Minimise investment to maximise profits, which you take, whilst running the minimum service required to avoid contract penalties or publicity so adverse you lose your contract. Then threaten to go bust and get bailed out by the government when the infrastructure starts to break a few years later.

At least that’s they playbook they’re all using.

The infrastructure isn't privatised though, it's maintained by Network Rail.

People literally died before it became Network Rail due to badly maintained infrastructure

https://en.wikipedia.org/wiki/Railtrack

https://en.wikipedia.org/wiki/Network_Rail

https://en.wikipedia.org/wiki/Southall_rail_crash

https://en.wikipedia.org/wiki/Ladbroke_Grove_rail_crash

Southall:

> The passenger train operating company had failed to inform Railtrack and the signaller that the automatic warning system (AWS), which warns drivers of adverse signals, had been turned off in the cab of the HST.

But Ladbroke Grove was Railtrack's fault entirely (within the first few years of its creation). Meanwhile it's been 20 years since National Rail was created, when do we get to blame current governments and National Rail for bad infrastructure?

Which was private under railtrack, but after a number of high profile crashes and failures was taken into public ownership again.

Railtrack made a lot of money by selling off land, and other assets, under invested and generally underperformed

Not disagreeing, but words are important here to get at precisely what happened.

> Railtrack made a lot of money

"Made" implies creation, growth, increase.

This is the opposite of what happened.

The money wasn't made. It was /extracted/. They /extracted/ a lot of money.

Railtrack doesn't have that money. Their succeeding entity doesn't have that money. The government doesn't have that money. The taxpayer doesn't have that money. None of that money was invested such that any of these entities might benefit from it in any way. It was removed from the system into private wallets.

The private owners plundered and fled, and the remaining skeleton was socialised again so it might regrow a bit of flesh from public taxes for the next extraction cycle.

One example that Ben Elton gave in his excellent "The Great Railway Disaster" documentary was not training new train drivers!

https://www.channel4.com/programmes/ben-elton-the-great-rail...

"Privatise the profits, Nationalise the losses!"

What about losses from federally funded corporations like USPS and Amtrak that are bailed out every year? Amtrak loses over $1 billion/yr and they are still "nationalized." USPS loses multi billions per year.

USPS costs billions, public services don't need to be profitable they just need to be paid for. Taxpayers pay for it with their taxes.

When we sell our public investments for a quick buck we complain when the real cost of the service gets priced in. The trouble is, we pay the same taxes still, they just no longer go to the service we privatised, so we feel it in the pocketbook individually.

Presumably those taxes are going elsewhere now, but I was very happy with them going to core public services.

The USPS is "loosing" money because it was told to prefund it's Healthcare having to set aside $100 billion in 10 years (unlike any other company) . Moreover, it's much more a service than a business, e.g. it can not really set its own prices.

https://www.barrons.com/articles/usps-louis-dejoy-post-offic...

I don't get it. The USPS has lost billions due to government policies and can't enforce prices due to government policies. They are forced to deliver to unprofitable routes and have prices set to inflation due to government policies. Private delivery services like Amazon and Fedex are generally profitable and don't have these issues. Why is a government alternative better?

> They are forced to deliver to unprofitable routes and have prices set to inflation due to government policies. Private delivery services like Amazon and Fedex are generally profitable and don't have these issues.

I, for one, think it's a good thing that people are entitled to their mail regardless of the profitability of their mail route. That's the point of a public service.

A cynic would say Congress's actions, loading the USPS with costs while denying it control over prices, is so that people ask "Why is a government alternative better?"

None of the competitors offer a similar service to USPS.

Among other core competencies, USPS has nationwide daily coverage of the entire United States and centuries(?) of experience interoperating the the respective mail services of every country in the world and then some.

Amazon wont even take MY package one town over.

None of the competitors are allowed to offer a similar service to USPS.

Is fedex forbidden from delivering to a lonely hut in Alaska for the same price as USPS?

Quite literally yes when we are talking about letters. Even if they did it for cheaper.

https://en.wikipedia.org/wiki/Private_Express_Statutes

Ah yes letters, the backbone of revenue for any delivery service.

Irrelevant snipe. I am not the one who said "a similar service". In a world where USPS had to compete, other entities could deliver letters.

It's extremely relevant. Other entities could deliver letters, but would they? At prices competitive with USPS?

Is it your opinion that some people simply shouldn’t get their mail, or that people who live in rural areas should pay exponentially more to get their mail delivered? Why is either of those things desirable?

