Many of the nation’s transit agencies are raising fares and cutting service, ostensibly in response to escalating costs and falling ridership. While all American transit systems are heavily subsidized by taxpayers, the recent acceleration in their deterioration has gone beyond the ability of state and local governments to cover the widening deficits, thereby forcing frequent fare increases and service cutbacks.
This need not be the case: Introducing competition and competitive contracting into a system now dominated by union and operating monopolies, combined with a shift in reliance from rail to buses, would go a long way toward curbing costs and increasing productivity. The potential for improved cost-effectiveness has been proved by the contracting of the entire London bus system as well as the bus and rail systems of Stockholm. Until such reforms are adopted in America, transit systems will continue to be financially unsustainable.
By Wendell Cox & Ronald Utt, Ph.D.