1. Building the Case for Privatization and Deregulation of Urban and Intercity Transportation Systems Clifford Winston The Brookings Institution

2. Some Transportation Issues in the U.S. Costs and aggravation from airport and road congestion are rising More public investment in urban transit is needed Additional infrastructure is needed to handle the expected growth in freight traffic Trucks do not pay their fair share giving them an advantage over rail

3. The Issues Were Actually Taken From Australian Newspaper Articles These issues and others raise a fundamental concern about government’s pervasive role in transport The concern is vital because transport expenditures and users’ value of time account for a sizable fraction of GDP One approach is to recommend efficient policies and live in denial about government’s track record An alternative is to understand the motivation for and potential benefits from institutional change that would curb government involvement

4. Government Involvement in U.S. Transport Providers of urban and rail transit Regulate taxis Provider of intercity rail passenger transport Owner and manager of most roads, airports, and bridges Residual regulator of intercity transport

5. Building the Case for Privatization and Deregulation Lessons from regulatory reform Current inefficiencies created by the public sector Constraints on efficient reforms Designing experiments

6. Lessons from Deregulation Government failure in regulation Static benefits of deregulation Dynamic benefits of deregulation Most important lesson is what regulation suppressed

7. Costs of Residual Regulation Railroads and the Surface Transportation Board Airlines: domestic Airlines: international Greatest cost is that managers still have a regulatory mindset

8. Current Inefficiencies: Air Transport Infrastructure Airports: Pricing Investment Terminal operations and security Air Traffic Control: Allocation of funds Obsolete technology and operations

9. Implications of Current Inefficiencies Limit competition Compromise service Increase costs

10. Current Inefficiencies: Highways Prices for cars and trucks Highway design Production Effects on land use

11. Implications of Current Inefficiencies Investments generate low rates of return Spending has small effects on users’ congestion costs Expenditures and earmarking continue to increase

12. Current Inefficiencies: Public Transit Prices for bus and rail Service Production Network design

13. Implications of Current Inefficiencies Huge public deficits Low load factors Questionable social desirability of current services

14. Constraints on Efficient Reforms Agency Limitations Political forces: Congress State and local governments Rail and truck interests General Aviation and commercial airlines Labor and suppliers of transit capital Users and supporters of urban transport

15. The Potential for Privatization and Deregulation to Improve Efficiency Full deregulation of intercity (domestic and international) transport Competition among airports Privatization of air traffic control Competition in urban transit Private roads

16. Designing Experiments Airports Air traffic control Urban bus transit Urban rail transit Highways

17. Conclusions Large inefficiencies associated with public sector ownership, provision, and regulation of transportation Little evidence that government policies have improved over time Constraints on efficient reforms are powerful Deregulation and privatization offer the possibility of significant improvements in efficiency—especially innovation and technological change that is suppressed Designing appropriate experiments is crucial to gain political support and indicate likely effects