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With or Without Its Network? - IUF comment 21/2006

Sascha Tamm, IUF

Should die Bahn (the German Railway) be privatized with or without its network? This continuing argument specifically shows one thing: die Bahn, a state monopoly that has existed for over a century, is structured in such a way that makes it difficult for it to be privatized. For many years, the network was neither updated nor run according to sound economic criteria, its costs were completely opaque and, although mostly unknown to the general public, it was supported in large part by the taxpayers and not the users.


Those at the Federation who support the retention of the network refer to approximately 100 Billion Euros that would be "invested" by the German taxpayer over a period of time. However, since when is the value of anything determined based upon how much money has been put into it? Obviously, no one is prepared to pay that much or even roughly that much for it, even when one calculates the large subsidies that the owner of the network is entitled to receive. An interesting question is how high would one be willing to pay for a piecemeal sale of the network?  


Governments do not invest. And when it comes to spending money, long-term profit is not an issue for politicians. Without considering future costs, politicians want to serve short-term interests: create jobs, offer subsidies for public transportation services, provide infrastructure for people in remote areas. Even when one sees the latter as the responsibility of the government, it is possible to achieve that goal with fewer financial resources as is currently being invested by the purchase of transportation services on the market. A Request for proposals for a portion of the local public transportation system is therefore the first reasonable step.  


If the network remains in the hands of die Bahn, competition among bidders from the transportation services would remain a delusion. Incidentally, it is completely irrelevant whether die Bahn AG or the state is the formal owner of the network. As promulgated by the Nießbrauchsrecht (the Usufruct Law), anyone has the right to use and enjoy its profits and advantages to their full disposal. The infrastructure must be separated from the present monopoly. That does not mean that new private bidders cannot invest in new infrastructure and also utilize it, if they deem it useful and profitable.  





  • Sascha Tamm, IUF


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