How to privatize public transport (not only) in Prague, how would a private system work? How to go to it? What is the purpose and purpose of privatization and deregulation of the various sectors? You will find the answer to these and other questions in this article.
Prague's public transport is a system of subsidies, a system of regulations, a de facto system controlled by the city.
By decision of the city, it has an almost monopoly position in the provision of services Transport company Praguewhich is owned by the city. As a team, the company's employees have great strength - together they can "block" traffic throughout the city. Their bargaining power vis-à-vis the city, the state and others is strong. It is a classic interest group that is well organized and can easily promote its interests at the expense of other citizens.
How to take this power away from them? Quite simply - privatize public transport. Not only is it possible, but it will most likely be a cheaper system. A strike by employees of one company will not have the potential to block the entire operation of public transport.
According to many, the problem with the privatization of public transport lies in the fact that it is a so-called "network industry“. A classic example of a network industry is, for example, the gas industry or energy in general.
In the network industries, many claim, there is a tendency to the so-called. "Network monopoly". After all, no one will build two gas pipes next to each other or two power lines. It is easy to create a monopoly in this sector, which will not be eliminated - that is why, according to some economists, it is necessary to regulate the network industry and "ensure" competition in them or completely control them.
We have a de facto system of complete management at the public transport in Prague today. The system of "ensuring" competition works more or less in suburban transport, where timetables are created by ROPID (under the control of the city), which then hires carriers to run according to these rules. He rents them entire lines.
The first system of complete management it creates a monopoly as such. The second system of "competition" creates a legitimizes the cartel, so the consequences are almost identical. Neither system is sufficient. How to create an environment for the functioning of standard market principles in public transport?
To answer this question, we must ask: how to privatize the current system? Next we can add: how will the new system work? We will answer both questions in the text.
It should be noted that any deregulation process (privatization) of anything controlled by the state or its parts (city) is a process artificially created and dictated - in economic jargon, it is "human design".
Thus, any process of deregulation and privatization is full of the same mistakes as the system of state regulation as such. If we swear at the privatization process, we swear at regulation.
If we want to get rid of the mistakes of state proceedings through privatization and deregulation, the aim of these processes should be the liquidation of state proceedings in the given sector, not "other state proceedings". It should be a process in which the state deprives itself of some powers.
Thus, the process of deregulation and privatization cannot be successful as a result if the state merely exchanges one power for another. It is not about "deregulation" and "privatization", but about "re-regulation". In this case, the privatization process cannot even take place, because the privatization of one is paid for by the nationalization of the other.
The aim of deregulation
The aim of the deregulation and privatization process should therefore not be to "establish an optimal state". This cannot be achieved through privatization and deregulation, just as this cannot be achieved through state proceedings (as privatization and deregulation is state proceedings). If we give privatization and deregulation the goal of establishing the optimal state, we can never get out of the tangle of regulations and state management, because state management (deregulation) cannot achieve the optimum. It is a vicious circle.
So what goal should we give privatization and deregulation? It should be about a process in which we create the conditions for the functioning of the "human act", spontaneous market mechanisms, which correct the unequal system created by the state to the optimal state.
The aim of privatization and deregulation is not to improve the functioning of privatized companies or better functioning of services per se, but to free up space for individuals to act.in which better performing businesses and services can be created. None of us know, what companies, what services and what industries it will be. But what we do know is that these will be businesses, services and industries that arise from voluntary exchange, that is, businesses, services and industries that will be desirable and effective - that is, for the benefit of all parties involved. That these will be industries, companies and services that would not have arisen if the system of regulation had remained.
Simply put, The goal of deregulation and privatization is to make the system of forced cooperation from a position of strength (state) he got out of the way of a system of voluntary cooperation created on the basis of all-round benefit (market). Otherwise, it is not about privatization and deregulation.
How to privatize Prague's public transport?
In order to be able to carry out this "way out of the way" with Prague's public transport, the whole system is literally needed smash into atoms.
Let's get rid of the Transport Company
Who knows how big DPP, as should be, when it was created as a "human design" by the decision of the city officials and not as a result of the market process? Kdo Does he know if such a company should exist at all?
Nobody knows it. Thus, logically, there is only one way to privatize a moloch called DPP: to tear it to pieces.
The smaller the pieces, the better. We can, for example, sell individual depots with their own property (buildings, cars) in publicly accessible auctions.
Why the depots? Because I sucked it out of my finger. Since the standard market does not work in public transport, no one really knows which parts to divide the company into. The DPP arose from a power decision. Due to the non-existence of market prices in public transport, no one really knows anything in this field. Possible the debate over whether to sell individual buses, entire depots or individual "divisions" of the company is thus a mere frog dispute.
We can see similar sucking from the finger in state industries almost constantly. Defending "why like this" is then just a rhetorical exercise.
By selling surface transport depots at auctions, we achieve two things:
- First: several bus and tram operators with their own fleet and assets will be created who can compete.
- Second: The auction will ensure that the given depots will be won mainly by those who value them the most, ie those who are determined to invest the most in acquiring depots. We can assume that these will want to get the most out of public transport.
