was "a pestilence; it was heavy with disease and the emanations from many bodies." ---Does this deserve a comment? The mild LA climate meant that windows could be left open year round (see picture in the article).

20) "Some had to cling to the outside" ---Libertarian philosophy would still allow those people to choose to be in that type of situation. Yet, Mr. Collins elsewhere implies the system was underused!

21) "Who framed General Motors? [The title]" ---Apparently, Mr. Collins is trying to frame private enterprise, unsubsidized, just because they were in the mass transit business.

Information that I ask you to send to me:

22) "LARy complained to the city council [about jitneys]. It moved quickly to ... regulate the jitneys out of business" ---Please send me your evidence, including a copy of the Code or city ordinance. As a result of the franchise that was imposed by the city of LA, streetcars had to subsidize buses and late night service (a uniform 5 cent fare was stipulated), subsidize the automobile by paving the street (taking 6% of LARy revenue), and subsidize government itself by a large franchise tax. Obviously, a jitney that did not pay these government imposed expenses can operate more cheaply, and will take customers from streetcars. Under these conditions, I don't think one can blame the streetcar companies, if indeed they did this as you charge, especially since they already invested a lot of money. The obvious solution to the problem was and is to completely scrap government franchises, and let the free market operate (especially as described in The Free Market for Transportation Plan).

23) "[LARy ] bribed elected officials for favors" ---this type of statement has to be substantiated. Please do.

For Mr. Collins' article, End of the Line, the following points are made:

24) "Not a single rapid-rail system in the country operates in the black" ---True, but not one of the competitors does either: the automobile/road systems. Because the automobile/road system receives greater subsidy, and is the prime reason for the transit subsidy, this needs to be pointed out, or the reader will obtain a distorted picture. It also distorts where the priorities should be for free market advocates.

25) "Because they have fixed routes, rail systems simply can't cope with changing living patterns" ---The fixed route is an advantage: developers are guaranteed comfortable transit access to their property, and high density development will occur along the route. (Also see next item for a more direct rebut.)

26) "Commuters can no longer depend on transit" because "Jobs are being created twice as fast in the suburbs, but the state's transportation system still assumes most people want to go downtown." but "Transit ... will be obsolete the next time people and businesses inevitably shift from existing locations to thinly populated areas" ---The logic is not quite there. Jobs are still being created in downtown (as Mr. Collins admits), and the existing transit system can cope with these. There is no REASON to pull these rails up and place them anew in the new suburb locations. What is lacking is a transportation system in the suburbs (a need that private enterprise needs to fill, including roads if they are economical). Collins questions placing new tracks here because of future population shifts. What Collins does not realize is that nothing is subtracted, as if most of the population abandons a region and moves over to another one. A "population shift" is actually a center, a term equivalent to center of gravity in mechanics. Attaching a mass to an existing one does change the center of gravity but the previous mass remains unchanged. A population shift means that existing travel patterns remain, while new ones are added to it (a subtraction is rare).

For the article by Gordon and Richardson, the following points are made:

27) "Sprawl can be efficient" and "Although congestion is still a problem, dispersion -sprawl- does alleviate it." ---There is a confusion between sprawl and dispersion. Sprawl means low density land use while dispersion means mixed land use (residential, industrial, commercial). Sprwal is inefficient (longer water and sewer pipes, longer trips required, greater percent of land devoted to roads, etc.), but dispersion is efficient (shorter trips on average because of mixed landuse zoning). The correct word here is dispersion, not sprawl.

28) "Road pricing" ---Completely agree. I plan to lead an estimated 2 1/2 year effort to achieve this in San Jose starting next year (in conjunction with eliminating automobile subsidies).

29) "New subways ... are failures" ---I agree that subways in many cases are too grandiose because light rail on exclusive right of way with signal pre-emption (the green light triggered by an approaching train) would be almost as effective for a fraction of the cost. But it must be pointed out that private enterprise did build subways, including a one-mile section in LA by Pacific Electric! The problem is political: traffic operations tend to be based not on maximizing the efficiency of travel in terms of the number of people, but in terms of the number of vehicles (mostly automobiles). The article Conflict of Transportation Competitors makes this very clear. A subway is a way out of the political difficulty, at a cost.

