Lessons from Seoul's controversial privatized subway line

The rest of Seoul's transportation infrastructure is so well managed and universally liked that the problems with Line 9, taken in that context, make it look hysterically bad. I have to say that the labour issues sound awful, but as someone from the UK, the profiteering and overcrowding issues sound quaint and almost laughable. There's no doubt that this ownership structure was setup as a grift for juicing citizens. But from the perspective of a user, I would describe line9 as "more overcrowded at rush hour than the other lines" but on the flipside, the rolling stock and stations are newer and nicer...

The proposed price hikes were a scandal at the time and public outrage was tangible. But the relevant context here is that the Mayor of Seoul is second only to the president, and usually it is someone with aspirations to run for president. There's things a Seoul Mayor a cannot do if he likes votes, and one of those is piss off everyone who uses the metro (which is everyone).

I think with privatisation, it just depends on the specifics. If the system can be privatised without bilking the ridership, compromising safety, or abusing the employees then, by all means, have at it. But if you're writing from the US, or the UK, especially if you work within the transportation system, it's understandable that you would get ranty when you consider how badly privatisation has fucked things up there.

I was so confused of the flow of writing and one sentence made me understand what just happened. "I grew up in Seoul in the 1990s before coming to the United States, so I missed all of Line 9’s construction and operations." The media in South Korea have criticized any privatization of public service for so long time. Trust me I have lived in this country more than 25 years. Even though author asserted that "I will list all sourcing as best as I can, all from media outlets in South Korea (of both left and right political leanings) I have vetted and determined as legitimate." Yes, the sources of articles are from both left and right leaning but the thesis of this post is villifing semi-privatization of Line 9. To me, the cause of Line 9 chaos is not from privatization but from the intervention of political campaign in this problem. Conservatively expected passenger numbers can go wrong, but they must not make mistakes on back-up plans, and they just did make mistakes on purpose for the sake of winning election.

> I have a hard time following this article because it's so obviously one-sided and ranting.

Same. The author also discloses his own biases against privatization.

Given the other reports here of well-operating metros run by MTR, could it be that this one failed because of french technology and involvement? (side questions: are these other MTR metros also join ventures with french companies?)

I read on his blog that 2 french companies were involved: Veolia and RATP. During a short 2 weeks visit to Paris in 2019, I was shocked how bad the metro was, even when compared to NYC which has a similar aging infrastructure

I was not expecting something as shiny and comfortable as in DC, but the seats were minuscule, the stench overpowering at times, and the general decay made me feel queasy about health risks (even pre COVID!). I then learned what RATP means for Parisians: "Retre Avec Tes Pieds" ("Walk Home")!

I also note a pictures captioned as "Line 9 employees on strike in 2017, holding the sign “Hold the French corporations responsible!”" so given my personal experiences and the employees signs, I'd first suspect french incompetence over "privatization can't work".

The Stockholm metro is run by MTR, but they don't own it.

They're only staffing the trains and platforms, not to different from e.g. a police station paying a sub-contractor to sweep their floors and manage the reception desk. The police station is still mostly a government run thing.

For example, MTR doesn't invest any money in new lines/tunnels, or buy/maintain the trains.

I don't think it's fair to compare it to this Korean line, it's not apples to apples.

Yes MTR here in Hong Kong is quite respectable: the subway works well, the price is cheap, the company redevelop a lot around stations, it's a model of proper corporate management of public infrastructure.

The only snag they faced in my 7 years here is when they were caught in the crossfire during the protest: at first they would help evactuate protestors during police intervention but then the police asked them instead to help them capture them which led to widespread destruction by protestors.

My own anti protest stance is mostly due to the wanton destruction of MTR properties which I found distracted from the original issue by the angelic democrats turned subway destructors.

Wikipedia said:

> MTR Corporation Limited is a majority government-owned public transport operator and property developer in Hong Kong... > Owner: Hong Kong Government 75.09%, Others 24.91%

So I think MTR is still owned by government?

As far as by privatization goes, I don’t much care for it with busses. But I’m having trouble seeing the issue here with the train, other than the financials which seem favorable to the corporation.