It is clear that the greatest interest will be in the depots that will contain the most cars, the best assets or will be (for example, in the case of trams) connected to the backbone lines. From this point of view, it may seem that the owners of "large" depots will be favored over the owners of "small depots".
However, we must also realize that large depots were purchased at a higher price (they are more expensive) and their management involves higher costs. The auction will thus ensure a fair market valuation of the assets.
Sale of stops
Stations adjacent to depots would naturally be sold with depots. But what about the others?
Again, we can resort to auctions. Large busy stops could be sold in separate auctions, smaller ones in some "sets" or also separately, as desired. For really small stops, however, I would lean towards "orchards". Why? Because it would involve fewer auctions, which means lower costs for the whole process as such. And what should those sets be like? I don't know. However, I believe that many would suck out interesting and creative variants.
Subsequently, we can get into two situations: some stops would probably be owned by some owners of depots, some not. But it wouldn't have to matter at all.
Stop owners who do not own depots would probably charge a fee from carriers for the possibility to stop and cash in at them. It would be a negotiation between station owners and carriers that would create timetables. Negotiations would, of course, be driven by the vision of profit: so at peak times, connections would naturally be strengthened, because it is in the interests of all: carriers, stop owners and passengers.
Owners of large stations, which is used by a large number of passengers, would be in a certain superiority to carriers and rather, they would dictate the arrival times of the individual lines.
Owners of small stationswhich uses fewer passengers would be in completely the opposite situation. Smaller stations are less attractive to carriers. In order for people to use smaller stations, their operators must offer as many attractive connections as possible - rather, they would be subject to the requirements of carriers in terms of the arrival time of individual lines.
How would a timetable come about? At the busiest stops, their owners would determine the arrival times of individual buses of individual carriers. Carriers would then set times for owners of smaller stops that are "on the way" from the depot to the large stop or from the large stop to the large stop.
Stop owners might charge different fees for late arrivals or no connections fines. The owner of a large stop could also own smaller stops, which he could request. The result, however, is that the stops used by the most passengers would be handled the fastest by the largest number of connections. From large busy stops, you would logically get to many smaller stations.
In case of frequent late arrivals also, there is nothing easier than offering the problematic carrier time to other carriers. It is thus very likely that it would be better transport with fewer late arrivals.
If the carrier, for example, did not build on smaller stations due to delays in order to get to a large station in time, it would damage its reputation and would be more difficult to get new stops for new connections or to keep stops that it already serves. The price that a problematic carrier would pay for stops would probably also be higher, as station owners would charge "risk premium“, As is the case in all other sectors.
It is not in the carrier's interest to be unreliable.
And if the owner of the depots also owned stops? It hardly changes anything. Its connections would have the stops free of charge and foreign carriers would pay for the opportunity to serve that stop if they were interested. For busy stations, it would be in the interest of the owner to provide an opportunity to stop other carriers as well, as he would probably not be able to serve the stop himself. If he could, it wouldn't be a problem.
If he is unable to do so and still does not let a foreign carrier stop, there is nothing easier for the competition than to arrange his own stop "on the street next door" and take over the passengers for the first carrier.
Privatization of tram lines could seem the most difficult - however, the opposite is true.
All you have to do is divide the lines between the various points of contact: stops, junctions, large junctions, etc., and then sell these pieces (as other than at auctions) - even in conjunction with the stops. Again: the carrier and the owner of the stop / track do not have to be one person, as already mentioned.
And what if the tram only needs to cross a line, but not stop at a given stop? Of course, tram line owners can charge fees for using the line, for stopping at stops, and so on. However, it is still customary today for the tram to stop at stops that it "meets" on the line.
If it were more optimal for lines and stops to be owned by different persons, this would happen (lines would be purchased without stops), because with the auction the privatization of assets would also open up a free market for those assets as such.
It is of course advantageous for owners of various lines to have connections with as many other line operators as possible: The more connections, the greater the reason for the carrier to use the track The higher the prices for the rental of stops for the lines and the higher the charges for crossing the lines, ie the greater the profit.
It could also be expected that there would be a more significant separation of roads and tram lines as such, which in turn would lead to safer operation.
How to privatize the subway? Sell individual lines with stops. Stops whose operation is too expensive for metro operators can be rented or sold. That would depend on the new owner.
It is actually the simplest thing for the whole privatization of public transport.
It is quite possible that it would all be completely different. Be that as it may, it is now quite clear that completely private public transport is not science fiction, but a real thing. And it is very likely that it would be at least as well-functioning as it is today.
Sure, you ask: how much would it cost us?
Honestly: I don't know. The ticket might cost more than CZK 32, but I dare say that less than the approximately CZK 80, how much does this ticket cost in full price (with a city subsidy). Competition is the most powerful "cutter" of prices.
You can also argue that the whole system is too fragile and can easily break down. You are certainly right. That, however it is not an argument against privatization, but for privatization.
The whole public transport system is too fragile and complex to be managed from "one center", as it is today.
And finally: as a result, it would be the passengers who determined what public transport would look like. And that's fine, isn't it?
PS: I really like games like Transport Tycoon or Open Transport Tycoon. 🙂