A recent example is the San Francisco Board of Supervisors blocking the extention of Southern Pacific's passenger train operation the 2 miles to reach downtown San Francisco, over existing train tracks that are used for freight, because they do not want the crossing guards to slow down automobile traffic to any greater degree. The cost of their decision will be about $200M for a subway, but San Francisco will not foot the bill (which explains their decision). The question is, should the cost be attributed to mass transit, which does not need nor want the subway, or to automobiles, which do not have the right-of-way at a train crossing? The obvious answer is automobiles (Let them pay for grade separations, if they want it!), but politics deems otherwise, and mass transit gets stuck with the bill.

Likewise, Pacific Electric built the subway under LA because automobile traffic slowed down their trains (and their transit business) when operating in downtown LA (in contrast to most other places, where they owned their right of way). Yet, the most cost effective solution would probably have been for the city to prohibit automobiles from the tracks, as is done in Europe to this day, because the tracks carry more people than a lane of automobiles.

Until a few years ago, traffic signal lights on San Francisco's Market Street were timed to maximize automobile flow instead of transit flow, which has a different timing sequence (for the green wave). Why should they have been maximized for transit flow all these years? Most people using Market St. still travel by trolleybus, bus or streetcar (not even counting the light rail and rapid transit subways underneath). Maximizing people's time efficiency should have been the criteria for traffic signals, as opposed to the unfair bias of just maximizing automobile users time efficiency.

What was the effect of the historical government bias against transit? First, the number of transit vehicles required to carry the same number of people is proportional to the travel time. This means the expenses of the transit companies are proportional to travel time for trolleybus or bus (which cannot be connected into a train as can guideway transit). For these, doubling travel time means double the number of vehicles, double the drivers and double the operating expenses. Second, because the ability to attract customers for the transit companies and for their competitors, the automobile interests, is a function of travel time, the bias has obviously harmed transit companies.

In summary, public ownership of streets tends to inefficient usage. But here is an example of an exception, which has seldom occurred in the U.S.:

A grandiose subway project shot down by voters was by one of the most pro-transit cities in the developed world: Zurich, Switzerland. The voters rejected replacing much of the streetcar system with subways (U-bahn). Instead, the decision was to give streetcars, which already have their own traffic lanes, signal pre-emption. Altogether, about 2000 detectors were installed. This greatly increased people flow of the street (most take streetcars), is almost as fast as subways with a small fraction of the cost, yet has only a minor effect on slowing automobiles. While streetcars typically come every 2 to 6 minutes, they only take about 20 seconds of signal time to cross the intersection. This is another advantage of guideway transit: it not only has greater capacity than freeways, but because it groups people together (instead of dispersed as for freeways), grade separation (bridges or subways) is not needed and results in a tremendous cost savings.

Such a scenario (signal pre-emption and streetcar-only lanes) would have also saved Pacific Electric in LA and other transit systems a large amount in not necessitating subways, since technology for train and streetcar detection was already in existence. But politics did not allow its implementation. By maximizing efficiency of vehicular flow instead of people flow, priorities were given to minimizing travel time only of people traveling by automobile, instead of all people.

30) "Washington Metro costs $8 per passenger" ---To make a REASONable assessment whether it is worth paying $8, the costs for other modes of transportation have to be considered, plus other factors. In Santa Clara County CA, the costs for buses are about $6 per passenger, not including pollution costs. The other factors to consider are that the Metro may be in a high value land area (where surface transportation would be more expensive), and the politics of a government operated, inefficiently run, highly political street system has been historically biased against transit. (The original purpose of my article Conflict of Transportation Competitors was to expose this bias.)

Subsidies to automobile transportation also have to be considered, these being often more than for the subway. The article never makes these evaluations. In Santa Clara Co, the new freeways will cost $10 per day per car from the 0.5% general sales tax subsidy alone, plus the parking subsidy (about $5 per day), plus other subsidies, plus pollution costs. Altogether, this amounts to more than the costs of the Washington Metro (about $7 per passenger with a $1 typical fare, or $14 round trip). Why the double standard, looking only at, and thus only attacking, mass transit subsidies?

