"The reason disposers of this system of torture feel quite secure is that the victims have no option, no means of escape."--Alexander Cockburn, "Why We Hate the Subways," Voice, March 14, 1977.

Local governments, especially those in larger cities, have meddled with community transportation so long and so thoroughly that it appears that each of the various transportation modes are much of the time carrying passengers who could be better transported by another mode. Government operates most bus and rail systems--at an annual loss of $2 billion--and protects high-priced taxicab monopolies by prohibiting the use of commercial jitneys and vanpools.  Against such odds, automobile users seem firmly wedded to their steering wheels.

Libertarians will end restrictions upon transportation entry, exit, and operation.  They will phase out subsidies to municipal transit operations.  Finally, they will accelerate and expand the process of street (and rural road) "abandonments" to private ownership.

     It is a hot morning in the summer of 1975 as one of the Washington Metropolitan Area Transportation Authority's buses sways and lurches its way across the Mall with its capacity load of passengers bound for jobs on Independence Avenue and Capitol Hill. Inside, the atmosphere is as thick with irritation as it is with humidity.  The late-model bus's non-operative air conditioning and the rough ride occasioned by subway construction below the street are standard fare; what really sets today's trip apart is the fact that the bell which signals the driver to stop seems to sound every time the bus hits a bump.  (On these buses, the bell cord stretches taut whenever it becomes tangled behind the route destination sign, so that every bump rings the chime.)  Too busy to investigate, the driver attributes it to mischief, curses a few times, and then starts skipping stops--bell or no bell.
     This proves to be a mistake, as he soon has a well-dressed HEW employee breathing fire down his neck for skipping her bus stop.  Out pours a torrent of abuse.  While the driver shakes his head, the passenger argues ever more fiercely.  Finally, drawing a big breath, she announces that this is the last time she'll ride this bus!
     A shrug from the driver.  "See if I care, lady; we got enough people here as it is."
     "Well! That's some attitude!  Don't you know you're supposed to serve the public?"
     Then the driver utters a riposte which silences her by naming the precise issue, by puncturing the passenger's dream-world belief that the driver is her servant, or that Metrobus is anything but an ordinary transit monopoly: "Your name don't sign my paycheck!"

A History of Government Control

     The business of getting around town has always been unfortunately caught up with government interference.  Few venture to guess how American communities would be composed today had roads, rail transit, buses, and other transport modes been provided privately.  We can, however, trace a distinct historical development in transit which largely explains the situation today.  Transit emerged in the mid-1800's with horse-drawn buses modified from stagecoaches.  Bumpy streets encouraged these buses to switch to rails, and streetcars powered by horse and mule became all the rage--at least until the outbreak of horse flu in 1872 spurred operators to seek improved locomotion.  When Frank Sprague introduced a reliable electric streetcar in 1888, urban transit was able to halve its operating costs;l by 1900, the electric streetcar became virtually universal.
     With it came economies of scale encouraging small streetcar lines to consolidate into larger city-wide systems making full use of a central electrical generating plant.  Pittsburgh Railways, which amalgamated over 100 smaller lines, holds the merger record.2  The competitive advantages of subways and elevateds with their exclusive rights-of-way further stimulated the rush to create unified monopolies.
     Electric street railways profited handsomely for a while, but revenues peaked in 1918 and ridership began to fall after 1923.3  Streetcar companies had used their market position not-to cut fares but to offer city-wide transfers for the existing five-cent fare.4  As economist George Hilton has pointed out, this cross-subsidizing of long-distance riders at the expense of short-distance riders gave outside entrepreneurs an incentive to offer a competing service to the short-haul riders5 alone.  So there appeared in 1914 the "jitney," a private automobile or truck-van employed (either full or part time) as public transportation. 
     The response of local governments at this crucial junction set the mold for much of our modern urban transportation.  Had the market taken its course, jitneys probably would have evolved into decentralized, owner-operator bus companies feeding and competing with larger line-haul bus and rail transit serving high-density routes. Whether the jitney/bus companies would have ultimately survived the suburbanization of American cities (or whether they might have slowed it, even) is open to question.  But it is clear that with the jitney business's extreme ease of entry and exit, the number and kind of jitney operators could have smoothly adapted to changing market demands.6
     But government's response was quite different.  Influenced by protectionist trolley tycoons, local councils almost universally outlawed the jitneys.  The electric street railways' fortunes went on declining anyway--though it was to the private automobile instead of the more economical jitney that the public was forced to resort.  When bus technology came into use, it was not for any purpose demanded by free market; streetcar companies introduced buses as a way of coping with reduced ridership on streetcar lines.  Since the companies' franchise monopolies were typically enforced by the government only for specific lines, buses were necessarily forced to operate on the old streetcar routes whether this was what changing conditions demanded or not.  In Hilton's words, all "this produced an organization so inferior to the automobile in speed and comfort that the transit monopolies could only decline."7  Centralizing bus and rail transit operation in legislative monopolies also subjected transit companies to strong labor influence.  Little competition could be expected from the developing taxi industry, enveloped as it was in blatant governmental restrictions upon entry and operation.

