What is the capitalist answer to rail passenger transportation being non financially profitable?

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11

In developed countries, rail transport is usually provided at financial loss, and needs to be subsidised by governments. In countries who have refused to do so (mostly on the American continent), passenger rail transport has become anecdotal and rail remains used for freight only, while in countries who subsidise their rail network (mostly on the European continent), rail transport has decreased significantly since the 1950s. Government subsidy leads to many problems such as the imposition of cost-saving measures on rail transportation companies, preventing them from doing their job well.

  • They are constantly looking for small, less profitable lines to close.
  • When it's not the line it's the individual stations that might be considered unprofitable and are closed.
  • They reduce the frequency of services, which by itself makes passenger trains much less attractive as the mean time of waiting for the train increases dramatically, which results in fewer passengers and an even less profitable line.
  • Even if none of the above happens, transportation companies might be unable to buy new vehicles and may have to maintain their service with old and obsolete vehicles.

However, rail passenger transportation is, from a purely engineering point of view, much more efficient than road transportation (both private vehicles and buses):

  • Higher passengers per hour theoretically possible on a given line. A road lane can have a vehicle at most every 2 seconds, so if we assume 1.5 per vehicle (optimistic figure) that's 2700 passengers per hour. Rail can have 500 passengers per train and 8 trains per hour easily, that's 4000 passengers per hour.
  • Because rail friction is smaller than that in pneumatic tires, the energy spent to transport each passenger is typically much lower (according to this wikipedia page Passenger transportation by rail requires less than one-tenth of the energy needed to move a person by car or plane)
  • Maximum speed much higher: a maximum speed of 115 km/h is usual between villages for regular trains; up to 200-300 km/h is common for high speed trains. In most countries cars can only go up to 80-90km/h between villages and 120-140 km/h on an autobahn, but even then traffic congestion makes such speeds rarely attainable, while traffic is planned in advance for trains and is a much smaller problem. (If, like in some countries, trains are running slower and/or traffic is poorly managed, that's because no effort was made and not an inherent flaw of rail.)
  • Much better safety: in Switzerland 2017, there were almost 18,000 people wounded or killed by road, only 57 people wounded or killed by trains (excluding suicides), this makes road 312 times more hazardous than rail.
  • Train passengers can perform another activity during the ride, an option which is limited in road transport, even for non-drivers, as the comfort and space available is much lower. (Unfortunately some trains can also be uncomfortable but this is due to bad wagon design and not an inherent flaw of rail transport.)
  • Rail transport is resistant to poor weather condition: fog, frost, snow, rain cause fewer problems than with road transportation.

Theoretically, by the mechanisms of economic freedom and concurrence, offer and demand, capitalism automatically finds an optimal solution. This does not seem to work for transportation, as the optimal means of transportation (energetically speaking) is not financially profitable and needs to be government-subsidised, while an extremely sub-optimal solution (road transport) is economically preferable.

What is the capitalist solution to make rail passenger transportation economically profitable again, like it used to be before road transport was a thing?

Bregalad

Posted 2018-09-26T08:33:34.147

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– Philipp – 2018-10-04T12:42:44.563

Answers

118

The idea that "trains are unprofitable" is quite a bit more complex.

First of all it's necessary to look at the main "problem" with trains: They tend to lead to natural monopolies. Setting up a rail network requires a lot of government involvement (otherwise you will never be able to get your hands on all the land you need) and once a rail network is set up it's practically impossible to set up a competing rail network. The result of this is that whoever controls the rails controls the entire market. This causes the government to always be involved with train companies, thus bringing with it the inherent government inefficiency (even though not involving the government at all would be worse, so it's not a case of government failure).

Next it's important to look at the primarily socioeconomical benefits (the positive externalities) of having a rail network. Having a strong public transport system allows skills to move more freely throughout a country and allows employment demands to be met more flexibly. This is especially important for people who are less economically well off. And beyond that trains provide a well developed electric transport option, thus keeping greenhouse gas emissions at a minimum. And also importantly trains are amazing at decreasing peak loads on important roads, thus it's often economical to invest a bit in train travel to prevent a lot more investments in a road network for those two peak hours a day.

The reason why trains failed in the US was primarily for political rather than economical reasons. Trains (and other public transport solutions) became "unsexy" politically, whilst at the same time car travel became extremely popular (linked to the "american dream") and subsidized. Both explicitly through investments in the road network and implicitly

Road travel is massively subsidised in the sense that the negative externalities of travelling by car, including the release of carbon dioxide and other greenhouse gases, are not fully offset, and most major highways—which cost tens of billions to maintain—are still free of tolls. [...] Petrol is cheaper than in Europe (mostly because of much lower taxes).

Source: https://www.economist.com/the-economist-explains/2013/08/29/why-dont-americans-ride-trains

So the real economical question would be: If all roads would be toll based to account for the road building costs + fuel would be properly taxed, how would that affect train travel? Right now train travel faces economically "unfair" competition in a lot of countries and that's without even considering the positive externalities that train travel brings.

David Mulder

Posted 2018-09-26T08:33:34.147

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– Sam I am says Reinstate Monica – 2018-10-03T20:18:41.633

I don't know if the situation anywhere exist. But if rail would managed like roads, it might change the whole picture. Roads are build and maintained by the government. And private companies can use them freely (or at a cost/toll on certain types of roads). Rail ten to lead to monopolies. Only because government allows it. If government would only be responsible for the tracks. Then private companies can put the trains on it. It is comparable to aviation where government controls the sky, but not the planes. – roel – 2018-10-04T08:20:48.727

1The comparison is a bit unlikely, @roel. The sky is pretty big, it's not that big a deal to have 500 planes using the same airspace, but just 10 trains using the same track is already going to be almost impossible because only one train can use the track at the same time. – Theik – 2018-10-04T13:43:15.367

There is another cost to consider (at least in the US): labor. My understanding is that at least until fairly recently, labor union contracts required the presence of a "fireman" on a locomotive. In the days of steam locomotives, a fireman's job was to feed coal to the steam furnace; but almost all locomotives have been diesel or electric for a long time. – David – 2018-10-04T16:29:24.503

@Theik and this is a particular issue in heavily travelled corridors, such as (in the US) Boston to Washington DC and San Fransisco to San Diego -- i.e. precisely in those places where population density makes rail more viable economically. – David – 2018-10-04T16:34:08.067

@Theik true and not true. Their is also a limit on planes per airspace. And tracks are split up in sections. – roel – 2018-10-04T17:07:20.740

118

Japan is a counter-example. Rail is profitable there, not least because the rail companies don't just run the trains. Train stations become hubs, often with a shopping centre built around them (owned by or in partnership with the train company), even parts of new towns. All this extra revenue helps keep the transport side profitable, and helps justify a high level of service by viewing it as a feed for the other profit sources.

user

Posted 2018-09-26T08:33:34.147

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– Philipp – 2018-09-28T09:15:53.200

7Similarly the Disney is the exclusive owner of one of the most traveled Monorail systems in the world (Walt Disney World Monorail system). Since it began operation in 1971, the system has had exactly one fatal incident in it's life time service (Though several emergencies with minor injuries) – hszmv – 2018-09-28T19:32:33.873

5One important difference between the USA and Japan is the geography. Japan is a very populated country with the major cities laying along the coast due to the mountainous areas in the centre of the islands. This makes it suited to the 1 dimensional travel of trains. Compare this to the USA which is large, not densely populated and is much more easily traversed over 2 dimensions. – Damien Golding – 2018-10-01T04:20:33.697

5@DamienGolding Your comment also highlights one area where there is still passenger train travel in the US: between DC and Boston via Baltimore, Philly, and New York. It’s a relatively densely populated corridor that is fairly linear, and also major stations are well served by local public transport such as metro/subway and bus lines. However, this is still a case where it only barely stays afloat via government subsidies. Air travel between DC and Boston can be cost competitive and faster while long distance bus lines are very cheap and popular. – Todd Wilcox – 2018-10-01T07:10:34.700

1Rail is definitely not profitable everywhere in Japan; did you mean "in Tokyo"? – fkraiem – 2018-10-02T01:40:21.873

1@DamienGolding much of Japan is quite sparsely populated. – user – 2018-10-02T08:14:12.500

@fkraiem trains are profitable all over Japan, especially in the Kansai region but generally everywhere. – user – 2018-10-02T08:14:14.953

@user You clearly don't know what you are talking about. Pretty much all train lines in rural areas lose money, and every year some of them are closed. And let's not mention the Hokkaido Shinkansen... – fkraiem – 2018-10-02T08:18:37.370

@user Pretty much what fkraiem said. – Damien Golding – 2018-10-03T04:19:51.660

@user Look at the financial statements of JR Shikoku and you'll know you're very wrong... – xuq01 – 2019-08-21T04:33:16.740

102

The answer is to stop subsidizing its rival: roads. You say that passenger rail stopped being profitable around the 50's or so: look up when the Dwight Eisenhower freeway project really hit its stride. Your tax dollars are hard at work building a vast, free to use (as opposed to actually free), and convenient transportation network.

While rail does have some limitations, most of them could be solved with technology and scale, both of which are beyond the resources of companies moving bulk materials at rock bottom prices against a virtually free rival.