31) "Markets for mass transit are extremely limited." ---The word market needs to be further described. If they mean free, unsubsidized mass transit but an unfree, subsidized automobile/road system, its competitor, then the statement is true. But simple market theory states that by instituting a zero mass transit fare, the market will be increased. The important point is that not a single statement exists in the REASON article about the subsidy to automobiles, the competitor to mass transit, nor the laws requiring private enterprise to subsidize the automobile!

32) "Fixed-rail system cannot be rerouted as people move." ---There is no need to do so, because additional developments add, rarely subtract, to travel patterns. (See reply to Collins on same point.)

33) "Preautomobile forms"---The use of this term throughout the article as a substitute for guideway transit portrays the lack of the most basic knowledge on the subject by the authors. The Key System electric trains (see picture in Conflict of Transportation Competitors ) were built in 1937-1939, well after automobiles were around, and used modern articulated technology. The decision to use trains was made not by government bureaucrats, nor by university professors professing transportation knowledge. It was made by people out to make a profit. Did these people regret their earlier decision? No. As late as 1946, they purchased trains and trolley buses. After the takeover by GM in 1946, the liquidation of the system commenced, including destruction of tracks on private right of way (the A-1 line) the same year.

The Key System owners were by no means the only people deciding it was more profitable to use guideway transit than buses. Many privately owned transit operations bought PCC type streetcars, which was designed in the late 1930s. This streetcar is used not only in Europe to this day, but also in Pittsburg and Philadelphia today after 50 years of operation! Yet, all the privately owned, unsubsidized systems where they were used were acquired by GM, and they were liquidated after the takeovers, often after only a few years of operation (for example, San Diego, 1949). All eventually became publicly owned. Were PCCs preautomobile forms ? Hardly.

Guideway technology has continued to advance, including chopper controlled propulsion power regeneration during braking and conductorless fare collection, but this is not the forum for discussing transportation technology. The point is, the people best qualified to select the technology, those putting their money on it, selected guideways. The fact that all the transit operations have since gone into public ownership is unfortunate, but the bureaucrats who select guideway technology today cannot in general be accused of making a bad decision. If it weren't for GM, most private transit companies would have continued to exist, and would be making the same decision. Attacking bureaucracy is fine, but let's not assume the bureaucrats make a bad decision 100% of the time.

Why did the transit company stockholders and owners sell? In the case of the Key System, the price paid by GM for Key System stock was over 600% of the previous going price. People sold, to the plundering of those who didn't (who owned 36% of stock), because 1947 was the last year for paying dividends as a result of the GM engineered financial catastrophe (see details in Conflict of Transportation Competitors ). Why did GM offer so much? The profit to GM for the same dollar investment in mass transit was probably over 10 times that which could be reaped by other transit investors. But this was not by running the systems more efficiently, but by liquidating them. In essence, the economics is analogous to a water bottling company doing a hostile takeover of a piped water company, and ripping up the pipes. Then, the government subsidizes the transport of bottled water to an even greater extent. To further lower water prices (of trucked water), government forces all property owners to place huge water tanks, even for those using their own well or a neighbors well water. In this analogy, the fact that the cost of storage tanks is more than the cost of laying pipe is not considered, just like the fact that one required parking space costs more than a transit pass is not considered. [See articles on parking, enclosed.]

An additional point regarding fare collection: conductors (the fare collectors) were as inefficient as tolltakers and stopping to pay toll every mile or so for an automobile, or the checkout line at the supermarket. Yet, government only forgave the automobile the necessity of paying. Modern technology makes fare collection very efficient, for both automobiles riding on roads (as described in REASON) and passengers riding on transit.

34) "But the overwhelming and universal success of the automobiles as the travel mode of choice means that preautomobile forms cannot be recreated." ---First, the automobile is the travel mode of choice because of automobile subsidies and laws requiring automobile accommodation; because GM's liquidation of guideway transit destroyed both the efficiency of transit and its customer base; and because often there is no other choice to choose from as a result of the previous reasons. Second, preautomobile forms is meant to be an inference that guideway transit technology is obsolete, a false innuendo. Third, in California alone, guideway transit has been brought back in Sacramento, San Jose, San Diego, and LA, all of which had their transit system liquidated by GM. The statement that it cannot be recreated is obviously false. Fourth, the authors fail to consider that a significant percentage of the population is unable to obtain a driver's license. Their promotion of the automobile as the utopia of transportation ignores this important fact.

