Railway privatisation in America

The history of railways in Britain follows a similar pattern that found throughout Europe and much of the world. The railways were built by private companies, which later merged and combined and were ultimately nationalised into a single, state-run operator. Britain is of course unusual in having since privatised its rail network again, notionally at least, with trains now run by a mixture of private companies on rails owned by a single publically owned body, Network Rail. Elsewhere in Europe, publically owned rails are increasingly opened to private rail operators under the European Union’s Directive 91/440/EC.
However, in North America, the opposite situation exists. The United States is one of the few countries that never truly nationalised its railways. However the government did indirectly take charge of passenger services by forming Amtrak in 1971. This has led to a situation where a national passenger operator, supported by state subsidy, operates a network over lines owned and maintained by numerous private freight railroads.
The formation of Amtrak in 1971 came at the end of a long story of decline for America’s passenger rail services. Trains were seen as an outmoded form of travel, supplanted by the automobile and the passenger airliner. Both road and air travel were receiving massive state assistance through the building of the Interstate network and new airports and air traffic control infrastructure. Meanwhile passenger railroads were struggling to compete, held back by overbearing taxation and political conflict over the proper way to assist the industry, should it be assisted at all.

With railroads continuing to fail, public pressure mounted to save passenger services. However the Democrats were unwilling to subsidise the for-profit private railroad companies, and the Republicans were opposed to nationalisation. This situation led to the decision to create a publically supported body that would take over passenger services from the private operators. While some private services lingered on into the 1980s, the majority chose to shed their services to the new operator.

Fast forward thirty five years and today’s Amtrak network is a mere shadow of the services it inherited in 1971. The ongoing drive to bring it closer to financial independence has left a dwindling system of slow, infrequent services appealing largely to leisure travellers. Two of the contiguous states are completely without service, and away from the key North East Corridor and Californian Coast routes, trains are not seen as a viable way of travelling compared to the extensive Interstate and airline networks.

Freight railroads, however, continue to be a lucrative industry, and a series of mergers has led to a few titans like BNSF, Union Pacific, Kansas City Southern and CSX controlling vast networks that span the country. On these lines speeds are slow, the networks being designed for America’s distinctive multi-mile long lumbering freight trains. While efforts to create new high-speed lines have been underway in several states, none have so far come to fruition, and no high speed trains operate (by the European definition of 200km/h) outside of the Boston-Washington DC North East Corridor, the only substantial area where Amtrak has control of its own rails.

The benefits of vertical integration here are as obvious as they are in the British system. Having operator and infrastructure be the same organisation avoids conflicting priorities and makes sure infrastructure operators are responsible for the punctuality of the trains using their rails. Whether it’s Amtrak running on Union Pacific metals in the US, or London Midland running on Network Rail ones in the UK, the hybrid of public and private ownership seems to create more problems than it solves.

It’s easy to assume that the solution to this is a single nationalised network, but this removes all opportunity for competition and shifts accountability from the passenger to the taxpayer. Instead, the proper solution in 1971 would have been to level the playing field between railroads, airlines and road transport, allowing private operators to continue operating their own services without government driving investment into competing modes.

Fortunately, there is now a glimmer of hope on the horizon. In Florida, the first of a new breed of private passenger railroad is emerging. The curiously named ‘Go Brightline’ is a private sector project to link Orlando, Fort Lauderdale and Miami with fast, modern services positioned to compete with road and air travel. For the first time in nearly four decades, privately operated passenger trains will link American cities along tracks owned by the same operator.
Despite the radically different geography, America, like Britain, provides a clear case study of how separating operation and infrastructure produces the wrong outcomes for the passenger. All too often this is ascribed to the failure of privatisation, but neither passenger system is truly in private operation. One place where railways are truly privatised is Japan, a country which enjoys a thriving passenger rail network that easily ranks as one of the best in the world.

It will be interesting to watch the progress of the Go Brightline project as it begins operating over the next few years. Hopefully it will demonstrate how true private operation can present a viable alternative, both to the inadequate Amtrak network and to proposed multi-billion dollar public sector projects that are rightly so off-putting to the American electorate.

