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Should Amtrak be privatized?

The politics started before the smoke was clear. One day after the May 12th crash of Amtrak Train 188, House Republicans voted to cut about a fifth of the rail operator’s budget, over protest from Democrats who claimed that tight-fisted funding was to blame for the crash.

Representative John Mica (R-Florida) defended the move on CNN, calling Amtrak “a monopoly run in a Soviet-style operation.” According to Mica and allies, the crash was the result of not of underfunding, but of mismanagement, fostered by a lack of accountability and lavish government subsidies.

According to the Congressional Budget Office, those subsidies have run to $45 billion since Amtrak’s creation in 1970. This has made Amtrak a recurring target of fiscal conservatives. President George W. Bush proposed cutting all federal support in 2005, as did candidate Mitt Romney a few years later.

Recent history offers two case studies of what might happen if Amtrak were taken private. Japanese and British rail systems were both privatized around 25 years ago, with starkly different results.

Margaret Thatcher, despite her affinity for privatization, opposed rail privatization, purportedly referring to it as a potential “Waterloo” for conservatives. But her successor as Prime Minister, John Major, split the former British Rail into several private companies in 1993.

Thatcher was proven right: The privatized British rail system has by most accounts become more expensive to riders, less safe—and even more reliant on public subsidies.

Privatization of rail management was quickly followed by a series of accidents, culminating in a 2000 crash in Hatfield caused by a crumbling rail. These led directly to the rails—but not train operation—being re-nationalized by 2002.

But according to a 2013 University of Manchester report, the new public infrastructure manager has drastically lowered rail access charges to private rail operators, becoming in effect a backdoor for public subsidy: Even as the operators claim modest profits, the public side of the system has generated nearly 30 billion pounds in debt in one decade—as much cash as Amtrak has bled since 1970.

To top it all off, economists at UBS determined that Britain now has the most expensive train fares in the world. Two-thirds of Brits now support re-nationalizing the entire rail system.

But the British debacle is not the only possible scenario for a privatized Amtrak. In 1987, the Japanese government began privatizing the struggling Japan National Railway, creating the Japan Rail Group and achieving largely positive outcomes.

The three JR entities in densely-populated central Japan have cut costs and turned profits while operating the most widely admired commuter rail system in the world. JR Central, headquartered in Nagoya, has even become a private innovator, sinking 5.4 trillion yen, or over $43 billion, into a new super-fast maglev line to connect Tokyo, Nagoya, and Osaka.

But the success of those central railways is not reflected in more remote lines. The JR units outside of central Japan are still government-owned, and smaller rural rails are under increasing financial strain.

Amtrak has a similar rural-urban divide. A 2013 Brookings report found that major metro areas were profitable for Amtrak, while rural and long-distance lines tended to lose money. But politicians have consistently resisted efforts to cut nonperforming lines from their own states, touting benefits in jobs, tourism, and livability that aren’t reflected in profit-loss statements.

A truly private Amtrak, tasked with providing returns to stockholders, would be legally obliged to abandon nonperforming rural and interstate lines. The real question, then, may not be whether Amtrak should be profitable, but whether America wants long-haul passenger rail at all.