BEST Tries Out New Colours; Asks For Feedback

Mumbai: BEST has repainted a few of its buses with a new colour scheme and has asked for feedback on them.

 

 

The Press Note is mentioned below:

As

Press Note on New Colours
Press Note on New Colours

As per the Press Note, the newly colour buses will run from 27 April to 30 April on Route 111 between Chhatrapati Shivaji Terminus to Gateway of India. Feedback on the new livery can be sent to probestundertaking@gmail.com

Now, for the new livery itself. BEST has replaced its trademark red colour with a white livery and yellow stripes.

Non AC BEST bus with new livery
Non AC BEST bus with new livery

Along with this, the BEST logo on the side has also changed marginally.

They seem to have repainted some of the Purple Faeries as well, in spite of them being pulled out of service.

Howver

AC BEST bus with new livery
AC BEST bus with new livery

However, the new livery looks grand on the Cerita bus.

Let’s see what happens. Don’t forget to send your feedback.

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BEST Suspends All A/C Routes

No, this is not an April Fool’s joke. Not even close to one.
BEST has announced that beginning 17 April 2017, operations of all AC buses will be suspended. This information was announced via a Press Note dated 13 April 2017.

BEST Press Note suspending AC services
BEST Press Note suspending AC services

This is a really sad thing. Mumbai is a huge city with a large number of vehicles. Cancelling AC buses would mean people will opt for cars/bikes/taxis.

BEST was among the first to introduce AC buses, way back in 1998. Things began going downhill when in 2007, then General Manager Uttam Khobragade (named in the Adarsh Scam along with his daughter Devyani Khobragade of the US Underpaid Maid infamy) procured Cerita buses by fakely claiming that they were Chinese Kinglong buses.

This is really a sad day for Mumbai. BEST had done all that it could in the last few months, from slashing fares, to introducing Happy Hours, to reintroducing cancelled AC bus routes. This is indeed a bad moment for us.

Featured Image: AS-524. (Photo Credit: Sameer More)

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Uber Movement: Can it help us solve our Transport Problems?

Uber recently debuted its new Platform, Uber Movement (http://movement.uber.com) which will offer users access to its traffic data.

According to Uber’s blogpost on the same, Movement is meant to be a website that uses Uber’s data to help urban planners make informed decisions about our cities.

Now this might actually work out to be the best thing to happen to us!

Let us take Mumbai and Bengaluru as an example.

Both BEST and BMTC and an eTicketing system and an ITS with a vehicle tracker in place. With these two systems, the transco is able to:

  • Place the bus on a map.
  • Compute the number of tickets sold on different stages of different bus routes.
  • Superimpose the two onto a single dataset to identify where maximum passengers are and and what time. Using this data, one can come to the conclusion of time taken between two stops, and what time people are more or most likely to catch the bus.

Now, what can Uber’s data add to this dateset:

  • Average traffic conditions. While this can be ascertained using the Vehicle Tracking in Buses as well, Uber’s data is bound to be a little more accurate.
  • Alternative routes between two points. Since Uber relies on Google Maps for its navigation, it normally is able to plot multiple routes from Point A to Point B. This data can be used to launch additional bus routes.

The purpose of a Public Transport Undertaking like BEST or BMTC using Uber Movement’s data is to provide streamlined traffic flow.

Now let us take a real-world example:

Bengaluru

Building up on a previous post (Stuck in Traffic: How I Might Have Averted a Major Jam), let us assume that one would have to travel between Arekere Gate on Bannerghatta Road and the junction of 5th Main and 17th Cross in HSR Layout. As discussed earlier, there are two main routes. Traffic data from Google, Uber and BMTC’s ticket sales would be able to place things on a map. Since BMTC does not have a smart card system in place, it would be difficult to ascertain if the passengers disembarking at Jayadeva are taking a bus towards HSR Layout. If it did have a Smart Card system, or load passes onto an RFID card, this could be ascertained easily.

BMTC can then, based on traffic movements and passenger loads, introduce minibuses between Arekere and HSR Layout via Bomanahalli during peak hours.

