[sustran] Poverty alleviation, basic mobility & the informal sector

[Institute for Transportation and Development Policy]

Re: Wendell Cox's comments about informal sector public transit service in
New York.  

Mr. Cox raises what is one of the thorniest issues of public transit policy
in the developed and developing world, which I will definately have to deal
with.  My colleagues at Columbia University, Profs. Elliott Sclar and Sigurd
Grava, did an in-depth study of the jitney services in the outer boroughs of
New York City. Despite their ambiguous legal position, these van services
continue to thrive in the outer boroughs, and their share of ridership I
believe is growing.  There is currently an unofficial tolerance of them by
the Taxi and Limosine Commission.  They indeed serve very low income
neighborhoods, are responsive to riders wishes, are faster than buses in
that once they are full they don't stop anymore, and they will stop anywhere
along their route.  

Of course the unions hate them because they are operated primarily by
immigrants, many of them illegal immigrants, who are therefore willing to
work for extremely low wages with no health care or pension benefits.  Many
of the vehicles operate with out any sort of insurance, or vehicle safety
inspection.  If these vehicles were forced to operate as legal small
businesses, it is not clear whether they would continue to enjoy the same
competitive advantages.  in other words, part of their competitive advantage
is that they do not have to pay the costs of working in the formal sector. 

There is also no agreement about whether they 'skim the cream' or 'shave the
peak'.  Dr. Grava claims that they 'shave the peak', meaning that they
reduce the operating costs of the formal system, as providing adequate labor
and vehicles to handle the peak ridership imposes considerable costs on the
system under current union work rules.  At the same time, it translates into
lower ridership figures and a loss of revenue for the public bus system.  

There are lots of more formalized minibus/van services in developing
countries. Surely the answer lies in some degree of formalizing these
informal sector vehicles, and not in banning them, but to be viable it would
have to be done in a way that does not needlessly antagonize the unions.
Does anyone know of successful first world examples of how this was done?
The Malaysia Minibus that Paul tells me Gab. Roth was involved in was
interesting, but it seems to be being phased out, no? 

Rgds, 
walter 





At 08:58 AM 5/20/97 -0500, Wendell Cox wrote:
>Introduction....
>
>Having already contributed a comment, I should introduce myself (after which
>I will comment on Jeff Turner's contribution).
>
>INTRODUCTION.....
>
>I was a three term member of the Los Angeles County Transportation
>Commission, which oversaw both public transport and highways in Los Angeles
>County (8 million people) from 1977 to the early 1990s.
>
>Since 1985 I have been a consultant specializing in public transport
>performance, especially efficiency improvements through competitive
>approaches, such as competitive tendering.
>
>I tend to come at the issue of sustainable transport from a slightly
>different perspective than most.
>
>1. I believe that we should recognize that automobile technology is getting
>a good deal better --- that in the future the emissions problem may well be
>completely solved, and that great progress has been made so far. With ITS
>automated highway technology on the distant horizon, it is possible that
>there will be a "marriage" between public transport and highways. My point
>here is to urge openness to the prospect that the auto may well be a
>significant part of the long term sustainable transport solution. 
>
>2. Sustainability has to do not only with environental, traffic and land use
>factors. It also has to do with finances. The US/western European model of
>relying on public monopolies to provide public transport is not sustainable
>economically. In the monopoly environment, unit costs (per km or hour) tend
>to rise above inflation, creating a perpetual need for more subsidies or
>higher fares to provide the same or lower levels of service. There is
>evidence that a major contributor to the rapidly declining ridership in the
>largest US systems is directly attributable to fare increases. That is where
>competition comes in --- especially competitive tendering, which provides
>the incentive that allows unit costs to be controlled, and to produce more
>service with existing subsidy and fare levels. The reality of public finance
>in the developed world is that there will never be enough public money to
>fund public monopolies that continually require larger subsidies to produce
>the same level of service --- that is, in the longer run the public monopoly
>approach to public transport is not sustainable from an economic standpoint
>(neither is the private monopoly approach). Of course, there is great
>progress being made on this front, especially in Europe, New Zealand and
>Australia, where systems are being converted to competitive tendering. The
>lesson, I believe, for developing nations, is not to establish public
>transport monopolies. Instead, models that encourage the informal sector,
>deregulated bus service should be employed. And, government can play the
>role of coordination and tender for services that are not provided by the
>market.
>
>RESPONSE TO JEFF TURNER COMMENT
>
>>I would like to contribute 2 comments to the discussion on possible
>>sources and consideration for any policy paper on this subject. Any
>>policy paper should mention:
>>
>>1. The importance of the informal transport sector to the lives of
>>     low-income city dwellers in  developing countries.
>>
>The problem exists in developed countries as well. A good example is New
>York City, where federal, state and local law effectively preclude the
>informal sector from providing transport that is desired by lower income
>people (van and jitney service). In many ways the transport market in the
>outer boroughs of NYC is similar to that of major cities in developing
>nations. Special interests --- especially trade unions and the vested
>interests of public and private transport monopolies unnecessarily restrict
>mobility, making the achievement of societal goals more difficult (poverty
>alleviation, welfare reform, air pollution abatement, traffic congestion,
etc). 
>
>In the US, where there is a strong market for second-hand (used)
>automobiles, the urban poor tend to switch to autos as soon as they have the
>financial means.
>
>These counterproductive urban transport policies exist throughout the US. At
>one point, before state and local laws drove them out of business, the
>informal sector in Miami was carrying more daily riders than Miami's billion
>dollar rail system. Owners tended to be minorities and recent immigrants.
>
>Los Angeles, with its large poor and recent immigrant population is another
>prime market for expansion (or perhaps establishment would be a more
>accurate word) of an informal sector. There is considerable support for such
>policies, even inside public transport bureaucracies, but insufficient to
>get the policies changed.
>
>All of this arises from an institutional environment in which the interests
>of those who work in urban transport takes precedence over those of the
>community and those who require mobility.
>
>A major challenge for developing nations will be to ensure that transport
>policies serve public purposes, not private purposes. Unfortunately, we have
>fallen far short of that in the US.
>
>Wendell Cox
>WENDELL COX CONSULTANCY
>International Public Policy, Economics, Labour, Transport & Strategic Planning
>The Public Purpose: Internet Public Policy Journal
>http://www.publicpurpose.com
>Voice +1 618 632 8507; Fax  +1 618 632 8538
>P.O. Box 8083;. Belleville, Illinois 62222 USA
>
>


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