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UK Railways Are Reverting to the Disaster of State Ownership

Transport for the North, a collection of the Northern Transport Authorities and some business leaders, will be calling for Avanti West Coast’s rail franchise to be stripped from it after continued disruption to services that sometimes leads to journeys lasting hours longer than they should, which, as you can imagine, leads to rather a lot of disgruntled and angry train users. They want the railway to be taken under control of the government on a temporary basis, but we should be careful, for there is nothing so permanent as something the government terms temporary. Major unions like the National Union of Rail, Maritime, and Transport Workers have already called for full nationalization of the railway network after what they perceive to be embarrassing failures of privatization. But it’s not just the unions who are open to nationalization as the “Conservative” Party has shown itself more than willing to nationalize railway networks when the franchisee is failing.

The opposition to full railway nationalization is crumbling, and the perception for most people is that the arguments against it are falling away due to the government’s nationalizing bits of it and the “private” companies performing badly on the networks on which they still operate. The Conservative Party has shot itself in the foot by nationalizing parts of the railway since that effectively takes away the foundation for claiming privatization is the better option, but as with many topics in politics, we should take this debate at more than mere face value and realize that it is a lot more nuanced than those who demand nationalization would have us believe.

The case for true privatization has been set back so much by this façade of privatization that the Conservative Party implemented. Those who seek nationalization would have you believe that the current system is extremely private and free market so all the failures of the current system justify their ideological pursuance of nationalized industries. True privatization would mean the state has little, if any, involvement in working the railway networks, with the added advantage of very few state-made obstacles in the way of railway companies buying land to build new infrastructure that would allow much greater competition; the proliferation of the NIMBY movements in the United Kingdom have made big rail projects like High Speed 2 incredibly more expensive.

True privatization is wildly different to the system we have had for the last few decades despite bearing its name and, in doing so, ruining its reputation. The state has control over who it gives the franchises to, but the process for doing this has become so flawed, through impossibly stringent conditions, that most genuinely private businesses have dropped out of the market, so it is now the case that foreign governments own most of the rail routes. You cannot make this up. Supposedly privatized railways are mostly owned by foreign governments, so you can’t exactly accuse the free market of running amok on the railway network unless you’re being intellectually dishonest.

If the system for awarding franchises, which supposedly introduces free-market reforms to the system, is so complex that actual private companies drop out and foreign states step in, then you never really had a privatized system in the first place. You can look deeper and find that even those who get awarded a franchise have one hand tied behind their back with time-tabling and fare prices almost wholly in the government’s hands. Furthermore, the actual infrastructure itself, meaning the tracks, signals, etc., are all owned by the government via Network Rail, who are notorious for producing very little improvement in the infrastructure. But as we know from the insights of Friedrich Hayek, government actors simply cannot gather the sufficient information needed to provide high quality services like a business driven by the profit motive.

We should not expect high quality service because it is simply impossible for them to deliver. The unions and a cross section of MPs accuse privatization of failing the railway network and use it as a club to beat the free market, but as outlined, it is nowhere near anything resembling a free market. The state has created a complex and dysfunctional system masquerading itself as a private company when nothing could be closer to the truth.

In the areas of the railway network where there is some semblance of a freer market, there is so much more efficiency than on the state quango that has sadly infected most of the railway network. Britain’s railway network is a great case study where you do have differing levels of state intervention between rail networks. It sends a clear signal that when the state takes a less invasive approach and does not overly restrict the workings of a free-market environment, then the participants, whether they be owner or consumer, experience far higher quality and cheaper services.

Social contract theory justifies tax collection using force by positing that you use the services that your tax money is going toward like the National Health Service or the police, etc. Thus, it must be moral as you are paying for the services you are using. This theory, while not directly referenced, is the thinking of a large section of the UK voting population—evidenced by the fact that most think the social contract is broken—and is the dominant theory among our political class. The theory has a lot of flaws, whether that be in logic or its consistency in practice, but even if we accept it as true, then the amount of taxpayer money going toward the railways, which would increase if nationalized, takes away any legs for it to stand on since a very significant portion of the population never uses trains.

Billions of pounds of taxpayer money is going toward the railways despite thousands of people never stepping foot in one for 99 percent of the year. That cannot even be justified by the social contract theory since the tax money they are collecting does not go toward a service they use. So, even using the most common theory for justification of taxation, it is unjustified and immoral to tax 40 percent of taxpayers for money that goes toward the railways. An individual should never be forced to pay money toward a service they do not use.

In my own experience, using analogies really hits home the immorality of this. If the government were to come to your door and state that you must give some of your money toward a railway project (or literally anything they decide to fund) you will never use in parts of the country where you will never step foot, you would be justifiably peeved with them. You would not accept that, so we should not accept it here. The state has an ace up its sleeve in this regard because it does not tell you where your own tax money is going. You cannot follow the path your tax money has taken since it was automatically deducted from your pay and taken into the hands of the state. It paints quite an abstract picture of where taxpayer money ends up, thus clouding the obvious immorality stemming from their own theory as well as libertarian theory.

The story of British railway privatization since the 1990s is not one of free markets; rather, it is one typical of political society today where the free market has been blamed for what amounts to the spectacular failure of state intervention. You scratch beneath the surface just a bit, and you find that the state has managed to take a dictatorial role in what is presented as a private business. The inability of the Conservative Party to acknowledge that this façade of privatization would fail has led to a complete reversal of public opinion in that the public now heavily favors nationalization of the entire railway network. They have made their bed, but unfortunately, it will be everyone else that has to lie in it!

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