Mumbai

Here, let us assume that one has to travel from Cadbury Junction, Thane to SEEPZ, Andheri.

Buses have two routes. Some of them like AS-422 take the Cadbury Junction-Marathon Chowk, Mulund Check Naka, Bhandup, Powai Route. Some, take the direct route by continuing on the Easter Express Highway and taking a right turn onto the Jogeshwari Vikhroli Link Road and then proceeding on to SEEPZ. Uber Movement can help BEST figure out when there is maximum congestion, and using its dataset on how many passengers and where they travel from and to, plan a more optimal route.

 

At the end of the day, Uber Movement is nothing revolutionary, it is merely Google Maps with a little more data, but more data is good for all of us.

What Uber Movement will certainly help us with is planning of land acquisition for newer transit projects, wider roads, metro lines, et al. But those are capital intensive projects. Newer bus routes would be the first step to implementing a full-scale transformation project. It will help make the city’s people smart, irrespective of whether city itself is smart or not.

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BEST Comes Up With Three Pronged Strategy To Curb Accidents

Mumbai: BEST has devised a new three-pronged strategy to curb accidents with its fleet.

A BEST bus that was involved in an accident.
A BEST bus that was involved in an accident. Photo: News18

Among them are:

  1. CCTVs
  2. Smaller Tyres
  3. Larger Mirrors
Survey report by BEST in March 2015 . Image credits: Mid-Day
Survey report by BEST in March 2015 . Image credits: Mid-Day

CCTVs

BEST has written to the state government to set up more CCTV cameras on streets. BEST wants to be able to monitor its drivers en route, monitor their driving skills and safety, and identify corridors where accidents are common. This should be extended to the buses too. One would wish that the requested CCTVs are for the exterior of the bus too, something which currently only the Volvo fleet has: A CCTV camera on the top of the rear window panel that can be monitored by a display next to the steering wheel.All BEST buses, barring the Volvo fleet have two CCTV cameras in them, as part of the agreement with Verve Compusoft for the PIS and Advertising system. However, BEST themselves are unsure as to how many of them are functional, and like the PIS, it is also in bad shape and nothing can be done due to a badly enforced contract. While more CCTVs is one thing, whether they will be properly utilised, is another thing.

Smaller Tyres

BEST has decided to get smaller tyres for its buses, as a alternative to installing a speed governor. While this might be great for certain routes, care must be taken and larger tyres must be present on buses that ply on Express or Long Distance routes such as A74Express or A8Express which ply on the Bandra-Worli Sea Link and the Eastern Freeway as well as go on top of almost every flyover on the Western and Easter Express Highways respectively.

6,500 new tyres will be fitted in 775 Tata buses (out of the total 3,800 buses that BEST has) and will be procured at a cost of ₹4.72 crore. The older nylon tyres are 9.00 x 20-14PR while the newer nylon tyres will be 9.00 x20-16PR.

Speed Governors are mandatory on heavy vehicles like buses, trucks and trailers under the Central Motor Vehicle Rules of 1989.

Mirrors

The Undertaking will also install newer mirrors. The new mirrors, with a dimension of 380mm x 190 mm is being tested. The existing mirrors are 40% smaller. If they are found to be useful, it will be retrofitted into 303 new buses and then gradually into the rest of the fleet as well.

Overall, BEST seems to have done a great deal of study to reduce accidents. We wish them all the BEST (pun intended) and hope they succeed.

 

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Dindoshi To Get A Makeover

The Dindoshi Bus Station (next to the Dindoshi Depot) on the Goregaon-Mulund Link Road near Oberoi Mall is all set to get a facelift.

Dindoshi Depot Render by WRI India
Dindoshi Depot Render by WRI India

Below is a slideshow on the whole subject:

In the above slideshow, a lot of emphasis is laid as to why Dindoshi was chosen for this. Dindoshi Bus Station is among the busiest bus stations in Mumbai. The plan takes into account the number of buses entering and leaving, the different routes along with the existing facilities at the bus station. The depot and terminal occupy 3242.9 sqm., and witnesses approximately 8331 passengers a day.