The Results Today

     The predictable result has been a transit decline which accelerated after World War Two and continued unabated except for a slight improvement in transit ridership during the recent gasoline scarcity. Twenty- five years ago, 14% of urban travel was by bus and subway; seven years ago, 4.9%; today, only 4%.8 Revenue transit passenger counts fell from
20 billion in 1945 to 9 billion in 1955 to 6.6 billion in 1965. 5.3 billion rides were produced in 1972, and the figure hovers slightly above that today.9  But rising costs have now got the better of transit.  When 15 million rides were added in 1975, the deficit jumped by $403,853,000, or $26.92 for every new ride.  Since 1963, transit has registered continually widening deficits now approaching $2 billion annually.10  Reports the leading transit association: "The private transit company is today all but extinct."11
     As costs skyrocket under the push of municipal unions, federal cost-plus subsidies, and energy scarcity, it increasingly appears that public transit may go the way of the dinosaur, too.  Except where crisp new federal dollars are lavished (San Francisco, Atlanta, Washington, D.C.) public transit is an almost unrelieved picture of cutbacks and degradation.
     How has transit parted ways with consumer preferences?  In general, we may answer that taxi regulation and municipalized bus and subway monopolies have prevented a smooth integration of small and large transit technologies from taking place.  The potential passenger has the choice of a high-priced, single-passenger taxi or a fifty-passenger bus or subway train.  Recent government experiments with intermediate-sized "para-transit" (subscription bus services, "dial-a-ride," vanpools, etc.) have been largely hamstrung by trying not to compete with existing transit, and thus only confuse the picture.



Population of
Urbanized Area

500,000 and greater
250,000 to 500,000
100,000 to 250,000
50,000 to 100,000
Less than 50,000 (c)

Total U.S.
Transit Systems

(a)  includes transit systems operating one of the following modes exclusively: heavy rail, light rail, or personal rapid transit (PRT).
(b)  Includes transit systems operating two or more of the following modes: heavy rail, light rail, trolley coach, motor bus, cable car, inclined plane, and ferry boat.
(c)  Population of urban place with less than 50,000 population outside an urbanized area.





Calendar Year
Of Industry
Number of Systems (December 31, 1975) 
Operating Revenue (Millions)
Vehicle Miles Operated (Millions)
Revenue Passengers Carried (Millions)
Number of Employees
Passenger Vehicles Operated (Total)
  Motor Buses 
  Heavy Rail Cars
  Light Rail Cars
  Trolley Coaches 