Let’s imagine an alternative to the NHS in this best of all possible worlds

The NHS is on strike today with 4000 operations cancelled in a dispute over pay and conditions. The government’s contract negotiations with junior doctors became more bitter recently with the publication of emails between the Department of Health (DOH) and Sir Bruce Keogh, the medical director of the independent body NHS England. The emails document how the DOH suggested, and made, revisions to Sir Keogh’s widely publicised letter to the BMA that was sent in the week after the November 2015 Paris terrorist attacks. The letter included a request for assurances about how junior doctors would respond if there was a terrorist attack. The changes were made in order to be more ‘hard-edged’ about the terrorism risk and the DOH planned that this point would be ‘pressed quite hard in the media once the strike is formally announced’.

It is not surprising that the DOH, as a government department, is trying to use fear and spin to win its political cause. It is saddening that a senior clinician, Sir Keogh, who has championed patient safety and the use of data to improve outcomes in heart surgery, has allowed himself to be manipulated this way, but perhaps it is also unsurprising, given the pressures on those in power. The concern raised by Sir Keogh is utterly invalid and we sadly have history to demonstrate this – has he forgotten that only 10 years ago in the 7th July bombings the actions of the off duty doctors at BMA house in Tavistock Square? Has he forgotten the doctors who rushed to work to staff the A/E and surgical departments? Given the 1st strike was meant to be a ‘Christmas Day Rota’ why has he not raised hysterical terrorism concerns each December 25th for the past few years? Even the most amateur of psychologists could understand that accusing professionals of a disregard for terrorism can only lead to a hardening of the resolve in those you are trying to negotiate with.

Much has been written about the junior doctor contract. To summarise: ‘junior’ doctors includes all doctors who are not consultants, from early 20s to late 30s and above; the banding payments are not optional overtime, rather they are a supplement based on the intensity and timing of the rota with an intentionally punitive supplement to reduce unsafe working; junior doctors have little choice of employer as there is an NHS monopoly on training; the market has shown the pay and conditions are too low, with dangerously understaffed rotas, rising emigration and increasing locum rates. The government’s proposals would reduce staff pay for an equivalent rota over time, thus hoping to delay the inevitable financial collapse of the NHS on their watch.

This industrial dispute, and the way it has been handled, however represents more than just a clash of two narrow interest groups. It is a symptom of the sickness in the NHS. This solely tax funded system, with no safety valve of patient contributions, can only tend towards one set of end points: a cheap yet inefficient system with unavoidable political input, top down bureaucracy, low patient autonomy, poor staffing practices and a public discourse dominated by emotion and clouded thinking to a near religious degree.

I am not saying that the NHS is all bad. In such a large system there are areas of excellence as well as areas that need improving. If we set our sights low enough the NHS today is much better than what came before it. We are not in 1948 however. All todays healthcare systems do much more that in 1948. We are in 2016 and live in a relatively wealthy country where people have discretionary spending and luxury way above that needed for food, water, clothing and shelter. And 2016 is a world with fast capital flows, increased movement of people, rapidly evolving technology and an increasingly ageing population. A centrally planned and funded system has no chance of keeping up in such an environment and a new solution is necessary.

Answers

For the junior doctors the problem of regulation and central contracting leads necessarily to collective bargaining and industrial action. Thus a first step would be to remove central contracting from junior doctors and allow hospitals, or chambers of specialist doctors, to offer their own services, including training, with their own T&Cs. At the same time accrediting specialist medical training should be opened up to the market. Thus training accreditation bodies and hospitals or healthcare providers would have to offer a package with training that had a reputation for being high quality, with good enough T&Cs to attract the best candidates.

