In transport, safety is profit

This week saw a relatively benign announcement from Transport Secretary Chris Grayling, who is intending to hand over responsibility for track maintenance to the private companies operating the railway franchises. Far from real privatization, UK passenger rail transport will still be divided into franchises awarded by the government. State-owned Network Rail will remain in charge of stations, signals, tunnels, bridges and much more.

But the announcement has been accompanied by the usual ignorant howls of ‘safety before profit’ from the left (and the middle, in Britain public ownership of the means of production is a consensus viewpoint). This is the usual false choice, implying that a corporate entity has no interest in the safety of its customers, even though safety obviously is at the very top of the list of these customers’ concerns. In the real world no successful company ignores the wishes of the customer; profit and safety are symbiotic.

Whereas the confused moaning from the public is based in a very loose grasp of basic economics, the noise from the unions are more thought through. Keeping the profit motive out of an industry means less pressure to keep costs down and less pressure on the workforce. The unions are defending their narrow self-interest when they shout the ‘safety before profit’ line.

Some have voiced concerns that the government will ‘hand contracts to their corporate chums’, and this is a legitimate point. As the government is spending taxpayer money when handing out these sorts of contracts, they have no incentive to seek value for money. At the same time, this type of Public-Private-Partnerships (PPPs) are designed to alleviate the government from responsibility: if things go well, the decision to outsource operations to the private sector was right; if things go wrong, the activity is re-nationalized for ‘public safety’.

The debate in Britain is clouded by demonization of the profit motive in a number of industries, the most obvious being health care. At the same time, the history of the Potters Bar accident is given as proof of the cost of privatization, whereas in fact it proves no such thing. Though the private company Jarvis was maintaining the faulty track, it is impossible to argue that the company was in any way trying to save money by not keeping the track in order. That is not to say that Jarvis wasn’t at fault, but the fact that it was a private company has no bearing on the event.

But let’s deal with the facts. They are that the British railways enjoy the highest degree of privatization and are at the same time the safest in Europe, according to the EU Agency for Railways. Unfortunately, in an ignorant, emotional debate, facts and common sense can rarely be heard over the naïve shrieks of ‘safety before profit’.

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