Heritage Foundation keeps the heat on WMATA

The Gates of Hell
Originally uploaded by Sam Felder.

Yesterday's Baltimore Sun has an op-ed by Ronald Utt of the Heritage Foundation and Christopher Summers, the president of the Maryland Public Policy Institute, a right-wing state-oriented policy institute.

The piece, "Earmark for Metro: Call it excess express," is the same one that's been making the rounds, that funding for WMATA is the largest earmark in history and that the WMATA system has a "legacy of mismanagement and high cost operations."

A great excess in the op-ed piece is trying to equate the Washington DC regional subway system, utilized by as many as 800,000 riders daily, as equal to Alaska's famed "Bridge to Nowhere," designed to link an island of 300 or so residents enjoying well-running ferry service, to the mainland, and the relocation of a railroad line in Mississippi, at federal expense, in order to open up more gulf beachfront land to development (which is another issue altogether).

As far as high costs, the reality is that WMATA pays union wages, and is an organization that has been in business for 30+ years, so its wage rates and pension costs are higher than contracted out bus services. This is a social choice, but can hardly be called mismanagement.

While Utt continues to call funding for transit a subsidy, he conveniently ignores the fact that about 40% of the cost of roads are not paid for by users through gasoline excise taxes and other fees. (See "Improving Efficiency and Equity in Transportation Finance, authored by University of California-Berkeley Professor Martin Wachs and published by the Brookings Institution.)

The Utt argument keeps getting refined--but is still weak.

Challenged when he called federal funding for the Washington-area subway system a burden on lower-income residents, when in fact, lower income residents comprise a significant segment of the users of the system, in the Sun piece they call this "subsidizing the daily commute for civil servants."

Somehow, thinking of the subway system as a way to avoid the cost of building and maintaining roads to accommodate 250,000 more cars doesn't enter the equation.

And, Utt is getting more specific, even if not writing the whole story. His comments in the Examiner weren't specific about all the great examples of outsourcing they alleged, while the Sun op-ed mentions Denver and London as examples.

Funny thing is, people in London, and a columnist for the Financial Times--the UK's equivalent of the Wall Street Journal and hardly an anti-business organ--seem to think that outsourcing transit isn't all that it's cracked up to be.

Michael Skapinker wrote, in "Sweating and fuming in the dark tunnel of outsourcing":

When I wrote about the Northern Line, it was an almost flawless service. Its reputation as the Underground's "misery line" was long out of date. I had, at that point, been using the Northern Line twice daily for 11 years - more than 5,000 journeys. Strike days apart, I doubt I had suffered more than 11 serious delays in all that time.

This year is a different story. There are regular hold-ups and disruptions. To many users, the reason is obvious. What happened was not that I jinxed the line by praising it, but that Tony Blair's government imposed a hugely complicated new management structure on the Underground, giving the task of maintaining and upgrading the tracks, signals and trains to two private sector consortia, leaving the old railway management with the hugely reduced job of managing the drivers and the station staff.

But at the heart of the Northern Line's problems lies a wider question, one of particular significance in this age of outsourcing: what happens when, in the interests of lower costs or greater efficiency, you rip up long-established ways of operating? Is deteriorating customer service the inevitable accompaniment to the contracting out of what was formerly done in-house?

There is certainly evidence that managers who try outsourcing do regret it. In a worldwide Gallup survey, conducted for Proudfoot Consulting and published last week, more than one third of managers said outsourcing had either delivered less than expected or had been a complete failure. A study by PA Consulting in 2002 found even more disenchantment: that two-thirds of companies were disappointed.

And similar problems surfaced with the privatization of British Rail (see "The Privatization of Public Utilities Can Be a Disaster" from the International Herald-Tribune) and contracting of railroad services for the Massachusetts Bay Transit Authority (see the Boston Globe editorial, "Unreliable Rails.)

(Also, another way to think about this is to compare the privatized British Rail system to the government-run French railroad system. In France the trains are much faster and a trip is 1/3 the cost--or less, if you buy the ticket far enough in advance. See the blog entry, "U.S. Federal Rail Policy: Learning from Worse Practices.")

With regard to Denver, according to a paper co-authored by one of the leading proponents of transit privatization, Wendell Cox, it appears that the primary benefit of contracting out bus services derived from lower wage rates and pension benefits. (See "Competitive Contracting of Transit Services: The Denver Experience.")

Finally, Utt and Summers fail to discuss that in the late 1950s, Congress ordered the dissolution of the Capital Transit streetcar system. Maybe it was a fit of pique over a strike, maybe it was a choice in favor of the bus-tire-gasoline lobby, but in any case, the system shut down in 1962.

It's not that most streetcar systems weren't in dire straits--they were, in response to the triple whammy of suburban outmigration, relatively cheap cars, and an expanding government-subsidized road network--but it is fact that streetcar systems dating from the same period, in Philadelphia, New Orleans, San Francisco, and Toronto, remain in operation today.

Perhaps Washington's system too would have remained in operation without the death sentence imposed by the Federal Government.

That decision had consequences and the Federal Government should pay for its bad decisions.

Where pray tell, is the Utt and Summers outrage over the federal financial support of the Springfield Mixing Bowl interchange, at a cost of $700 million, or the construction of the new Wilson Bridge at a total cost of almost $2.5 billion?

The amount of government subsidy to these two projects alone totals about $1.3 Billion, based on the percentages outlined by Professor Wachs.

Given the variety of benefits of the WMATA subway system to the federal government and the region in terms of more efficient mobility, this expenditure is hardly out of line. And is the last thing that should be called bad public policy.

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