The existing terminal has a terminal building, bus bays, bus parking bays and a passenger boarding area. For pedestrians, it is a bit dangerous due to the large gap in the central median outside the depot as well as vendors on pedestrian pavements. It is a little difficult to spot as well, due to its inconspicuous look. Further, due to a single entry point for drivers and buses, it is accident prone. Passengers further have to often board buses in the parking bay, thus making them walk across the open area of the terminal where buses are in motion. Due to haphazard parking, buses may also collide with each other.

Several changes have been proposed to the layout, in two phases:

Phase One

Phase One lists the basic changes that need to be made:

  • Improving pedestrian safety while accessing the terminal
  • Changing bus circulation and the pattern in the terminal
  • Reorganising the terminal layout for better accessibility and safety
  • Amenities for both passengers and staff

Phase Two

Phase Two involves commercialising the entire structure.

Multiple concepts have been provided in the entire plan, which can be seen in the Slideshow.

 

Overall, this is a good move. If it is done in the right way, with proper accessibility for pedestrians and those who are visually or physically impaired, it would be a big boon for the city and for BEST.

 

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USSD Bus Travel: Is it worth a try?

Last week, I wrote an article on Swarajya about a little known Banking System that exists in India: USSD Banking, aka the National Unified USSD Platform (NUUP) that allows anyone with a basic GSM phone to perform financial transactions. You can read the article here: No Smartphone? You Can Still Transfer Money Using A Basic Mobile Phone

A user dialing *99# to access NUUP.
A user dialing *99# to access NUUP. Image: Srikanth Ramakrishnan/Swarajya

Now, to buses. Can we try and replicate the USSD Banking model for bus travel? Why not? We have two major applications for it.

  1. Ticketing.
  2. Tracking.

For all practical purposes, we will try and take BEST and BMTC as an example here. We will also assume a simple USSD number to dial: *456#

Ticketing

Since both BEST and BMTC have an Electronic Ticketing System in place, this can be relatively easy. It is easier for BEST, since BEST has all its bus stops numbered as well. Example: If I am at Nehru Planetarium/NSCI/Lotus bus stop at Worli, with a Bus Stop code 07187. I dial *456#, it asks me to enter the stop code, then I type 07187, it then asks me if I want to 1.Buy a ticket or 2. Know the arrival of buses, I choose 1. It then lists out the buses arriving in the next 30 minutes. I choose AS-4. It then lists out the stops from NSCI to Backbay Depot, I choose Backbay Depot, it asks for confirmation, I say yes. It deducts ₹75 from my wallet and sends me an SMS with the ticket details. It gives a 4-digit reference number which I show the conductor when I board the bus. He enters that onto his machine and that’s all.

Tracking

This is even more simpler than booking a ticket. The process is pretty much the same. Dial *456#, enter stop code 07187, choose 2 and it shows the list of buses. I choose AS-4. It shows the last stop the bus has crossed and the ETA, like : AS-4, Acharya Atre Chowk, ETA 4 min. This is similar to BEST’s existing SMS based system, but provides more real time data.

Shortcodes

A shortcode can be created enabling faster access to frequenters.

Eg: *456*1*07187# to open the list of buses to book a ticket. Or *456*2*07187# to open the list of buses to track then.

Pricing

Now comes the tricky part. Rates for the NUUP are charged, with a maximum cap set by TRAI at ₹1.5 per transaction. As far as tracking is concerned, the existing SMS system (although not functional right now) costs ₹3 per message. A ₹1 charge per transaction/lookup might be good for tracking. The issue comes for payments. Charging a rupee extra per ticket doesn’t sound like a good move. However, since BEST already charges ₹30 for the ePurse Card, and ₹10 per month for bus passes as administrative charges, it might not be a problem if it is charged as a rent from the user’s account.

