Get transit on the right track.

• Author: O'Toole, Randal
• Position: DOLLARS SENSE - Column

THE TERM "socialism" has been much abused in recent years, with people applying it to bailouts, regulation, and other government activities that fall short of actual government ownership, but one industry unquestionably has been socialistic for decades: urban transit, more than 99% of which is owned and operated by state and local governments.

In 1964, the vast majority of the nation's transit systems were privately owned and profitable. In that year, Congress passed the Urban Mass Transit Act, promising capital grants to public agencies that operate transit. Within a decade, almost ali transit systems had been taken over by cities or state-chartered public agencies.

Many believe Congress began supporting transit to help low-income people who lacked access to automobiles. In fact, the real goal was to support wealthy property owners in the downtowns of a few large metropolitan areas. Railroads that offered commuter train service in Boston, Chicago, New York, and Philadelphia had proposed to discontinue these money-losing operations. Since Manhattan and other downtown areas were not designed to handle the influx of automobiles needed to replace these trains, and since many of the locomotives crossed slate lines, Congress decided to use Federal funds to support public takeover of these commuter lines.

Politically, Congress could not limit the program to just four metropolitan areas, so the law allowed any public agency to apply for Federal capital grants, which led to the near-complete socialization of the transit industry. "'Federal policy started out with the notion of a one-shot injection of capital to rejuvenate the aging physical plant of our transit systems," explained the late University of California economist Charles Lave. No doubt many members of Congress who voted for the law expected that, since private transit companies had covered their operating costs before 1964, public transit agencies would continue to do so, but because of the political nature of public agencies, "it didn't work out that way."

The results have not been pretty. Since 1964, worker productivity-the number of transit trips carded per operating employee--has fallen more than 50%. After adjusting for inflation, operating costs per rider nearly have tripled, while fare revenues have increased by a mere eight percent. "It's uncommon to find such a rapid productivity decline in any industry," observed Lave.

Today, urban transit is the most expensive way of moving...