For better or worse, we picked the winner in 1956. https://en.wikipedia.org/wiki/Interstate_Highway_System

(While this answer is incredibly US-centric you can pretty strongly see governments choosing rail or road, rather than the market, in most countries).

wedstrom

Posted 2018-09-26T08:33:34.147

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– Philipp – 2018-09-28T09:14:57.000

I feel like this answer was excellent up until the update. The discussion around government investment, monopolies and inefficiencies apply equally to roads and rail, so I think a brief mention would've been enough. Big brother and car sharing likewise are interesting issues, but don't seem to address the original question. – craq – 2018-09-28T19:24:05.750

1@craq I think you're right – wedstrom – 2018-09-28T19:43:35.027

It may be interesting to see if there are any studies of the costs, to the government, per pound of freight on the Interstate system vs the RR system. Or the cost, to the government, per passenger on highways vs on the RR. – grovkin – 2018-09-28T20:40:34.867

7The US also subsidizes air travel. – 200_success – 2018-09-29T22:48:23.293

1Roads are not free to use. (Except currently for electric vehicles, and bicycles most places.) You pay for the roads every time you buy fuel, and when you register your vehicles. – jamesqf – 2018-12-07T18:26:22.723

77

What is the capitalist answer to rail passenger transportation being non financially profitable?

The same as a capitalist answer to anything that is being non financially profitable; such as horse drawn buggies; or hand-written manuscripts; or film based personal photo cameras. The exact answer depends on economic circumstances, the options being:

  • Either completely cease investing in, and producing, the good due to lack of demand. For example, horseshoe industry basically died out once horses ceased to be a meaningful means of transportation/farming.

  • Or, if the demand still exists but is served cheaper by a substitute good/service, invest in and produce that better competing service. Examples are too numerous to list (digital cameras replacing film, cars replacing horses, pertinent to your question, commercial air travel replacing passenger rail in sparsely populated country like USA, etc...)

  • Turn into niche/custom mini pocket industry ("artisanal" goods of Etsy type, horse-drawn carriage ridea around New York City's Central Park, audiophile targeted turntables).

  • Reinvent your product so it becomes financially profitable, via new technology or process or business model. I can't come up with a perfect example of the latter at the moment but budget airlines (Ryan Air in Europe and Jet Blue in USA) come to mind.

rail passenger transportation is, in a purely engineering point of view, much more efficient than road transportation (both private vehicles and buses)

As other answers pointed out, that is not universally true. It is especially false in the large sparsely populated areas like United States of America, outside of Acela-corridor (and, ironically, Acela corridor is named that way... after a hugely profitable rail line) and possibly areas of California coast.

... capitalism automatically find an optimal solution. This does not seem to work for transportation, as the optimal mean of transportation (energetically speaking) is not financially profitable and needs to be government-subsided, while an extremely sub-optimal solution (road transport) is economically preferable.

OK, this way of looking at the problem can be addressed in one of two ways; depending one what your view of "energetically optimal" means.

  1. If it's just an engineering quirk, the capitalist answer is "who cares"? The objective value of being "energetically optimal" from engineering standpoint - even if true (as noted above, it isn't in most of USA) - is very small. If that's the case, capitalism did find optimal solution, it just isn't one that your own personal value function prefers.

  2. If "energetically optimal" is just another way of saying "lower negative externalities in the form of negative impact of high energy usage on the environment"; then the answer is to price said negative externalities (impact on the environment) correctly; if they are truly too high, their price will be high enough to make road transport less economically preferable. This is, for example, basically, the economic and political basis for carbon tax.

user4012

Posted 2018-09-26T08:33:34.147

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2

Within the USA, each of the megaregions has reasonably similar conditions as European regions, not only the Acela corridor and areas of California. European countries have decided to politically sponsor passenger rail even in sparsely populated areas, like in the Nordic countries or Russia.

– gerrit – 2018-09-26T15:19:09.673

3

See also my answer here debunking that geography has anything to do with this.

– gerrit – 2018-09-26T15:28:12.643

1@gerrit - yes, the key word here being "politically sponsor". What does that have to do with the question about "capitalist answer"? – user4012 – 2018-09-26T15:43:37.700

7@gerrit - your answer doesn't debunk anything. It just says "yes there are rail lines - which I will ignore 100% whether they are profitable or not - in diverse geographies". What the claim is (that you did NOT in any way debunked) is that geography - or more specifically, mostly population density - correlates with (and probably affects) profitability of the line, before subsidies. – user4012 – 2018-09-26T15:48:49.833

3

It does not have a lot to do with capitalism; the question somewhat supposes a false premise, namely that the demise of US rail is due to capitalism, which it isn't, as pointed out in wedstroms answer and in my answer. My linked answer points out that even where geographical conditions between the US and Europe are the same, passenger rail is far more popular in Europe — geography cannot explain the difference in popularity. Culture/politics can.

– gerrit – 2018-09-26T15:52:10.323

7Population density correlates with profitability, yes. That applies to both roads and railways. Lacking any situation where both compete privately in a fully free market where all infrastructure is privately owned, we do not know what the capitalist answer would be. I'd speculate that rural areas would depopulate even more than they do now if residents had to pay the full cost (+ private profits) to private companies for long stretches of rarely used roads. In all likelihood, the 50 km road to a village with 100 inhabitants would never be built in the first place. – gerrit – 2018-09-26T15:56:12.433

1@gerrit - that or they'd drive on crappy roads like they do in many rural areas today. I partly agree with you on status quo not being a capitalist solution, but you are forgetting about private railroads in 19th century – user4012 – 2018-09-26T16:00:41.770

1There were private railroads, but I don't think there were private roads? Until automobiles came around, privately funded passenger rail could compete with publicly funded roads due to the massive speed advantage, but when they lost that advantage, publicly funded roads won over privately funded rail (with the US and Canada now having a unique construction of publicly funded rail on privately owned infrastructure). Today airlines have a similar speed advantage, most routes would survive with zero implicit, explicit, or externalised subsidy since few can afford private planes. – gerrit – 2018-09-26T16:16:33.257

Re "...horseshoe industry basically died out...", you obviously aren't paying your farrier https://en.wikipedia.org/wiki/Farrier $100 per horse every couple of months :-) Not the best example of an industry that died out due to lack of demand.

– jamesqf – 2018-09-26T17:49:09.963

7@jamesqf He did say basically died out. Yes, the industry is still around, but it's a far more niche industry than it was when people actually used horses as a primary mode of transportation rather than mostly for leisure. – reirab – 2018-09-26T17:53:22.407

@reirab: May be a niche industry, but it's hardly a small one. It's like saying single-engine prop planes died out because of commercial jets. – jamesqf – 2018-09-26T18:45:09.710

2you are completely missing one crucial point, see @wedstorm ’s answer – törzsmókus – 2018-09-27T08:04:13.857

@törzsmókus - that answer completely misses the point that most roads aren't "subsidized". In my personal life, I spend about 3% of my driving time on Interstate Highways; the rest on roads that the federal government doesn't "subsidize" – user4012 – 2018-09-27T09:44:39.763

7@user4012 the roads are built with taxes, are they not? If you would have to pay for every mile you travel on a road not on your own property, your traveling might look differently. – Josef says Reinstate Monica – 2018-09-27T11:54:24.160

5@user4012 so your municipal or state government is subsidizing them instead? – Paŭlo Ebermann – 2018-09-27T21:54:48.397

@PaŭloEbermann - they tax the people driving on them (mostly, property tax) and use that to pay for the roads. It's far more of a direct pay for use than interstate highways. – user4012 – 2018-09-27T23:18:01.100

> most roads aren't "subsidized" even if this were true in a direct sense, the externalies would turn the bottom line to negative – törzsmókus – 2018-09-28T07:24:34.347

Too minor of a change to edit it in myself, but your link for "after a hugely profitable rail line" doesn't include the "a" at the beginning of after. – David Archibald – 2018-10-01T00:06:40.653

1State/County governments do not build roads simply for the sake of building roads. They build roads almost always for the simple reason that building the road will provide economic benefit to the State/County. In that regard, there's no such thing as the government 'subsidizing' roads. They are simply performing upkeep and investing in more roads using money that they only have thanks to those roads while at the same time pocketing extra for themselves. – Dunk – 2018-10-03T23:19:23.510

2@Dunk this could exactly be said for rails, so what. – törzsmókus – 2018-10-11T06:28:18.577

1@torzmokus - The 'so what' is that the government isn't 'subsidizing' roads and has zero relationship to trains. Governments build/maintain roads because the benefits gained by the people of the state are higher than the costs AND the politicians believe that money can't be put to other uses (such as more trains) where they believe an even higher benefit can be achieved. – Dunk – 2018-10-11T21:24:16.310

35

What is the capitalist solution to make rail passenger transportation economically profitable again, like it used to be before road transport was a thing?

There is no capitalist solution.

All extant capitalist systems exist in an environment of infrastructure for which construction and maintenance is publicly paid (road taxes count as public, users in densely populated area subsidise the ones in sparsely populated areas, the system thus relies on solidarity).

Privately owned roads are very rare. Entire road networks built privately from scratch do not exist. Therefore, the question on how railways and roads would compete in a purely capitalist environment is entirely theoretical, and not answerable based on the real world.