Source: American Public Transit Association



     Taxi regulation ranges from the small-time, venal persecution of unlicensed Amish drivers serving their kinfolk in Lancaster County, Pennsylvania,12 to major police crackdowns in cities like Los Angeles.13  The general pattern of restricting the taxi supply to a fixed number of official "medallions" has so discouraged the taxicab user market that the price-fixing increasingly fails to provide a living wage to taxi drivers.  Along the way it has ruined the taxi as an effective transport option for poor and middle class people.
     The misuse of bus technology is visible to the naked eye; just look at the empty buses trundling noisily around city back streets. Attempting to cut labor expense, municipal agencies use forty- and fifty-passenger buses on routes where large vans would perform a higher quality service at lower cost.14  Municipal bus service tends to be useful only to those who place a low value on their time; the buses pollute, waste energy, and are expensive to maintain and operate.15  Government transit policy has in some cases also displaced buses from the line-haul city-to-suburb runs where they seem most appropriate.  When express buses can obtain reserved highway lanes, they provide commuter service of a quality equal to rail at less cost and energy consumption.  One study of suburban bus and rail services placed the capital cost of a new rail system at $2.5 million per mile per year, as against $400,000 per mile per year for a reserved busway. Capital costs of rail equipment were figured at $560 per seat per year, compared to $135 for express bus equipment. Rail operating costs were estimated at 2.5 cents per seat mile versus I cent for express buses.16  Yet the political bias-of federal funding for well-publicized, high-employment rail projects--coupled with the extreme political difficulties of appropriating "public" highway space for specialized operation--continues to favor rail over bus for line-haul commuting.17  Only the high cost of new projects has forced a rethinking.18
     Thus we have taxis pricing themselves out of a market.  Buses are forced to perform jitney and taxicab service.  Rail transit is forced to perform express bus service.  While this undoubtedly oversimplifies the picture, we may ask: Is it any wonder Americans have resorted to their cars?
     It will take more than the government's "carrot and stick" to dislodge drivers from behind the wheel.  New York's Tri-State Regional Planning Commission recently found that in the face of a 30¢ gasoline price hike, threefold increases in tolls for single-person autos, raised parking fees and restrictions, or gas rationing, only 30 to 50% of the commuters surveyed would change their driving habits--and three-quarters of these would switch to a carpool.19  A 1976 Regional Plan Association study summarized the impact of mass transit improvements in this way: cutting fares could boost ridership anywhere from 7 to 45%; halving running times might increase it from 14 to 20%; and doubling frequency, from 24 to 77%, all depending on existing prices and service.  Seldom, it was recognized, do ridership increases make up for the revenue lost in lower fares and higher costs.20  To put public transit investments in perspective, it needs to be remembered that subsidizing new rail and bus lines during the past decade has mainly diverted riders from other previous transit lines and, to some extent, made new ridership possible.  Diversions from automobiles have been so small that they often cannot be distinguished from the ordinary variance found in traffic counts.21  Even a 50% increase in transit ridership nationwide would dent urban auto use by only one per cent.
     We make no brief for the auto here.  It's just that of all the contraptions which use government rights-of-way the family car is for most people the option which minimizes the impact of government intervention.  What all transportation technologies need in order to be able to compete on a fair footing is to be released from the institutional constraints of regulation and municipal operation.


     Something like this is fortunately beginning to take place. Until recently, "paratransit" experiments--modern-day jitney, "dial-a-ride,"
and vanpool services--were the playthings of well-publicized Urban Mass Transportation Administration demonstration grants.  Such projects almost universally failed to attract sufficient consumer support, and many were quietly scuttled.  But now, free-market paratransit is serious business--a success in places.  Spurred by rising gasoline costs, employers such as the 3M Company in St. Paul, Minnesota and Conoco, Brown & Root, Aramco Services, and Hughes Tool in Houston, Texas are sponsoring fast-growing vanpool programs. Citizens' leagues in Minnesota have established multi-employer vanpools, and in Knoxville, Tennessee vanpools and express buses have eliminated the equivalent of 19 miles of morning traffic.23  Typically, vans are purchased by employers and entrusted to employees who are paid to drive other employees to and from work.  Vanpool commuters travel for costs which are "invariably and significantly less than what it would cost to drive by oneself,"24 and the Knoxville vanpool and express bus riders commute at prices as much as 50% below regular city transit costs.25
     Government transportation officials, notably California Department of Transportation Director Adriana Gianturco and Knoxville transportation board member Frank Davis, are coming to recognize that the key to making full use of existing transportation facilities is to eliminate regulatory barriers.  Davis holds that the prohibition against free market taxis and jitneys "prevents 99% of the drivers and 99.8% of the vehicles on the road from providing transit service for fee to others."26  The authors of a recent book about paratransit concluded similarly that "there is probably no other single or simpler palliative for some of our urban transportation problems which could have such a large impact as the relaxation of present day entry controls for both taxis and jitneys."27  And because outlawed for-hire paratransit appears to be the crucial link in the process of rebuilding transport, its decriminalization is urgent.

