I have a confession to make. I love the French TGV train that recently set an speed record of more than 350mph – that is quicker than some of the fighter aircraft of World War 2. It is a brilliant, sleek example of engineering and no wonder the French are proud of it. French civil engineering is in fact world-class, a fact that Frog-bashers would do well to remember. The French also played a part in that other magnificently quick and elegant beast – Concorde.
I read an interesting article on the TGV business in the UK weekly, The Spectator, last week, by Neil Collins (subscription-only). In this week’s Speccie, old-style socialist Neil Clark (defender of Milosovic, to his eternal shame) pops up in the letter’s page of the print edition to poke fun at privatised railways, arguing that the TGV example proves how splendid nationalisation is. It is a superficially appealing argument, but wrong on a number of grounds.
First of all, the TGV train has most of its fixed costs paid for by the state, ie, the French taxpayer. Taxes in France are high, some of the highest in the western world. It is all very well for Collins or Clark to wax lyrical about the ability of Monsieur and Madame to travel from Paris to Marseilles for under 20 euros, but that rather ignores the heavy tax bill that the benighted citoyens of France pay to keep this ultra-quick train system operating. When anyone talks about the ‘profits’ that the TGV might make, it is an abuse of economic language, since the initial investment into the railway was not an ‘investment’ in the sense that anyone spending their own money of their free will would understand it. And France, a less densely populated nation that Britain with a rather less respectful attitude towards property rights, can more easily punch straight railway lines across the land regardless of the objections of anyone who stands in the way. These are costs that lie on the debit side of the ledger.
The truth is, that many big state projects are often awe inspiring and people will therefore conclude that we should model the rest of our activity on that. When emergency planning methods were used to make war machines during WW2, socialists and others imagined that we should turn to such ‘rational’ methods in times of peace. How naive they now appear, but no more naive than those folk like Al Gore who claim that the State should take the credit for the internet, for example, as if such things as Google, YouTube or this blog would ever occur to a civil servant. In fact, just imagine how crap the internet would be if it was run by a state monopoly, like British Rail in the 1960s and 70s.
UK rail privatisation is often held up as an example of the supposed limits of ‘free market fundamentalism’, but given the botched way in which railways were sold off, the constant interference with the railways in the early years of Labour, it is a nonsense to claim that only state monopolies can run rail networks.
Of course the corollary to the state-run TGV is the Japanese bullet-train – a wholly private operation. I seem to recall that the Japanese got there first…
As a French taxpayer I hate to say I don’t see the whole point of this TGV record. I don’t think my tax money needs to travel at 350mph. It should have stayed in my pocket to start with.
Not everything done by the state is an utter failure. The problem is that people see only what has been done, and not what could have been done had the state been left out of the equation entirely.
The state reduces economic growth by at least several percent a year. If economic growth in the US or UK had only been a couple of points higher every year for the last century, we would now have something like seven times the wealth we do now. If growth had been three points higher, we would have something like nineteen times the wealth.
Imagine the things a society seven times richer than ours could have done, let alone a society nineteen times richer. The occasional fast train or mediocre government funded hospital pales in the light of what a society like that could do.
Those that think this is fantasy should consider that in a few centuries, steady economic growth has brought us from thatched hovels to comfortable homes with hot and cold running water, electricity, telephones, etc. for even the poorest segments of society.
What would have happened if we had experienced another two or three or even four percent higher economic growth over the last century? We’ll never know. We traded our birthright for a TGV or two.
In his autobiography, Albert Speer wrote expansively about his drive to deregulate (probably relatively) Nazi German industry to benefit their war effort.
He noted the irony that, in response to the war, the free nations of Britain and the USA heavily regulated industrial output, whereas Speer, upon taking his position as Minister for Armaments in 1942, embarked upon a programme to drastically cut government regulation of Nazi industry. Consequently, Nazi armament production peaked in 1944 during the time of the heaviest Allied aerial bombardment.
Certainly Speer was clearly not a liberal, however he at least understood the stultifying hand of bureaucracy, which is more than I can say for the socialists Johnathan mentioned who admired the inevitably greater combined industrial output of the nations confronting the Axis powers.
As you know railways in Britain are owned by the government.
There was a brief period when the system was owned by a company called “Railtrack” but (as you also know) did not own the trains themselves or have much say in the service – and certainly there is nothing private about “Network Rail”.
As for the “train operators” they did not tend to own the trains they ran, and they bid for a “franchise” for X number of years.
People demand the “renationalization of the railways” seemingly unaware that they are nationalized.
It irritates me that so many people who are successful in life are so ignorant, but then (perhaps) their ignorance is the secret of their success in this world.
Quite. When the butchers’ bill for the Paddington disaster was presented to court it was made clear by the judge that it did not matter if the penalty against Railtrack/Network Rail was £1 or £100m – the fine would ultimately be borne by the taxpayer anyway.
