Tuesday, 22 September 2015

Jeremy Corbyn: Nationalising the Railways is Stupid and Wrong

The Bearded Sage has announced his plans over the weekend to gradually return the railways to public ownership. Cue much orgasm from the Hard Left, to whom state ownership of everything is mana from Heaven. But, as ever, nationalisation of the railways is a bad policy.

1. Based on False Premise
Corbyn's implied assertion is that he wants to take Britain back to the Golden Age of Rail, which he intimates was when the rail network was nationalised. However, this is total nonsense. The Golden Age of Rail was arguably when rail was a new technology, developed in the early 1800s. The entire rail network was in private ownership from its inception in the 19th century until 1948. Far from being the Golden Age, British Rail (the nationalised company) oversaw an unprecedented decline in railway use, as the country transitioned to automobile transport. So if you want to go back to the Golden Age of Rail, the economic model to follow is the one we've got now.

2. Assumption of Public Sector Efficiency
The assertion also follows that the rail system was so much more efficient under British Rail than it has been since the privatisation. This is hogwash. Trains regularly ran late under British Rail, and passengers were entitled to no compensation. Furthermore, the train traffic under British Rail was significantly lower than it is today - as previously mentioned, British Rail oversaw a huge decline in rail usage. Probably because people were sick of their shit and bought cars instead.

If anything, the railways are more efficient and more fair to consumers today than they have ever been. There is simply no case for change.

3. Myth of Price Controls
Another oft-touted argument for returning the railways to public ownership is the idea that that ticket prices can be fixed by the State. Again, this is actually bollocks. The price of a ticket is ultimately determined by the cost of operating the train, plus a profit for the train company. Let's assume that the State runs the railways on a non-profit basis. Well, that would reduce ticket prices initially, although the absence of price competition and the efficiencies that ensue would probably render the difference negligible. The only factor then would be operating costs.

As operating costs increase (salaries, health & safety, maintenance, repairs, investment in new rolling stock etc.) then so do the ticket prices. The Government has very little control over these factors - if new rolling stock need to be bought, then they need to be bought. If something needs fixing, it needs fixing. These are the costs of running the concern, which are effectively passed onto the consumer via the ticket price.

Now, of course, the Government could keep ticket prices artificially low, but then wouldn't receive enough money to cover the running costs of the railway. In order to stop it from becoming dilapidated and unsafe, it would therefore require a bail-out, courtesy of John Q. Taxpayer. This results in either higher taxes, spending cuts elsewhere, or higher inflation if the Government recklessly just borrows the money. In this manner, every taxpayer in the country ends up paying for something that only a few taxpayers use.

And where is rail usage the highest? Ah, yes - London and the South East. Who uses it the most? Commuters into London. So El Corbyno advocates a policy where shelf-stackers in Middlesborough have higher taxes, lower-quality public services and/or higher prices to fund a transport perk for commuters in Hampshire?

Wrong, wrong, wrong. The people who use the railways should pay for them, and the only way to ensure that is to keep them in the private sector, using price competition to drive through efficiency.