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Con: In real cities, privatizing transit has failed miserably

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Wayne Madsen
February 23, 2008
EDITORíS NOTE: The writer is addressing the question, Is the time ripe to privatize our urban mass transit systems?

The privatization mania sweeping the nation has shown us that taking taxpayer-funded assets and turning them over to corporations is as close to vulture capitalism as one can get.


Unfortunately, all too often these corporationsí definitions of public service are pretty much confined to earning big bonuses for their executives and windfall profits for their stockholders.


The last thing such privatization enthusiasts are interested in is improving service and being polite. Newly privatized employees who take pay and benefit cuts in the name of efficiency cannot be expected to be pleasant about their plight, either to their new bosses or to their customers.


Calls to privatize urban mass transit systems must be seen as just part of an overall agenda that wonít be satisfied until it gobbles up every public asset created with taxpayersí funds. That includes electric and water utilities, community hospitals, public schools, highways and bridges, and other assets that make up the public commons.


A prime example of what happens when urban mass transit is turned over to private corporations is Santiago, the sprawling capital of Chile with a metro-area population of more than 6 million.


A few years ago, the Chilean government unwisely decided to turn over the revamping of Transantiago, the capitalís once efficient bus system, to a private corporation.


The private company quickly cut back bus service to poorer neighborhoods in Santiago because profits were not as lucrative. The corporate planners also reduced the number of buses in service and decreased the number of bus stops. Rides that took 40 minutes soon took two hours. Many commuters were forced to walk and some others, constantly late for work, lost their jobs. The result was chaos.


Santiagoís smoothly functioning state-run Metro subway system found itself deluged by former bus riders, stretching its capacity.


In a further display of capitalist hubris, some investors began negatively speculating on the financial prospects of Transantiago, creating huge losses for the firm. As a result, the cash-flush state-run Metro was forced to make $300 million in loans to the privatized bus serviceóbeggaring Peter to pay Paul.


In other words, Chilean taxpayers were forced to bail out a poorly run private enterprise that was formed from proceeds stolen from the taxpayersí own pockets.


And how did Transantiago react to its poor service and resulting disruption of the lives of its customers? It ignored the complaints and threatened to raise fares if it did not get a new infusion of public funds. Commuters reacted by banding together and suing Transantiago for tens of thousands of dollars each.


The same dismal picture is repeated in virtually every other city that succumbed to the privatization craze.


Buenos Airesí privatized Metro system is overcrowded and poorly serviced. Plans by the European Union to privatize rail service in France, Greece, Spain, Portugal and Belgium have resulted in strikes by workers who see what is coming: loss of benefits and cuts in service.


British Rail privatized in 1997, and the results have been poorer service and horrendous safety problems. Outsourcing safety and maintenance work resulted in a 1999 two-train crash outside Londonís Paddington Station that killed 31 passengers.


As more and more cities try to switch commuters from greenhouse-causing cars and SUVs to greener mass transit systems, now is scarcely the time for further de-regulation and privatization. If anything, U.S. commuters need more centralized planning and tighter government oversight.


It is hoped the lessons of Santiago, Buenos Aires and London will convince U.S. transit policy planners that the public commons and privatization are mutually exclusive terms.


Americans are best served by transit systems where employees are treated fairly and receive living wages. If anything, itís time to devote more public funds to urban mass transit systems as a first, significant step in the battle to fight global warming.


Wayne Madsen is a contributing writer to the liberal Online Journal (www.onlinejournal.com). Readers can write to him c/o National Press Club, Front Desk, 529 14th Street NW, Washington, D.C. 20045.

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