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  • A short reminder about New York City municipal takeovers

    Posted by TM Lutas on July 24th, 2019 (All posts by )

    The New York City Subways were largely built by private enterprise and had private owners. Rides were $0.05. The private owners of the various systems couldn’t keep offering service for that low a price and were discussing raising the fares.

    The city took over the multiple private systems in 1940. The stated reason was in order to save the nickel fare. They did, for seven whole years. They then doubled it to $0.10. The current fare is $2.75 a ride, an inflation of 5,500% from the takeover date of 1940. Annualized over the 79 years that’s 5.2%. Average inflation has been 3.72% over that period of time.

    Mayor Bill DeBlasio just proposed looking into taking over the regional electric company, ConEd which serves the city and Westchester County. His stated reason is to reduce the number of service failures.

    Note: as I wrote in the comments, I asked for someone to check my math. The numbers were recalculated and the verbiage edited. I’ve never thought it was important but I’m not an economist. I’m also not an alumnus of the University of Chicago. I was invited on this blog many years ago as someone “at heart” and have been contributing ever since. The University of Chicago is not responsible for me and I’m not responsible for it.


    17 Responses to “A short reminder about New York City municipal takeovers”

    1. TM Lutas Says:

      I don’t usually calculate inflation rates. Anybody willing to check my math?

    2. Mike K Says:

      Conquest’s rules apply.

      1. Everyone is conservative about what he knows best.
      2. Any organization not explicitly right-wing sooner or later becomes left wing.
      3. The simplest way to explain the behavior of any bureaucratic organization is to assume that it is controlled by a cabal of its enemies .

      — Robert Conquest.

      Plus, of course, Warren Wilhem Jr is a communist

    3. Brian Says:

      I believe the annual inflation rate for the fares is actually 5.18%. Recall compounding. So you want to solve $0.05*(1+x)^79=2.75, and you get x~0.0518.

    4. Pouncer Says:

      Conservatives generally and Chicago School economists specifically have a reputation for being good with numbers.

      Post the corrected rate into the top (original) analysis. Protect our reputation.

    5. Raymondshaw Says:

      The private sector recognized that a fare of $.05 was inadequate in 1940. The government sector learned that by 1947. Suggests to me that the calculation should be based upon an initial fare of $.10, which would lower the inflation rate calculation.

      I’ll posit that a better way to look at this is to consider how long one must work to recover the fare in after tax dollars. In 1947 at say $1.00/hr w/ likely no income tax, call it 6 minutes. In 2019 at say $25/hr with 30% tax we get 9.42 minutes. Meh. If you have a job, the public transit fare doesn’t much matter. If you don’t, it does. Also note that the ride purchased likely takes (much) longer than it takes to earn the fare.

      The real reason for these takeovers is to ensure dominance of ever more of private life by democrats. Public transit workers vote D. So would public utility workers.

      From 1988 until late 2006 I lived and worked in North Philadelphia. My house fronted Fairmount Park in Brewerytown on the east side of the Schuykill River. My business was located 3 miles east of there in Fishtown/Kennsington just west of the Delaware River. Both locations were just shy of 2 miles from City Hall, so close in. Night and day difference between the 2 locations. My home was fairly new and had a garage and a driveway that allowed off-street parking for up to 4 cars. So I drove back and forth. I was without a car for about 6 months and used public transit for that period of time. What a miserable experience that was. If you are a strap-hanger going from one nice neighborhood to a nice employment area, I suppose the experience would be tolerable. But if you begin or end in a ghetto, life really sucks.

      Democrats, recognizing that gov’t. can’t fix problems of poverty (or any other kind), has decided that the best solution is to make everybody live like this. If you won’t come to the ghetto, they will bring the ghetto to you.

      Rant over, I feel better already.

    6. Brian Says:

      Republicans in New York state had somewhat miraculously been able to stand against total Democrat domination, and usually have controlled the state Senate (albeit only with rebel Democrat help recently), but they were absolutely slaughtered in last year’s elections. It’s going to be a really sharp downhill path for the state now that the “progressives” have free rein. Raymond’s absolutely right that this is a transparent play to make the ConEd employees members of a public union. Though I suspect their employees already are heavy Dem voters, if taken over they’d be able to get huge pay raises voted by Dem politicians who don’t have to worry about crazy stuff like business sustainability, with correspondingly large donations to Dems from their new union.
      It’s a travesty that Andy Cuomo isn’t in prison, multiple of his close advisers have gone down for corruption, as have senior legislators of both parties, but of course the media and the state system won’t touch him. That’s who SDNY should be going after.

