Nationalize Greyhound? New Socialist Claptrap

America has an extensive network of private, for-profit (and profitable) intercity bus services primarily serving lower-income people. It’s a great example of how the free market can provide an essential service without public subsidies.

Naturally, the socialists want to shut it all down.

In response to recent news reports about Greyhound closing bus stations (in favor of curbside pick up) and shutting down service to some midsized cities entirely, Jacobin columnist and Rutgers philosophy professor Ben Burgis advocates for nationalizing the company and running its buses on dedicated interstate lanes.

“A publicly owned intercity bus service with dedicated highway lanes could do for travelers what the US Postal Service does for letters and packages,” writes Burgis.

Travelers, like Postal Service packages, would “criss-cross the country cheaply and quickly,” says Burgis. This new government-run bus company would extend service to everywhere, he writes, and “like the USPS,” this government-run bus company would be “financially self-sufficient.”

That the Postal Service is “financially self-sufficient” would be news to USPS, which reported a $6.5 billion net loss this past fiscal year. Indeed, the Postal Service is currently shuttering facilities and raising prices as part of a 10-year restructuring plan meant to get it out of the red.

As it turns out, the nationalized Postal Service is engaged in the same kind of retrenchment a nationalized bus company is supposed to avoid. This fact strengthens Burgis’ point that a government-run intercity bus company would perform as well as USPS. But it doesn’t necessarily recommend nationalization.

The whole point of nationalizing Greyhound would be to expand service to unprofitable routes and improve facilities while still keeping prices affordable for people whose only option is taking the bus. That’s unlikely to happen if this nationalized bus service is to remain committed to being “financially self-sufficient.”

That all would be technically possible by providing a nationalized intercity bus service with endless government subsidies and no expectation that the money will ever be paid back. The obvious parallel is Amtrak, the government-owned corporation that provides intercity rail service.

Amtrak is currently in the process of expanding service and improving train stations, despite ridership continuing to be below pre-pandemic levels. The rail service’s expansion is only made possible by billions of dollars in additional subsidies provided by the 2021 infrastructure law.

Despite these subsidies, Amtrak is neither the fastest travel service connecting most cities (that would be for-profit airlines) nor the cheapest (that would be for-profit buses). When it comes to nationalized intercity rail service, the inefficiencies of government ownership have overwhelmed the benefits of government subsidies. We should expect the same results from intercity nationalized bus service.

It is true that Greyhound has cut service levels in recent decades. A major reason for that is that travel options have expanded, not contracted, for most Americans. Plane travel is increasingly affordable for most people. Rates of car ownership have gone up as well. Fewer people are taking the bus as a result.

All things considered, intercity bus companies have responded pretty nimbly to these market changes by cutting costs, changing business practices, and selling off valuable, underused facilities to more profitable uses. If only America’s nationalized postal and rail companies were so dynamic!

Obviously, some bus-dependent passengers will be made worse off if buses don’t run to their chosen destination anymore. There are lots of things policy makers could do to help those individual riders.

Instead of nationalization or subsidization, though, policy makers could cut the subsidies they give to other forms of transportation.

If Amtrak weren’t getting billions of dollars in public subsidies, many former train takers would skip the higher, unsubsidized cost of train travel and take the bus instead. Perhaps that would boost demand enough to prop up currently unprofitable bus lines. Ensuring motorists pay the full costs of their interstate highway trips could produce a similar effect by getting some would-be drivers to take the bus instead.

Further deregulation of the airline industry and making it easier for private concerns to raise capital for expanding airport facilities could bring the costs of air travel down to a level that many current Greyhound bus riders could afford.

The intercity bus industry gets few favors from the government. While airlines and Amtrak got billions during the pandemic, bus companies had to survive off their own resources. The fact that they managed to do that is a testament to how dynamic free market services can be, even in the face of disaster. Let’s not squeeze out that dynamism by turning private bus companies into another flabby appendage of the government transportation sector.

Originally published by the Reason Foundation. Republished with permission.

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