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A Market-Based Solution to the MAX Security Crisis

Sreya SarkarJohn A. Charles, Jr.Cascade Commentary

Summary

While TriMet has agreed to some reforms in the wake of the MAX security crisis, a much better solution would be to allow consumers to have real choices in transit service. Here in Portland, privately operated automobiles formerly served successfully as unsubsidized, flexible, quasi-public transportation directly responsive to popular demand.

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In recent months, long-standing concerns about safety on TriMet’s light rail system have rapidly evolved into a full-blown crisis. Gresham and Hillsboro police predicted since the beginning that MAX would become a magnet for crime, and those predictions have come true.

While TriMet general manager Fred Hansen has agreed to several necessary reforms, including reductions of fareless square and the pilot testing of turnstiles at one Gresham station, a much better solution so far has been ignored: allowing competition to TriMet so that consumers have real choices in transit service.

This may strike some people as unrealistic. The conventional wisdom is that transit service is inherently unprofitable, so it must be run by a government monopoly. But the conventional wisdom is wrong. We know that transit can be profitable because we have a track record of it right here in the Rose City. More than 360 privately operated automobiles served Portland as flexible quasi-public transportation between 1914 and 1917. The usual fare per ride was five cents, or a “jitney,” as it was called then – hence their name.

“…[T]he conventional wisdom is wrong. We know that transit can be profitable because we have a track record of it right here in the Rose City.”

The freedom of jitney operators from streetcar tracks and governmental franchise restrictions gave them greater flexibility in destinations than the street railways that served as mainstream public transit in those days. Jitneys acted as buses, taxicabs and delivery vehicles, efficiently filling service gaps.

Jitneys came to Portland in 1914 in the midst of a depression which brought 20% unemployment in its wake. Since there was open entry into the jitney business, many unemployed people were able to start new transit services simply by using something they already owned – a car. Jitneys were owned and operated mainly by the poor working class.

Most of us have never had direct contact with jitney service, but according to Milwaukie resident John Gray, whose uncle ran a jitney business from 1915 to 1918 in Portland, jitneys mainly served hard-working blue-collar lumberyard workers. He says, “Jitneys were popular because they were fast, flexible, inexpensive and ran long hours.”

Jitneys also offered stiff competition to the Portland Railway Light and Power Company’s monopoly on public transportation by providing faster and more flexible service to passengers. The Oregonian supported the street railway monopoly and considered jitneys a “threat to an established business providing an essential community service.” Editorial writers neglected to mention that the jitney was a form of unsubsidized transportation directly responsive to popular demand.

The question of regulating jitneys came up continuously before Portland city commissioners between 1915 and 1917. Once jitney operators realized the huge degree of hostility they faced from the city Commission, most of them joined a union affiliated with the Central Labor Council. Eventually, jitney operation became a ballot issue, and jitneys were regulated out of business.

The real reason why jitneys were regulated out of existence in Portland, as in most other cities, was because they took passengers away from street railways. Regulators publicly proclaimed that regulations were intended to make jitneys “safer” to ride. Expensive license fees and liability bonds were imposed on jitney drivers, along with absurd rules of operation, ultimately making jitney operation infeasible.

“It is becoming increasingly difficult for TriMet alone to expand services to cover the new centers of business and employment developing around Portland. Jitneys are perfect for moving people inexpensively in these newly developing areas.”

If jitneys were once regulated out of business because of speculative safety concerns, next in line should be Portland’s light rail system which has quantifiable safety concerns. But little can be done through regulation because MAX is owned and operated by the regulators. As a government monopoly, the system has no accountability for safety, cost or any other measure of performance.

One way of making MAX accountable would be to deregulate the transit market to legalize all forms of competition, including jitneys. The modern version of jitneys could be small buses or vans carrying two or more passengers. Though they would have to follow some safety regulations and get proper insurance, they should not be subject to absurd laws like running 24-hour service or employing a minimum number of people.

Of course, few people would start up a jitney service when TriMet receives more than $210 million annual in payroll taxes to subsidize its operations. As long as that revenue stream is monopolized by TriMet, competitors would have difficulty competing for service. One way to jump-start competition would be to use a percentage of the payroll tax revenue (perhaps 25%) and convert the funds to transit vouchers, made available to the lowest-income riders. Such vouchers, as with food stamps, could be used for any qualifying transportation purchase, including bus, light rail, taxi, jitney or FlexCar. By making transit providers compete for the revenue, market discipline would force changes on everyone, including TriMet.

It is becoming increasingly difficult for TriMet alone to expand services to cover the new centers of business and employment developing around Portland. Jitneys are perfect for moving people inexpensively in these newly developing areas. Jitneys were popular when consumers were actually allowed to ride them. Getting the government out of the way would be a good start to bringing back this low-cost transit service.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market think tank. Sreya Sarkar is Director of the Wheels to Wealth Project at Cascade.

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