I would speculate that in a fully private system, both the road and railway networks would be much more limited than they are in reality. The 100-inhabitant village would be served by neither road nor rail, therefore soon become a 0-inhabitant village. With the road network much worse under a theoretically fully capitalist system, rail may be relatively more profitable for the rest. But as stated, this is speculation as no such system exists anywhere.

gerrit

Posted 2018-09-26T08:33:34.147

Reputation: 40 843

"You didn't build that." It was a baseless canard when the other person said it. – None – 2018-09-27T00:13:04.977

5Besides the cost of building roads, the cost of the land under them, particularly in urban areas, is a huge subsidy to driving. – Emilio M Bumachar – 2018-09-27T03:21:35.967

2@puppetsock I don't understand what your comment is referring to. – gerrit – 2018-09-27T09:42:35.400

2

@gerrit It's a reference to a 2012 campaign speech by Obama, where he said essentially the same thing you do in this answer

– JollyJoker – 2018-09-27T13:48:01.337

5@JollyJoker Well, that seems entirely correct, business depends on public infrastructure, to which they contribute by paying taxes. – gerrit – 2018-09-27T14:30:11.907

2@Emilio M Bumachar: Do you think railroads weren't subsidized? Look at land ownership maps in the US west, and you'll see a checkerboard pattern along major rail routes. The railroads were given every other square mile of land along their routes to subsidize construction. – jamesqf – 2018-09-27T17:17:01.300

11The 100 inhabitant village would be served by a road if maintaining road access to the village were worth the cost. I know of at least one instance where a private road was built and maintained several miles up the side of a mountain simply because the lady who's cabin was at the end of it was the best chef in the area and told the local loggers that she was getting too old to hike down every day to cook for them. If there's enough traffic to and from the village for a road to be viable, it will be built. If not, it won't be. Neither outcome is inherently better than its opposite. – Perkins – 2018-09-27T23:07:58.553

2@jamesqf Not all railroads were subsidized. And, interestingly, the ones that weren't were the ones that actually turned a profit without requiring ongoing suppression of competitors and/or grants and subsidy from the government. – Perkins – 2018-09-27T23:11:45.647

2This answer could be immensely improved by referencing sources. As it stands, it looks like it may as well just be an opinion of a random person on the internet. – Brythan – 2018-11-14T00:33:39.337

@Brythan True, I could look for statistics on what fraction of roads are publicly vs. privately owned, if anybody cared to dispute my claim that ownership is overwhelmingly public. I could also look for data on maintenance cost per inhabitant on densely vs. sparsely populated areas. The final paragraph is explicitly speculative. – gerrit – 2018-11-14T10:19:53.183

17

Just because governments operate passenger rail systems at a loss does not mean that it is an inherently unprofitable enterprise. It's just that governments have a legal monopoly on the industry, so private carriers can't exist.

I don't know enough about the history of rail transportation in Europe to say how it got the way it is, but in the United States they have AmTrak. AmTrak was started in the 1970s precisely because it had become unprofitable for private carriers to operate. So that kind of proves your point...

Except that in the U.S, passenger rail makes almost no sense purely because of geography. The capitalist answer was to abandon rail transportation because it's almost always better, cheaper, and faster to fly. Even though rail transportation may be more efficient from an engineering perspective, air travel (at least in the U.S.) is far more efficient logistically and economically speaking. Rail freight, however, is still big business in the U.S. because planes have limited cargo capacity, so there is still a niche that air travel can't fill.

In Economics, this process is called creative destruction; society changes and newer technologies come along and render the old ways of doing things obsolete.

Now again, I can't say what would work or not work in Europe. The geography is much different there and it very well could be potentially profitable for private carriers to operate. We'll never know because the option is legally off the table. But that's a public policy problem rather than a free market problem.

So to summarize, the capitalist answer to passenger rail not being profitable anymore is to just stop doing it. Inevitably, the new thing that replaces the old usually makes society better off for it.

Wes Sayeed

Posted 2018-09-26T08:33:34.147

Reputation: 11 044

11It's just that governments have a legal monopoly on the industry, so private carriers can't exist. False, private companies exist but they need government subsides. It's not the same as government directly operating the industry. Also there's no law preventing a private company from running a service without government involvement. Except that in the U.S, passenger rail makes almost no sense purely because of geography. Within east or west coast region it'd make perfect sense. Air travel has ridiculously high energy per passenger, that alone makes it inherently inefficient. – Bregalad – 2018-09-26T10:11:14.050

4I'd fully agree with you if rail transport was inefficient; the problem is that, technically speaking it is efficient and not obsolete as you called it. It's only financially inefficient; which it shouldn't be because of how capitalism works. – Bregalad – 2018-09-26T10:15:26.410

(Also, if you're taller than 1m85, plane travel becomes a torture seance) – Bregalad – 2018-09-26T10:24:11.727

3The Netherlands has privatized rail transport, and mostly it just seems to have made things worse for the passengers. (Even though by international standards, we still have a really good public transit system) – Erik – 2018-09-26T12:48:30.560

in the U.S, passenger rail makes almost no sense purely because of geography, is simply wrong. Each of the Megaregions of the US have population densities and geographies quite similar to areas in Europe with dense and popular railway networks, and even in more sparsely populated areas like the Nordic countries or Russia, passenger rail is popular. Europe is not smaller than the contiguous USA, and it is not much more densely populated. Spain and California have very similar geography. It's culture, not geography. – gerrit – 2018-09-26T15:23:25.623

See also my answer here debunking that geography has anything to do with this.

– gerrit – 2018-09-26T15:28:18.607

8@gerrit Hold up: "[Europe] is not much more densely populated [than the USA]". That's just not correct. For being within a couple percentage points for landmass, Europe has more than twice the population (and the European landmass consists of a lot of super-sparse land in the East of the continent). – Delioth – 2018-09-26T15:34:03.433

@Delioth Contiguous USA has 40 inhabitants per km², Europe has 72 per km². It's more dense, but not hugely more dense, and it doesn't explain the huge differences in passenger rail. Many European countries and regions have (much) less than 40 inhabitants per km² yet popular railway networks (think Sweden, Russia), many US regions have for higher population densities than 40/km² yet passenger rail is essentially absent (Front Range comes to mind). – gerrit – 2018-09-26T15:41:18.567

In USA, it’s not geography, it’s that they seem to have ignored geography and demographics in deciding where to not go. – WGroleau – 2018-09-26T16:57:32.913

2Rail freight makes sense because many kinds of "freight" won't mind waiting for other freight that's going to the same place. Passengers, however, generally don't like such waiting. – supercat – 2018-09-27T03:28:46.733

1Re "...better, cheaper, and faster to fly". Faster, yes. Cheaper, I think it depends on whether you fly first class or sardine class. But better? Have you actually been on a commercial flight in this century? Horrible experience... – jamesqf – 2018-09-27T17:21:12.287

1@jamesqf 'Horrible experience' sure, but only for, say, three hours, (one hour in the miserable and soul-destroying airport queues, and a couple crammed into goat-class on the plane). 1000 miles by train is another level of utter, interminable misery:( – Martin James – 2018-09-29T08:38:00.460

@Martin James: Your airport queues seem to move much faster than the ones I've experienced. On the contrary, while I've never done a 1000 mile train trip, I found the few longish trips I've taken - Fort William to London, London to Sligo (with a break for the ferry) - to be quite pleasant. – jamesqf – 2018-09-30T04:22:51.027

3@Erik the Dutch Railroads have NOT been privatized. They were set apart from government on paper by creating a company out of them. But those companies are still 100% government owned. – Sjoerd – 2018-09-30T10:25:03.477

8

To answer your original question, capitalism's answer to passenger train travel not being economically viable is to not provide passenger train travel where it isn't profitable.

Capitalism can only react to changing economic conditions, and it reacts in an economically efficient manner, not necessarily in a socially conscious manner.

Passenger train travel exists where it is economically viable. In the northeast corridor of the US, where trains operate profitably in the major metropolitan areas, it's the cost of parking, cost of auto insurance, and time dealing with auto congestion that makes the train a viable alternative. To reproduce the added expense of heavy urban areas to make passenger train travel viable elsewhere, you'd have to raise the price of gasoline substantially.

However, capitalist societies are also typically democratic societies. Tell the voters you are doubling the cost of gasoline, and they'll set a world record voting you out of office.

A capitalist who wanted to boost train travel might consider addressing the less pleasant aspects of air travel: claustrophobic, occasionally smelly, delays at checkin, delays on the runway, being treated like a criminal... air travel today has become a truly wretched experience. If one can get train speed up to cut the time, then the more reliable scheduling could translate into near aircraft travel time, once one factors in the inevitable delays in air travel today. And infinitely more pleasant.

tj1000

Posted 2018-09-26T08:33:34.147

Reputation: 9 859

I agree about air travel. It's fast, but in almost every other way, a horrible way to travel. It needs to be relegated to the pages of history. – user1751825 – 2018-09-27T03:44:22.207

4Tell the voters you are doubling the cost of gasoline, and they'll set a world record voting you out of office. You don't tell them; you just lie about your prolitical progarm to get elected, then you do this once elected. Works well enough in democracies :) (PS: This comment is intentionally ironical) – Bregalad – 2018-09-27T06:25:11.177

6Tell the voters you are doubling the cost of gasoline, and they'll set a world record voting you out of office., possibly. But tell voters in central London, Berlin, or Stockholm that you're introducing a congestion charge to drive into their cities with an internal combustion engine, and lots of local residents may support you. – gerrit – 2018-09-27T09:33:21.057

2When I was a boy, I rode one of the last luxury trains, the Super Chief, from Chicago to LA. It was wonderful... relaxed, great food in the dining car, plenty of room to roam around, and you haven't slept until you've been gently rocked to sleep on a train. Many is the time I've been on a wretched flight to and from LA that I remembered that delightful trip. Took 1.5 days... a high speed train could get that down to 14 or 15 hours - leave in the evening, have a great dinner, go to sleep, and wake up at the destination. There's a market for pleasant business travel. – tj1000 – 2018-09-28T15:36:32.147

