Privatizing the Trains

April 1, 2010 — Leave a comment

To recall the golden age of railroad is to return to a time when powerful steam engines roared through quiet country fields, and when the whistle of the noon train pulling into the station carried with it the promise of goods and news from afar. Rail transportation remains important for U.S. economic and civilian infrastructure, as well as America’s cultural heritage. But the present state of U.S. rail travel is anything but idyllic.

In his new book, End of the Line, former Amtrak public affairs spokesman Joseph Vranich discusses the promise and perils that lie ahead for U.S. rail. Vranich sees the innovative private and semiprivate train systems of Europe, Asia, and Canada as positive models for what rail systems can be. He also believes that the government-run U.S. train system, Amtrak, should be done away with.

The United States government established Amtrak in 1970 under the Rail Passenger Service Act, envisioning the organization as a way to consolidate and revitalize America’s steadily declining private rail lines. This public system is a failure, according to Vranich, because it stifles free-market competition, is sustainable only through a gargantuan annual outlay of public funds, and offers mediocre service.

“Scaling back and restructuring Amtrak to make it more relevant is [American passenger rail’s] only hope for the future,” Vranich concludes.

He suggests that immediate privatization is the best option for the U.S. rail system, citing the Central Japan Railroad Co. (CJR) as a model. “CJR’s reorganization into the private sector has given management extremely well defined goals,” Vranich writes. One illustration of CJR achieving such a goal might be the new N700 series bullet train scheduled for commercial service in 2007. A bullet train for the new century, the N700 will feature 14 motorized cars, an active tilt suspension system for maneuvering corners at high velocity, and the capacity to run at a maximum continuous speed of 300 kph.

According to Vranich, the success of trains like the N700 is a direct result of free market competition within Japan’s rail service industry. “Another benefit of Japan’s railroad privatization has been an explosion in the research and development of advanced train technologies, with many train designs reaching new performance standards,” he says.

Vranich points out that privatization of a national rail system can take several forms. For example, a “franchised” system would allow a government like the United States to specify service levels, quality standards, and ticket prices, but then allow private companies to compete for contracts. According to Vranich, this model has worked well in many parts of Europe, Africa, and South America.

Another option is “devolvement,” or the transferring of operations from federal to state and local authorities. In this scenario, each state would be in charge of not only its own commuter rails, but also its portion of the interstate rail system. This option has been employed in Alaska with some success.

“With a motivated local management attuned to market forces, the Alaska Railroad entered into partnerships with cruise ship companies to serve the leisure market,” Vranich notes. “As a result, more passengers traveled on the Alaska Railroad than on 31 of Amtrak’s 40 routes in 2003.” Devolving or franchising Amtrak are two options heavily favored by the Bush administration. In 2003, President Bush proposed to eliminate Amtrak’s federal budget.

Skeptics of privatization point out that devolving the U.S. train system will require individual states (already cash strapped) to put additional money into maintaining and improving rail lines.

“Devolvement could be the death knell for Amtrak’s national network,” writes David Briginshaw, editor in chief of the International Railway Journal. “If a large number of states cease to be served by Amtrak [because they refuse to contribute funds to maintain services], it could become difficult to get support in Congress for passenger rail in the future.”

Another option the United States could employ, in contrast to outright privatization, would be to drastically increase federal funding and invest in a strategic long-term plan for Amtrak. This plan would aim to upgrade the U.S. intercity rail network to make it more secure and less expensive to maintain. A more ambitious plan would be to develop a faster and higher-capacity supertrain to rival the bullet trains of Japan.

Economist Lester C. Thurow discusses such a national rail project in his landmark book The Future of Capitalism (Penguin, 1997): “If individuals are to have a builder’s mentality, then government must be active, visible builders. Deciding to beat the Japanese and Europeans when it comes to having the best intercity high-speed rail network in the world would be a good place to start.”

Were the United States to develop such a train, and make its rail system easier and less costly to maintain, it could then devolve or franchise the system to the private sector. With a new and improved infrastructure already in place, a private firm looking to get into the train game would face a much smaller initial investment, as well as lower continual maintenance costs. That would help to ensure that states and towns are not forced to disrupt crucial services to save money. An improved national rail system might serve the public good by alleviating traffic congestion and greenhouse gas emissions, but it remains to be seen whether these innovative ideas ever leave the station.

-Patrick Tucker

Source: End of the Line: The Failure ofAmtrak Reform and the Future of America’s Passenger Trains by Joseph Vranich. AEI Press. 2004. 265 pages. $25. Order online from

Originally published, THE FUTURIST, September-October 2005


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