Libertarian Proposals

     What will Libertarians do about community transportation?
     * Libertarians will end restrictions upon entry, exit, and operation.  This means the repeal of licensing, franchises, and other restrictions upon all kinds of community transportation--taxis, jitneys, vanpools, bus, and rail.
     * Libertarians will phase out government subsidies to transportation operations.  This means halting existing subsidies to private operators.  If a municipal transit agency exists, it should be required to seek its revenues from voluntary, private sources; if its operations cannot be supported, then its assets should be auctioned so that they can be reorganized in a manner useful to the community. Subsidies once ended should be passed through to the taxpayer in the form of direct tax cuts.
     * Libertarians will progressively privatize streets and highways. Acknowledging that state law often restricts private ownership of roads, Libertarians urge that a policy of selling streets and highways be adopted where possible.  For communities large and small this can at first mean merely extending the routine process of street "abandonments" (conversions to private use) to cover petitions for ownership by private individuals and neighborhood associations.  Lanes of major urban roadways can be sold, even if the entire highway is not; bus companies might purchase exclusive lanes for express transit. To encourage the process, tax cuts should be made available to those who assume maintenance of their own roads.  Local governments should insist that roadways in new subdivisions remain the responsibility of subdivision owners, with tax cuts applying here, too.  Rural townships can start paring at the edges of their road networks by speeding the process of abandonment to farmers and other landowners.  Where government easements are maintained, they can be auctioned or sold directly to the landowners involved.
     How paratransit, bus, rail, and the private automobile will ultimately sort out their comparative advantages in consumers' eyes is highly dependent upon what local government does about the last crucial element in community transportation: roads.  If private use of public streets is deregulated, but streets themselves remain subsidized by tax revenues (either general or coercively-imposed "user charges"), then the modes which use roads more efficiently will probably continue to operate at less than full potential.  Autos and paratransit would tend to carry traffic which would be attracted to buses were road users to pay direct prices; buses will be denying rail transit ridership which rail might attract were highway usage directly priced.
     We should expect the actual total costs of providing highways and streets to decline as political costs are factored out by private ownership.  Thus we would look for driving, overall, to increase as it became less expensive--and this might occur.  But privatization will not necessarily result in greater highway usage, particularly if highway users pay highway costs in direct prices rather than in general, "hidden" tax levies.  It is because the perceived cost of highway use is so low that drivers presently crowd urban highways to the breaking point.
     We need not assume, however, that toll booths will be the norm on free market roads.  Other viable road-pricing technologies from meters to electronic sensors to colored license plates have been demonstrated.28  And one may question the assumption that driving activity will be priced at all, everywhere.  It is the State--not individuals on the free market--which insists that everyone must pay for every benefit he or she receives.  Do shopping centers and hotel complexes, for instance, charge prices for the privilege of strolling through air-conditioned, carpeted malls?  Do they even inquire of passersby whether or not they are there to shop?  No.  Use of shopping mall thoroughfares is given away free in the hope that attractive, convenient access will improve the fortunes of the businessmen who line the indoor "street."  (A Fort Worth, Texas department store even provides a trolley subway from a fringe parking lot to its downtown location.  The ride is provided free to all, be they shoppers or commuters.29)  Similarly, commercial and neighborhood associations can own and maintain their streets for their own benefit, as is done with residential streets in St. Louis.30  Private road entrepreneurs could
sell driveway access to property owners fronting on a road.  Whether such revenue sources will prove sufficient to maintain roads in the fashion desired by the market is an open question, but in general we may conclude that where the costs of pricing drivers directly exceed the revenues of such activity, driving will be "free."
     Community transportation is inextricably bound up with the complexities of land use, energy, technology, time values, and other socioeconomic factors.  It is more than merely presumptuous to suggest, as a top regional transportation planner recently did, that "there will be no more new ideas."31  Government can embalm the technology of 1888 and 1914, but a free market in community transportation promises dramatic innovation and progress.  Ultimately it is inadequate to describe free market benefits in terms of present technology alone, though much beneficial innovation in community transportation is already in sight.




Taxicab: door-to-door service on an individual basis, over a wide range of land use densities. Costs fall rapidly when ride-sharing is allowed.

"Dial-a-bus:" essentially group-riding taxi service using vans. Usually not feasible where low traffic density exists, but may be useful in collecting riders over a wide area bound for a single destination such as a railroad station.

Subscription bus: fixed-route, subscription van transportation. Often arranged by employers to collect and distribute commuters to and from a work establishment. Also known as "vanpooling."

Jitneys: vans operating on irregular routes and nonscheduled times, usually as feeder service for heavier transit. A taxi with ride-sharing is essentially a jitney.

Local bus: fixed route, fixed schedule transportation usually using standard large bus equipment. Typical of most, urban bus transit operations.

Express bus: nonstop line-haul bus service using standard or somewhat improved large buses,, usually operating between downtown and larger concentrations of suburban commuter origins. Often improved by the addition of facilities for "park and ride" or "kiss and ride."

Light rail transit: essentially the old trolley rejuvenated, with the exception that most modern applications include exclusive rights-of-way. Cheaper than subways, and often applicable to existing "paths" such as abandoned railroad beds or freeway medians.

Light guideway transit: automated systems being tested in various locations under Federal grants. Have yet to show feasibility because of high costs, inability to flexibly cope with peak traffic demands, and complex control equipment.

Rapid rail transit: at a very high capital cost, usually not a viable proposition--unless a community has a highly concentrated business district including more than 15 million square feet of office floorspace and travel is limited to a few narrow corridors. In 1974-5 prices, both the Washington, D.C. and Atlanta rapid rail transit systems cost about $40 million a mile.