USPS is not a business, and it’s a fundamental mistake to pretend it is, solely for the sake of slandering it.

Wait until you hear how much money the US military has lost.

Welcome to the world of privatising public services. This has been a scheme of free market politicians for years; call public services too expensive, strip them of funding and hamper them in other ways, then call out how they are not delivering on their promise. Then sell the off at bargain prices, often with additional government guarantees on revenue. After privatisation services don't improve and cost never go down, but somehow the public is better off?

USPS isn't losing money. It's a public service. It costs money.

Amtrak is the least subsidies mode of Transportation. It has to compete with road transport and the subsidies given to highways, roads and parking is orders of magnitude larger then what Amtrak gets.

Amtrak gets surprisingly small amount of money.

Freight rail also has priority over Amtrak, which causes all kinds of problems with scheduling and adds insane delays.

I mean sure, we can talk for hours about issues with Amtrak.

However that doesn't change what I said so I'm not sure why you are bringing it up. Amtrak most likely wouldn't be profitable if they had priority.

I think you may have conditioned by HN to assume that any comment is a refutation. I brought it up because it’s an additional piece of the explanation for why amtrack can’t support itself on ticket prices alone.

Fair. I'm just saying that its one of many factors so I was confused why you would bring it up specifically.

Mostly because it’s the single biggest thing that keeps me from using Amtrak. The last few trips I’ve taken, we ended up sitting waiting on freight trains for many many hours.

Each big city we came to we had to stop and wait without having any idea how long it would take for “freight traffic to clear”.

I love train travel, and I’m not price sensitive at all, but the delays were completely absurd.

Public infrastructure does not need to make a profit, its there to provide a service not make money.

USPS delivers to remote addresses no one else’s will on route that will never make money.

They are not bailed out, is the highway maintenance service ‘bailedout’? They don’t build themselves you know

We need to rearrange our brains. USPS provides a valuable service to the country. It does not need to make a profit. It should be evaluated based on the value it generates for the people. Why does something like the mail system get treated differently than something like road development, which is not expected to bring in any revenue at all let along a profit?

They don't lose money, they cost money. You can't measure the losses if they even exist

There’s also water, energy, busses outside of London, Openreach (especially them), and pitty the poor people of Hull with that Kingston shitshow.

>avoid contract penalties

I expect the maximum profit sweet spot actually includes a small amount of penalties. If you don't get any penalties at all, you are probably leaving money on the table re service cuts.

Offering shitty, expensive service. It's not like customers can use a competing rail line, so every dollar you invest in customer service is a dollar out of your pocket.

The USA's rail lines are privatized and they're anything but "shitty" and "expensive" considering they're lower cost than trucking.

US rail has been in the news lately, with apocalyptic skies and chemical rain. Safety issues abound. What are you seeing that I don’t?

There are 3 million rail cars moved per day that haven't produced apocalyptic skies and chemical rain. You misrepresent the overall safety of private rail lines.

Us rail lines are horribly mismanaged https://m.youtube.com/watch?v=jNkYNjADoZg

My experience of American railways as a tourist is having to show my passport to book a ticket from Davis to Sacramento (I assume I also did that on other trips like to SFO but don't remember), and it being expensive.

My experience in the UK and Germany is show up, pay, go, and it being cheaper.

US consumer rail way is a quasi public corporation (Amtrak) that has lost money for decades and is still funded to the tune of over $1 billion per year. You are confusing that with private US rails.

If you're going to insist on focusing on that, I think you'd already missed the point of what you were replying to in your comment that I replied to.

The parent is still wrong. Customers of private rail lines can use competing services (trucking) which they often do.

US private rails own the railways and, while in theory they are required to give way to passenger rail, are so long and take so much time to cross that in practice passenger rail is forced to adhere to the time-schedule of private rail.

This is arguably illegal and only exists because the govt refuses to enforce the obvious interpretation of the agreement.

Meanwhile, the US DOT has historically always taken the approach of "the solution is more highways. What's the problem?", losing far more than $1B/year.

US rail is okau for cargo, but there are third world countries with better passenger services.

We're talking about passenger rail here, not cargo. Amtrak has a legally mandated monopoly, so you can only compete with them by building your own rails or using a different travel mode (e.g., bus or air).

If you find their service to be good and cheap, I can only assume you've never ridden a train in Europe.

By running your lines on a shoestring budget, how else would you? The contacts have a fixed life time, keep your expenditures low and you can extract the highest profits. Long-term maintenance in particular suffers after privatization, because why would you, that doesn't align with your goals. And the risk is nill, because the government needs to provide the services so if things go awry you have little too worry about. They will have to bail the line out. Just find a way to move money from the entity to shareholders while you can and you're good, they are not clawing that back.

