Brussels favor: Public transport in Holland

Most that will read this will be unfamiliar with Dutch public transport, but anyone living in Europe will known that Brussels is guarding the market by securing cross-border competition. This means that when nations want to sell a ‘concession’, which means a monopoly-permit for one company to take care of certain transport for a prior determined time, they must consider all incoming offers. And not just consider them in a narrow sense, all offers must be given equal weight and be judged on their merits, not on personal political preferences. So no Dutch company will be given a concession simply because the Dutch like to see other Dutch people in charge. Brussels muscular legal system will grab hold of national bias more quickly than you’d expect from bureaucrats.

The reason for this is simple and clear. The market will take care of the best possible combination of price and quality, market equilibrium in other, more over-stated and positive words. There are downsides to this, but gladly some upsides as well, as we shall now see.

Downsides first, as I would have it when someone wanted to deliver both a negative and positive message to me. First, concessions don’t make the market work. If anything, it postpones market processes for another say five to eight years by giving away a monopoly. This has lead to severe criticisms from two sides. One side wants to see the market regulate everything. That is to say: No government involvement. Let the companies decide what is profitable and what is not. And I’m sure they will, but I would stress with reasonable conviction that they would not drive any busses on lines that are not profitable, which would mean less public transport, less means to get to your destination as a traveler and ultimately, because of these reasons, less people who choose to make use of it. That is not an option many consider to be attractive, especially not in the current climate where we want to get as many cars off the roads in order to save our precious world.

The other option can be taken more serious. It proposes complete government involvement. Privatized businesses will save too much money on quality, equipment and personal are a few rounds of ammunition that have gained momentum on this side of the story. When the government takes care of business it will mean quality and service, for the best possible price. The best possible price indeed! But who will pay that price? It is no secret that projects ran by governments tend to stretch over long periods, because of bureaucratic idiots. It is also no secret that this often leads to abnormal amounts of wasted money. Stepping into a bus and getting to your destination free of charge might be a good feeling, but we should remember: Whenever something moves, there is some force that makes it move. And the laws of physics are not alone here: The diesel, the engine and the driver have all been paid. Yes, not by the traveler, by the government. All good and well, but we all know who finances the latter.

So back to the drawing board. Are there no alternatives? Some route that gets us the best of the two possibilities? Making a proposal including subsidies for companies that take good care of the clients will run you into a wall of legislature, standards and trials over who should be getting which share of the money-pie. Neither will that make the market any less transparent to citizens, let alone to companies who might be interested in bidding for an option when outlooks are positive. It seems then, that our government has already actually found the road that gets the best of both possibilities. Indeed; concessions.

I know they are not very popular, especially not among drivers (I can tell, I am one of them whenever study-schedule allows me to). But let’s get into view what it does step by step, before elaborating on each of them:

• It gives companies an opportunity to propose a deal that they think is fair, profitable and manageable.
• Equipment write-offs are spread out over the period in which the concession runs, which makes sure things never get too old, hence more safety and less environmental damage (new vehicles tend to be cleaner).
• Personal will have to swap sides every now and then perhaps, but good arrangements have been written down so that none of few will lose their jobs.
• No government bureaucracy, so no waste of tax-payers money.
• Quality, service and price are distributed reasonably well.

The first is important, because when governments run public transport there is no competition. This means there is no way to make profit for a company at all. Running things by market processes will be ‘natural selection’ at its extreme, with the likely result there will be no companies left who even want to give it a try. By giving them a manner in which they can make an offer however, you give them one chance they will not want to miss. Why this is so is easy: If they miss out, their hands will be empty and no money will be earned. That’ll be a decent blow to any company, given that there are big sums of money involved. Because there is only one chance, they will be unwilling to miss on it, so they come up with a good offer (read: good price). This is the good side of market self-regulation; the other side pulls in the opposite direction (though of equal importance), because companies want to make profit. The result is most likely to be a nice balance between two extremes (Aristotle would be pleased. How virtuous politics can be!)

The second option is no less important of course, because it involves climate and safety, but also, again, competitiveness. The first two are near-logical consequences of regular-material ‘refreshment’. A company uses vehicles for as long as the concession runs; after it ends the material will have been written off completely. That does not mean the equipment has become useless, it only means that, when a new concession will be entered, new material will be used if the contracts demand this (and they do). That is good thanks to technological improvement: New engines run cleaner and cheaper, with more miles to the gallon. Improved machinery and computers in combination with newly produced systems (not new in development, merely in production) such as ABS will also make transport safer, which is another plus in combination with the new brakes etcetera.

The fact that employers are so dependent on contracts also means that personal will have to change the color of their uniforms every now and then. No good old fashioned loyalty anymore then, but to be honest this is nothing new. The number of times companies were re-named, re-located or taken over have been numerous even without concessions. But at least drivers get good conditions, and let’s remind ourselves of the value of that, because the recent crisis has left many people behind envying such conditions. In general, a one-to-one transfer of drivers leaves no one behind against their will.

The last two points of our short list might best be combined, for we have already discussed the view that governments are less efficient than privatized businesses normally are, and I don’t think I need to argue my case if I state that no one wants to see his or her tax-money flushed down the toilet. Another good side to this is that companies will have to take care of staff-education, material reparations, de-tours, complaints, accidents, insurances….and so the list goes on. Governments are usually terrible when it comes to handling paperwork (though even on this issue many countries are showing improvements, partly thanks to the digitalized world). If we want to make a combination of some functional market aspects with government subsidies and monopoly hand-outs, we will probably get the best we can hope for. Decent prices, frequent fares to get where you want to (and on time), with the service of a company that can actually be accounted for any failures.

With so many anti-Europe moods hanging around in the lobbies of national parliaments, we might for once be just a little optimistic then. Partly thanks to Brussels, countries from for instance France can take care of Dutch public transport if they like to. Some people are wary of this, thinking that it is no good to have ‘foreigners’ so close to the heart of another nation, but this doom-day scenario is utter nonsense. First of all the evidence is ungrounded, maybe even uprooted. It rests solely on dogmatic assumptions. Second, companies give a lot less about national states than people do. Sure, when more French people work at a firm they might be inclined to see French interests met where possible. But if those French interests are losing money, while the Dutch are making money, then I doubt any prolongation of their bias.

Admittedly, I used to be a fervent opponent of concessions, until quite recently to be honest. But after I have given the matter more thoughts, there is only pragmatism. No, concessions are not the best solution. The best solution would be a government-run scheme, with the efficiency of Wall-street’s best accountants. That is however, an ideal. And ideals are often deprived of any sense of reality. So this might not be the best solution, but it is as close as we can get to that ideal in practice.