@gerrit - Ignoring that in a capitalist society, the government does not set prices....You may get local support for something like that but when companies start moving their offices and factories to 'friendlier' cities and those 'local' people start hitting the unemployment lines, you'll lose that support and then some. – Dunk – 2018-10-03T23:45:18.973

@Dunk ... and then the problem is solved! Moving factories with lorries going in and out all day out of the city was the entire point. You're also forgetting that at the same time, other businesses that generate less car traffic are moving back in to fill the space. – user253751 – 2018-10-04T03:25:03.173

@tj1000 I wish it was true, but the trend for sleeper trains in western Europe is the opposite. With trains that can only do one run per day, relatively low passenger density, access costs, high staff costs, and few travellers in intermediate stops, it appears most sleeper trains are unfortunately too expensive and unable to compete with low-cost airlines. I wish it was different. – gerrit – 2018-10-04T09:55:01.487

@Dunk In pure capitalism, those urban roads would be privately owned and the access price would be much higher inside than outside cities, exactly as for real estate. The owners would seek to maximise profit from owning those extremely valuable urban access roads. And that doesn't even consider the externalised cost of polluting the air that everybody is breathes, for which I don't believe capitalism has an answer. We can sue the polluters, but only if government has passed laws prohibiting such pollution in the first place. – gerrit – 2018-10-04T10:00:35.597

@immibis-Re:"other businesses....moving back in". That is wishful thinking and doesn't help those put out of work as they don't have the skills for your imaginary jobs that are supposedly going to be moving into the city in droves. – Dunk – 2018-10-04T20:26:05.867

@gerrit - Re:"In pure capitalism...". Which is why there are some things that require the equivalent of a government. It would suck to have to stop and pay toll at every house you pass to use the road that is on the owner's property. It is simply not practical as a 1 mile drive could take an hour because of all the stops to pay toll. People already pay for the externalized costs you are referring to. The cost of 'air-quality' equipment is built into the price of the vehicles. – Dunk – 2018-10-04T20:31:58.280

@Dunk Some things indeed require (the equivalent of) a government. One of those things is infrastructure, which is the gist of my answer, that a purely capitalist solution does not exist. As for air quality equipment, those reduce air pollution but leave a lot of residual air pollution, and I don't think that if traffic-induced air pollution makes me sick, I would have much success to sue the sources of air pollution for damages or get this paid for by air quality levies/taxes. It could make for an interesting test court case, though.

– gerrit – 2018-10-05T11:40:17.613

@Dunk If essential heavy industry is inevitably so polluting that it's highly damaging to place it next to where people live, the sensible solution would be for people to commute (preferably collectively) from a town/city to where the industry is located. That way jobs and industry are protected and the lorries don't need to drive into the city, which improves not only urban air quality but also traffic flow both in the city and near the industry, so it actually makes economic sense for such industry to relocate outside the city. – gerrit – 2018-10-05T11:47:56.603

@tj1000 there's always business/first class if you prefer comfort – JonathanReez – 2019-02-26T04:19:18.430

6

A Libertarian would say the problem is not an economic one, it is a regulatory one. The reason railroads have limited scope and profitability in the United States is that they were destroyed by Congress and the president Woodrow Wilson. In 1917, Wilson simply seized by dictatorship all the railroads in the country and put them under government control. Ever since then, US railroads have been much less important than if they were privately owned and controlled.

In 1920, the railroads were "returned" to private ownership, but in fact there are government "boards" that decide what people railroads can hire, how much they have to pay them, and control every aspect of railroad development. So, even though railroads are "privately owned", in reality they serve at the whim of bureaucrats in Washington. Needless to say, this does not result in a profitable situation.

This situation could be immediately fixed at any time by repealing the Transportation Act of 1920 and the Railroad Labor Act. Those two bodies of laws are 95% of the problem.

The cost of this oppression of the railroads is heart sickening. Our country has literally lost trillions of dollars in lost productivity due to these two statutes and the attitude in Washington that demands control over railroads. It is absolutely sickening. Our country could have been far larger and wealthy and more successful at every level if not for these laws. In fact, I would go far as to say that if the US government had not seized the railroads and shipping industry of the country in 1917, World War II, a war that cost 40 million lives, might never have occurred, or would have been much less destructive.

Tyler Durden

Posted 2018-09-26T08:33:34.147

Reputation: 4 645

9Can you explain how the 1917 nationalisation of railroads has led to the Nazis invading Czechoslovakia and Poland? I don't follow. This answer also seems to ignore that most European countries nationalised the railways and that passenger rail remains well-developed there (although it did go down substantially when private vehicular transport came along, in particular in rural areas). – gerrit – 2018-09-27T09:37:42.510

@gerritt Wars happen because of economics. There is no simple answer to your question, but if you want to begin to understand it, you could start by reading the books "The Making of the Reparation and Economic Sections of the Treaty" by Bernard Baruch and "Reparations, Trade and Foreign Exchange" by Lawrence Angas. – Tyler Durden – 2018-09-27T12:59:38.117

7I appreciate that the causes of wars are complicated and that economics are related to the rise of the nazis, but it does seem a stretch to blame the latter on the 1917 nationalisation of the railroads in the US. – gerrit – 2018-09-27T13:01:53.033

@gerrit I didn't blame the nationalization, you are changing my words. I said that if the nationalization had not occurred, World War II might not have occurred. There were other mistakes as well that, if they had not been made, could have averted the war. – Tyler Durden – 2018-09-27T13:06:16.597

1Given the historical grants and shady contracting from governments to rail operators (how did Leyland Stanford get his fortune for Stanford University?), it's kind of weird to claim 19th century US railroads as a paragon of libertarianism. – user662852 – 2018-09-27T14:25:57.540

@user662852, I don't see anywhere in this answer where 19th century US railroads are claimed as a paragon of libertarianism. Irrespective of the shady history of railroads, the libertarian solution to the current situation is to remove the regulatory restrictions. – Wildcard – 2018-10-01T19:18:51.243

6

The pure capitalist answer would be simply to stop investing in public transport, and instead invest in profitable alternatives.

Declining investment in public transport is not a problem that 'pure capitalism' can (or even should) attempt to solve.

If public transport should to be maintained, and I believe it should, then it's the responsibility of governments to intervene, and ensure the alternatives are appropriately taxed to reflect their true social and environmental costs.

Private vehicular transport has been shown to have very negative impact on human health, due to air pollution, and encouraging low levels of physical activity.

Private vehicular transport is very damaging to the environment for a variety of reasons which I won't go into here.

If governments appropriately taxed the car industry to reflect it's true costs to society, and the environment, then it would very quickly become much less profitable, and consequently public transport would become more profitable.

user1751825

Posted 2018-09-26T08:33:34.147

Reputation: 169

5

As theresawalrus notes, markets optimize for collective utility, not energy efficiency. But the American experience is not an example of this.

The United States has a passenger rail system so lightly used that it could be safely ignored. But it also has the the world's most advanced and profitable freight rail system, and the energy savings from freight rail far exceed the energy savings it would get from a European-style state passenger rail system.

In fact, expansion of the passenger rail system in North America would increase freight rail congestion, driving freight only the highways. This would waste much more energy than it would save. So, at least in North America, the market solution did, in fact, come up with the optimal energy solution. Furthermore, by keeping trucks off the road, freight rail has a measurable beneficial effect on highway safety.

https://www.bts.gov/bts-publications/freight-facts-and-figures/freight-facts-figures-2017-chapter-6-safety-energy-and

Jeffrey Hall

Posted 2018-09-26T08:33:34.147

Reputation: 51

1Please indicate which part of the source supports the most advanced and profitable freight rail system claim. – JJJ – 2018-09-26T21:34:19.973

I think one could expand passenger rail transport without blocking freight transport – of course one would need more rails for that. – Paŭlo Ebermann – 2018-09-27T22:08:04.433

I disagree with your freight contention. Prior to the interstate system the vast majority of freight went by rail. Today, three products account for the lion's share of freight rail in the U.S. (coal for power plants; oil and bulk chemicals, and one other I don't recall right now). Conrail came into existence because so many railroads were failing in the 1970s. – eSurfsnake – 2018-10-02T18:44:20.043

5

History answers this question and corrects its invalid premise - namely: that passenger rail, as such, is not financially profitable.

Capitalism is the as yet untried system where the sole purpose of government is to protect individual rights. Under capitalism there are no government subsidies for individuals or firms. Savers and investors back entrepreneurs and those who are most able at producing are those who create the greatest profits. Excluding dictatorships like N. Korea and Iran, all countries today operate under "mixed economies" - mixtures of freedom and controls (mixtures of capitalism and socialism). 19th century America following the civil war came closest to pure capitalism.

In the 1850s, Congress passed the Pacific Railroad Act which led to the formation of the Union Pacific and Southern Pacific Railroads. Although both firms enjoyed massive government subsidies including loans and land, and although the UP and SP joined in the first transcontinental railroad, they have gone bankrupt multiple times (despite having been combined as Amtrak).

The Great Northern, by contrast, accepted no subsidies, yet completed its transcontinental road and operated profitably for decades with never a bankruptcy. Its focus on profit caused it to choose land and materials that were cheaper and better for building and operating a railroad. The GN would simply build a section of road, run spurs to areas occupied by productive farmers, merchants and others; develop profitable freight and passenger traffic along those spurs to feed its main line; then reinvest some of the profits to extend the main line further West. Eventually, the GN connected St. Paul to Seattle, and operated as the best built, lowest cost, most reliable and least corrupt transcontinental road.

