Now that the City of Toronto is facing a strike in the Toronto Transit Commission (TTC) - a government owned monopoly – perhaps this is a good time to ask the above question.
The reason usually given by defenders of the public transit for the TTC monopoly is that if the city buses were not a monopoly then greedy private companies would operate only at rush hour, scooping all the passengers before TTC busses could do so and leave the unprofitable routes such as the night bus to the TTC. Public transit needs the profit it makes from rush hour routes to subsidize off-hour and out-of-the-way routes. Public transit provides a service that for-profit companies would refuse to do.
The first step is to note that even if this were true, this argument concedes that a majority of bus riders will experience better bus service as a result of free competition. Even if it were true that mediocre service for all is a better public policy choice than better service for most, it still has to be noted that the public monopoly argument begins with a huge concession: most people currently suffer poor service because the bus company faces no competition.
But is it true that private companies would not serve unprofitable routes that the TTC is currently required to serve? The usual argument is that no private company will run a bus along a route at 3 AM with 3 people on it. This is undoubtedly true however it begs the question, why do we want such an inefficient service in the first place?
To answer this question we have to first note that currently government regulations provide for only two forms of public transportation in Toronto, large vehicles (such as buses, streetcars and subways) run by the TTC, and taxicabs limited to single fares. The reason for this limitation is to protect two monopolies, the TTC monopoly and the taxicab monopoly.
For instance, why aren’t there 9 passenger minivans sitting in front of popular bars at closing time, ready to drive bar patrons home? Answer: because it is illegal for them to pick up multiple fares. If vehicles were allowed to take multiple fares, then the fare each patron pays the minibus could be much less than for an individual taxi ride - say $10 per person. Since taxis are not allowed to pick up more than one person, they have to charge a prohibitive rate to pay the driver and stay in business. One would think that with all the emphasis on drunk driving these days, this suggestion would be welcome, but one would be wrong.
Fortunately, to deregulate public transit is simplicity in itself. Only three sets of laws have to be abolished. First, eliminate the law prohibiting taxi cabs from taking multiple fares (i.e. break the TTC monopoly). Two, eliminate the preposterous and counterproductive rule limiting the number of taxis in the city to 10,000 (i.e. break the taxicab monopoly). Let the free market decide the optimum number of cabs. Three, allow the taxis to charge whatever fees they want (which we can safely do when they face unlimited competition). The only aspect of the taxi business the government has any business regulating is vehicle safety and driver competence. The rest is better left to the marketplace.
Why in the blue blazes is the number of taxis regulated anyway? Keeping the number of taxicabs fixed serves absolutely no social good. One can see that the number of taxis is kept artificially low by the fact that the cost of taxi license is roughly $100,000 on the open market (these things can be bought and sold).
Once can immediately see why these reforms have not been enacted. If one were to propose such heresy, two hornet’s nests would be aroused: the transit workers unions and the taxi license owners. While there is no getting around the fact that the transit workers will be in for tougher times when their monopoly is broken, the cab owners do have a legitimate beef that can be at least partially addressed.
Since they were forced to buy a taxi license because of a regulatory climate the government set up, it can be argued that the government has a moral duty to compensate them for their losses. After all, their deal was: you pay a 100 grand for a license, but in return you get access to a restricted market. To buy all these licenses back would cost a billion dollars – a number the government understandably chokes on. However, if you think about it, this may be money well spent, because where would it go? To small businesses that specialize in public transit, that’s where. Doubtlessly some might blow their new found fortune on coke and hookers, but I suspect that because all these people are entrepreneurs, they will invest it in the one business they know - public transit. They will buy things like the minibus parked outside the bar described above. And since they are small businesses, they will invest their money far more efficiently than a large bloated government bureaucracy like the TTC is capable of doing, whose first temptation is to hire more upper management and buy them all ergonometric chairs.
The most important positive result of these reforms would be that businesses will be allowed to experiment with creative public transit solutions. Minivans at bars; central minivan stops, where larger minibuses can ferry people on a longer journey to other minivan stops; and of course, as many buses as the market will bear at rush hour, competing with each other on fare or amenities. And these are just the things I came up with off the top of my head. However, as long as the monopoly remains, we are stuck with a system whose last new idea was the subway - implemented over 50 years ago.
Speaking of the subway: Because of its nature, this is an aspect of public transit where the public monopoly argument makes some sense. There really isn’t room for more than one subway system in a city (though Toronto is stuck with two, thanks to the wretched Scarborough Light Rail Transit System the province forced on the city in the 1980’s). However, if the TTC were divided in two, the buses in one company and the subway system in another, and the bus company were cut loose to compete as best it can with private firms, then public transit grants could be focused exclusively on the subway system. In this way, we could start a campaign of continuously building new subway stations, adding a new stop every year or two.
The last item on the agenda is the streetcar. This is a costly, obsolete technology that needlessly clogs our crowded streets. It is a costly indulgence for nostalgic streetcar cranks and misguided socialists. Public transit should be a state-of-the-art tool not a museum exhibit. The argument that streetcars pollutes less can be met by mandating hybrid and forthcoming electric technology on our new (and private) buses. If we must, we can bring back electric trolley buses as a compromise. The neighbourhood-killing (and street clogging) streetcar right-of-ways that the City of Toronto is hell bent on building only adds urgency to this issue. This is just one of the bad ideas that would have never seen the light of day if private industry were running the show instead of showboating politicians beholden to special interest groups. And by the way, the term ‘red rocket’ referred originally to the subway, not the streetcar.
But don’t hold your breath waiting for any of this. All of the foregoing is anathema to Toronto Mayor David Miller. It also goes against the instincts of Ontario Premier Dalton McGuinty. The leader of the provincial opposition, John Tory could suggest it to good effect, but he won’t. He is too timid and too unimaginative.
And so we soldier on with a creaky 1950’s system that requires ever increasing amount of government money to keep it afloat.