An example of the relative weight of regulation in war time is Germany and France during World War One.
Before the war Germany had vastly more heavy industry than France (this was partly due to the loss of Alsace and Lorraine after the war of 1870 – but was also due to French companies tending to go for consumer good markets).
In the original German attack some more of France’s industrial areas were occupied by the Germans – and the war was mostly fought (as regards the Western Front) in northern France.
However, in spite of all this, France ended up producing more shells (and doing better in other ways) than the Germans.
Why was this?
It was because Germany practiced “War Socialism” and France was not so statist.
And the conclusion that world drew from this experience?
Why that War Socialism was a great success and should be copied.
This relates to my comment above.
I find it very difficult (in fact impossible) to operate in a world where most people think like this. It is like being trapped in a Mad House.
“To be fair”
It is true that state action can stimulate production in the short run – by capital consumption (a good example is provided by the French Revolutionaries who stole factories and other such in France and ran them till the machines fell apart, in order to produce war materials – when N.B. took power he found that only private enterprise could meet his needs in the long term).
But the above is not what people mean when they hold that the state should organize production in war (control those evil profit seekers who make money out of Iraq and so on), or should solve any other great problem.
They just think, if only the right people were in charge the state could solve ………..
And they are quick to believe that the state has solved X, Y, Z, problems – at least in some other country of which they know little.
Perhaps Hayek was right and it is connected with humans having evolved in hunter gatherer packs – there does seem to be something collectivist about humans, which no amount of reason or experience can clear.
“We traded our birthright for a TGV or two.”
Well put !
The question to ask is: is the TVG useful, or is it a white elephant ? Useful means: economically viable – i.e. enough people travel by it, and pay enough fares to cover the costs, over time.
No, Jacob, it’snt a white elephant. It’s gorgeous. I watched the video on the ‘net a couple of times and thought “fuck me!”. It is awesome and wonderful.
The real question is perhaps could that have been done privately? The further question is could it have been done better privately?
Well, I grew up three miles from Mr Stephenson’s cottage in Wylam. I remember reading about the Rainhill trials and the Rocket and folk worrying about being able to breath at the then unprecedented speed of 20mph. That was private enterprise.
The last mainline to open in the UK was Settle-Carlisle in 1896. The London Underground was originally built by private enterprise. The Wright Brother’s weren’t state funded…
The real, deep question is why can’t such enterprises be privately funded, successful and, well, just happen?
They always used to.
“No, Jacob, it’snt a white elephant. It’s gorgeous. “
White elephants usually are gorgeous. The question is: is it useful ? Useful means: enough people use it and pay fares to cover costs.
Technology isn’t a means to producing “gorgeous” things, or an end in itself.
The real, deep question is why can’t such enterprises be privately funded, successful and, well, just happen?
The real deep answer is: useful things “just happen”, while useless things need governments to make them happen.
Jacob,
My point was I reckon the invisible hand could have made that TGV if it wasn’t forced to wear the mitton of government regulation and taxation.
I’d ride that train for the sheer hell of it (and the travel times would be a bonus). It would make TransPennine Express seem bitterly ironic…
There is a genuine market for such things and governments just prevent it or build it themselves and then screw it up.
Johnathan,
a rather less respectful attitude towards property rights, can more easily punch straight railway lines across the land regardless of the objections of anyone who stands in the way.
Apparently when they started building the TGV network M Mitterand ordered that nothing should stand in it’s way except vineyards. How terribly… Gallic.
Also Al Gore didn’t exactly claim that the state should take the credit for the internet. He in fact claimed to have personally “practically invented the WWW”. I yearn for the days of the Stephensons, Armstrong, Parsons, Edison, Marconi, Tesla, the Wrights and all the rest of ’em.
Daniel makes a good point above.
And Johnathan, enjoy it whilst the magnetism holds because it’s going to be fun the first blip which occurs, as it must. Living on the edge is fine for the Wright Brothers and Evel Knievel but not so good for commuters.
As for privatized railways, what a mess Britain is. On the other hand, it wasn’t much better before that. The poor British commuter.
The pyramids are still impressive. No one sees the exhaustion, injury or deaths of hundreds of thousands that slaved half a year, every year, to build them. No one remembers their names.
Little people. The ‘Masses’. Serfs, slaves, peasants the vast majority of humans. Yet the delusions, wasteful econs of the powerful attract the human mind like coke addicts to a kilo bag. Zombie like we go. Nurture (sort of) or nature?
Now, worse than medieval peasants we work half the year for our lords and masters, and he gives us things that we can behold and know that master is great and wise, kind and loving and all powerful. Everywhere in the world, the temple like buildings of the state stand amongst the tired and exhausted. The world wide church of the god on earth, the State.