Had the U.S. government not subsidized losing railroads beginning in the 19th century, the U.S. today would likely have superlative private rail. Ditto for its having subsidized the grossly inefficient Interstate Highway System and Federal Aviation Administration.

To end the corruption, waste, impoverishment, and legalized grand larceny which central planning spreads, the government and the economy should be completely separated. Then, like cheaper, faster, better computers, most people would enjoy cheaper, faster, better transportation.

Francisco D.

Posted 2018-09-26T08:33:34.147

Reputation: 61

Great answer. I hadn't known of The Great Northern story. – holaymolay – 2019-12-04T09:35:03.403

4

Theoretically, by mechanism of economic freedom and concurrence, offer and demand, capitalism automatically find an optimal solution. This does not seem to work for transportation, as the optimal mean of transportation (energetically speaking) is not financially profitable and needs to be government-subsided, while an extremely sub-optimal solution (road transport) is economically preferable.

You are confusing two types of optimality. One of the reasons I love capitalism is that it optimizes profit, not engineering efficiency. And by profit, we mean whether customers are willing to pay for it, as davidbak notes. Since customers are not willing to pay for it, they do not consider the rail system optimal.

And so the capitalist solution is don't invest in trains unless it is profitable. More generally, don't invest in things consumers don't want. Instead, invest in things they do want.

theresawalrus

Posted 2018-09-26T08:33:34.147

Reputation: 1 081

1This is correct but you can go further and say: The profits depend on the product or service being desirable to customers who will pay for it. Energy efficiency, engineering desirability, a moral sense that something is "better for you": None of this matters if the customer wants something else. And in this case there are a lot of possibilities for that "something else" the people might want - not least of which is the freedom to go wherever they want whenever they want - regardless of whether there is a RR station at point A or point B, or a track between them, or a train to travel it. – davidbak – 2018-09-28T17:35:58.917

@davidbak Thanks, I'll edit the post to reflect this. – theresawalrus – 2018-09-28T18:18:19.850

4

The accepted answer makes the good point that there are socioeconomic externalities governments consider when they invest in an "unprofitable" mode of transport. However, this gives the impression of the state as some kind of guardian angel/incompetent bungler acting out of some kind of saintly intention against capitalism.

In fact, it's more appropriate to notice that the state is a capitalist actor like a company and with profit maximising incentives like a company. The difference is simply the wider opportunities through which a state can receive such profits.

A private rail company can only profit from the cash its customers are prepared to pay above the cost of its provision. However, thanks to the magic of competition (or regulation in the case of a rail monopoly) the market price of a service is usually lower than its actual utility to the consumer. The difference with a state is that its consumers are also its shareholders. When the customer wins (e.g. with a great job they can now commute to or just a nicer travel experience) the state is also winning. In economic terms the surplus consumer utility is an extra financial component that pushing the endeavour into the black on the balance sheet.

One might object that the marginal utility of train over car is already fully priced in by consumer choice. i.e. Yes, train is often better and faster than bus but only a certain amount better. Some will say we can know exactly how much better by looking at consumer choice. If tickets cost 40% more that means consumers feel it's exactly 40% better. So if that isn't enough to make rail profitable then bus must be the better choice for an efficient economy, and short-term focussed capitalism would do us a favour by eliminating it.

With a simple model supposing perfect rationality, information and capital in the hands of consumers this would be true. As it is, investment in infrastructure is more analogous to a large company with individual subdivisions (like citizens) who are rational to organise their work inefficiently with adhoc spreadsheets rather than buy expensive software their budget will not allow. However, the head office has the capital for a long term IT project which will help keep its subdivisions efficient over the long haul.

In summary, there are many train networks which are in the end financially profitable for the capitalist actor known as "the state" which wouldn't be for even quite large companies.

Adamantish

Posted 2018-09-26T08:33:34.147

Reputation: 141

3

For train passengers, raise the price.

Of course, this will lead to substitution - like automobiles, etc. Customers will choose the quickest, most affordable method of transportation.

The "capitalist," therefore, will not be married to the idea of commuting via 19th century means, if it means costing him more money and consuming more of his time.

Eric William Bast

Posted 2018-09-26T08:33:34.147

Reputation: 308

4Road travel also has it's root in the 19th century, industry as a whole was invented in the 19th century, photography was invented in the 19th century, industrial use of electricity started in the 19thc century etc... I don't see the problem about something being invented in the 19th century and still being relevant today. Actually more things were invented in the 19th century than in the rest of history combined. – Bregalad – 2018-09-27T06:38:04.660

Consumers can't choose the quickest and most affordable. They need to balance one against the other. The relationships between these factors become less linear when income is constrained. i.e. even a perfectly rational actor would need to consider not only the smartest price/time ratio but if the quicker option leaves them with $5 spare rather than $70 per month it's a massive difference in financial risk. This is where the price will be distorted away from true value and large actors without such constraints can fill the value gap. – Adamantish – 2018-10-01T07:12:20.323

3

What is the capitalist answer to rail passenger transportation being non financially profitable?

There is a capitalist solution at work as we speak: SELF-DRIVING CARS

In addition to all the other answers out there, I will take a more futuristic (hypothetical) outlook.

No matter how you see it, trains are inflexible compared to cars. In a near future, when cars will have to be able to communicate with one another about their speed and other metadata (effectively forming a train on the highway), some traffic problems might be solved. This means that in a country like the U.S. with approximately 2 vehicles per household, the free market would choose the cheaper (time and cost) option.

I can speak from personal experience (U.S.) that it takes me 75 minutes to go "door-to-door" from where I live, to my work place, all using trains. The equivalent 'door-to-door' distance via roads and highways is 30 miles. In a future where I could be in the comfort of my own car, with all the privacy that comes with it, and with the time saving I would get from the car driving on average 40 mph, I would definitely pick driving. The cost now is almost the same (tolls + gas + parking) almost exactly as all the monthly train passes I need.

Dashi

Posted 2018-09-26T08:33:34.147

Reputation: 147

3This is exactly what I decided when I worked in the DC Metro area. DC has a pretty good subway system, but I found that it took me twice as long to commute, it cost more (even factoring in the exorbitant parking fees), and I often had to sit next to a guy who wanted to tell me all about scientology. It did not take long for me to ditch the train and go back to driving. – Michael J. – 2018-09-26T20:50:12.860

Self-driving cars would make rail passenger transport less, not more, profitable, your answer is contradictory. – gerrit – 2018-09-27T09:40:19.867

People predicting the future have a strong tendency to do so wrongly. Even if your prediction is true, running car-trains wich one motor per person is energetically extremely wasteful compared to rail transport with one huge motor being able to transport 500+ people; which in turns means more maintenance costs, higher fluel/electricity cost, so lower attractivity for customers. – Bregalad – 2018-09-27T09:51:52.010

@Bregalad: but in some respects, that's no different to the situation now (except that future cars might be more efficient than they are now) - yet plenty of people still choose to drive instead of taking the train because it's quicker, even if it's not cheaper. – Steve Melnikoff – 2018-09-27T10:34:16.093

@gerrit I fixed the question I am trying to answer – Dashi – 2018-09-27T11:17:21.133

1@Bregalad while this hypothetical and predictive approach might be wrong, I think you should also consider time as a major factor in your argument. While pure energy and monetary cost might be higher, the time saved by passengers might be well worth the trouble – Dashi – 2018-09-27T11:19:00.837

@SteveMelnikoff As I said in my OP trains are driving faster than cars. If for a given traject car is quicker, it's because the railway was not invested in, not an inherent flaw of rail transportation. – Bregalad – 2018-09-27T11:19:32.770

3@Bregalad There are still inherent delays in public transport, e.g. having to stop frequently to let people on and off, passengers having to get to and from stations, and having to follow a fixed (and usually very fragile) schedule. I walk to work instead of taking the bus because, despite a higher top speed and taking the same route, on average, the bus takes longer. If there was a bus (or train or tram) every 5 minutes and it brought everyone right to their doorstep, it would be far less energy efficient because they'd have only one or two passengers at a time. – Ruther Rendommeleigh – 2018-09-28T10:09:46.493

@RutherRendommeleigh Absolutely, bus is road transportation thus horribly inefficient. There needs not to be rail to every people's homeway, people can afford to walk 5-10 minutes to go to the next rail/tramway station and then use that mean of transportation. If they use a car they likely have to walk as much from their parking slot; only bicycles or kick scooters can solve that problem and scale well. – Bregalad – 2018-09-28T10:15:00.963

OK I've tought about this and all; and in the end it all depend if self-driving cars will mix with in with the usual traffic or if they have their own roads. If they mix in the traffic they have the same shortfalls as usual car traffic congestion and parking congestion and energy waste. If they have their own road only THEN they can use computing to optimize usage and avoid traffic congestion, but then you have to develop a new network. Basically you're re-inventing train on tires; but tires have few advantages to metal so we might just as well have self-driving private mini-wagons on rail. – Bregalad – 2018-09-28T13:43:42.050

@Bregalad - I completely agree. My hypothetical answer is more based on the idea of mass adoption (somewhat similar to the adoption of smartphones and how landlines are almost dead). In an ideal world, everyone should have their mini-cabin driving them on a platform similar to a network of train lines. – Dashi – 2018-09-28T15:00:00.273

@Bregalad also, when it comes to walking in a large parking lot - consider the ability that the self driving car can drop you off right by your door and then go park itself wherever it needs to. Same thing for picking you up – Dashi – 2018-09-28T15:08:14.720