With regards to low value healthcare, such as GP appointments, day case procedures or specialist clinics, a mixture of self-pay and concierge models would lead to multiple choices for patients with varying mixtures of convenience, price, access and continuity. There would still be a market for the lowest price options, but insurance based schemes could offer the ability to top up or pay an excess as needed at the time of use. Paying with one’s own money as much as possible should always be preferable to alternatives. The waste and the clash of incentives that arise when others, government or private, spend money on our behalf is responsible for many poor outcomes.

High cost healthcare is more challenging. How does one know in advance how much to pay in insurance for a rare yet potentially severe event, such as many cancers, that could cost £100,000 at the median yet could cost £150,000 in a service with higher safety, more convenience, greater autonomy? The market is so opaque the only answer for many is to pay what they can afford in insurance and hope it’s enough when they need it. More confusingly an insurance provider might take funds and use it to build a pool of money by investing in various investments which may or may not have provided enough money at the time the money is needed.

When one buys a healthcare insurance the main concern of many is that the healthcare insurance will provide enough cover when needed. This explains why historically supporting a system such as the NHS was logical for many people, as MPs will always have to vote for a certain amount of tax to be used on the service and will always vote to keep the local hospital open. There is no guarantee, however, that the UK government will remains solvent to the extent needed to fund an NHS in future, in the same way that elderly people relying on only a state pension and state nursing care already find themselves in circumstances much reduced compared to their expectations during their working life.

I would like to propose a system whereby providers of healthcare issue vouchers for their services. This could be digital voucher via a blockchain, most effectively brought into existence by ‘proof of burn’. The current market value of, for example, a prostatectomy is purchased by a cryptocurrency such as Bitcoin then destroyed in an open manner whilst creating the equivalent digital voucher for prostatectomies. Brokers could create these vouchers. Underlying this is a series of options which are tied to individuals and expire on use, or on death of the holder. This is sold as a healthcare package funded by a mortgage like product. The role of the brokers, or insurers, is to ensure they balance the number of options vs tokens so that they remain solvent. Blockchain technology would be able to ensure the reserve held by different insurers is public and comparable, whilst the rate of use of tokens remains transparent. The capital for insurers would be via investors who would buy a bond in the fund that bought the tokens.

If I get prostate cancer, and an operation is the appropriate option I can redeem my option and spend a voucher worth 1.0 the cost of a prostatectomy. But what if 1.0 x cost is not enough for provider I wish to use? What if the provider charges 1.2x a prostatectomy? In that case I could buy an extra eligible option on the open market from someone who is happier with the 0.8x service. If no one wants the 0.8x service the market response will be for the marginal price of 1.0 x service to rise. The aim of the system is for it to be self-balancing as the change in price for the 1.0x service cannot be hidden from new joiners to the scheme, as the insurance companies must buy enough tokens with the capital raised when a new person joins. The system therefore stays ‘honest’ and consumers are paying for what they want – the right to appropriate quality medical care if they need it in future. Of course one could buy 1.2 x options as standard, in the same way that someone buys the full featured medical insurances, and there could be options where there are 2 alternative yet different priced treatments, with a rebate if one chooses the cheaper, perhaps more inconvenient, treatment option.

This sounds complex but the principle is that the individual must have some stake in the money being spent, or saved, when accessing healthcare, and that the more transparent and open this market is, and the more incentives can be aligned, the great the chance of maximising value. The core idea is to envisage a system where consumers trust they will receive healthcare when needed yet do not have to appeal to regulators, whilst still incentivising insurers and health care providers to continue to provide a choice of high quality, convenient and affordable treatments.

The idea for this system is a work in evolution, and as such needs developing, but if you are an interested actuary, trader, cryptographer, insurer, mathematician or an imaginative thinker who might want to help progress this to a white paper, feel free to contact me on @MrZachCope.

How can I do in 2016 what I did not do in 2015?

There are plenty of roundups up the year and previews of next year floating around at the moment. Any brand which desires your long-term engagement (and they all do) is making sure to tell you what they did for you in 2015 and to make promises for 2016. I am not big on promises, but we have spent much of 2015 thinking about and sharing ideas about the kind of thing we would like to do – the kind of strategy we think would work. Now is a good time to reflect on that material and if we feel we can achieve some small part of this vision in 2016 then let it serve as a reminder to reach out and find the help you need to achieve it.

