Ownership of Public Transport
Public transport is an essential service to the well-being of society. An efficient, reliable, and affordable public transport system is fundamental to the quality of livelihoods and the effective movement of people and freight, which is at the core of the relationship between the society and the economy (Pettinger, 2019). However, the debates on whether the government or private companies should own public transportation have always been inconclusive. The paper will discuss the benefits associated with transport ownership by each entity and the shortcomings in each case and use the insight to demonstrate why government ownership still prevails. Although government ownership of the transportation system is characterized by corruption and gross inefficiency, this is still the best option to counter the dangers posed by the total privatization of the public transportation system.
Historically, the government has always been involved with the transportation sector because they either own most components of the transport system and have a high level of jurisdiction on all levels of the existing modes of transport (Veeneman & Mulley, 2018). Transport services are essential to virtually every aspect of the economic, security sector, social and political activities, and thus, most governments consider it imperative to control the transportation sector (Pettinger, 2019). As a significant stakeholder in the public transport system, the government plays an effective role in formulating restrictive policies concerning the operators of the public transport systems. Therefore, the government breaks any existing monopoly in the transport sector by allowing free operation of multiple companies and thus giving the public many alternatives for transportation (Pettinger, 2019). Most transport policies have been formulated to control the inherent monopolistic tendency of many transport modes. In the past, unrestricted competition in the transport sector has led to market dominance by a company, therefore, achieving close to monopoly power. The government has served a significant role in breaking these tendencies since such an incidence would translate into many issues affecting the public, such as access, availability, and overcharging of transport services by monopolized services.
However, government interference in transport services has been disappointing in many countries. Corruption by the officers in charge of overseeing the effectiveness of the public transport system has been a barrier to efficiency in many countries. The breeding place for corruption has always been limited accountability by most government offices (Sieber, 2012). This has then translated into misappropriation of funds, poorly maintained transport infrastructure, and eventually gross inefficiency in the government-owned transport system. Corruption has been mapped to reduce a country’s growth rate by 0.5 to 1.0 percentage every year (Sieber, 2012). Besides, the state’s efficiency in managing public transportation is usually compromised by competition of resources by other sectors. Government interference in the transportation sector is also characterized by restrictions on management freedom due to public service norms and procedures.
The outsourcing and privatization of essential services such as transport functions to the private sector are at the heart of the libertarian party reform. The new state of the business that the liberals envisioned is such that most (if not all) of the public transport systems are run and managed by the private sector (Veeneman & Mulley, 2018). The major argument for this approach is that, while politics steer the state-run transport systems, the private control function would solely be privately oriented, which is achieved by total accountability, reduced corruption, and with minimal political interference (Amos, 2004). Besides, this would reduce the burden on public entities, the government, and the taxpayers at large. In some cases, privatization of the transport sector has been an unavoidable instance, such as the British airways in 1987 and, most recently, the British railways. The private sector also embodies significant transparency and limited corruption in comparison to state-run transportation systems. This would translate into increased efficiency of the privately managed transport systems. Whereas most transport systems can essentially be made competitive or contestable, a natural monopoly would eventually unfold (Amos, 2004). Some companies would dominate the transport sector with no neutral body, such as the state, to regulate the charges and policies. On this vein also, there would be a significant risk of foreign companies dominating the local transportation industry, which would be disastrous for any country’s economy.
To this end, it is evident that both government and private forces have both desirable and undesirable consequences when managing the public transport system. Government ownership breaks the monopoly in the transportation sector and formulates policies to maintain the transportation sector in desirable states. However, low accountability creates ideal conditions for corruption with the ultimate consequences of gross inefficiency. The private sector, on the other hand, has lower rates of corruption, which increases its overall efficiency. In this case, however, there are increased chances of monopolistic restriction, which may have far-reaching adverse consequences on a country’s economy. Government ownership, although with significant shortcomings, breaks such monotony tendencies, which may have distributive impacts on a country’s economy and therefore maintain the economic and social balance (Veeneman & Mulley, 2018). The libertarian party’s idea of dropping all government agencies influencing the transport sector, therefore, fails to account for the bigger image of the risks posed by unmonitored monopolization of the public transport system by the private sector. Sealing the corruption loopholes would slash the gross inefficiency in the government-owned public transportation. Conversely, private companies could be contracted to provide their workforce and operate in some transit routes and assigned necessary resources. This would render the transport sector at the hands of the government, with significant input of the private sector, which would improve the overall efficiency of the transportation system.
References
Sieber, N. (2012). Fighting Corruption in the Road Transport Sector: Lessons for Developing Countries.
Pettinger, T. (2019). Pros and cons of government intervention – Economics Help. Retrieved 12 June 2020, from https://www.economicshelp.org/blog/151818/economics/pros-and-cons-of-government-intervention/
Amos, P. (2004). Public and private sector roles in the supply of transport infrastructure and services: Operational guidance for World Bank staff.
Veeneman, W., & Mulley, C. (2018). Multi-level governance in public transport: Governmental layering and its influence on public transport service solutions. Research in Transportation Economics, 69, 430-437.