By stripping and selling off as many assets as you can and borrowing as much as possible leveraged on the income from future fares. There is no incentive to spend this on long term investment or contingency planning. The railways are an essential service so the government will always have to step in when the private company reaches breaking point, so no money is saved by the state in the end. It’s just disguised debt with terrible interest rates.

Amtrak, a public rail company gets over a $1 billion in public funding. Private rail lines do not. Amtrak has operated at a loss for decades unlike private rails.

You are comparing completely different services, though, right? Private freight lines versus passenger? Amtrak runs on lines owned by the freight companies. I've been on an Amtrak train that had to sit on a siding while a freight train passed. The passenger service has to have a published, predictable schedule. The freight moves when it is needed and breaks the Amtrak schedule, leaving a crap passenger service.

I think the extent to which freight shoves aside passengers varies from region to region. My worst experience was going to West Virginia from DC. I find the Vermonter keeps its schedule pretty well.

So? In 2014, a total of $416 billion was spent on highway and water infrastructure

A "loss" here is just a politicized framing of the fact that government pays Amtrak to do something of use to society.

You might as well say that the US military makes a $1 trillion loss per year. No, they supply something which is required by the govt and which has a cost.

Cutting corners and costs e.g. shutting ticket offices, doing just enough to barely offer the service. It's not like your passengers have any sensible alternative. If that doesn't do it then you can also load the company up with debt and pay yourself a nice dividend until rates rise.

> load the company up with debt and pay yourself a nice dividend

I am new to this. Doesn't a dividend come from profits? What profits are there if you need debt? And who will loan to you if your business plan is to exit scam?

> Doesn't a dividend come from profits?

A dividend can be paid with money from any source, it's all money.

> And who will loan to you if your business plan is to exit scam?

Ambitious junior bankers. Or you get the government to guarantee your debt.

> What profits are there if you need debt? And who will loan to you if your business plan is to exit scam?

If you’re a water company, after government bailed out the banks, chances were good you’re not going bust. What are they going to do? Let the entire population of London die of dehydration?

And since a lot of investors in large utility companies are international, should the government somehow not make them whole (or worse, just expropriate), there would typically be repercussions - with international arbitration courts adjudicating reparation with processes that are typically stacked in favour of businesses.

It's a sham market.

I just explained the thought process, I never said it was guaranteed to hold true.

> shutting ticket offices

Why should I pay higher prices/taxes to keep ticket offices 90% of the country and increasing don't use open?

International Airlines finished moving to e-ticketing 15 years ago

Why should I pay to maintain a road I’m not using now, or a fire service I haven’t used yet?

Because ticket offices are a costly relic from the 20th century that simply are not needed, as evidenced by the collapsing usage of them.

Company: "Use the app" / cut back front line staff

People: "ugh, I will use the app"

Company: "Look, nobody uses the front line staff"

There's a considerable portion of the population that does not own or feel comfortable using the Internet, and would prefer in-person interactions.

And they should thus pay the extra cost for that privilege.

30 years ago Terry Wogan was using his radio 2 breakfast show telling the 40-60 demographic how to send emails and watch his webcam. That demographic are now 70-90. I do sympathise for independent 95 year olds who can't use a ticket machine. I'd rather we spent the money in a far better way -- increasing services for example.

Have you ever tried to get off the train in a wheelchair? Or find out which stations have wheelchair access?

Ticket office staff won't help you there.

they literally tell yoy which stations are accessible and which ones arent.

"get off the train in a wheelchair"

Nothing to do with accessible stations, where they simply look up entries in a database and will have very little personal knowledge.

I dont think this is true, but suppose it was - so what? If I am travelling eith my daughter I often need advice from the ticket office folks. It does not matyer how they aquire it.

Additionally, often the ticket office gives better rates -

https://twitter.com/CraigJordanBak1/status/16786743395735101...

The fact that you dont know this, betrays the fact that you havw no idea how the UK ticket prices are actually set

What happens if you're blind or disabled?

Same as happens at the majority of stations now. If you need assistance you book it.

It could possibly be achieved here if our prices weren't so arcane and difficult to understand. There's tickets you can't get from the machines etc. There was a photo yesterday of a queue of 10 odd people waiting next to 4 idle ticket machines. It's solvable but nobody seems interested in actually doing it, presumably because it costs money to fix. International Airlines I assume gained some competitive edge by that move, there is no competition in a lot of our privatized industries so no real incentive to do anything but the bare minimum.

