Sunday, 5 July 2009

Just privatise them?

Ken's right. Can we now, please, at least five years too late, renationalise the railways. After the National Express disaster, it is time to acknowledge that PFI is bollocks and that private franchisees for public infrastructure amounts to nothing more than a grant from the state to shareholders in the good times and socialised loss in the bad ones. Sorry to the crude language and bald assertions, but this waste of money by the ideologically challenged really annoys me.

Update. Felix Salmon has a fascinating piece on the costs of driving in cities here, and how sensible congestion charging combined with fare revisions can make everyone's travel more efficient. While I am not convinced that fixed pricing is the right approach - letting investment bankers who can afford it drive while less highly waged workers are forced onto the subway - there are clearly some very interesting results in the work Felix describes. The right approach would be a variable tarif based on income, so that the congestion charge depends on how much grief you cause other people, how much carbon you emit, and how much you earn, but that is politically impossible.

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2 Comments:

Blogger Dave said...

"The right approach would be a tariff based on income...". That seems like an odd position to me. It suggests that you don't understand economic efficiency, but I'm sure you do.

I guess you are concerned about the equity implications of a transition from "free" road travel to priced road travel. But the equity implications depend upon how you allocate the proceeds of the congestion charging, not how you price congestion. That is: how you cut the cake, not how you bake it.

An efficient and equitable approach would be to have a fixed tariff in order to maximise the congestion proceeds and then allocate the proceeds fairly.

12:28 am  
Blogger David Murphy said...

I know this is standard economic theory, and that it probably maximises efficiency. I just don't like the social policy implications. For me, ethics trump economics, and having the rich pay more is (again for me) good ethics. This is all relative of course, and I have little doubt this will never happen.

7:48 am  

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