@Dashi Of course, but that means even more traffic so in dense areas it'll only work if there's a centralized traffic planning (like trains), not individually planned traffic. This also means one company gets vehicles and roads and parkings and traffic organisation, just like today for rail transport. The ability to have your own private wagon and not having to wait for the next train nor to switch train would be an improvement over today's trains, – Bregalad – 2018-09-28T19:36:02.587

@Bregalad - You completely ignore that trains do not take people where they want to be. Just because you think it is ok to walk 5 or 10 minutes from the train station doesn't mean that others want to do so. Additionally, you completely ignore the part where the train station is far further than a 5 to 10 minute walk and requires, you guessed it A CAR to go from the train station to one's destination. In almost all cases, it is simply far more efficient in every way except 'arguably' energy to use one's personal car. It takes a person exactly where they want to go. – Dunk – 2018-10-04T00:09:43.267

I said 'arguably' with regards to energy usage because you can't do any meaningful analysis without taking into account the costs and inefficiencies of travel to/from the train stations. Those costs don't exist if people use their car. If fewer people have cars then that means more taxis and buses are required. Unlike personal cars that are running a very small fraction of a day, taxis and buses are running all day long. – Dunk – 2018-10-04T00:13:27.253

@Dunk It seems like you're still living in the 1950s or 1960s where you could park your car right at your destination for free. This is not possible anymore today for most destinations - it's not rare to have to walk those 5-10 minutes or even worse from where you are allowed to park to your destination and you have to pay parking. Cars are an amazing concept at small scale, but it scales horribly. And yes, if people would just use cars to go to the next nearby train station, as you mentioned it, they would be a much lesser problem - i.e. they're fine at small scale. – Bregalad – 2018-10-04T06:07:02.950

@Bregalad - I live in the USA. Other than probably around 0.00001% of destinations, I can park for free and really close to my destination. – Dunk – 2018-10-09T17:39:06.687

2

In developed countries, rail transport is usually made at financial loss

I dispute the whole notion of the question, since capitalists in the US love the railroads.

In fact, the US carries much more stuff via rail than does the vaunted EU.

https://en.wikipedia.org/wiki/Rail_freight_transport#Statistics

In 2010, North America (an integrated rail system) moved 2.8 trillion ton-km of freight, while the EU only moved one seventh that amount.

Within the U.S. railroads carry 39.9% of freight by ton-mile, followed by trucks (33.4%), oil pipelines (14.3%), barges (12%) and air (0.3%).

Railways carried 17.1% of EU freight in terms of tonne-km,[29] compared to road transport (76.4%) and inland waterways (6.5%).

It's obvious that Europe loves roads and the US loves trains.

RonJohn

Posted 2018-09-26T08:33:34.147

Reputation: 484

1OP is asking about passenger rail transport. – Julien Lopez – 2018-09-27T06:28:49.723

3As a Swiss person I fully agree that EU's policies with truck transport (and lacks in freight rail transport) is a huge scandal. Switzerland has a major issue against the EU on that topic, but that's another problem and not part of my question. – Bregalad – 2018-09-27T06:35:28.180

@Bregalad you can't isolate passengers from freight. It's all "stuff" that needs to be moved from Point A to Point B. Driving is not only faster, but when I reach my destination, I still have a car with which to drive around town, instead of having to rent a car. – RonJohn – 2018-09-27T06:55:43.143

You are right. The notion is false. I think it's about oil. – mathreadler – 2018-09-27T08:08:21.387

2@RonJohn Trains are must faster than road transport, see my OP; also yes I can isolate passengers from freight. – Bregalad – 2018-09-27T08:31:07.770

2It's obvious that Europe loves roads and the US loves trains., that conclusion does not follow. European waterways are heavily used for freight transport. – gerrit – 2018-09-27T09:34:54.637

1@gerrit only 6.5% of freight tonne-km is moved via inland water, while 12x that much is moved via road. – RonJohn – 2018-09-27T13:05:53.647

1@Bregalad #1 trains have to stop every so often to drop off passengers and pick up new ones while a private vehicle (we loved our minivan for transcontinental vacations -- better even than flying!) just keeps on driving, needing only to stop for bathrooms and fuel; with two drivers, you can easily drive 1800 km before having to stop for the night. #2 People don't want to go to train stations; they want to go places miles from the train station. Thus you've got to rent a (quite expensive) car. – RonJohn – 2018-09-27T13:18:14.147

2@RonJohn You should definitely visit switzerland as it seems your vision of what trains can achieve is limited; train stations are dense enough not for everything but for most usages. When driving you are legally obliged to stop and switch drivers or make a pause every 2 hours. How often a train stops depends on the service offered, it's not an inherent limitation of rail transport. High speed with occasional stops is still better than average speed. – Bregalad – 2018-09-27T13:27:25.223

1@Bregalad "You should definitely visit switzerland". (I have; it's smaller than the small state I live in.) You should visit the US. It's 238x larger; Los Angeles to Boston is 4185 km, while Madrid to Moscow is 740 km shorter. . Many tens of millions of people live in the middle of nowhere. "When driving you are legally obliged to stop and switch drivers or make a pause every 2 hours." That's absurd. – RonJohn – 2018-09-27T13:50:57.177

1@RonJohn Taking the train from LA to Boston or Madrid to Moscow is uncommon, the few travellers who do so are mostly tourists. And people who want to visit central London or central Paris pretty much do want to be close to train stations. Trains work in densely populated areas, cars work in sparsely populated areas. Both Europe and the USA have both densely and sparsely populated areas. – gerrit – 2018-09-27T14:28:08.073

@gerrit you also need to visit the US. – RonJohn – 2018-09-27T14:31:05.657

2@RonJohn I've visited the US several times, my wife used to live in Iowa, I've taken the train across the continent several times, it's a lovely way to travel. But trying to get from the Denver train station to Fort Collins is a frustrating endeavour indeed, despite a chain of closely connected reasonably centralised cities where passenger rail could work very well. That the train from Chicago to Omaha connects through small villages in southern Iowa rather than mid-sized cities in central Iowa is stupid. The buses from Iowa City to Chicago via the Quad Cities are popular, as would a train. – gerrit – 2018-09-27T14:51:45.933

1@RonJohn Amtrak and Via Rail long distance trains have better service than any European train I've ever been on in any class, but those trains are focussing on tourism, not on practical travel. I travelled between Toronto and Iowa City a lot. Toronto-Chicago could be connected like Paris-Barcelona, Chicago-Iowa City could have trains popular with college students, but no, travelling between Toronto and Iowa City is a pain. I ended up taking a bus to Buffalo, taxi to the train station, train to Chicago, bus to Iowa City. And Eastern Iowa Airport has almost no transit connection at all. – gerrit – 2018-09-27T14:58:03.480

1Trains may be a 'lovely way to travel' but choosing a train over other options makes no logical sense. Generally people choose transportation based on travel goals. 1 - Get from point A to B ASAP. No point in taking the train when flying is an option. 2 - Low cost. Train is the most expensive option (in the USA) versus flying/driving. 3 - Sightseeing: If you are in your car you can stop at any/every point of interest you come across. Not so with trains. 4- Transportation is part of the vacation. Why would someone take a cramped train when a cruise is overflowing with activities. – Dunk – 2018-10-04T15:26:04.397

2

I wonder whether it's not that capitalism can't find rail to be the optimum solution, but that it just hasn't done it yet?

As things currently stand, environmental issues and diminishing reserves of energy resources are a problem apparent to any long-term observer, but do not have any immediate effect.

That being the case, I would argue that the capitalist solution would be to maintain the status quo until such a point as energy resources are scarce (and therefore expensive) or environmental issues have become such a political issue that emissions / inefficiencies are heavily penalised. This could then create an environment where rail passenger transportation would become financially more viable (unless there was something even better).

David Fulton

Posted 2018-09-26T08:33:34.147

Reputation: 699

That's exactly my thoughts, too ! – Bregalad – 2018-09-30T17:53:55.970

1

As background I am very much pro-rail. I don't own a car and my daily commute is on a rail line. I like rail very much, it is a premium mode of transportation.

That said, I have put a lot of thought into this and have to confront the following. Since the OP is focused on engineering efficiency, let's talk about manufacturing and the mechanical engineering that goes into the vehicles. I have a theory that the efficiency of car and truck manufacturing (and internal combustion engines) gained orders of magnitude on locomotive and rail car manufacturing at about WWII. Both railcar makers and auto makers built armored tanks for the US Army in WWII. Budd, Brill and American Car and Foundry simply were not as good at economies of scale as General Motors (at the end of the war, ACF was only the 36th biggest military contractor)

This leads to the marketplace today:

A new Siemens ACS-64 locomotive cost Amtrak $466 million for 70, at $6.6 million per unit. An unpowered coach car is between $500k and $1 million, and can seat about 120.

A Hyundai-Rotem Silverliner V EMU cost Septa (Philadelphia) $274 million for 120 cars, and RTD (Denver) $300 million for 66 cars, for unit costs of $2.2M-4.5M. These seat 91-107 passengers each.

A transit bus such as the largest supplier to US transit systems, "New Flyer" has an average new cost of $506.5K in 2017 and can seat about 60 passengers.

So at a back-of-envelope level the equipment for a 500 passenger train (whether locomotive plus 5 coach cars or 5 EMUs) will cost on the order of $8-15 million. The opportunity cost of $8 million is 16 transit buses with capacity for 960 passengers, so in round numbers nearly double the passenger capacity, and with the operational flexibility to run 16 routes (or 16 headways) instead of 1.

