Historical Lessons for the Bay Area’s Transit Crisis

Currently, important discussions about transit are taking place in the San Francisco Bay Area. The region’s main transit systems—BART, Muni, and Caltrain—are facing significant budget deficits. Many progressives argue that market forces would fail to deliver effective mass transit and that the market couldn’t provide trains in California. The state has already issued emergency loans and authorized regional taxes. It might not be enough, and BART has even moved forward with plans to close 15 stations and cut 60% of its train service if it does not receive more public funding.

Perhaps the Westerners could learn from the New York City experience. At present, there are three subway lines in the Big Apple: the Brooklyn–Manhattan Transit Corporation (BMT), the Interborough Rapid Transit line (IRT) and the Independent line (IND). All three, of course, are now fully owned and operated by the New York City government. You would expect nothing other under the administration of the newly elected Mayor Zohran Mamdani.

So what can be learned by the Westerners from the Easterners? Both systems are owned and operated on the basis of transportation socialism: municipal governments are in total control.

However, as a matter of history, the BMT and the IRT were originally built, owned and operated by private companies. That ought to put paid to the notion that there is a “market failure” going on in this sector of the economy, and that free enterprise, which has done so much for our prosperity (just compare East and West Germany, North and South Korea), is an utter failure here, and, necessarily so. Nonsense on a pogo stick. If the marketplace is so great, why, then, are these NYC subways under government control? The market couldn’t hack it after all?

Not a bit of it. These two subways were in the process of raising their fares from a nickel to a dime, and the government authorities were horrified! So, in 1940, they nationalized these entities, or, rather, municipalized them (soon afterward, they doubled the fare that had so horrified them when under private control)

Why is it that not only are the economies of socialist countries in dire straits, but this applies to cities as well? According to eminent economist Thomas Sowell, who just happens to reside in California: “It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.” When entrepreneurs err, they lose profits. If they do not improve their ways, they suffer bankruptcies and are compelled to enter other areas of the economy, where perhaps they can make a positive contribution. Not so at all when that state or city apparatus is in charge. Yes, the politicians face the electorate every two or four years, but this does not apply to the bureaucrats in charge of government operations such as subway systems.

There is no earthly reason why laissez-faire capitalism cannot provide “long thin things” like subways or railroads. Even streets, roads and highways are not beyond its capacity. But the latter is a story for another time.