Frankly, I am appalled that both the authors can have such a strong bias that it overcomes REASON despite their education.

For Mr. Hayward's article, The Growth Brokers, the following points are made:

35) "The chief cause of the calamitous congestion gripping the state, however, is not growth itself but bad government at the state level. Put simply, California stopped building roads 10 years ago, as a deliberate policy of Gov. Jerry Brown" ---First, the spending for roads under Dukmejian was less than that under Brown, a result of economics. Dukmejian was pro-road subsidies, but revenue didn't increase that much (thanks partly to my effort) while costs increased.

Second, the implication is that decreasing government road construction is bad government! I thought REASON favored reducing government! Let's get government out of the road business as much as possible. On existing roads, all but 2 lanes can be sold while still retaining property access. All freeways can be sold outright, since right of access is not a problem.

The start in this process is to stop all government new roads. Is that bad government, to quote the author? If these roads are truly economical, then why does no private company engage in the road business in California, as for example, fareways instead of freeways? Private toll roads are legal in California (not in some other states). The government subsidy to transit is not the reason, since the automobile industry already has over 80% of market share of California urban and suburban trips except in San Francisco.

Third, as Ms. Scarlett points out in her article "The Seduction of [Government] Planning", government planning is inefficient, and damaging! Why should the government decide where to build a road (the question asked is never "should it be built?", but "can money can be procured?"). It not only effects adjacent land use development, but government roads are themselves on valuable land; land that can be put to more efficient uses if the question ever becomes asked "what is the most efficient usage?". That question can only be answered by a property owner if the land is privately owned. LA's freeway interchanges alone would probably generate a great increase in regional economic vitality if they would be sold, along with the freeways, to private concerns. These potential new owners might, for example, keep 32 feet for a guideway system. This system can even go through buildings ---there's no exhaust fumes, little noise and it's safe (since it does not rely on humans for steering, and has anti-collision features keeping vehicles apart). They can sell the remaining land (about 90%, more if easements are obtained to go through buildings) for high density development. Most of the developments' customers, employees, tenants and condo owners would patronize their transit system. The guideway can even transport freight during wee hours (as was done by Pacific Electric and most other private transit systems using quiet, non-polluting electric locomotives), thus helping to get trucks off the public roads. This freeway privatization scenario would increase economic vitality, increase transportation capacity (guideway transit has the capacity of several paralleling freeways), increase average travel speeds (at least during rush hour) and decrease air pollution! [Contrary to pro-freeway propaganda, freeways increase air pollution, primarily by increasing the number of automobile trips and the average trip length. Details will be provided by me on request.]

Additional note: The author mentions builders' fees. He might have added that much of these go toward subsidizing the automobile transportation system (even so-called toll roads in Orange Co. are mostly paid by property owners, in addition to "donating" land to the state so that they could get a building permit). The property owners of a development need the freedom of choice to decide whether they want to spend their money for road usage, for guideway transit fares (which does not need roads), or for neither.

Transportation politics

The transportation arena is probably the most unfree market we have today. Most mass transit advocates are aware of the absence of free market principles, of direct and indirect subsidies and of laws requiring automobile accommodation, and the need to eliminate these subsidies and laws. Strangely enough, free market proponents, including REASON Magazine, for the most part, are not. Let's educate them!

Any transit advocate reading Mr. Collins' article will immediately be turned off, and rightfully so! If Mr. Collins' article were to be taken as representative of free market thinkers, than the obvious deduction would be that we are a bunch of hypocrites. For your information, I and others tried to dissuade the recent petition drive by the Planning and Conservation League for a ballot initiative for a $3B state bond measure to pay for guideway transit capital costs. They were not successful, but REASON's unREASONable attacks on mass transit, as opposed to attacking its government operation or subsidy, does not make my job any easier.

REASON needs to laud privately owned, unsubsidized mass transit, because it is the only form of transportation complying with the philosophy promoted by REASON (excluding new forms not yet implemented in California). Neither alternative (a) or (b) does. REASON also needs to expose the unfree transportation market. There has not been a single REASON article on this unfree transportation market (to my knowledge). Why not? I have sent REASON a number of articles (in CALIFORNIA TRANSIT), several of these were already printed in the Santa Clara Libertarian. An easily documentable subsidy, and its effects, is that of parking requirements. A special issue of CALIFORNIA TRANSIT on this topic was sent to you over a year ago. Another good choice would be Stanley Hart's well documented article Huge city subsidies for automobiles, trucks also sent to you over a year ago. Can articles on these topics be published in REASON?

