[Ringo]

We do not need nationalization. We need to close the open gap in the funding circle where money pours out. Firstly we have to understand some economic basics. Economic growth created by a community, pubic & private, soaks into land and crystallizes as land values. That is where the land values come from, not the landowners. When a house raises in value, it is not the bricks that rise in value. The land and the capital (the bricks) have to be split to gain understanding. The capital depreciates, like a car. The land appreciates as community created economic growth soaked into it creating the values.

Transport infrastructure is a major aspect in that economic growth creation. Taking community created land values (wealth locked into land) and using that to fund transport the funding circle is complete. Hong Kong, Singapore, Japan, etc do this. Hong Kong built a whole new metro by not using taxes on people's incomes, just reclaiming wealth the community created that was locked into the land. In short socially created wealth was socialized and used for social purposes. Privately created wealth was left alone. It works brilliantly.

The cost of the Jubilee Line extension was £3.4 bn. The land values around the lines and stations rose by £14 bn. This wealth created by the rails and tunnels was not cycled back into the costs rail and tunnels. Landowners took windfalls.

Close the London Tube tomorrow for good. Land values would drop like a stone as economic growth, assisted by the underground rail network, is not created. People would leave the city in droves. The fats urban rail tracks as essential in economy of London.

Railways are generally self-financing. However we use an 18th century accounting system that does not recognise where economic growth crystallized and doesn't know how to capture this wealth to pay for the transport that greatly assisted in that growth creation.

Use the right funding mechanism, reclaiming the values in land, and the UK can have the finest rail network in the world - which would be self funding. This mean no cities or regions need go with begging bowls to the DfT in London to extend, or update, their rail networks.

"The Far Eastern countries are densely populated: they cannot afford to waste space. The market-based tools they developed to deal with that pressure are revealing. Hong Kong and Singapore are rated at the top of the most comprehensive Index of Economic Freedom. Japan’s record is also not contested: she came from nowhere after World War II to create the secondlargest economy in the world. Comparing their transport policies with those of the UK and USA may help to sharpen the insights that have emerged in this study. We focus our analysis in terms of three hypotheses.

Hypothesis I: Taxpayer subsidies are an inevitable part of mass
transit systems

The durability of this assumption was affirmed by the spokesman for Britain’s Strategic Rail Authority. David Thomas (2003) claimed that there are only two types of income for rail projects: fares and subsidy. The demand for subsidies is rationalised by a political vocabulary that presupposes the inability of railways to pay their way. The collateral damage of this doctrine to the fabric of political institutions is significant. If subsidies are to be extracted from taxpayers and transferred to railways, government has the right to control the industry One consequence is the touting of solutions that are selfdefeating. Take the case of the need to increase fares to pay for infrastructure. This proposition was advanced by Richard Bowker as chairman of the SRA. He argued that upkeep of the rail network rests too heavily on taxpayers and that ‘passengers should pay more’ (Bream, 2004). To raise fares closer to the actual cost of rail travel would be likely to price more passengers off the railway.

This would render rail companies even less able to cover their operating costs, let alone the costs of capital, and consequently increase the demand for more subsidies.

Hong Kong rejects the subsidy mentality. Is this the product of a philosophy of public finance that does not favour taxes that deliver deadweight losses?

Hypothesis II: Efficient railways are those in public ownership

The House of Commons Treasury Committee, after reviewing a decade’s worth of evidence in running privatised railways, endorsed this view in The Future of the Railway. The view was shared by the head of the Rail, Maritime and Transport Union, who claimed that rail privatisation was ‘an act of vandalism that tore apart our national railway network and handed it in 113 pieces to the private sector to bleed dry’ (Crow, 2003). In the British circumstances, there was force to his claim that separating the ownership of tracks from the operation of the trains ‘would be an act of dangerous folly – and that the only way profits would be made by the private sector was by taxpayers and passengers subsidising them’.

But had the nationalised British Rail (BR) been a paragon of operational efficiency? Transport Minister Kim Howells told the House of Commons Transport Committee that BR had been ‘an appalling service’. It had employed some managers who were ‘rubbish’. An eight-year-old child could have come up with better cost estimates than those managers, he asserted.

Japan’s railways may provide evidence to help us resolve some of the contentious issues. Her rail network is a rich mixture of public and private enterprises, and the latter have not prejudiced the ability of the Japanese to operate an efficient economy.