A little story from the French railways via The Man In Seat 61:

Competition works, who knew? Trenitalia is now competing with SNCF on Paris-Lyon: Overall bookings (SNCF+Trenitalia) up 20% on Paris-Lyon, up 106% on Paris-Turin-Milan. The average fare paid on Paris-Lyon has fallen by between 23% & 30%.

Note that (1) This replicates the experience in Italy: Competition WORKS for inter-city high-speed, but not necessarily for local/rural/commuter; (2) SNCF is nationalised, but this did not mean low prices. Without competition, SNCF priced to maximise revenue, nationalised or not.

That last sentence misses an important part. SNCF is still pricing to maximise revenue, even with the competition. It’s just that to maximise revenue it has to cut prices and so shift the demand curve.

Still, that is interesting isn’t it? Both SNCF and Trenitalia are state owned organisations. They’re both being forced to compete in markets without also picking up that grubby capitalism bit. The result is that more consumers gain what more consumers desire - that’s what that 106% rise in ridership is.

There’s also that point that such markets don’t necessarily work everywhere for varied technical reasons. Which is fine, not even we, arch neoliberals that we are, insist that all markets, everywhere, are all the time optimal. We do insist they should be used where they are though.

For example, it’s not necessary to sell the NHS to Americans to make it better. We have a sneaking suspicion that wouldn’t work anyway not least because who would in fact buy it? But where markets are possible then let’s have them - they produce that increase in consumer welfare by providing more of what consumers want. Which all sounds very sensible to us to be honest.

It could well be that there are parts of it that won’t work - say, the demand for a valid credit card before getting a jugular stitched up at A&E. OK, that’s fine, let’s not have markets at that specific point then - but let us have them where they are optimal. Say, elective surgery for hip replacements, perhaps that sort of thing.

At the very least let’s do what markets are really, really, good at which is to experiment and allow us to find out what is the optimal arrangement.

Seriously, if markets can improve the Italian train system - with rather less unpleasantness than the last man who managed to make them run on time - then we must be well within the envelope of things that markets can optimise.