As an editor of newsletters since 1982, I have had a policy of 1) distributing all major articles for comment by several people knowledgeable on the topic, and 2) obtaining the oppositions' literature and even interviewing them (to alleviate rebuttal as much as possible, plus the undecided politicians need to be persuaded). Judging only from the evidence of the above four articles, it can be stated that REASON does neither. Regarding the transportation market, it is important to note that I am not the opposition to free market and to the elimination of government regulation, I am the proponent! It is REASON that turns a blind eye to the government subsidy of automobiles and government regulation requiring automobile accommodation. Worse, REASON actually attacks private enterprise trying to compete with it. Considering what REASON Magazine has stood for, this is outright hypocrisy!

Four incorrect beliefs by many free market advocates, including REASON Magazine, are:

A) Streetcars, subways, trains, or, in general, guideway transit (ground transportation that is not steered) is contrary to the free market. ---These are forms of transportation technology. They have nothing to do with markets! A refrigerator likewise has nothing to do with markets, even though its manufacture, sale or use can be subsidized, monopolized, taxed, regulated, prohibited or left to the free market.

B) A government's decision to implement guideway transit is contrary to the free market. ---Here, there is a confusion between the technology of guideway transit and the subsidy for mass transit. Let's put this confusion to rest, right now. Assuming a given subsidy amount to transit, would it not be better to get the most bang for the buck? The answer is yes, unless one advocates that government expenditures should be wasted. (Do I hear "yes"?). Once this point is conceded, the attack on government operated guideway transit falls apart. No, this is not advocating government subsidy or government operation (remember, that is a given). And there may be certain operations that are exceptions. But no general attack can be made on guideway transit, unless, and there this logical exception, guideway transit is consistently more expensive than bus transit. Is it? No.

Guideway transit expenses can be separated into operating costs and capital costs. Operating costs are almost always lower than for buses. This has repeatedly been shown to be true, from the 1930s and 1940s PUC reports, from the operating experience of the private companies prior to GM's takeovers (probably the most believable of all!), and from recent operating experience of the transit operations. The general rule is this: once capital costs are paid for, guideway transit is cheaper than buses, and attracts more transportation customers.

Lower operating cost means that it would be illogical to convert streetcars to buses (unless the goal is to sell automobiles). But what about the large capital expense of building new guideway systems? Guideway transit can still come out cheaper than buses when the capital expenses are amortized. It has to be on a case by case basis.

Not only direct costs, but also patronage attraction needs to be considered. A recent study (Transportation Research Board report 1221) shows that guideways attract about 40% more customers, other factors being equal. (This validates the intuitive feeling that streetcars are more fun than buses.)

Air pollution needs to be considered, in line with recommendations that appeared in REASON (The Environment by Jo Kwong, June 1989) for using the market to control air pollution. Buses pollute, not electric guideway transit. Electric guideway transit needs to be attributed a negative pollution cost. Furthermore, guideway transit is much more attractive than buses for automobile users, encouraging them to voluntarily leave their cars at home, further reducing air pollution.

C) The automobile/road system is not subsidized (and roads are not government operated?) ---Far from it. Turning a blind eye to this subsidy (and operation) not only makes transit subsidies look worse, it causes great harm in achieving the goals of free markets. It is well known that lack of free markets lowers the standard of living. But since we all have limited time, energy and money, it pays to concentrate efforts for freedom where it would be the most efficient. The unfree transportation market has more impact on our lives than all the import tariffs combined, yet many free market advocates, including REASON, ignore the big paycheck and concentrate on the penny pinching. It doesn't make sense.