As for the Internet, the French have a fantastic example of what the Internet would have looked like if designed by civil servants (or even Al Gore) in the Minitel service.
Not bad in its rather limited way (you could book TGV tickets on it, in fact), but basically crude text-based pages with no real scope for expansion or innovation. The thing that particularly baffles me is that its Ceefax graphics didn’t prevent it from being remarkably successful in “36-15” porn sites. Il faut avoir de l’imagination…
Jameshigham is a good example of the problem that I pointed to above.
Britain does not have private railways (other than a few lines run by steam lovers and so on), and yet he points to Britain as a example of “privatized railways” – this is irritating.
Nick M. asked a valid question – why are the not more great projects financed by private enterprise?
Taxation and regulation.
Taxes (especially “progressive” income taxes and capital gains tax, but also inheritance tax and corporation tax) make such things far less likely.
And regulations often directly stop them – or at least make them much expensive.
Two things are required for the State to run a public utility efficiently: population density and small geography. It’s why the postal service in Holland is exemplary while the USPS sucks big time, and why Boston’s T-line commuter train is pretty good, while the one in Dallas is a joke.
Paul,
Inheritance tax is a particular bugbear of mine. Because it represents income that has been taxed (at least) once already. What is the point of starting a real long term project if your kids are going to be whacked half-way thru.
manuel II paleologos,
To be fair to minitel it’s an old system and dates to around the time teletext started in the UK. I’m imagining a state-run internet and it’s giving me the vapours. I can imagine that resulting in me getting spam (so to speak) from the 5-a-day co-ordinator.
I remember reading an article somewhere (I think it was The Guardian years ago) which pointed out that every single new technology or idea for communication had been adopted in very short order for the distribution of porn. I recall from my youth “Sam Fox’s Strip Poker” on the Speccy! I never played it. I was more of a Linda Lusardi fan.
Some of the above statements may be untrue.
So far I note that nobody has used the easy reference for costly white elephants paid for by the taxpayer, used only by those who can afford it and with a limited shelf life … our very own (well, almost) Concorde. I went to New York on it in 2000 just so I could say that I had been on it and it certainly was worth it in comparison with the equivalent boring first class 747 seat. But worth the colossal tax bill? I don’t think so.
I am sorry to put a dampner on things but Japan’s bullet train is by no means a private operation. While it may be owned and operated privately, every single line required state subsidy. The combined cost of all these lines is probably over £100bn.
Seeing as nowhere in the world has ever managed to build and operate a high-speed line on a commercial basis I very much doubt if the private sector would ever have managed the trick.
So, is this an argument for state-owned railways? Not at all, quite the opposite in fact. Profit is good. Therefore losses are bad. And the sort of losses associated with high-speed railways are really bad.
Nick: was radio ever used for porn?
And the answer is: yes!
Nick M.
On inheritance tax – quite so.
Long term projects often tend to be done “so the children can see it”.
One reason that Catholics did not develop their farms in 18th century Ireland is because both private ownership was undermined (not just be confiscation, but by the insistance that an estate be broken up among all the children on the death of the owner), and even lease hold was hit – leases were limited to a certain number of years [and a whole series of other regulations and taxes].
So most of the country was reduced to peasant plots relying on subsistance farming. This did not have good consequences.
Inheritance taxes do indeed fit in with high tax rates on income and (especially) investment.
They all lead to a culture that is hostle to working for the future and is directed to instant gratification.
Umm, sorry to come late to the party, but I wanted to get back the the giulty pleasures of really fast stateowned machines.
Eventhough I can’t fly one, the F16’s that buzz about my town are way cool. And when they have the airshow and the F15s come to town it is even more fun to watch.
A few years ago, I had the pleasure to teach at a university in Sweden, in Linkoping, where Saab aircraft was the big employer in town. They had an airshow and they were showing off their latest cool plane (Viggen?). It was quite impressive in that it could almost hover at a 45 degree angle, then bolt into the sky.
I have to admit that as an American, I did feel just a twinge of airplane envy.
Is Saab aircraft owned by General Motors?
I believe that Saab auto makers are.
Just as Volvo cars (although not trucks) are owned by Ford.
British Volvo drivers tend to be very antiAmerican – especially anti “Ford driving trailer trash Americans”.
I wonder how many of them know they are driving Fords themselves.
Paul-
A delectable irony indeed. Thanks.
“Boston’s T-line commuter train is pretty good”
HAHAHAHAHAHA…… eh…. what?
Group seeks debt relief for the T(Link)
“The bill, which will be introduced by Senator Jarrett T. Barrios and Representatives Alice K. Wolf and Carl M. Sciortino Jr., calls for the state to accept $2.9 billion of the T’s $5 billion debt ($8.1 billion if interest is included)”
As a daily rider… I guess it’s not the worst ever, but it’s not good.