What is the capitalist answer to rail passenger transportation being non financially profitable?

  • In developed countries, rail transport is usually provided at financial loss, and needs to be subsidised by governments. In countries who have refused to do so (mostly on the American continent), passenger rail transport has become anecdotal and rail remains used for freight only, while in countries who subsidise their rail network (mostly on the European continent), rail transport has decreased significantly since the 1950s. Government subsidy leads to many problems such as the imposition of cost-saving measures on rail transportation companies, preventing them from doing their job well.

    • They are constantly looking for small, less profitable lines to close.
    • When it's not the line it's the individual stations that might be considered unprofitable and are closed.
    • They reduce the frequency of services, which by itself makes passenger trains much less attractive as the mean time of waiting for the train increases dramatically, which results in fewer passengers and an even less profitable line.
    • Even if none of the above happens, transportation companies might be unable to buy new vehicles and may have to maintain their service with old and obsolete vehicles.

    However, rail passenger transportation is, from a purely engineering point of view, much more efficient than road transportation (both private vehicles and buses):

    • Higher passengers per hour theoretically possible on a given line. A road lane can have a vehicle at most every 2 seconds, so if we assume 1.5 per vehicle (optimistic figure) that's 2700 passengers per hour. Rail can have 500 passengers per train and 8 trains per hour easily, that's 4000 passengers per hour.
    • Because rail friction is smaller than that in pneumatic tires, the energy spent to transport each passenger is typically much lower (according to this wikipedia page Passenger transportation by rail requires less than one-tenth of the energy needed to move a person by car or plane)
    • Maximum speed much higher: a maximum speed of 115 km/h is usual between villages for regular trains; up to 200-300 km/h is common for high speed trains. In most countries cars can only go up to 80-90km/h between villages and 120-140 km/h on an autobahn, but even then traffic congestion makes such speeds rarely attainable, while traffic is planned in advance for trains and is a much smaller problem. (If, like in some countries, trains are running slower and/or traffic is poorly managed, that's because no effort was made and not an inherent flaw of rail.)
    • Much better safety: in Switzerland 2017, there were almost 18,000 people wounded or killed by road, only 57 people wounded or killed by trains (excluding suicides), this makes road 312 times more hazardous than rail.
    • Train passengers can perform another activity during the ride, an option which is limited in road transport, even for non-drivers, as the comfort and space available is much lower. (Unfortunately some trains can also be uncomfortable but this is due to bad wagon design and not an inherent flaw of rail transport.)
    • Rail transport is resistant to poor weather condition: fog, frost, snow, rain cause fewer problems than with road transportation.

    Theoretically, by the mechanisms of economic freedom and concurrence, offer and demand, capitalism automatically finds an optimal solution. This does not seem to work for transportation, as the optimal means of transportation (energetically speaking) is not financially profitable and needs to be government-subsidised, while an extremely sub-optimal solution (road transport) is economically preferable.

    What is the capitalist solution to make rail passenger transportation economically profitable again, like it used to be before road transport was a thing?

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  • The idea that "trains are unprofitable" is quite a bit more complex.

    First of all it's necessary to look at the main "problem" with trains: They tend to lead to natural monopolies. Setting up a rail network requires a lot of government involvement (otherwise you will never be able to get your hands on all the land you need) and once a rail network is set up it's practically impossible to set up a competing rail network. The result of this is that whoever controls the rails controls the entire market. This causes the government to always be involved with train companies, thus bringing with it the inherent government inefficiency (even though not involving the government at all would be worse, so it's not a case of government failure).

    Next it's important to look at the primarily socioeconomical benefits (the positive externalities) of having a rail network. Having a strong public transport system allows skills to move more freely throughout a country and allows employment demands to be met more flexibly. This is especially important for people who are less economically well off. And beyond that trains provide a well developed electric transport option, thus keeping greenhouse gas emissions at a minimum. And also importantly trains are amazing at decreasing peak loads on important roads, thus it's often economical to invest a bit in train travel to prevent a lot more investments in a road network for those two peak hours a day.

    The reason why trains failed in the US was primarily for political rather than economical reasons. Trains (and other public transport solutions) became "unsexy" politically, whilst at the same time car travel became extremely popular (linked to the "american dream") and subsidized. Both explicitly through investments in the road network and implicitly

    Road travel is massively subsidised in the sense that the negative externalities of travelling by car, including the release of carbon dioxide and other greenhouse gases, are not fully offset, and most major highways—which cost tens of billions to maintain—are still free of tolls. [...] Petrol is cheaper than in Europe (mostly because of much lower taxes).

    Source: https://www.economist.com/the-economist-explains/2013/08/29/why-dont-americans-ride-trains

    So the real economical question would be: If all roads would be toll based to account for the road building costs + fuel would be properly taxed, how would that affect train travel? Right now train travel faces economically "unfair" competition in a lot of countries and that's without even considering the positive externalities that train travel brings.

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    I don't know if the situation anywhere exist. But if rail would managed like roads, it might change the whole picture. Roads are build and maintained by the government. And private companies can use them freely (or at a cost/toll on certain types of roads). Rail ten to lead to monopolies. Only because government allows it. If government would only be responsible for the tracks. Then private companies can put the trains on it. It is comparable to aviation where government controls the sky, but not the planes.

    The comparison is a bit unlikely, @roel. The sky is pretty big, it's not that big a deal to have 500 planes using the same airspace, but just 10 trains using the same track is already going to be almost impossible because only one train can use the track at the same time.

    There is another cost to consider (at least in the US): labor. My understanding is that at least until fairly recently, labor union contracts required the presence of a "fireman" on a locomotive. In the days of steam locomotives, a fireman's job was to feed coal to the steam furnace; but almost all locomotives have been diesel or electric for a long time.

    @Theik and this is a particular issue in heavily travelled corridors, such as (in the US) Boston to Washington DC and San Fransisco to San Diego -- i.e. precisely in those places where population density makes rail more viable economically.

    @Theik true and not true. Their is also a limit on planes per airspace. And tracks are split up in sections.

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Content dated before 7/24/2021 11:53 AM