    7. Mike K Says:

      Though I suspect their employees already are heavy Dem voters, if taken over they’d be able to get huge pay raises voted by Dem politicians who don’t have to worry about crazy stuff like business sustainability, with correspondingly large donations to Dems from their new union.

      The length of time between political control of utilities and crime is rapidly diminishing.

      The L.A. Department of Water and Power, infamous for a 2013 billing scandal and other shenanigans, got raided Monday by FBI agents who marched in and carted away records in a corruption probe that also brought raids at other city offices. At the DWP building, nine agents went to one floor alone, and at the end of the day, witnesses saw uniformed personnel pushing carts away. I don’t think they were the caterers.

      On Tuesday, DWP chief David Wright stepped down and was replaced by an underling I’ve known to be a pretty good guy. But can we trust someone who didn’t have the sense to run for the hills rather than take the helm?

      An old Los Angeles story.

    8. elliott Says:

      I betcha the private owners, offering a .05 fare, did not have employees who were members of the Tranit Workers Union. You do the math.

    9. TM Lutas Says:

      Raymondshaw – I would submit that it is corrosive to the republican project to have a government take over an economic enterprise on the grounds that it can do it cheaper, proceed to do it more expensively, and end up with one of the most expensive public transit systems in the developed world, all without the polity stepping back and taking a second look that maybe the seizure wasn’t such a good idea after all.

      The public transit system in NYC is a scandal. Saving the nickel fare is the horse they rode to get their grubby hands on their private competition. It’s Orwellian to forget that. The NYC pols don’t deserve any pity on the subject.

    10. Raymondshaw Says:

      I wasn’t arguing in favor of gov’t take over of any economic enterprise, just pointing out that a cursory economic calculation
      might not be very illuminating. Nor does it illuminate what urban democrat pols want for everyone’s future.

      I will illustrate with a few anecdotes from my experience in Philly.

      When the crack epidemic hit Philly mid to late 80s, ghetto life took a major nosedive. Girard Ave., just a few blocks north of my home on Fairmount Park had a major grocery store, an Acme food store. If you live in the ghetto and don’t have a car, you walk or take the bus
      to do your weekly food shopping. You better take the whole family, cause you are going to have to carry all of those bags of food to get
      them home. As the environment deteriorated, more stringent security measures were implemented. 4″ steel pipe was imbedded into the sidewalk
      in front of the entrance doors with maybe 16″ spacing between them. This kept the shopping carts from being used to transport the bags of
      groceries from store to home. Just inside the store front doors stood a uniformed security employee and a bank of lockers. All handbags,
      purses, loose jackets & etc. went into a locker, to be retrieved after paying the shopping bill. By about 1994 or so, the economic calculation of the
      store’s viability said it was time to throw in the towel, and the only decent supermarket serving that ghetto community closed. Life got a lot harder for folks on a tight budget trying to feed their family. There were smaller stores, mostly convenience type stores. There was also one meat type store I particularly remember, forget the name, but specialized in the cheapest cuts of meat vacuum packed and concealed in ghastly sauces and way over-priced. The few different ones I tried all had the texture of some sort of ground, compressed and textured mystery meat. Of course much of the slack was taken up by fast food restaurants, mostly fried chicken joints and Korean owned places with 200 items on the menu, sitting under heat lamps. The cashiers all sat behind 1″ plexiglass windows, with money pushed into a depression under the bottom of the barrier.

      Me? I had a car so driving a few miles south to whole foods worked for me. Not so much if you live in the ghetto and have to take the bus.

      Some of the people did have cars, but not many. Street parking mostly, if you were lucky you could park in some fenced in vacant lot. Of course the gang bangers had cars. They called them hoopties, usually a 15-20 year old asian clunker that cost ~$600. No insurance, likely
      no license. Certainly not titled/registered. If something happened while driving that rendered them undriveable, they were abandoned.
      I would come in to work about once a year and find one either wrecked/burned or just left on my property. The city won’t pick them up if on private property, so I would pick them up with my forklift and dump them across the street, and not gently. Stab them through the doors and lift, maybe raise them up 10′ and tilt until they fall.

