Strong and Weak Management: The Case of American Bus Companies and Regional Transit Authorities

By the end of the 2010’s, city officials in several American cities were rethinking bus service in a fundamental way; the passenger-fare revenue model was being questioned, and in some cases replaced with a model that fit better with serving poor people and changed local business environments. Yet the downside effects on the bus companies of trends, especially regarding ridership, may have been the result of internal organizational factors immune to a change in the revenue model. I contend that city officials and the managers of bus companies should resist the temptation to view a new model as a cure precisely because some problems, internal to the companies, could go on and silently undermine analysis of the new model such that it could erroneously be discontinued. To be sure, being willing to question a longstanding model is a mark of managerial strength. Indeed, it is precisely the managers of bus companies and regional authorities who are mired in longstanding assumptions who would tend to have the most difficulty in dealing with troublesome internal problems. 

Providers of goods or services must adjust to changing local environments, which in turn are impacted by broader trends. Bus companies and regional authorities in the U.S. faced increasing traffic congestion as well as decreasing ridership from 5.6 billion in 2008 to 4.67 billion in 2018.[1] Also, competition ranging from electric scooters to ride-hailing services like Uber and Lyft were literally driving people away from buses nationwide, according to transit officials. Light rail and subways, which do not have to fight street congestion, also saw ridership decline, but not as much as buses. There was also the argument that the very poor, including the homeless, who generally rely on bus service, are least equipped to pay for it. Many universities were already using the student-fee model for university bus service, spreading the cost wide enough that the students could afford the service. Alternatively, only students who used the service could have paid for it, which would have been particularly hard on poor students.

In the altered environment in which bus companies found themselves by 2020, the concept of free fares on some or all bus routes was drawing increasing support in several cities. “Advocates in Massachusetts claimed that free buses would speed up boarding times, draw more passengers, aid poor residents and help reduce greenhouse-gas emissions.”[2] Michelle Wu, a member of the Boston City Council who supports free transit, remarked, “If we’re truly treating it as a public good that has benefits to everyone when everyone uses it, then we should remove barriers.”[3] To the extent that poor people are especially in need of a public good, charging a user free can essentially privatize the good for the poor.

The poor may go without transportation needed for their very sustenance, or resort to fraud. In Phoenix, Arizona, for example, people needed only go to a convenience store to buy reduced-fare cards otherwise reserved for the elderly and disabled. As of 2020, enforcement on the buses was rare; few if any drivers asked to seek the accompanying ID of discount fare-riders. Even on the light rail, security employees intent on staring at passengers as if they were all conducive to violence would not bother to even ask to see the ID. In fact, passengers who had not paid were let out at the next platform, from which they could easily board the next train. Lest the shady passengers get all the blame (though surely they deserve a lot for their sordid attitude alone), the revenue model itself was culpable because it did not adequately take into account the extremely limited financial resources and vital transportation needs of the very poor. Such a regional transit authority and its bus operating companies would not likely be willing or able to address internal problems, such as rude drivers and horrendous (and risky) driving. Phoenix buses were widely known locally for these two things. Also, it was not uncommon to see three or four transit security employees in half of a light-rail train car staring at passengers as if the latter were prisoners.

Put another way, city and transit officials in the Phoenix metro would not be likely to analyze, let alone perceive the free-rides option because they were so preoccupied with, and yet unsuccessful at, stopping the ticket fraud in order to boost revenue from riders. Getting serious with bus drivers who were rude and/or bad drivers was something beyond the reach (and will) of the bus operating management and regional transit authority. Moreover, the political environment in Arizona was such that a majority of the voters would have balked at the prospect of paying for poor people to ride free. Minimizing tax increases fared much better in that political climate.

A world away, in Lawrence, Massachusetts, the region’s transit authority in September, 2019 stopped collecting money on three routes that go through the poorest parts of the city. Lawrence used $225,000 in reserves to waive fares for two years. Lawrence Mayor Dan Rivera explained the rationale for free rides. “We could support those citizens to mobilize themselves out of poverty.”[4] The regional transit agency said ridership on the three free lines climbed quickly—up about 24% in the first few months from a year earlier.

In Olympia, Washington’s capital, a ballot measure in 2019 that boosted transportation funding helped the Intercity Transit agency start offering free service on all buses in January, 2020, according to Ann Freeman-Manzanares, the system’s general manager. Fares there amounted to $2.7 million annually, a small portion of the agency’s budget, and some of that is spent maintaining fare boxes and collecting cash. “It actually was surprising to us when we started digging deep how much it costs to collect fares,” Ms. Freeman-Manzanares said.[5]

In Kansas City, the local transit authority was overhauling its bus service and already offered free rides to veterans and students. The authority aimed to completely cancel fares by May, 2020, Chief Executive Robbie Makinen said. The city council voted unanimously in December, 2019 to find about $8 million a year to cover free buses, which were already heavily supported by taxpayers.