This ignores operating costs as part of the total cost of ownership (e.g. additional fuel and labor for so many buses on the pro-rail side, but also track maintenance of way and the notable manufacturing shakeout issues that e.g. Silverliner V and Acela had in their first decade on the anti-rail side). I would note that once the Chinese government brute-force R&D for battery powered buses enters the western market, or a self driving car service that will move a passenger 10 miles for $6, it could be over on the economics for commuter rail systems.

user662852

Posted 2018-09-26T08:33:34.147

Reputation: 337

5Your answer also does not seem to take into account the expected lifetime of rail cars or locomotives, which are much higher than for cars or buses. – gerrit – 2018-09-28T07:54:53.963

1

Rail isn't necessarily unprofitable. Private rail lines can, have, and do exist.

Japan has a privately funded maglev rail line.

https://en.wikipedia.org/wiki/Ch%C5%AB%C5%8D_Shinkansen

JR Central announced in December 2007 that it planned to raise funds for the construction of the Chuo Shinkansen on its own, without government financing. Total cost, originally estimated at 5.1 trillion yen in 2007,[23] escalated to over 9 trillion yen by of 2011.[4] Nevertheless, the company has said it can make a pretax profit of around 70 billion yen in 2026, when the operating costs stabilize.[24]

https://en.wikipedia.org/wiki/Shinkansen

Development of the Shinkansen by the privatised regional JR companies has continued, with new train models developed, each generally with its own distinctive appearance. ... The privatized JRs eventually paid a total of ¥9.2 trillion to acquire JNR's Shinkansen network.[18] After privatization, the Shinkansen network continues to see significant expansion to less populated areas, but with far more flexibility to spin off unprofitable railways or cut costs than in JNR days.

The NYC Subway was private until the city instituted price controls and forced the companies to sell to the city (like Venezuela).

https://en.wikipedia.org/wiki/History_of_the_New_York_City_Subway#Independent_System

Mayor John F. Hylan was a strong advocate of public operation of the subway. ... he tried to push the two operators out of business. To that end, Hylan had denied allocating money for the BRT by refusing to build new lines, refusing to raise fares (thereby putting the BRT in more debt), denied building permits so that some major building work lasted longer than planned.

General Motors lobbied and bribed politicians to eliminate streetcars in favor of buses, built by General Motors of course. This reduced access and use of rail lines.

https://en.wikipedia.org/wiki/General_Motors_streetcar_conspiracy

The General Motors streetcar conspiracy refers to convictions of General Motors (GM) and other companies for monopolizing the sale of buses and supplies to National City Lines (NCL) and its subsidiaries, and to allegations that this was part of a deliberate plot to purchase and dismantle streetcar systems in many cities in the United States as an attempt to monopolize surface transportation.

To me, the solution is obvious. Eliminate government. Government is used, bribed, and controlled to eliminate competition, and interferes in natural prices and market demands. Without government, companies will have no one to lobby for subsidies or regulating their competitors, nor will they have to fear price controls and bureaucrat manipulation.

So the premise of the question is flawed. Rail can be financially profitable, when it doesn't have to contend with government interference.

Chloe

Posted 2018-09-26T08:33:34.147

Reputation: 5 729

Government is great and there clearly is a need for government. The problem is the people in government. If we could somehow get rid of people from government then the world would be a much better and efficient place. – Dunk – 2018-10-04T15:31:33.713

@Dunk Cool a government genocide. Like a reverse genocide. Now that's a genocide I can get behind. – Chloe – 2018-10-04T20:57:37.330

1

You have the cart and the horse confused.

If rail were the only way to get around, it would surely be profitable. In fact it would be a monopoly.

Someone gave a very good hint to why passenger rail does not work in the U.S. It is because, starting about 1950s, we built the interstate highway system which everyone with a car can use for free. The costs are paid for by the government, so users get to use it at far less than cost for their trip. It also killed freight rail, by the way (look up 'Conrail').

Cars and trucks use the interstate highways for free, so the cost of a trip is (loosely speaking) only the cost of gas. A railroad, on the other hand, must buy and maintain the property, track, signals, etc. And, to make matters worse, they pay property tax on the land they use (an anti-subsidy).

Economists call this an 'externality', because things outside the control of the actors is causing a distortion (free roads in this case). In free-market capitalist microeconomic theory this is one example of what is called a 'market failure'. Market failures are known departures of free markets away from the optimal solution. That is not a political claim; it is very orthodox free-market microeconomics.

The answer is that passenger rail needs a subsidy large enough to offset the subsidy driving implicitly has to make a profit and succeed.

By the way, there is one route in the U.S. where passenger rail makes a profit: it is Amtrak's Boston-New York-Washington service, Acela. It works because (1) it is high-speed track and the trains move fast; (2) as a result, it is quicker to go from downtown to downtown (where rail stations are) than to drive out to the airport, get there early enough, wait, fly, and then drive into the destination city; and (3) there are no weather delays, flight cancellations, etc. to contend with. And, given the speed of the trains, it is faster than driving - and you can work while on the train. So it is a viable route.

As I noted, freight rail also was pretty decimated. A freight train can operate with a crew of 2 (used to be 4) and move huge amounts of stuff. But, with free roads, you can hire hundreds of trucks and drivers to do the same job cheaper.

The answers would be (1) toll roads that cover their own cost; (2) a fuel tax that evens the playing field (one reason trains are more successful in Europe is high gas taxes); or,as you note, subsidies.

eSurfsnake

Posted 2018-09-26T08:33:34.147

Reputation: 143

Roads are anything but free. Taxes explicitly intended for roads more than cover the cost paid by the government of building and maintaining the roads. Without the roads, most states would still be agrarian and very poor. if one were to look at society overall, the roads are what allows most people to live the middle-class life style. Nobody other than the railroad companies would be better off trying to make road travel more expensive. States would lose enormous amounts of tax revenue, which means they'll be looking for other things you like to tax. BTW, Freight Rail is thriving in the USA. – Dunk – 2018-10-04T17:38:46.783

I disagree. If you look at most government budgets, the costs of roads exceed toll, gas tax, and other receipts. You are arguing that other income redounds to the government that makes roads worthwhile. But the fact is that the cost per mile for rail freight is much below the (total) cost for road freight, hence the growth of internodal. The U.S. used to be crisscrossed by long rail trunk lines and thousands of spurs, most of which are now gone...the track is ripped up and right of way never recoverable. Only boats are cheaper per ton-mile than rail. – eSurfsnake – 2018-10-07T02:25:17.980

You must be a liberal who never bothers to look beyond the first layer. What studies who make the claim you are making say is that taxes are coming from 'general taxes'. However, what those studies always fail to mention is that those 'general taxes' have been increased to those levels on basis of claiming that the tax hike is needed to pay for roads (which means any taxes associated with those tax hikes are in fact explicitly intended to pay for roads). – Dunk – 2018-10-09T17:06:56.290

I'm sorry you disagree, and don't see why that makes me a liberal, or why making an ad hominem blanket insult about liberals is helpful. European nations have expressly set higher gas taxes to more closely match up road costs and revenues. But, just because polticians say they are raising general taxes for "infrastructre" like roads doesn't mean it gets spent that way. (Private) toll roads would make more sense, and be akin to what railroads do. In fact, there is one in Denver and it is pretty pricey compared to other tol roads or gas taxes. – eSurfsnake – 2018-10-09T19:33:09.447

I just checked the facts. Highway spending in the U.S. alone (not roads in total) was $168 billion last year. Federal gas taxes were about $35 billion, and state taxes boosted that to a number still under $100 billion. And this is the problem: because the difference comes from a general fund, the cost to a highway user is lower than it should be because people who live in Manhattan and don't drive but use public transit are having some of their tax dollars go into highways. Again, this provides no incentive for people to not use highways as much, no matter what a politician says. – eSurfsnake – 2018-10-09T19:41:41.867

As I said, the 'general fund' includes a whole **load of taxes that would never be there without the tax increases being targeted for roads. People can accept their politicians increasing taxes for roads that are obviously in need of repair. Most won't accept tax increases when they don't see a need and politicians don't tend to vote for things that won't get them re-elected. People who live in Manhattan are using a ton of money doing things that others never use, so your example of Manhattan people paying for something they don't use is pretty meaningless... – Dunk – 2018-10-09T20:35:26.650

Even if there are Manhattan people that have never driven in their life, they still use the roads. Practically all of the products they buy used the roads at some point to get from the manufacturer to them being able to buy the product. As for those things that Manhattan people use that others don't...that's all freebies to the Manhattan people. Clearly unfair to others, so they should kind of stay quiet and accept their freebies before it becomes clear how one-sided the distribution of tax money is. – Dunk – 2018-10-09T20:38:44.073

I'm not sure where you are coming from or what point you wish to make. I have an advanced degree in Economics and Finance, and most people would put me at the very conservative end of the economic spectrum. Those New Yorkers are getting things to them cheaply on those roads, yes, but that gets back to your original question: the fact the cost of running a truck is cheaper than a train makes it happen and the low gas taxes in the U.S. distort price signals and actions. – eSurfsnake – 2018-10-10T21:53:50.777

As to your earlier point, I have never seen any claim or analysis that says general funds get beefed up by saying it is for roads. Politicians say all sorts of things will get done with taxes, but in the end they collect based on a formula, and spend based on a budget, and seldom are the two aligned in a meaningful way. And when it comes to general subsidization, urban, "blue" areas tend to pay high federal taxes which tends to get spent in rural, "red" areas where people praise (and vote) for small government. A lot of city-dwellers pay for those interstates across Wyoming, Montana, etc. – eSurfsnake – 2018-10-10T21:56:53.033