I am delighted to include two brand new videos of our events from earlier in the year. This year’s recording are a treasure trove and I am really looking forward to sharing more of that in 2016.

syed kamall two chairmen featured

Poverty Solutions without Politics

Syed Kamall started his talk by saying that he knew quite a few of the people in the audience. This was not to ingratiate himself with us. His point was that although he is familiar with and agrees with our ideas and has mingled quite a bit with us in the past, he is not now inclined to spend much of his time merely reading and talking about these ideas. His concern is to do something about them.

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martin-keegan-evolution-of-private-coop

Martin Keegan on the Evolution of Private Cooperation

It would be a mistake to underestimate the importance of a subject like this one, merely because the guy doing the talking is keeping the emotional temperature strictly at lukewarm. The Trust is the means by which Civil Society, the society of what Edmund Burke called the “little platoons”, becomes a reality. All manner of cooperative enterprises are able to get started and to thrive, for decades and even for centuries.

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simon-at-making-change

Making Change Within Your Lifetime

Brian Micklethwait, Charlotte Bowyer and Guy Herbert joined myself for a wide-ranging chat about how they do and have done libertarian activism. All the participants looked at their efforts as incremental, not revolutionary, and that they all agreed it was difficult. Things will get worse before they get better. This rather noisy recording is from the Fine Line – the dinner and drinks venue for the Liberty League Freedom Forum 2015.

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andy-bolton

WE will build the roads! Implementing a stateless society

We all accept that we want to reduce or remove the state, so how do we get to that libertarian nirvana; or at least closer to it? There is no simple answer but instead of travelling along that road to serfdom we should start building the road to liberty. Our liberty.

Who will build that road?

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© Outme

Opportunities in purity

Some dismiss natural rights libertarianism because they believe it requires revolutionary change. It does not – it requires a more creative and more incremental approach. Libertarians need to find the changes that are beneficial and that lie within a complex set of constraints. This is a very different, and much superior, approach to simply ignoring natural rights.

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© Helen Cobain

© Helen Cobain

Decentralising welfare

I thought it might be helpful to summarise my tactical ideas on welfare provision. Note that the focus of these ideas is on long-term joblessness, although various other problems could be solved the same way. Enabled by Nudge we achieve a transition back to voluntary Friendly Societies as the main service provider, and a “big bang” that opens up the market to all sorts of innovate players.

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Who is we?

The biggest news of 2015 is that “we” now means something, and is a word we can use more. Rob, Leon, Devika, Brian, Miss P,  and others have begun to make significant and regular contributions; we have been plugged in to a team workspace (Slack), installed apps on our phones, and now when something happens here there is more than one person whose phone beeps, more than one person thinking about how Libertarian Home relates to today’s news agenda, and taking to social media on behalf of the brand. This is a huge step forward and I am really grateful for those of you who have taken the plunge and committed to Libertarian Home as a vehicle for regular activism.

There is space for more of you to get plugged in. We have made progress somewhat at random. If you are a regular contributor, or would like to be again, then come and talk to me about taking up your place in the team. There is no need to commit to doing anything more than you already do. If you just want to blog, that is fine, but blogging as part of a team connected in real-time is a different and more valuable experience for all.

The Inevitable 2015 Top 10

This content, selected from the top 20 most well-read articles of 2015, is the content that deserves to be read again in 2016. Enjoy.

Our Long Term Economic Madness, by Ben Kelly

In May the Conservative Party portrayed the election as a choice between Tory competence and Labour chaos. Labour’s spending and borrowing compared to the Conservative “long term economic plan”. The electorate made their choice and the current government received a mandate to cut the budget deficit and fix the economy.

Britain is now purportedly on the path to economic sanity, but you can be forgiven for having some moments of doubt

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Ending Fake Charities, an interview with Sara Scarlett

A well known libertarian and a former Lib Dem started a petition calling on the Government to cease all funding of the charitable sector.  “A “charity” which receives taxpayer funding is simply not a charity.”

