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Comment by jacobsenscott | Hacker News Reader

You can't privatize competently maintained infrastructure.

most japanese railways are privately owned and operated and maintained, and turn a healthy profit

This is a lot more complicated than your pithy quote is making it sound. Japan has a mix of public, private, and quasi-private railways, and while many of them are profitable on a cash-flow basis, that's only because the government assumed (and passed to taxpayers) the majority of the debt of the former public railway entity (which was mainly from costs of construction) as part of the privatization program in the 80s and 90s. This amounted to something like 30 billion dollars that the companies didn't have to pay.

Yeah it's really interesting. Something like a substantial portion of profits come predominantly from the bullet trains and non-transportation businesses (like JR West Hotels). But not all regions are as lucky, so government assistance has still been called on.

Specifically about the bullet trains, they are absurdly efficient in speed, they had to outpace air travel. Absurd speeds incredibly early on, and to this day only really China has surpassed them in terms of nation coverage and speed - a dominance Japan held onto for a good 50 years.

Fascinating to learn about, but not so great to apply blindly to other places.

The Shinkansen is actually more expensive than domestic flights though. I don't think the people asking for HSR in America realize this; it's more convenient, more comfortable, faster up to some distance (because you don't have to go to the airport), and usually full, but it's basically business class travel.

The shinkansen is not equivalent to business class travel. Flights between Tokyo and Osaka cost roughly half of a shinkansen ticket, but that doesn't include transport to and from the airport. It also takes way more time to fly, including transit time to and from the airports.

The average person is willing to spend an extra 10000 yen to save 2-3 hours and the hassle of a flight.

Funnily enough, the business travelers I know in Japan actually take the plane, because it's cheaper for the company and they can keep the miles.

+1 - add in that they also get a lot of money from developing land adjacent to their rail lines, and operating things department stores, apartments, bus lines, etc. They don't get all their money from providing rail services.

Yeah, although IIRC some/many Japanese railways are still profitable even discounting the land development interests. Twitter trainman @380kmh has written about this but I can't find the thread right now.

It's just the private version of transit-oriented development[1]. It's a good way to align incentives. The railway increases the value of the land around the stations, so the railway company gets to enjoy some of that benefit. Having the most salient product/service as a loss-leader for the real money-maker behind the scenes is a very common business strategy. Hell, it's how American railroads got built in the old West. It's how London became Greater London.

Many governments seem to have forgotten this basic stuff ... they'll do silly things like keep restrictive low-density anti-retail zoning codes in the areas around train stations. And then they wonder why the promised benefits of the railway didn't arrive and people still drive everywhere. Or they won't see any benefit to pre-emptively expanding the network into new places because "nobody lives there", reversing cause and effect.

[1] https://en.wikipedia.org/wiki/Transit-oriented_development

I barely remember that, but that is how the old dos game A-train was based off of.

Which is why they shut down vast miles of their networks in unprofitable rural areas...

And that is why rail is so expensive in the States; transit decisions are not made on the basis of profitability.

(Note that in the case of Japan, some of these private rails were converted to "Third Sector" aka public-private rails, where they continue to be run by the private rail company under the financial subsidy of the local prefectures through which the rail line runs.)

> (Note that in the case of Japan, some of these private rails were converted to "Third Sector" aka public-private rails, where they continue to be run by the private rail company under the financial subsidy of the local prefectures through which the rail line runs.)

I'm sure there are some differences, but this is true for Amtrak in the US too

https://en.wikipedia.org/wiki/Amtrak#

> Which is why they shut down vast miles of their networks in unprofitable rural areas...

The Japanese countryside is ageing and depopulating. Any railway operator, public or private, has to face this reality. You can either shut them down, or reduce service, or subsidize them; all three are painful in their own ways, and all three are done in different places, depending on local conditions.

Furthermore, a line may be "unprofitable" on paper, but still be worthwhile overall because of network effects.

The rural decline is at least being managed with more rationality than the senseless Beeching cuts[1] (and at that time, British Rail was wholly under state control).

[1] https://en.wikipedia.org/wiki/Beeching_cuts

But there are still countless lines in use where you’ll see one person get off every 3 stops.

It’s sometimes insane how lines are kept running in Japan.

Right, those are "Third Sector" lines, where the stops or even the line itself are subsidized by the local prefecture.

Notionally private, but often the government is the biggest shareholder. And the tax and planning regime channels a lot of funding towards them. (Though the way I see it the problem is more the opposite: the US tax and zoning regime diverts a lot of public money to subsidise car travel, implicitly and explicitly, which means it undercuts fairly-priced rail transport).

Exactly this.

Tokyo Metro: 100% owned by the Government of Japan and the Tokyo Metropolitan Government.

Toei Subway: 100% owned by the Tokyo Metropolitan Government.

JR East: The vast majority of their infra was built before privitisation using cheap or free gov't money. Also, during their 100+ year build-out, the Japanese gov't would regularly favour their own national system over private systems (grants, loans, approvals, etc.). This gives them a huge economic advantage that lasts today.

Let's see Tokyu, Tobu, Odakyu, Hankyu, and so on. (though such private trains only profitable on metropolis.)

Keiratsu aren't truly private industry; they tend to have at the very least close political connections.

>Notionally private, but often the government is the biggest shareholder.

Better than British railways (and energy suppliers). Private companies with a government as the biggest shareholder. Just not the British government ...

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