For a libertarian urbanist blogger, I’ve always felt kind of embarrassed by my lack of knowledge about East Asian transit, considering that it’s the only place left on earth with a thriving competitive private transportation market (they even have profitable monorails!). I’ve heard good things about South Korea, Singapore, and Hong Kong, but it looks like Japan is really the world leader in market urbanism. I always found Japan’s post-WWII dynamism quite intriguing – despite its supposed lost decade and what I understand to be a fairly corporatist entrepreneurial model (in the end, they lost the tech innovation game to Silicon Valley), Japan has managed to remain an elite economic power. I have a (completely unfounded) theory that a lot of the dynamism comes from not having to carry the burden of a shitty, state-run transportation network and stunted land use market – as I understand it, private railway companies are pillars of the Japanese economy, similar to what the auto industry was to the US at its height.
Anyway, I’ve been reading papers on Japan’s transit companies, and the first half of the abstract of this one I think sums up pretty succinctly the reasons why private transit (and, therefore, urbanism writ large) succeeds in Japan and fails in the US:
In Japan, a liberalization policy was implemented over railways and buses in 2000 and 2002 respectively. Under that policy, quantity regulations for railways and buses were abolished, withdrawal regulations were eased, although fare regulations were maintained. However, even after this liberalization, institutional design remains considerably different between Japan and EU countries. An argument for competitive tendering is missing in Japan as 87.5% of rail passenger transport in the three major metropolitan areas is provided by profitable private railway companies that enjoy high social evaluation in respect to managerial efficiency, quality of transport services, and the adequacy of are levels and systems. The major private railway companies in the big cities have built their present status by 1) being blessed with favourable transport markets, 2) developing commercialism in their investment activities, 3) pursing efficient management, and 4) engaging in business diversification. The Japan Railways group companies (former Japanese National Railways) and Tokyo Metro Co., which is in the midst of privatization, are now copying the style of corporate management of major private railway companies.
Each of these points offers a lesson for America:
- While it may be true that Japan is “blessed” with limited land, the Japanese state also doesn’t forbid the sort of density that allows transit to be viable. America doesn’t allow much dense development around rail stations, and its transit agencies actively prevent it by paving and maintaining free (or, at most, very low cost) parking lots around their stations. It may be that America’s geography will always be a problem for private transit, we can’t know this until we liberalize urban land use.
- American transit agencies don’t develop property.
- “Efficient management” is partly code for “is not run by an inept governmental bureaucracy.” But even those averse to private transit ownership could understand this as not hobbling transit agencies with restrictive union labor costs, trade protectionism, and onerous safety regulations. Systemic Failure covers this well from a left-ish perspective.
- “Business diversification” is partly the simple idea of owning restaurants, hotels, etc. near stations, but I think may partly be a result of the intensely corporatist Japanese policy incentives. I don’t think the latter point is really necessary for sustainable private transit.
I should add that the second half of the abstract deals with the “market failures,” so it’s not all roses. But even these are dealt with by relatively minor subsidies – on the order of 20% of new infrastructure costs and 5-20% subsidization of operative costs, which appear to be much lower American road subsidies. Not to mention that all Japanese rail companies (I think?) also pay taxes. And even these subsidies seem to be concentrated in more far-flung locales, which themselves might be the result of the Japanese tendency to subsidize rural constituents (rural, not suburban/exurban) with rice subsidies and road spending.
Western Europe does a little better on these four metrics than the US, but it doesn’t do nearly as well as Japan, which may account for its lower overall transit use. It allows more density around its stations than America does, but I believe that height and density restrictions are much more prevalent than in Japan. European transit agencies also don’t own property or diversify. And while their union, safety, and protectionist regulations may not be as bad as America’s, the agencies are still publicly run bureaucracies and therefore take a certain efficiency hit.
Anyway, you can consider this an open thread for all things Japan. Also, in addition to the paper excerpted above, here are a few more that I’ve found if you’re looking for more info:
- Shoji, Kenichi and Bruce Killeen. “Diversification strategy of the ‘minor’ private companies in Japan.” [source]
- Enoch, Marcus. “Japan – the world’s leading transport technology test-bed.” [source]
- Smith, Jeffery and Thomas Gihring. “Financing transit systems through value capture: An annotated bibliography.” [source]