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Dear Mehdi Hasan, I Am A Free Speech Fundamentalist, by Rob Waller

I read your recent article on ‘Free Speech Hypocrites’ and the Charlie Hebdo attack with great interest. However I found it to be poorly thought out and flawed

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12 libertarian policy statements

I find myself thinking, once again, in terms of leaflets…. here are 12 policy statements. Are they in the right order? What would you include?

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How I will be voting, by Simon

Let’s be clear about what a UKIP vote was at the EU election: it was a vote against the existence of a political institution that we do not need and do not want, so I voted UKIP.

The test for this Westminster election is very different.

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The virtuosity of individualism, by Ben Kelly

Conventional wisdom dictates that individualism is a destructive force which has enraptured and degraded our society. According to leftist orthodoxy it manifested itself in our culture with Thatcherism and rampant consumerism and has infected the “selfish” millennial generation, the only explanation for their worrying right-wing tendencies.

Conventional wisdom is, as is so often the case, quite wrong.

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Things you can’t say about culture that are true, Ben Kelly

For them “multiculturalism” is an attempt to create tolerance and harmony amongst multi-ethnic groups and do away with the supposedly chauvinistic concept of a dominant culture

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Let’s sea if we can bung some politicians and make a fortune

It is not that a bribe was offered to politicians on national TV, but that changing laws to make your product compulsory was discussed as an attractive business strategy with no discussion at all of whether a such a move was ethically appropriate.

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Ignorant Andy Burnham just insulted 700 NHS staff, by ExxCee

I was part of the team which led the shut-down of the service. I personally stuffed envelopes with redundancy notices for our staff. I tried to answer the questions of confused nurses and call handlers who were unsure about the TUPE transfer process. I was even able to help them with information about their future roles

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Soviet Migration Chaos, by Nico Metten

Europe seems to be in crises at the moment. Economic problems of some EU states, most importantly Greece have been constantly in the news over the past few years and no end is in side. The people in charge to manage the crises are our completely clueless politicians. They have identified all kinds of causes, except the real one, which is of course themselves.

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Remembered

At the very start of 2015 we faced up to a tragedy in our community. She was not a regular attendee of our Meetup but was well-known and well liked by everyone there. The mood at our February event was raw. I am sure Christina Annesley will be warmly remembered in 2016.

Video: Poverty Solutions Without Politics – Syed Kamall

Syed Kamall started his talk to Libertarian Home by saying that he knew quite a few of the people in the audience. But this was not to ingratiate himself with us. His point was that although he is familiar with and agrees with our ideas and has mingled quite a bit with us in the past, he is not now inclined to spend much of his time merely reading and talking about these ideas. His concern is to do something about them and with them. To “roll back the state”, yes, but not just by talking and reading about how that would be good and how the state is bad, but by showing that there is a real world alternative to state provision when it comes to tackling poverty. And he wants us to do likewise.

But before talking in more detail about that, Syed talked about himself. He spoke first about how his electoral record so far is: played five lost five, and that he only became one of London’s three MEPs because he came fourth and then one of the MEPs became an MP and stood down.

The way Syed told that little bit of anedotage got a couple of big laughs, and it was indeed good self-deprecating stuff. But it also drove home the larger point that Syed had been raised to believe in himself, to work hard, to persevere, and to pick himself up and carry on whenever he fell or stumbled. Syed’s dad, who had arrived in Britain as an immigrant in the 1950s, wanted Syed to go further in life than he had been able to. He said to young Syed things like:

“People that tell you that something can’t be done are showing their own limitations, not yours.”
These sorts of words, said Syed, do inspire. And he now says similar things to the young people he now talks to, in schools and clubs. “I’ve done it, so can you.” You can reach your full potential. Everyone can reach their full potential.

But politicians are not now helping. The left’s idea is:

“You pass legislation … and that’s supposed to solve problems. … Clearly, it hasn’t worked.”