D) Mass transit and freedom are opposites, just as conformity is opposite to individuality. ---General Motors doesn't make it any easier with their propaganda that a car is equivalent to "freedom". At first glance, there seems to be some truth to it, although in a perverse way, since they liquidated the only viable unsubsidized alternative to cars (other than human power): streetcars, electric trains and trolleys. Upon a little thought, GM's freedom can only be had by paying a levy, to GM and related interests. Is that freedom? No. Freedom is being able to choose to take a streetcar, if one wishes. Freedom is being able to choose an alternative to hassling with car repair, car payments, car washing, keeping it filled with gas, oil, water, air and fluids, and being a chauffeur to family members. Freedom is being able to choose to take the streetcar to and from a party, without worrying about getting a little drunk. Freedom is being free of bodily harm caused by others, a less likely event now that GM liquidated the safest form of transportation. Freedom is being able to breathe clean air on your property, without GM-caused air pollution trespassing into your lungs, and those of your children.

Four correct beliefs by many free market advocates:

E) Transit operations need to be privatized ---Definitely. The Train Riders Association of California showed that bus operations in the Sacramento Valley area cost roughly twice as much for a government operated system as for a privately operated system. Most transit advocates support privatization. Even transit districts are starting to privatize ---witness LA area's SCRTD recently forming Foothill Transit Zone to enable private companies to bid on running 14 of its 56 bus lines: "The purpose is to save money and provide more adequate and responsive service." Savings are immediate ---the fare is 85¢ instead of the current $1.10.

But note that privatization is not the same as subsidization. Privatization means that the transit operation is sent out to bid by private transit operating companies, with resultant cost savings and better service.

F) Transit subsidies need to be eliminated ---True, but the question is when. It must be considered that what was once a private company, unsubsidized, eventually became both government owned and government subsidized, after GM destroyed both its efficiency and its customer base. The transit companies also had owned much of the property under their tracks, realizing another goal of free market advocates.

Other factors also played a part in decreasing customers for transit (despite a population increase) and increasing them for automobiles: government subsidy for automobiles and government requirements for automobile accommodation. The subsidies are not only direct payments, like property taxes and developer fees paying for most roads (including expressways!), but indirect subsidies. These include traffic police time, increased drainage costs (since rain doesn't absorb into the ground where there's asphalt), air pollution damage costs, the cost of automobile accidents, lost productive use of property when land is used for roads, traffic signal lights (often $1/4 million per intersection), electricity costs for more street lighting required when roads are widened for automobiles, and even school crossing guards.

In order to relieve automobile traffic and parking congestion, city councils acted in ways that actually caused further increases in automobile usage, and, for different reasons, discouraged transit and bicycle usage. The solution to automobile congestion is to discourage automobile usage, by charging demand pricing as described in REASON. Instead, cities passed ordinances requiring property owners to provide plenty of free parking spaces. This not only provides an artificial incentive for car usage, but causes buildings to be sprawled out. Even worse, low density zoning laws were instituted in almost every urban and suburban area for automobile "traffic mitigation" purposes. But sprawl development is very damaging to transit ---service is spread thin and less frequent. The longer average travel distance also detracts from bicycle usage.

By eliminating laws requiring automobile accommodation, much of the efficiency of transit will return, by doing nothing more than allowing the free market to operate in land use. By eliminating automobile subsidies, transit can charge a higher price for its service, and reduce its subsidy. Because transit has large fixed operating costs while small incremental costs per passenger (even for bus operations), it would not be difficult to bring the operation into the black. For example, San Diego's trolleys have a farebox return between 90% and 100%; and would be profitable except for two paralleling freeways, and other paralleling roads, that are free.

When should transit subsidies be eliminated? For three reasons, the answer is after eliminating automobile subsidies and laws requiring automobile accommodation: 1) the magnitude differential of the subsidies (both public and government enforced private) dictates that advocacy time and energy needs to be spent on the greater one, 2) the ultimate goal of unsubsidized, private company operation, and with the additional goal of operating on its private property, would be less likely met if transit systems were immediately liquidated (as a result of insolvency), and 3) considerations of freedom, not the way GM defines it, but the freedom to choose the travel mode, to be free of bodily harm caused by others, and the freedom to breath clean air.

G) Transit subsidies are (often) a form of welfare ---Unfortunately, transit has become so bad that in many areas most of the people taking transit are those that don't have a choice: welfarees, retirees, handicapped (e.g., poor vision), those for other reasons unable to get a driver's license, students, or those just simply poor. But it must be remembered this so-called welfare, in the past, was provided by private companies, and at a profit!