Yes, it should be noted that if you live in somewhere like the UK or the US, the "bad" lines, 9 and 2, are technical and organisational marvels with no parallel in your country. From the end user standpoint they operate amazingly well. They're cheap, clean, safe, reliable, convenient. They're crowded at rush hour. Line 9 is so crowded at rush hour that there was this one time, a few weeks ago, that I wasn't able to get on a train and had to wait 3 minutes for the next one. That's how bad it is. ¯\_(ツ)_/¯

I don’t mean to be rude, but your theoretical “1 monopolistic player” goes against practical experience.

Let’s look at how privatization works in for example Europe.

One (private) company owns the infrastructure (the actual railways) and private companies pay them for usage.

The same private companies make bids on operating a particular bus or rail system, in some cases competition is open, and anyone can start a new long distance bus service.

So you have (for example) Dutch companies running bus systems in the UK or Sweden, or German railway companies running trains in Denmark or the U.K.

Japan has multiple lines that go between the same stations that are privatized. Works perfectly fine there.

Well Singapore also has privatized subways (though recently one of the operators has been re-nationalized) so we will see what happens as a "natural experiment"

If network time were bid on at time of usage, would that begin to move things in the right direction?

I think what the author points out is that there’s a problem with leadership and accountability here. Subways are an essential city utility, and citizens expect them to meet certain standards (capacity, pricing, etc.) and then will elect political leaders who are accountable to those standards. If subways are publicly run those leaders have some authority to make changes, as well as to be held fully responsible by voters if things don’t work. (Not saying this system is perfect either.)

In this particular flavor of privatized system, citizens still have the same expectations of functional infrastructure. (A subway line is, after all, a city project even if the city chose to outsource it to private interests.) So they will elect leaders to address perceived problems, except that the leaders won’t have full authority to change things. At the same time the private firm won’t have full control over pricing and won’t be incentivized to improve service. Hence the example of a private line wanting to raise prices and being blocked by the city, but the city leaders being unable to take direct action to improve the service itself.

Presumably there are ways to implement private provision of public services that don’t end up like this. I would imagine the key is not handing control to private interests who can’t ultimately be held accountable. This article illustrates one of the bad outcomes.

No, it was that the government accurately estimated ridership, then unrealistically lowered that estimate later. The government was incentivized to lower this estimate because it lowered the amount of revenue that had to be guaranteed, and the builders were happy to use those estimates to cut costs and lower capacity. The case for privatization is partially built on avoiding state liability and accused inefficiency, and that very mindset motivated the lowered estimates that destined the entire project to failure.

So people got a incapable subway line when it could have been (and was) foreseen by everyone. The "solution" of raising prices to lower usage is not a good outcome for people whose taxes are guaranteeing revenue, and additionally, if raising prices didn't manage to lower ridership, it would be a reward.

In the end the government is liable for massive expenditures to fix or cover the problems of the "private" line. What was gained by privatization in this case, rather than just directly building the line, other than the guaranteed loss of any profit from it? It's another case of privatized profits and socialized losses.

well the author complains "the employees per every kilometer of rail" is low...

But the author doesn't actually mention '신분당선 (new-bundang line)', which doesn't even have train drivers (automated)...

And the main reason line9 being crowded is: it goes through gangnam! of course it's crowded.

Lastly, the stations are built to accommodate +2 extra cabinets (6->8), which is the lowest hanging fruit... (even the screen doors installed for those cabinet places) ...so "economically infeasible to add more cabinets" doesn't seem to make sense to me...

depends on your goals. when prices are raised then the poorer segments of the population, who are usually the ones that need public transport the most, may not be able to afford to ride.

it's one thing to raise prices to cover costs, but quite another to raise them to reduce congestion.

Have you ever considered having more cars to deal with capacity vs raising prices?

In Britain the government solicits bids to run the trains, and what a shambles it is. For two months, the wife was commuting weekly between Cambridge and Edinburgh, and the train wasn't on time even once. And then we move to Edinburgh, also by train, and everyone gets to take the bus from Berwick onwards, because the engine of the previous train had actually caught on fire, blocking the tracks.

It seems that with large, complex infrastructure even switching operators doesn't work, because with a switch you lose all the informal knowledge needed.