What do you say? USSD Banking is here. USSD Bus Travel? Why not

 

 

 

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[Satire] BEST Buses To Stop At Bus Stops For Two Minutes

BEST today announced that henceforth all buses would stop at bus stops for atleast two minutes irrespective of whether passengers boarded or disembarked.
This announcement came following the speech by former Prime Minister Dr. Manmohan Singh in the Rajya Sabha where he quoted British economist John Maynard Keynes and said “In the long run we are all dead” yesterday.

A boy running to catch a bus (Representative).
A boy running to catch a bus (Representative). Image copyright Fengalon. Image in Public Domain.

When contacted, BEST chairman Mohan Ramchandra Mithbaokar was unavailable to comment. We were told by his assistant that the new move was to give commuters ample time to reach the bus stop. “If people run to catch a bus, it could be dangerous, they might die,” we were told. “Hence, the order was issued that all buses would stop for a few minutes to allow those running to slow down and walk to the bus. We are also planning to insure people who buy tickets in case the long run kills them,” he added.

Meanwhile, when contacted, NMMT chairman Saboo Daniel was visibly angry. “BEST thinks they can outdo us? No way! We will beat them to this. We will show that we care more for the passenger than they do. We will prevent their buses from stopping in Navi Mumbai just like we prevented their buses from entering our depots. Why, we’ll even stop our buses everywhere so that people do not have to run or walk at all! That way, nobody will die in the long run!”, he fumed. When asked if NMMT had any insurance plans like BEST, he said, “It is only needed if people run right?”

We just hope that whenever these happen, nobody will die in the long run.

BEST to take additional measures to prevent people from dying in the long run! Click To Tweet

Note: All content in this article is fictitious, and must not be taken seriously. This article is satire, and should ideally be treated as such.

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BEST: Old Notes Can Be Used For Bus Passes

BEST today has announced that the old ₹500, and ₹1000 notes can be used till 24-11-16 to buy Bus Passes/Renew Bus Passes.

The higher value notes, that had been pulled out of circulation for most purposes on 08-11-16, were to be valid in Government Hospitals, as well as to buy air tickets, railway tickets and bus tickets at airports, railway stations and bus terminals of State Transport Undertakings respectively.

BEST announced this by sending a text message to existing passholders and prepaid card holders.

SMS from BEST notifying that Old Currency of ₹500 and ₹1000 can be used for bus passes.
SMS from BEST notifying that Old Currency of ₹500 and ₹1000 can be used for bus passes.

While the demonetisation of notes presents us with a great opportunity to go cashless, it will take time to start.

For a list of Point of Sale (PoS) Counters from where you can Buy/Recharge/Renew Bus Passes and ePurse Prepaid cards, please refer to Page 11 of this document.

Note: You will be required to provide your Name, Address, Phone Number along with the Serial Number of the notes.

Read: Going Cashless In Transit: Blurring The Line Between Digital And Physical Approach by Srikanth Ramakrishnan on Swarajya

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BEST: Free Bus Passes for Visually and Physically Impaired

BEST has announced that it will issue bus passes to Visually Impaired and Physically Impaired passengers with more than 40% motor disability or handicap.

According to a Press Note dated 19th October 2016, the scheme would be operational from 20-10-16.

The Press Note [in Marathi] mentions the following:

From October 20, 2016, a scheme for free of cost travel for the visually impaired and people with 40% or locomotor disability has been introduced in all buses of the BEST program, excluding the air-conditioned bus service. Highlights of this scheme:

Mumbai – Effective from Thursday, 20/10/2016, a program is being activated for handicapped persons (visually impaired and >40% handicapped) to avail of free transport in buses (except air-conditioned buses) operated by the BEST Undertaking.