What happened? Transit involves a large fixed cost, and small incremental costs per passenger. GM both destroyed the efficiency of transit and its customer base, thus greatly increasing the cost per passenger. But market conditions should have eventually returned the previous state of private transit companies providing transit, given a free market. However, because of the enormous government subsidies to automobiles, and laws requiring automobile accommodation, there is no free market in transportation.

In the past, many private transit companies were able to compete in this unfree market by making use of guideway transit, which has lower operating costs and is much more attractive to customers than buses. Today, even using guideway transit is seldom enough to be in the black (but still is generally more cost effective than buses). Why not? Roosevelt's make-work road construction programs, which ignored a competing private source of transportation, was just a start. Since the second world war, government has greatly increased its interference in the transportation market. As the number of automobiles mushroomed, laws requiring parking, low density zoning, and growth control were enacted in a vain attempt to solve traffic and parking congestion. As already described, they hurt transit in more ways than just taking away customers.

The bottom line is that transit does not need a subsidy in a free transportation market. In the present unfree market caused by government, transit will simply disappear without a subsidy. This is what differentiates welfare for transit users vs. welfare for foodstamps (for example): Government is at fault for causing one problem, not the other. Welfare for transit is simply a partial correction of a government wrong. Even foodstamps can fall in that category, as when the government confiscated the source of livelihood of Native Americans. While foodstamps in this case may also be considered welfare, they certainly are nothing more than a partial compensation of a government wrong.

Questions of mobility and of freedom are at stake for those unable to use automobiles. For a minority, GM's method of obtaining freedom of mobility is unattainable: 22% of Los Angeles' population (16% state wide) do not have driver's licenses, excluding those under 10 years of age. GM, and government subsidies to GM automobiles, nearly ended the principal alternative method of obtaining freedom of mobility: transit. Even bicycling and walking has become difficult because of government enforced sprawl development. The destruction to transit would have been complete, if it were not for the government taking over GM's transit operations and subsidizing it. While the solution is undoubtedly a return to the free market, until this does occur on a large scale, considerations of fairness and freedom dictate that transit subsidies should remain. While it can also be considered welfare, it is a partial compensation for a government wrong.

H) Transit subsidies should not be increased. ---Because of the low incremental cost per passenger, a significant subsidy reduction per passenger can be realized by increasing passengers. (A first approximation is that it costs about the same to run a train or other guideway operation, no matter how many people take it. The San Diego-LA Amtrak route now turns a profit, as a result of increasing passengers.) Much greater increases in transit passengers can be realized by eliminating subsidies to automobiles, and laws requiring automobile accommodation, than by increasing subsidies to transit. There is empirical evidence that transit usage in many areas will as much as triple just by eliminating the parking subsidy alone [see CALIFORNIA TRANSIT special issue on parking].

The importance of benefiting transit (and the economy) by eliminating automobile subsides and repealing laws requiring automobile accommodation is demonstrated by comparing the transportation situation of the U.S. with other developed countries. Of 10 West European countries plus Canada and the U.S., the U.S. has the highest passenger subsidy, yet the lowest transit usage. Of these 12 countries, Switzerland has the lowest transit subsidy yet has some of the finest transit systems in the World. This is summarized in the table below.

Transit subsidy per passenger for USA and Switzerland, and the modal market share.

------- % of all urban and suburban trips ---------

Subsidy per passenger























Obviously, subsidy is a minor factor in transit usage. Even the per capita subsidy was less for Switzerland, about 60% of the U.S. level.

Major factors are subsidies to automobiles and laws requiring automobile accommodation. Switzerland generally has no parking requirements or low density zoning. The important point is the dramatic difference for all transportation modes: 14 times more bicycles, 3 times more walking and 6 times more transit. The laws requiring automobile accommodation helps GM and related interests in more ways than just giving them customers that would have preferred using transit. In addition, these transit systems would probably make a profit if it weren't for the Swiss government's subsidies to their competition: roads and freeways.

As automobiles continue to increase in number, political pressures are exerted for increasing parking requirements, low density zoning and growth control. The public does not perceive their effects: that these actually promote more and longer distance automobile usage, and that these discourage transit usage, lower its revenue, and require a greater transit subsidy to keep the same level of service (or suffer service cutbacks and further losses in riders and revenue). Free market advocates (at least those in REASON) have also not recognized their effects. But continuing a facade of ignorance will achieve the exact opposite of the results desired, because political pressures will be brought to increase subsidies to transit.