Sounds like Amtrak... the zombie of a train service, constantly revived by new cash injections from Congress whenever it does poorly (which is always)

1.) Force other competitors to go belly-up or buy them to create a Monopoy or if the authorities don‘t let you do that, try to end up in a duopoly situation where you and your competitor come to some silent agreement to not overly compete.

2.) Raise the regulatory bar to prevent startups from entering your field.

Milk whatever half dead infrastructure you have and people depend on.

Oh and raise prices every odd year while still not investing in the rotten infrastructure. Somehow investors need to see growth and dividend payments.

Due to 1.) there is no competitor left that could offer a better service. People cannot simply switch.

Die to 2.) you are not in danger of ever having to face situation 1.) again.

Job of the government is to not let 1. and 2. happen.

Sell off assets, get subsidies, understaff, rundown and don’t maintain equipment. Provide a shit service. When bankruptcy comes up you’ll be bailed out.

By raising the prices of your local monopoly to the yield-maximizing level whilst cutting overheads as much as possible.

Cut costs. And if youre in a monopoly position, you can in addition prices.

I mean, do you really not understand how earnings are calculated, or are you trolling?

I don't understand. If it's a monopoly, it's not a free market, by definition. Seems like you are the one trolling here.

The award of the contract to run that particular collection of routes is ostensibly free-market. Once it's awarded, they hold a monopoly for the duration of the contract though.

You asked how profits are extracted, and I answered your question. Now you're bringing up monopoly vs free market, which has nothing to do with the question.

Trains are a natural monopoly, that's why lassiez-faire policies don't work.

Nothing about a free market precludes a monopoly from existing. I have no idea why you would think that was the case.

> it's a monopoly, it's not a free market, by definition

It is a free market, you are free to open your own water company and build your own water pipes or deliver water in bottles. No one is stopping you

Actually, the very widely replicated experience of most challenger utilities is that the entrenched utility will stop you, sometimes in collusion with the government or municipalities. Try getting permits to dig up the road to put your competing pipes alongside the current monopolists.

In Britain, British Telecom spent around 20 years making it impossible for other players to supply an internet service to consumers. They used various anti-competitive practices and had very good capture of the largely toothless regulator OfCom. This is all documented.

Extracting short term profit isn’t hard, and that’s all these investment funds that operate on short time scales are looking to do.

There was an excellent book on the subject published this year called Our Lives in their Portfolios[^1].

[^1]: https://www.ft.com/content/7da72f9c-978b-41e7-8e4b-478818f74...

By competing to make the best rolling stock, online booking systems, catering, cleaning services, etc. These contracts should be put out to tender and should the promised level of service not be delivered then contracts should be lost and/penalties applied where necessary.

Most important is that the target service coverage, quality, etc should be decided by government (who should be seeking to please voters), not corporations who are seeking to please shareholders.

By cost-cutting and offering the bare minimal of service...

Especially when the service is a necessity for many (Train to work, water to drink, electricity to keep warm and cook, etc).

You milk the captive market.

Minimizing costs and competition?

You don't.

Just like all PE; take on huge debts ostensibly to fund expansion, efficiency, etc, and then ... give the loaned cash to shareholders.

Rail lines have inherent competition in form of trucks and boats (for transport of goods) and cars, busses and planes (for transport of people) and rail is often outcompeted by these as they don’t require large station in expensive real estate.

So the example of rail doesn’t really apply to this branch of the discussion.

However, once you’ve bought a house, it is very difficult to to but in new pipes from a different water works.

Deferring maintenance, focusing on how to make the most per dollar spent, making your workers lives terrible, ignoring safety.

Here is how that works in American railways: https://m.youtube.com/watch?v=jNkYNjADoZg

And why they are on a road in implosion.

By making sure there no water fountains on the train platforms, yet plenty of kiosks and vending machines that sell water.

I was just at EWR last night waiting for an arrival and there was an old man looking for water. He asks an employee where to find some and she looks at him like he has two heads.

“You have to buy some. Or you can drink out of the faucet in the restroom”

Can you imagine that? Telling an old man at 1am he has to drink out of a bathroom fixture to quench his thirst. But that’s the system we’ve built for ourselves. In a better present, the man would have access to a drink for free. But because a profit needs to be made, the entire airport is organized around little nickel and dime scams.

This is the way the world works now and anyone who disputes the justification of it just gets neatly added to the pile of "complaints" burned by elites for warmth.