Salient features of the program:

  1. The free travel benefit can be availed of by blind (visually impaired) and handicapped (more than 40% physical handicap) persons. This program will be applicable in the Mumbai Metropolitan region and adjoining cities where the BEST Undertaking bus service is operational.
  2. For those availing of the benefit, it will be mandatory to possess a RFID smart card/ ID Card issued by the BEST Undertaking.
  3. The blind (visually impaired) and handicapped (more than 40% physical handicap) persons wishing to avail of the benefit are required to go to Transport Departmental Office in any depot of the BEST Undertaking near their residence (or any other depot otherwise convenient to them), collect the free printed form issued by the undertaking and submit it, filled up along with a photocopy of the handicap certificate to the concerned Administrative Officer or Depot Officer during the office timings (9:00 AM to 4:30 PM, except for Sundays and public holidays).
  4. After the Administrative Officer scrutinises the form and the attached documents, the applicants will be sent to a nearby bus pass distribution centre for registration and photographing. The applicants will have to pay a fee of 40 rupees (only in the beginning) for the RFID card / ID card. The bus pass will and RFID card will be made available within 4 to 7 working days of registration at the bus pass distribution centre.
  5. Once this program for free transport for blind (visually impaired) and handicapped (more than 40% physical handicap) persons is activated, the existing travel fare benefit programs for visually impaired and handicapped persons will be cancelled.

All blind (visually impaired) and handicapped (more than 40% physical handicap) persons are requested to avail maximum benefit of this program of free transport in the in buses (except air-conditioned buses) operated by BEST Undertaking.

Prior to this BEST used to charge a flat fare of ₹2 for totally blind passengers on non-AC buses, irrespective of the distance traveled. This used to be ₹1 earlier.

The only drawback to this entire scheme is that the disabled person has to go to a Pass Issue Counter at a Depot, buy the ₹40 RFID card and submit all the documents. While paying a one-time fee for the card might be justified for BEST to cover costs of procurement and running the system, going to the Depot for a disabled person maybe extremely cumbersome

The template of a BEST RFID bus pass. It has the Users photo in the box, and their name and ID number on the right. Image: BEST
The template of a BEST RFID bus pass. It has the Users photo in the box, and their name and ID number on the right. Image: BEST

Accessibility in the Commuting and Transport sector is virtually negligible in India. This is a good step towards changing that. While one may argue that Subsidies are not good, this shouldn’t be treated as a subsidy but rather a necessity.

Thanks to Rohini  and Sameer for help with translations.

Thanks to Zophop for notifying users.

BEST offers free travel to Visually-Impaired commuters. Click To Tweet

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Subsidies in Transport: Good or Bad

Subsidies in Transport are visible everywhere. Tamil Nadu has kept its bus fares at rock bottom rates, gives free bus passes to school students, Delhi has dirt cheap rates with the maximum fares being ₹15 and ₹25 in a non-AC and an AC bus. So, what else?

As stated earlier, extreme amount of subsidies bleeds the Transco of its revenue, and create a heavy indifference among the commuters to quality of services. Given that a vast majority of India’s transport services are entirely General Class services, revenues are inherently low. Similarly, in the case of Roads, a lot of people argue that Tolls are a “scam”, especially when they pay road taxes. Again, this is a false notion, one that can be explained if we cared to look at the Basic Difference between Toll and Road Tax: Toll is a User Fee. Road Tax is a Tax. I repeat, Toll is a Fee, and not a Tax. A tax is levied on a category of people on the basis of the income or what they own, in this case a vehicle. A toll, or a fee, is levied only on those who use the certain service or product, in this case the road. Many users accept this, but go on to further state that they are unjustly charged for using the entire section of a road rather than just the portion they used. Again, this is a flawed point of thought. In India, it would be a superhuman effort to set up Toll Plazas at every junction, man them [an automated one wouldn’t work, people will definitely find a way to avoid paying it then] and operate it. Of course, the Coimbatore bypass has 6 Toll Plazas on it, but 6 of them on a 28km two lane road, we all know the jam that occurs most of the time.