This pressure is brought on by a public support for transit financing that, at least in California, is greater than that for roads. Numerous opinion polls show that the public views greater subsidies for guideway transit not only as much more deserving than road subsidies, but as a solution to traffic congestion. A recent one for the Bay Area (July 1989) shows "rail lines" received the highest "most supported" score of all transportation modes, receiving 37% (vs. 19% for freeways), and freeways received the highest "most opposed" score, receiving 34% (vs. 9% for "rail lines"). (This is why in recent California sales taxes for roads, they include a small percentage for guideway transit and conduct the campaigns as benefiting transit: a lie.) The public now recognizes that all freeways will eventually become congested ---which they often do the day they open. (Although free market and transit advocates know this congestion would be solved by demand pricing.)

Both free market and transit advocates have the same goal for transportation: the goal which was achieved in the past by private enterprise, receiving no subsidy. A secondary goal is the use of private right of way, which can be private property, leased aerial space or purchased subway space. What form of transportation technology will the transportation companies use? Would it be traditional guideways, automated guideway transit (the ones in Las Collinas TX, Tampa FL are privately financed private ventures), fareways (private toll roads using non-stop fare collection), or all of these? While we can make calculated guesses, the only people truly qualified to decide are those willing to put their own money on it. Let's work together to achieve it for a second time!

Rectification of errors in the four articles

I expect that REASON will rectify the errors listed above. I think the best way is to publish another article that supersedes and corrects the existing ones. A rebuttal with the above points would not work effectively in a letter to the editor. I have already written an article (enclosed) for a newsletter on this same topic, and am willing to make the modifications needed for the change of audience, including eliminating local interest sections. I will make available to REASON Magazine, at no cost, Conflict of Transportation Competitors. Many parts of this letter can also be incorporated for the change of audience, for example, the sections on correct/incorrect beliefs of many free market advocates, and the real reason for subways (inefficient street usage).

I have mailed copies of this letter with the enclosures to the four authors rebutted: Mr. Craig Collins, Mr. Peter Gordon, Mr. Harry Richardson and Mr. Steven Hayward. My complements go to Ms. Lynn Scarlett on her article "The Seduction of [Government] Planning", and mail a copy for her also.

Recommendations for the future

In the future, it would be most beneficial to all concerned if REASON submits transportation articles for comment to people who have both expertise in the area and are libertarians, as for example, myself, since I have been a transit and bicycle advocate for 13 years, have written extensively, and have political accomplishments. For example, not only have I been successfully leading the repeal of bicycle prohibitions in Santa Clara County, but I and a few other officers of the California Transit League caused the defeat of Dukmejian's $1B bond measure for roads in 1988! It failed by 300 some odd votes, undoubtedly as a result of $50,000 worth of radio messages that we put out state wide.

If you have any questions, please call me at 408/294-0694.


Akos Szoboszlay

Craig Collins, Author
Peter Gordon, Author; University of Southern California, Univercity Park, LA CA 90089
Harry Richardson, Author; University of Southern California
Steven Hayward, Author; Claremont Economic Institute, 250 W. 1st, Suite 220, Claremont CA 91711-2712
Lynn Scarlett, Reason Foundation
Steve Alexander, Chair, Libertarian Party of Santa Clara County, 2156 The Alameda, Suite B, San Jose CA 95126
Jeff Smith, Editor, Santa Clara Libertarian; 2156 The Alameda, Suite B, San Jose CA 95126
Sarah E. Foster, Editor, California Libertarian News; 777 Terrace 49; LA CA 90042.
Cato Institute; ATTN: Transportation Economics; 224 Second Street, SE; Washington DC 20003.
The New Republic; ATTN: Transportation Editor; Box 56515, Boulder CO 80322-6515.

Conflict of Transportation Competitors
California Transit, special issue on parking
Mac disk contain this letter and Conflict of Transportation Competitors (please keep)

I wrote five more letters to Reason Magazine, and made a number of phone calls, requesting corrections or a rebuttal, but to know avail.

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