      Twice I apprehended and held at gunpoint burglars who had broken into my place of business. 3 times I had guns pulled on my in robbery attempts. Twice I ran successfully, once the guy got too close and I took his weapon away from him, then ran with it. Once, while standing on the loading dock, someone took a potshot at me. He missed, but I heard the bullet smack into the cmu wall nearby.

      About the time I moved away, Philly had about 30 brick row homes collapse and fall onto the sidewalk/street a week. The City did an audit and counted 30,000 abandoned and dilapidated homes in the City.

      These urban cores are completely dis-functional, and there is no fixing them. Recall the efforts by HUD under #44 to force section 8 housing
      into affluent suburban neighborhoods. This is what they want for all of us.

    11. TM Lutas Says:

      Raymondshaw – Our disagreement is encapsulated by your third to last sentence “These urban cores are completely dis-functional, and there is no fixing them.” We agree on the first part and disagree on the second. If you cede ground as irrecoverable, you eventually lose.

      I strongly believe in playing the full field and that means figuring out how to bring small government to the megalopolis. It starts with simple things like establishing a consensus that cities should not be run under partial or complete permanent emergency rule. Then force the question is this big government stuff actually working?

    12. Subotai Bahadur Says:

      I have seen what Raymondshaw has seen. Note that I am a retired Peace Officer. We are not one country anymore. A significant portion of our population has neither loyalty to nor willingness to work to achieve “the American Dream”. And as a result, I am guessing that we have something approaching a majority who have no empathy for each other. This is not either a good thing, nor a desirable thing; but it is reality.

      Any attempt to restrict criminal activity in urban areas is met with political demands that standards of conduct be lowered to below what is considered civilized because otherwise the criminals’ psyches will be harmed.

      We are on the edge of actual warfare. If we do not control criminal activity, it will come sooner.

      Subotai Bahadur

    13. TMLutas Says:

      Subotai Bahadur – I do not dispute that there are such people. I don’t even dispute the proportion of the population that feels that way. What I stand firm on is that people can change and be persuaded to cross those lines. The liberal project is virtually built on the idea that they can recruit people from conservative households to the liberal cause.

      My point is that people do move the other way and that it is important to recognize that and encourage it.

      The dead end of politically correct socialism lite that liberalism has devolved into means that we’re currently lacking a sane center-left party.

      America does not survive as a one party state. It needs at least two parties, all of which love this country.

      This does not change if there is a civil war. After the war, no matter who wins, the country will still need sane options to swap out parties.

    14. Mike K Says:

      The liberal project is virtually built on the idea that they can recruit people from conservative households to the liberal cause.

      I think they have given up on that and are now working on population replacement. Lots of talk about “old white men” and how the future is theirs.

      Plus the attack on the border is progressing.

      For example.

      A local chamber of commerce gathered 25 local businesses together to host an East Side [of Chicago ]community day where kids took turns smashing a piñata designed to look like an ICE officer. When the kids weren’t beating ICE officer piñata, they got to throw balls at President Trump.

      Perhaps child activities that teach kids violence is one of the reasons there were almost 30K violent crimes in Chicago in 2017 per the FBI.

      It seems to be the new strategy. I suspect that Trump has upset their plans with the lower middle class and blacks.

      Colleges are still working on Gramsci’s plans but they are facing trouble. Some of these small leftist colleges are in financial trouble.

    15. OBloodyHell Says:

      His stated reason is to reduce the number of service failures.

      His ACTUAL reason is Cranio-Rectal Insertion Syndrome.

    16. TMLutas Says:

      Mike K – If they gave up on that, they wouldn’t invest so much in retaining their advantage in education. .

      OBloodyHell – Heh. I have nothing to add to that.

    17. Anonymous Says:

      Mike K. wrote:

      The liberal project is virtually built on the idea that they can recruit people from conservative households to the liberal cause.

      I think they have given up on that and are now working on population replacement. Lots of talk about “old white men” and how the future is theirs.

      Berthold Brecht’s writings, like George Orwell’s, have become a how-to for the left instead of a warning:

      “Some party hack decreed that the people had lost the government’s confidence and could only regain it with redoubled effort. If that is the case, would it not be simpler, If the government simply dissolved the people and elected another?”