Toll Roads and other BOT transport projects, such as BOT Railway lines, like the Mumbai Metro One, Rapid Metro Gurgaon, Hyderabad Metro, et al, have specific intervals at which they are allowed to hike fees and fares, which makes it easier to operate and break even. In case of Transcos, most of them are either under pressure from the state or municipal body to keep their fares low [Prime Examples being DTC, MTC, TNSTC]. A few exceptions exist in the form of BEST, BMTC, TSRTC, which by virtue of the autonomy enjoyed by them revise [hike or slash] their fares at a reasonable interval. One method of determining rates is market oriented rates, which is what Uber and Ola normally does. When demand goes up, fares go up so that those who are willing to pay extra for it. However, this isn’t a feasible solution in all cases. In such situations, BEST’s Happy Hours concept works well. Similarly, KSRTC and the Indian Railways have successfully emulated the aviation industry with dynamic pricing in the form of Premium Tatkal tickets. Every transport corporation has schemes to attract customers. Similar to Toll Plazas offering a return ticket and seasonal pass, buses offer Passes and other forms of subsidies to frequent customers like the market.

Now, to take this further, below is an article from the Foundation for Economic Education which talks about the ill effects of subsidies.

 

The Distorting Effects of Transportation Subsidies

This article won the 2011 Beth A. Hoffman Memorial Prize for Economic Writing.

Although critics on the left are very astute in describing the evils of present-day society, they usually fail to understand either the root of those problems (government intervention) or their solution (the operation of a freed market). In Progressive commentary on energy, pollution, and so on—otherwise often quite insightful—calls for government intervention are quite common. George Monbiot, for instance, has written that “[t]he only rational response to both the impending end of the Oil Age and the menace of global warming is to redesign our cities, our farming and our lives. But this cannot happen without massive political pressure.”

But this is precisely backward. Existing problems of excess energy consumption, pollution, big-box stores, the car culture, and suburban sprawl result from the “massive political pressure” that has already been applied, over the past several decades, to “redesign our cities, our farming, and our lives.” The root of all the problems Monbiot finds so objectionable is State intervention in the marketplace.

In particular, subsidies to transportation have probably done more than any other factor (with the possible exception of intellectual property law) to determine the present shape of the American corporate economy. Currently predominating firm sizes and market areas are the result of government subsidies to transportation.

Adam Smith argued over 200 years ago that the fairest way of funding transportation infrastructure was user fees rather than general revenues: “When the carriages which pass over a highway or a bridge, and the lighters which sail upon a navigable canal, pay toll in proportion to their weight or their tonnage, they pay for the maintenance of those public works exactly in proportion to the wear and tear which they occasion of them.”

This is not, however, how things were actually done. Powerful business interests have used their political influence since the beginning of American history to secure government funding for “internal improvements.” The real turning point was the government’s role in creating the railroad system from the mid-nineteenth century on. The national railroad system as we know it was almost entirely a creature of the State.

The federal railroad land grants included not only the rights-of-way for the actual railroads, but extended 15-mile tracts on both sides. As the lines were completed, this adjoining land became prime real estate and skyrocketed in value. As new communities sprang up along the routes, every house and business in town was built on land acquired from the railroads. The tracts also frequently included valuable timberland. The railroads, according to Matthew Josephson (The Robber Barons), were “land companies” whose directors “did a rushing land business in farm lands and town sites at rising prices.” For example, under the terms of the Pacific Railroad bill, the Union Pacific (which built from the Mississippi westward) was granted 12 million acres of land and $27 million worth of 30-year government bonds. The Central Pacific (built from the West Coast eastward) received nine million acres and $24 million worth of bonds. The total land grants to the railroads amounted to about six times the area of France.

Theodore Judah, chief engineer for what became the Central Pacific, assured potential investors “that it could be done—if government aid were obtained. For the cost would be terrible.” Collis Huntington, the leading promoter for the project, engaged in a sordid combination of strategically placed bribes and appeals to communities’ fears of being bypassed in order to extort grants of “rights of way, terminal and harbor sites, and . . . stock or bond subscriptions ranging from $150,000 to $1,000,000” from a long string of local governments that included San Francisco, Stockton, and Sacramento.

Government also revised tort and contract law to ease the carriers’ way—for example, by exempting common carriers from liability for many kinds of physical damage caused by their operation.