Commuter rail: a mode of community transport usually limited by high labor and other operating costs to concentrated urban areas. Presently exists in significant amount in only seven North American Cities.

Source: "Where Transit Works: Urban Densities for Public Transportation," Regional Plan News (August 1976). p. 1.


1. Peter C. Weiglin, "A Short History of Transit in the United States," 1976 Transit Fact Book (Washington, D.C.: American Public Transit Association, 1976) p. 14.
2. Ibid., p. 15. 
3. Ibid., p. 17. 
4. George W. Hilton, Federal Transit Subsidies: The Urban Mass Transportation Assistance Program (Washington, D.C.: American Enterprise Institute for Public Policy Research, 1974) p. 109.
5. Ibid., p. 109 Cf. Ross D. Eckert and George W. Hilton, "The Jitneys," The Journal of Law and Economics, vol. 15 (1972), pp. 293-325.
6. Hilton, Federal Transit Subsidies, p. 110.
7. Ibid., p. 110.
8. William D. Burt, "The Ride Out of No Man's Land," AREA Bulletin
(November-December 1976), p. 4.
9. 1976 Transit Fact Book, p. 30.
10. Ibid. p. 28.
11. 1976 Transit Fact Book, p. 22.
12. "Two Sides Explain Stands in Amish 'Taxi' Hassle," Lancaster (PA)
Intelligencer Journal, February 23, 1977.
13. "Transit Innovations," Reason (September 1975), p. 30.
14. For a detailed examination of comparative advantages of bus and rail modes, see J. Hayden Boyd, Norman J. Asher, and Elliot S. Wetzler, "Evaluation of Rail Rapid Transit and Express Bus Service in the Urban Commuter Market (Arlington, VA: Institute for Defense Analyses, 1973), and discussion in Hilton, Federal Transit Subsidies, p. 112.
15. Hilton, p. 112.
16. Boyd, Asher and Wetzler, cited in Hilton, p. 112.
17. Among the most successful of UMTA-funded projects were reserved bus-ways in Seattle, WA and Washington, D.C. In Washington, the Shirley Highway bus lane was later opened to four-rider carpools. 1973 estimates of the car trips diverted to bus in the morning rush hour reached 3,000 (Hilton, p. 19) and carpools using the reserved lane in the morning rose from 1,790 in November 1975 to 2,757 in May 1977.
It is worth noting that large portions of the Shirley Highway bus lane were built anew rather than subtracted from existing highway capacity; nonetheless considerable political pressure surfaced for converting the new lane into a straight addition to highway capacity. (Washington Star, August 11. 1977.)
18. This rethinking is composed of a new emphasis upon obtaining better use of existing facilities, called "transportation systems management." But even if federal funding for new rail systems halts, the bias continues to encourage capital grants for new cars, new stations, etc. in existing rail systems.
19. Burt, op. cit.
20. Regional Plan Association, Public Transportation and Land Use Policy (Indiana University Press, 1977).
21. For a survey of how UMTA-funded projects fared in this regard, see Hilton, Chapters 2 and 3.
22. "Getting to Work in Houston," Houston Chronicle, August 15, 1976.
Cf. William D. Burt, "Paratransit: From Out of the Woodwork," AREA Bulletin (July-August 1977).
23. Neal R. Peirce, "A New Approach to Mass Transit" Philadelphia Inquirer, June 15, 1977.
24. "Getting to Work in Houston," Houston Chronicle.
25. Peirce, op. cit.
26. Ibid.
27. Ronald F. Kirby, Kiran U. Bhatt, Michael A. Kemp, Robert G.
McGillvray, Martin Wohl, Para-Transit: Neglected Options for Urban Mobility (Washington, D.C.: The Urban Institute, 1972).
28. See Gabriel Roth, Paying for Roads (Middlesex, England: Penguin Books, 1967), Chapter 5; and William Vickrey, "Pricing in Urban and Suburban Transport," American Economic Review, vol. 52 (1963),
pp. 452-465; and "Pricing As a Tool in Coordination of Local Transportation," Transportation Economics (New York: Columbia University Press, 1965), pp. 275-291.
29. "Striking Contrast: Trolley and People Mover," Civil Engineering-ASCE, March 1977, pp. 67-68.
30. Robert Bish, Vincent Ostrom, Understanding Urban Government (Washington, D.C. American Enterprise Institute for Public Policy Research, 1973) p. 21.
31. James Wilson, Regional Planner, Tri-State Regional Planning Commission, at the Polytechnic Institute of New York, fall 1976.

Chapter 6
Table of Contents