Nationalising the railways might be popular but perhaps not for the reason people think
Owen Jones tells us that Labour should, to beat the Greens, announce some really popular policy like re-nationalising the railways. And this might well be popular but perhaps not for the reason that people are assuming:
But there are three clear commitments Labour could offer to win over Green defectors. First, renationalise the railways. It would cut through like few other policies, and probably prompt some voters to break out in spontaneous applause. Polling demonstrates a publicly owned railway has near-universal appeal, winning over well-heeled Tory commuters and Ukip voters alike. But it also has a totemic quality about it: a clear demonstration that Labour has taken a decisive stance against the untrammelled market in the era of market failure.
The real complaint, we feel, about the railways is not over who owns and or runs them. It's over the price of them.
It's common enough to see people complaining that UK ticket prices are among the highest in Europe. And they are, as a result of a deliberate political decision. More of the revenue to keep them running comes from ticket prices and less from direct subsidy than in most other countries. And that's the correct decision too. There's Britons who don't use a train from one decade to another: difficult to see why they should be taxed to provide cheaper transport for others.
And that's why nationalisation won't make much difference. Because doing so isn't going to reverse that decision that, by and large, people who use trains are the people who should pay to keep trains running. The only way ticket prices will come down is if the taxpayer gets dunned for it. And why should we?
On the merits of competition in government services
Perhaps we should be having more competition with government services? A businessman who built his own £325,000 toll road to bypass roadworks is to close the shortcut after the local council invested £660,000 to finish repairs five weeks early.
Mike Watts, 63, claims he will now not make a penny and will lose out on a profit of several thousand pounds after Bath and North East Somerset completed the work ahead of schedule.
He became the first private individual to build a British toll road in more than a century when a crucial road in Kelston, Somerset, was closed by a landslip, leaving locals with a 14-mile diversion.
The roadworks were scheduled to last until Christmas, which would have given Mr Watts and his wife Wendy, 52, a healthy profit on their £325,000 investment.
But instead the A431 Kelston Road between Bristol and Bath will re-open tomorrow, meaning he couple will just break even after spending £150,000 to build the road and £150,000 on upkeep.
That he won't make a profit is no doubt distressing to him but it's of no importance at all over public policy. And there's more than a suspicion (look, your humble writer is a Bathonian and he's absolutely convinced that there's no suspicion at all, this is simple fact) that the speed up was done out of spite. Can't have the council being made to look bad or incompetent, can we, people will wonder what they're paying their taxes for! But again that's of no real import here.
What is important is that the landslip has been corrected, the public road opened 5 weeks earlier than it would have been without the competition. And yes, even if is simply spite that drove that decision the consumers are all better off as a result. So, more competition in public services please: for we are supposed to be running this whole economy and government thing in order to benefit the consumers.
Unfare Competition
It’s not really a huge surprise that Brussels, the home of EU bureaucracy, has recently banned ‘cab app’ service Uber from the city. The Brussels court unashamedly declared the company “unfair market competition” to the town’s two (yes, two...) taxi companies, and drivers face a €100,000 fine if they use the app to pick up customers. This isn’t a one-off, either; Uber’s had a bumpy ride from the start. Across the USA and Canada they’ve endured cease-and-desist letters, impounded cars, sting operations and suspended trading. Taxi drivers in Chicago are suing the city itself over them, Berlin’s slapped on an injunction, and in France enraged taxi drivers are getting physical.
Uber hit London in Summer 2012. Given the range of ventures on the scene- Black cabs, mini cabs and fleets of Addison Lee, as well as apps like Kabee and Hailo – Uber’s operation should be uncontroversial. Not so. Instead, the Licensed Private Hire Car Association (LPCHA) has called upon TfL to ban cab app services for failing to conform to relevant legislation, citing , uninventively, public safety concerns.
Reading all of this Uber come across as renegade cowboys, tearing through cities kidnapping passengers. Reality is far more boring.
Uber’s critics deem them an unlicensed taxi company (or as per the Chicago lawsuit, an ‘unlawful transportation provider’), who blatantly violate regulations. In actual fact, Uber are a new kind of entity: an app-based, ‘logistical’ intermediary. They use GPS to connect passengers with self-employed (and in the UK, licensed) drivers, and handle payment through a registered card. Their trick is that in only ‘matching up’ independent drivers with riders, they don’t count as a taxi operator.
Additionally, in the UK private hire vehicles can’t ply for trade like registered taxis and must be booked in advance. It seems that a rider requesting a pickup through Uber counts as a booking, allowing a nearby driver to accept a request and be there in minutes. In these ways it does seem that Uber and other like it have thrown away the rulebook, but only because they’ve been ingenious enough to innovate around it. Uber’s model also brings other innovations too, such as price discrimination through ‘surge’ pricing, truly flexible work for drivers, and a highly responsive rating system of both drivers and passengers.
There’s no wonder that incumbent players are worried. But it’s sad, if not surprising, that anti-Uber sentiment comes not from governments angry at rulebreaking but businesses threatened by fresh thinking.
State intervention imposes huge costs and barriers to entry on the taxi industry (think of London cabbie’s ‘The Knowledge’, fixed taxi fares, and America, where taxi medallions have sold for over $1m) - scuppering competition and innovation. Reform of the industry with its often cozy cartels is long overdue.
Companies like Uber show other firms how they can improve their game. In fairness there is an argument for ‘leveling the playing field’; it’s not one actors want to use. When Uber works around (or even flouts) a jurisdiction’s regulation, other players can use Uber’s success as evidence that restrictions are superfluous to providing a good service, and therefore unfair on them.
Instead of demanding more relaxed regulation, however, incumbent actors have decided which side their bread is buttered, and would rather keep the status quo than improve their service. Instead of competing, they cling to the regulatory chains binding them and wail for others to be shackled by them too. They might cry the cry of public safety, but it’s the safety of their market share which they’re really concerned about.
Sadly, vested interests have had far too much success in this area. Where Uber hasn’t been banned completely, lawmakers have often caved in and introduced new restrictions. Frequently, this doesn’t stop protestors. And it isn’t just Uber who has such woes. Companies with similarly innovative models such as AirBnb and Aereo have also faced an uphill struggle of acceptance.
TfL should disregard LPCHA’s demands. It certainly isn’t up to the government to protect old industries and vested interests, but sadly so many other cities clamping down on Uber adds false weight to their claims. It’s beyond obvious that consumers, not regulators, and certainly not business rivals should be the judge of an effective (and safe) service. That said, the fact that cab app services are making so many competitors uncomfortable is a pretty good indicator that they’re doing something right.