Had railroad ventures been forced to bear their own initial capital outlays—securing rights of way, preparing roadbeds, and laying track, without land grants and government purchases of their bonds—the railroads would likely have developed instead along the initial lines on which Lewis Mumford speculated in The City in History: many local rail networks linking communities into local industrial economies. The regional and national interlinkages of local networks, when they did occur, would have been far fewer and far smaller in capacity. The comparative costs of local and national distribution, accordingly, would have been quite different. In a nation of hundreds of local industrial economies, with long-distance rail transport much more costly than at present, the natural pattern of industrialization would have been to integrate small-scale power machinery into flexible manufacturing for local markets.

Alfred Chandler, in The Visible Hand, argued that the creation of the national railroad system made possible, first, national wholesale and retail markets, and then large manufacturing firms serving the national market. The existence of unified national markets served by large-scale manufacturers depended on a reliable, high-volume distribution system operating on a national level. The railroad and telegraph, “so essential to high-volume production and distribution,” were in Chandler’s view what made possible this steady flow of goods through the distribution pipeline: “The revolution in the processes of distribution and production rested in large part on the new transportation and communications infrastructure. Modern mass production and mass distribution depend on the speed, volume, and regularity in the movement of goods and messages made possible by the coming of the railroad, telegraph and steamship.”

The Tipping Point

The creation of a single national market, unified by a high-volume distribution system, was probably the tipping point between two possible industrial systems. As Mumford argued in Technics and Civilization, the main economic reason for large-scale production in the factory system was the need to economize on power from prime movers. Factories were filled with long rows of machines, all connected by belts to drive shafts from a single steam engine. The invention of the electric motor changed all this: A prime mover, appropriately scaled, could be built into each individual machine. As a result, it was possible to scale machinery to the flow of production and situate it close to the point of consumption.

With the introduction of electrical power, as described by Charles Sabel and Michael Piore in The Second Industrial Divide, there were two alternative possibilities for organizing production around the new electrical machinery: decentralized production for local markets, integrating general-purpose machinery into craft production and governed on a demand-pull basis with short production runs and frequent shifts between product lines; or centralized production using expensive, product-specific machinery in large batches on a supply-push basis. The first alternative was the one most naturally suited to the new possibilities offered by electrical power. But in fact what was chosen was the second alternative. The role of the State in creating a single national market, with artificially low distribution costs, was almost certainly what tipped the balance between them.

The railroads, themselves largely creatures of the State, in turn actively promoted the concentration of industry through their rate policies. Sabel and Piore argue that “the railroads’ policy of favoring their largest customers, through rebates” was a central factor in the rise of the large corporation. Once in place, the railroads—being a high fixed-cost industry—had “a tremendous incentive to use their capacity in a continuous, stable way. This incentive meant, in turn, that they had an interest in stabilizing the output of their principal customers—an interest that extended to protecting their customers from competitors who were served by other railroads. It is therefore not surprising that the railroads promoted merger schemes that had this effect, nor that they favored the resulting corporations or trusts with rebates.”

Reprising the Role

As new forms of transportation emerged, the government reprised its role, subsidizing both the national highway and civil aviation systems.

From its beginning the American automotive industry formed a “complex” with the petroleum industry and government highway projects. The “most powerful pressure group in Washington” (as a PBS documentary called it) began in June 1932, when GM president Alfred P. Sloan created the National Highway Users Conference, inviting oil and rubber firms to help GM bankroll a propaganda and lobbying effort that continues to this day.

Whatever the political motivation behind it, the economic effect of the interstate system should hardly be controversial. Virtually 100 percent of roadbed damage to highways is caused by heavy trucks. After repeated liberalization of maximum weight restrictions, far beyond the heaviest conceivable weight the interstate roadbeds were originally designed to support, fuel taxes fail miserably at capturing from big-rig operators the cost of pavement damage caused by higher axle loads. And truckers have been successful at scrapping weight-distance user charges in all but a few western states, where the push for repeal continues. So only about half the revenue of the highway trust fund comes from fees or fuel taxes on the trucking industry, and the rest is externalized on private automobiles.

