Hacker News Reader

Comment by aga98mtl | Hacker News Reader

I'm confused by the article. The main problem is that the line is too popular because the government under estimated ridership? How does this have anything to do with it being privatized?

When they tried raising prices the city fought them? Should you not raise pricing when you have more customer than capacity?

View on HN

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.

In this case, it’s presumably (at least in part): raise prices to be able to pay for more rolling stock that the government doesn’t want to finance because part of the benefit will accrue to the private operator.

If a government doesn’t want a private operator to be able to turn a profit on an incremental investment, that government shouldn’t be surprised when they decline to make that investment.

I agree that in the long-run, one shouldn’t raise prices one public transit just to curb demand (although in the short-term, that’s better than running an unsafe-to-the-public operation).

right, i was specifically focusing on the idea to raise prices to reduce the number of people wanting to buy a ticket. if prices need to be raised to cover costs and keep a reasonable profit then that is a different issue. in that case, if the government doesn't want prices to be raised it needs to subsidize.

They failed immensely when they didn't raise the subway fare alongside the minimum wage earlier in the last few years.

That was the perfect time. It's incredibly cheap still.

My city does this with public roads… in the good old west coast USA.

sure, but that's the point. it is the city making that decision, not a for-profit company.

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

Reply on news.ycombinator.com