You claim to be a great economist and then you make the statement "low gas taxes in the US distort price signals and actions". The government does not set prices, the market does. The only distortion that occurs is when the government gets involved. As for your claim about not believing general funds don't get beefed up by saying it is for roads tells me you have very selective memory or you don't bother to pay attention to the issues. Look at the last few times taxes were raised in your state/county/city and tell me roads weren't among the reasons given to support the hike. – Dunk – 2018-10-11T21:33:04.877

The politicians have to say 'it is for the roads' because they would otherwise not be able to raise taxes unless they didn't care that they did not get re-elected. If the politicians then go ahead and don't use at least some of the money for roads then once again, they'll be voted out next election. IOW, there's a ton of money in the general funds that would not be there except that it was targeted to pay for roads. – Dunk – 2018-10-11T21:36:55.437

My last local election had 3 bond bills to raise taxes. Roads/Sidewalks passed. Parks Failed. Schools Failed. Yes that is explicitly targeted money, so slightly different from general funds. However, politicians can't ignore that those votes are what the people voting for them prioritize and going against their wishes in regards to general fund spending/taxing is not going to keep them in office. – Dunk – 2018-10-11T21:43:27.140

I didn't say I was a great economist. I was pointing out the technical qualifications. But it feels like you are looking for an argument rather than an answer, so I am not going to respond anymore. I hope the effort I put in trying to answer the question to the best of my ability was useful in some way to you, however. – eSurfsnake – 2018-10-13T20:12:52.253

1

To make this kind of analysis for real you'd need to be able to:

  • Be able to compare all the economics cycle of the railway (not the passenger rail transport only) with the alternative road, I mean:
    • All the building costs
    • All the operating costs
    • All the diseconomies (pollution, environmental effects, accident effects...) they are not minor, i.e. in the UK, taking into account only fatal accidents we can talk about 3.3 Billion(US billion not former UK or spanish or italian billion) GBP/yearly according to this and this and car pollution costs 6 Billion GBP/Yearly according to this.
  • Isolate both cases in a pure public, public private or mixed scenario

But you can not do that because there is no chance of economic freedom on transportation, because:

  • You need licenses to operate railways
  • You need government allowances for railroad building
  • Alternative Roads are operated by governments
  • Alternative diseconomies are paid by governments

So basicly the only thing you can ask is: "is profitable a pure capitalistic railway passenger transportation against a monopolistic road transport held by governments or their licensees?" In this point I must agree it isn't unless it is subsidized or operated by governments and their licensees (indeed licensees are what we are taking now as private held)

L. Amigo

Posted 2018-09-26T08:33:34.147

Reputation: 111

0

Let's paraphrase a quote I heard a long time ago:

The problem with trains, like with any mode of mass transport, is they leave from a point you're not at and go to a destination you don't want to go.

Cars simply don't have this problem. A commuter can park his car in the direct vicinity of his house and in the direct vicinity of his job. A train simply doesn't have that option. So your question misses 2 important points:

  1. Distance travelled during each trip is often (much) longer than the distance of the train trip.
  2. Additional distance requires additional methods of transportation. Another train, bus, metro, bike or on foot, but most options have extra expenses and extra travel time just to wait for the next one.

In short, road travel isn't as bad economically as it looks. It's a whole lot more complicated.

What is the capitalist solution to make rail passenger transportation economically profitable again, like it used to be before road transport was a thing?

IMO there is no real capitalist solution to it. Multiple countries are considering and/or experimenting with tax benefits to make it more viable or different methods of road pricing to make road travel less viable.

Mast

Posted 2018-09-26T08:33:34.147

Reputation: 127

A commuter can park his car in the direct vicinity of his house and in the direct vicinity of his job. And then either die of an earth attack due to lack of physical exercice, or spend time doing sport he could do naturally with 10 min walk from his home to the train station. That's terribly sad, but you're 100% right people are ready to use very sub-optimal solution just to avoid walking 20 min per day :( – Bregalad – 2018-10-02T14:30:10.233

@Bregalad For some people, it's a lot more than 20 min per day. – Mast – 2018-10-02T14:47:48.820

1I'll give you my example. To get from my house to my work is a 45 minute drive in all but the heaviest traffic. If I were to use rail (plus other necessary transport forms) the journey is closer to two hours (15 minute walk to the station, 1 hour 10 train run, bus wait 15 minutes, bus journey 15 minutes, 5 minute walk from bus to work.)

All of those are once per hour so there's no resiliency for lateness of services.

Add to which the price of train fares has risen to the stage where the car is equally as economical – Wenlocke – 2018-10-04T11:25:55.970

1@Bregalad-Even if it is only 20 minutes extra per day. The problem is that the weather is not always nice. 20 minutes walking in the rain is miserable. Walking on icy sidewalks gives a high probability of slipping, falling and being injured. Reaching work after sweating from your 10-20 minute walk is going to make for one very smelly person. You keep saying cars are sub-optimal but nothing you've shown even remotely supports that claim in any place other than possibly a highly populated city. Speaking of which, it sucks making that 10-20 minute walk with both arms full of grocery bags. – Dunk – 2018-10-04T17:28:47.673

0

Some argue that a faction of capitalists conspired to make rail transport appear less optimal than it was, (by means of graft and disinformation), to sell more oil and automobiles. If that is in fact true, the answer would be to reduce, eliminate, and correct that graft; and replace the disinformation with correct information; after which ordinary non-conspirational capitalism would then be better able to reward the most optimal solutions.

Rail is much less dependent on oil than any other modern means of transportation. (Ok this is very slowly changing now last 5 years with electric cars starting to be sold.) But all throughout the 1900s this was the case.

This is real reason why rail was scapegoated so much in America. Oil businesses quickly grew and gained huge amounts of power there.

mathreadler

Posted 2018-09-26T08:33:34.147

Reputation: 211

This does not seem to address the question and it is a comment rather than an answer. – Alexei – 2018-10-02T13:53:16.737

1Also note that electric cars are dependent on batteries, especially Lithium which will be getting rare in the future. On the other hand electric trains does not require batteries. – Bregalad – 2018-10-02T14:28:49.453

0

the answer would be like other said, to not worry about making it profitable and find an alternative.

if you're asking HOW to make it profitable, one would have to address the shortcomings in infrastructure or manpower or with money. none of which would leave a good taste in anyone's mouth unless they really believed in it becoming commonplace again.

when I lived in SE Asia they had a passenger line going from Bangkok to Butterworth MY. it was always packed because it was fast, convenient(ish), and safe. there were larger metro areas on both ends with local transportation available to go into the city. so that's the first thing you would have to do. provide local transport reliably at your stops. most people in the USA would want you to pay for that yourself.

guest

Posted 2018-09-26T08:33:34.147

Reputation: 1

0

Properly designed rail is actually quite profitable to run. The reasons why there isn't more rail around without government support, are:

  1. The initial cost of infrastructure is quite high. The rails themselves are quite expensive. Yes there's rebar in the cement under properly designed roads, but that's a much cheaper type of steel than is used in rails. Besides the rails, you have nearly all the problems of running a road over the same plot of land - drainage, washout, flooding, etc. etc.
  2. Operation can become expensive because of lawsuits if the rail isn't built in such a way to make public crossing difficult or impossible. If a car traveling on a highway can spot a suicidal ahead of time and hit the brakes to stop relatively quick, a train can take a VERY long time to stop. For this reason, rail that runs on ground level through towns and cities has a very low operating speed, which makes deliveries long, and clients tend not to favor this transport.

MishaP

Posted 2018-09-26T08:33:34.147

Reputation: 123

0

Not sure if this answers your question, but in my country we have all trains are Government owned.

They are crammed , smelly , very unkept and look like they haven't been updated since the 40s.

They remind me of sardines in a metal can because everyone is sharing a certain space. The toilets are non existent.

Our government is Socialist with a semi-Captialist economy. The state has declared that the train system must be controlled by the government because this means of travel is a need and wants to keep the prices down. The odd thing is that most would pay more if there was something decent to travel in.

A more captialistic approach would allow open business in this area and people would choose the most comfortable and viable means of transportation. Competition would enable to have trains get from one city to another in a matter of hours.

incentivise the train use to cut down on pollution and keep the benefits safety and you'll have something financially viable.

Different companies can have fast lanes and wifi on rides and such.

Ultimately, it would be like any transportation business. This can be applied to airlines too.

LUser

Posted 2018-09-26T08:33:34.147

Reputation: 101

-3

Firstly land (homes and offices) near to stations sells for more, therefore tax this increase in property value.

In the UK most "commuting" trains are empty after 9am, therefore give large discounts to people who travel as these times. But to get this to work the season ticket needs changing, as most people need to travel at peak times a few days of the week.

Ian Ringrose

Posted 2018-09-26T08:33:34.147

Reputation: 433

4In the UK most "commuting" trains are empty after 9am, citation needed. I've frequently had to stand between Reading and London well after 9 am. Unless by empty you mean there exists at least 1 empty seat on the entire train. And in the north, the first Sunday morning service from Lancaster to Manchester is so crowded that people get left behind on the platform. The rail companies don't give large discounts to off-peak travel (which is priced like most countries), they rather charge highway robbery prices to on-peak travel (which is the most expensive in the world). – gerrit – 2018-09-27T09:46:31.790

2Everything you identify already happens in the UK. Properties are taxed on their value when they're bought (stamp duty land tax), and for commercial and rental property, when they're sold at a profit (capital gains tax). Off-peak travel is already priced differently compared to peak travel. – Steve Melnikoff – 2018-09-27T10:39:29.157