This doesn’t even count the 20 percent of highway funding that’s still subsidized by general revenues, or the role of eminent domain in lowering the transaction costs involved in building new highways or expanding existing ones.

As for the civil aviation system, from the beginning it was a creature of the State. Its original physical infrastructure was built entirely with federal grants and tax-free municipal bonds. Professor Stephen Paul Dempsey of the University of Denver in 1992 estimated the replacement value of this infrastructure at $1 trillion. The federal government didn’t even start collecting user fees from airline passengers and freight shippers until 1971. Even with such user fees paid into the Airport and Airways Trust Fund, the system still required taxpayer subsidies of $3 billion to maintain the Federal Aviation Administration’s network of control towers, air traffic control centers, and tens of thousands of air traffic controllers.

Eminent domain also remains central to the building of new airports and expansion of existing airports, as it does with highways.

Subsidies to airport and air traffic control infrastructure are only part of the picture. Equally important was the direct role of the State in creating the heavy aircraft industry, whose jumbo jets revolutionized civil aviation after World War II. In Harry Truman and the War Scare of 1948, Frank Kofsky described the aircraft industry as spiraling into red ink after the end of the war and on the verge of bankruptcy when it was rescued by the Cold War (and more specifically Truman’s heavy bomber program). David Noble, in America by Design, made a convincing case that civilian jumbo jets were only profitable thanks to the government’s heavy bomber contracts; the production runs for the civilian market alone were too small to pay for the complex and expensive machinery. The 747 is essentially a spinoff of military production. The civil aviation system is, many times over, a creature of the State.

The State and the Corporation

It’s hard to avoid the conclusion that the dominant business model in the American economy, and the size of the prevailing corporate business unit, are direct results of such policies. A subsidy to any factor of production amounts to a subsidy of those firms whose business models rely most heavily on that factor, at the expense of those who depend on it the least. Subsidies to transportation, by keeping the cost of distribution artificially low, tend to lengthen supply and distribution chains. They make large corporations operating over wide market areas artificially competitive against smaller firms producing for local markets—not to mention big-box retailers with their warehouses-on-wheels distribution model.

Some consequentialists treat this as a justification for transportation subsidies: Subsidies are good because they make possible mass-production industry and large-scale distribution, which are (it is claimed) inherently more efficient (because of those magically unlimited “economies of scale,” of course).

Tibor Machan argued just the opposite in the February 1999 Freeman:

Some people will say that stringent protection of rights [against eminent domain] would lead to small airports, at best, and many constraints on construction. Of course—but what’s so wrong with that?

Perhaps the worst thing about modern industrial life has been the power of political authorities to grant special privileges to some enterprises to violate the rights of third parties whose permission would be too expensive to obtain. The need to obtain that permission would indeed seriously impede what most environmentalists see as rampant—indeed reckless—industrialization.

The system of private property rights . . . is the greatest moderator of human aspirations. . . . In short, people may reach goals they aren’t able to reach with their own resources only by convincing others, through arguments and fair exchanges, to cooperate.

In any case, the “efficiencies” resulting from subsidized centralization are entirely spurious. If the efficiencies of large-scale production were sufficient to compensate for increased distribution costs, it would not be necessary to shift a major portion of the latter to taxpayers to make the former profitable. If an economic activity is only profitable when a portion of the cost side of the ledger is concealed, and will not be undertaken when all costs are fully internalized by an economic actor, then it’s not really efficient. And when total distribution costs (including those currently shifted to the taxpayer) exceed mass-production industry’s ostensible savings in unit cost of production, the “efficiencies” of large-scale production are illusory.

Kevin A. Carson


Kevin A. Carson

Kevin Carson is a senior fellow of the Center for a Stateless Society and holds the Center’s Karl Hess Chair in Social Theory. He is a mutualist and individualist anarchist whose written work includes Studies in Mutualist Political Economy, Organization Theory: A Libertarian Perspective, and The Homebrew Industrial Revolution: A Low-Overhead Manifesto, all of which are freely available online. Carson has also written for such print publications as The Freeman.

This article was originally published on FEE.org. Read the original article.

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