Smash the Toronto transit monopoly

After the 2003 blackout, the last time Toronto commuters had to walk to work -- the city’s electrically-powered subways and streetcars having been knocked out along with everything else -- the newspapers were filled with solemn meditations on the deeper meaning of it all: man’s dependence on technology, the fragility of power grids, an interconnected world, etc. etc.

This time the city’s transit system was shut down by a strike, the fourth since 1989, and no such search for root causes seems to have occurred. The Toronto Sun fumed that someone should pay for all the disruption. The Toronto Star demanded the transit workers’ union apologize. A Globe columnist speculated the union leader might be suffering from an overdose of testosterone. There was even a call to have transit strikes declared illegal, apparently in the belief that this would prevent illegal strikes such as Monday’s.

But the problem is not that transit strikes are legal, any more than it is that union leaders are irresponsible (or male). Unions strike when it is to their advantage, and it is to their advantage, typically, where they hold some kind of monopoly -- if not, other workers would simply step in to fill the gap. In the present case, the union benefits from a double monopoly: the monopoly it enjoys on the supply of labour to its employer, the Toronto Transit Commission, and the monopoly the TTC enjoys over its customers. But of course the one is the product of the other. Were there no transit monopoly, the union’s would dissolve as well.

So entrenched is the TTC’s monopoly that many people may assume public transit is some sort of “natural” monopoly, like electricity transmission, where the initial costs of constructing the network confer massive economies of scale, allowing the largest firm to price its competitors out the market. It isn’t: to run a bus service all you need are a few buses. Even the subways could make room for competing providers on a common set of tracks.

The reason public transit is a monopoly, not only in Toronto but in cities across Canada, is not nature but statute. Unannounced as this latest strike was, within hours improvising entrepreneurs had come up with alternatives: the TV news showed some delighted commuters sharing a limo downtown at $20 a pop. But at most times the providers of such private transit services would face prosecution. Strikes may be legal, but competing with the TTC is strictly verboten.

And the costs of monopoly are not just counted in strike days. The TTC is in the grip of a spiral of escalating costs, rising prices, and stagnant ridership. While taxpayers pick up roughly 50 cents of the cost of every journey (at more than $300 million this year, the TTC operating subsidy is the second most expensive item in the city’s budget, after the police), service is notoriously poor, marked by a patchy subway network, half-filled buses, and the commission’s disastrous love affair with its undependable, unsightly, slow-moving streetcars.

While the TTC remains stuck in the monopoly rut, around the world the movement is toward competition in public transit. Britain’s remains the most radical experiment: in 1985, the streets of Britain were thrown open to competition from private bus services, in every city outside London. The results, admittedly, have been mixed. While costs were slashed by 42 per cent, partly by experimenting with minivans, jitneys and other alternatives to the traditional bus, prices have not moderated to the extent hoped.

Firms have instead tended to compete on timeliness, scooping up riders by arriving at a stop minutes before their rivals: a tactic known as “schedule jockeying.” To guard against this, some firms took to swamping their routes with hordes of buses, giving rise to worsening congestion and competition-inhibiting economies of scale.

So in many other cities, from Copenhagen to San Diego, a different model was adopted: putting out routes to competitive tender, or “contracting out”. Here the record of savings to the taxpayer is unambiguous, and it is hard to see why Toronto should not have learned from the experience of neighbouring municipalities, such as Hamilton, where costs are demonstrably lower. If the TTC is as efficient as its supporters claim, it should have nothing to fear.

But while safer politically, this is largely a static model, with little incentive for innovation in service delivery. A third model would combine the first two, correcting for some of the deficiencies of the British model by auctioning off “curb rights” -- that is, the right to pick up passengers from a given stop for a given time interval. That way, firms that had incurred the costs of gathering passengers in one spot would not see their investment profit their competitors.

But which sort of competition works best is a debate for another day. For now, it is enough to agree, as Toronto’s transit riders surely must: abolish the monopoly!