But we libertarians now do little better:

“My criticism of libertarians and classical liberals is that actually what they do is, they just talk.

They say: let’s roll back the state. And that’s it…

“You’ve got to prove that there’s an alternative to the state. We don’t do enough of that. … If you live in some areas, and there are no civil society organisations or other organisations like that, then sometimes the state is all someone’s got. So if you talk about rolling back the state, what you’re doing is you’re saying: I don’t care about you. I don’t give a damn.”

The left needs to be reminded that there once was a pre-state, non-state, cooperative ideal for the provision of welfare. But on the right, the tendency is for Conservatives to suppose that all that is required to make top-down socialism work well is for Conservatives to be in charge of it. They too need to be show than there is a viable alternative to state provision as the way to tackle poverty.
“And the way to do it is to say, you yourself, in our local communities, are there problems that we can help solve? … You don’t really have to look that far.”

On the Roehampton Estate, they have a drug problem and a gang problem. But the drug dealers were very entrepreneurial.

“This guy, Andy, who runs Regenerate …took those entrepreneurial skills and they created a business called the Feel Good Bakery, where they now sell sandwiches. So they’ve gone from drugs dealers to sandwich dealers. … The T-shirt is inspirational. It says “From Dope Dealer to Hope Dealer”. I just think that’s an amazing story … I said to them, how can I help you? How can I use my job, having a title after it, three letters after my name, covering London, how can I help you?

“One of the things you realise in politics is that actually, you are at the centre of lots of networks. You meet lots of people. And so, what I can do, as a politician, is connect people.

“Regenerate doesn’t want money. They want potential customers to buy sandwiches. So what I’ve been doing for this business is I’ve been writing to potential customers, local councils, local businesses, and others, who might want to be customers …

“Another example is a project called CleanSheet, that helps ex-offenders. The problem is, when someone goes to prison, a lot of people immediately label them a bad person, without understanding why they went to prison. … they come out … they re-offend, go back to prison, come back out, re-offend. So, CleanSheet looks at breaking that cycle …

“Jane, who runs that project, said: Could you write to businesses, or talk to businesses that you talk to, and ask them whether they would meet with us. That’s all. We’ll make the case for why they should consider taking on a reformed offender. We can show good business results, why people are loyal because they’ve been given another chance in life, …

“So that’s all I did. I got together with a local MP, in Croydon, and he and I wrote a joint letter on headed paper. Every big business that I meet, I’ll ask them. I’ll say, there’s one of the projects I’m helping, any chance that you might meet this charity.”

The big financial institutions say no way. But manufacturers often have real problems training younger engineers, or retraining people from other disciplines. They have been much more receptive to the CleanSheet message.

Another project Syed mentioned was a jobs club in Croydon, which has put a hundred of its members into work. All they asked Syed to help them with was finding second-hand computers.

So how does Syed now respond to pleas for help from members of the public?

“The first stage now, is I will introduce people to a project that’s tackled a similar problem in their local area. …

“Second stage, let’s … give you the confidence to set up the organisation and to give you help and training.

“And the third stage is: let me introduce you to people who might be willing to fund it, so you get it on a self-sustaining basis, and then you solve the problem. …

“If we did that, right across the country. If classical liberals or libertarians started getting involved in their communities …

… My plea to you is put down your books, get out there, and solve the problem.”

Watch and listen to the whole thing. It lasts no more than twenty minutes and will provide libertarians with much food for thought. Personally, as I said in the Q&A afterwards, I think that there is a definite place in the libertarian movement for reading books and talking about them. Yes, words can be a substitute for action, but if done properly they can also inspire action.

But Syed surely speaks to and for many libertarians, for whom reading and talking is, to use a phrase that I regularly hear: not good enough! Many Libertarians believe that they can actually do things to roll back the state and roll forward humanity. And just as his father’s words inspired him, Syed’s talk will definitely inspire libertarians, of the sort who want to do things, to do better.