Angry Doctor

Friday, July 22, 2011

Nationalisation - the cure for all woes?

Nationalising public transport not fair

MR GERALD Giam states that taxpayers already contribute to the basic infrastructure of the transport system and does not elaborate ("Consider the economic reality of transport here"; Tuesday).

His view suggests that, as we have paid for some of it with our taxes, it should not bother us to continue to subsidise the transport system's operation.

We should draw a clear line between state money, which funds basic infrastructure (which benefits the country as a whole) and state money subsidising transport operations (which benefit only users).

Mr Giam does not differentiate between the two. Using taxpayers' funds to subsidise public transport users is an ongoing, open-ended contribution which is unfair to those who do not use it.

Mr Giam also criticises the profit model which he says benefits only shareholders via dividend payouts.
This may be true but somewhat distorts reality.


Investors did not get a free ride. They coughed up money from their own pockets, which the public transport operator uses for its operation and such.

To the investor, this constitutes some risk and it is not wrong for him to expect a return.

Capital formation markets, be they in stocks or bonds, are basically avenues for enterprises to gain access to vital capital, without which any economy would fail.

It is a willing-buyer, willing-seller system which, one hopes, is a win-win situation.

In a nationalised transport system, the taxpayer who does not use the system is not given the choice whether he wants to ante up this risk money to subsidise its continued operation.

Daniel Yew

angry doc does not think that our public transport system is perfect, or that the public transport market is truly competitive; still, he is not convinced that nationalisation of public transport is the solution, or that it is fair, for reasons that Mr Yew has stated.

The idea that "[u]sing taxpayers' funds to subsidise public transport users is an ongoing, open-ended contribution which is unfair to those who do not use it" seems obvious, but there will always be those who continue to advocate it because they perceive that they stand to gain from it, either for political capital, or because they don't want to pay for what they use.

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