The canonical answer is of course the 1997 Asian financial crisis. The crisis greatly strained governmental and municipal budget available for pretty much every public infrastructure and the 1998 Act on Private Investment in Social Overhead Capital Facilities (사회간접자본시설에 대한 민간 투자법) was introduced to fill this gap. The problematic minimum revenue guarantee stems from this law, originally intended to encourage private investment, and while the law was subsequently fixed in 2006 many infra projects built around 2000 including the Seoul Subway Line 9 still suffer from its consequences.

That makes sense, but it's a moving target. The company will optimize for the metrics at the cost of everything else.

Private but paid by public funds is always a tricky place to fall into.

Some things only make sense as a unified system, like, there can't easily be as many train lines and stations as there are potential competitors, because the value of the good is greatly increased if all the stations and lines link up together and aren't redundant.

Profit has to come from somewhere. In some cases, it can come from neglecting to maintain the infrastructure that the investors (usually the taxpayers) paid for to put you in business. Once the system collapses under the neglect, everyone is held hostage because the system is vital and then taxpayers are forced again at gunpoint to bail out the system. In the mean time, the profits of the mismanagement have been taken and are effectively unrecoverable.

The "politics" that comes in here is when people refuse to be robbed in this way and, instead, insist in a return on their investment (in the form of a functioning public utility). This is a consequence of democracy (fortunate or unfortunate, depending on your perspective).

Things have different properties so they can (and should be) treated differently.

What things should be nationalised and what privatised has been extensively argued. We also have a lot of real world examples of what happens when you nationalise companies. The UK nationalised all its heavy industry and most of its light industry after WW2. It didn't go well. French nationalisation of its finance sector in the 70s didn't work great either. The things that are commonly nationalised are those that aren't huge, enormous, obvious, fast fuckups. Some countries do this better, some worse. But mostly it's kludges based on experience, not principles.

The nature of some things require a monopoly or quasi-monopoly. In those cases, there is an argument for public ownership.

Every subway line is effectively a monopoly, because for most people one line is much closer/more convenient than the others. If there's one thing that's worse for consumers than a public monopoly, it's a private monopoly.

> if it's all publicly operated, then what's the incentive to keep improving things since your only stakeholder is the public and you're a monopoly anyway.

What is the incentive of a private company to improve anything when they get a monopoly?

Most of these companies have a high incentive to let the infrastructure rot, cut on maintenance cost and let tax payers chip in huge invoices when - years or decades later - it breaks or becomes unsafe. And they create the illusion of 'efficiency' as not maintaining things reduced the cost of operation, meanwhile the government was paying for that.

It's a complex situation.

> All over Europe and in much of the rest of the world, public transit is operated by private companies. (Usually with great results.)

Speaking for Europe, primarily Germany: The infrastructure is usually public (or via a company, owned by the state). Local transit planning is usually also public and only (sometimes) operated by private companies, which bid on a tender offered by the state. Busses can be often private, but train (tram, subway) operation are more primarily operated by some public entity (even more so if the ones operated by other countries are counted).

Long distance transit can have private entities even creating their own schedules, but most service is performed by publicly owned entities (with rail).

There are many companies owned by public entities (even competing), which I'd count as public.

I think almost are all long distance busses are private.

In Austria and Switzerland, the top countries in regard to rail things in europe, almost nothing is private.

> There’s no way governments would start nationalizing tens of billions of dollars worth of infrastructure in a time where finances are already stretched.

There is: the central bank printing press goes BRRRR

I can tell you that line 9 is nothing like the the privatised transport system in the UK (I have lived most of my life in UK, and 7 years in Seoul). It costs about 65p to ride, 75p for the express train, it's clean, safe, comfortable, modern, spacious. The stations are accessible, welcoming, and full of conveniences. Transferring to or from a bus is free. Ticketing is contactless, convenient, uniform across the whole country.

It's like a cheap, modern, less cramped version of the best lines on the tube.

All the other lines are mixed private/public and they run very well.

The story here isn't as simple as "public good, private bad, mixed worse." As with many things in life, it all depends on the actual details.

The obvious counter example is Japan's hundreds of privatized railway companies compete with each other in numerous local, regional and national markets.

Funny thing is, most of the tube was privately built. It was bought out by the government in 1933 after the market failed.

And for a more recent example the PPPs for maintenance of the tube set up twenty years ago.