Meanwhile in Phoenix, bus drivers regularly held up their buses waiting for passengers to dig for more coin—not having bothered to do so before boarding. Also, the fare machines on the buses were old, and thus particularly susceptible to breaking down, in spite of the priority on revenue from passengers. The bus operating companies and the regional authority erroneously accepted these intangible and tangible costs as necessary in part because the managers assumed the passenger-revenue model being used to be fixed rather than possibly replaced.

Generally speaking, a mind wetted to one way of thinking as if a blind card set in a highly rutted dirt road is likely to accept as necessary too many costs because another way of thinking, a broader one, would be necessary to take into account other models even though their costs would be lower. A mind willing and able to perceive and think beyond its groves is necessary. Though such a mind is likely to be more motivated and able to take on seemingly intractable internal problems, such as rude drivers and bad driving (e.g., accelerating too fast, and braking too hard), even being willing to think wider may not be sufficient. Hence it is possible that the continuing internal factors (i.e., problems within a bus company) could sabotage a new model’s perceived efficacy.

---

[1] Jon Kamp, “Cities Offer Free Buses in Bid to Boost Flagging Ridership,” The Wall Street Journal, January 14, 2020.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Ibid.

The 2012 U.S.Trade Deficit: An Analysis

Coming in at 2.7% of GDP, the U.S. trade deficit fell to $107.5 billion in the third quarter of 2012—down 9 percent from the second quarter’s $118.1 billion, which was 3% of the economy at the time. The current account includes merchandise, services, and investment flows. The surpluses in services and investment were out-done by the deficit in merchandise to produce the overall trade deficit. According to the New York Times, the “improvement in the current account in the third quarter reflected a decline in the deficit on goods and a small increase in the surplus on services, led by a gain in foreign earnings made by financial services, insurance and professional services provided by companies in the United States. The surplus on investment earnings narrowed to $50.8 billion, down from $52.1 billion in the second quarter.” Most of the decline in the deficit on goods reflected a decline in the foreign oil bill, according to Paul Ashworth at Capital Economics.

Analysis:

Lest we get bogged down in the purportedly significant differences between 2.7% and 3.0%, $107.5 billion and $118.1 billion, and $50.8 billion and $52.1 billion, respectively, we might take note of the rather stark difference between goods on the one hand (i.e., sustained deficits) and services and investment (i.e., sustained surpluses). Although it was no doubt true that the economic slow-down in China and the debt/austerity-induced recession in the E.U. were reducing demand for American exports, a basic imbalance between exports of American-made and imports of foreign goods is clear from the numbers year after year. Indeed, in 2006 the current account deficit had reached a record $800.6 billion—suggesting that something fundamental was “out of whack.”

                                               This graph isolates the deficits in goods imported/exported.   source: thismatters.com 

The question may be whether Americans were importing too many foreign goods or were too uncompetitive in making goods. Regarding the former, being able to buy a relatively inexpensive television made in China is not in itself a bad thing, particularly to the consumer. The question is perhaps whether the price was artificially low, due for instance to a relative lack of environmental regulations, lower labor costs, or government/bank subsidies. However, even if due to these factors, a low price is undoubtedly welcome to any consumer.

Regarding American competitiveness, was it hampered by labor and environmental standards or simply by unmotivated workers and bad management? Whereas American consumers benefit from cheap imported products, no such benefit can be found in the U.S. to any sector from a relative inferiority in competitiveness.

There is, however, the argument that an “advanced” economy oriented to professional, business and financial services rather than manufacturing can enjoy a higher standard of living if the services are more premium than the goods would be. The pristine notion of the “knowledge economy” captures this point very well. That not all Americans are willing or even able to participate at this level suggests that the term could never completely cover an entire economy. Hence, it is necessary even in an “advanced,” or “high tech” and “professional,” economy to tackle the problem of competitiveness in manufacturing.  Does it come from high regulatory costs (which can be viewed as part of a demand by Americans for a certain “standard of living” writ large), a lack of product development, or an inefficient labor or management force?  Whereas wanting a decent wage-floor or environment as a condition of manufacturing has merit—the cost being that society may have to support people who would otherwise be working in manufacturing—a dearth of ingenuity, bad employee attitudes, and inept management have no such positive aspect.

I was born and raised in a medium-sized industrial city in the “rust belt.” Furniture was the first industry, following which machine tools were the dominant manufacture until competition from Europe took out most of the factories. Speaking a few years ago with a European who had been sent over to oversee a factory that had been taken over by a European company, I was not surprised when he admitted, “the workers here just are not good. They are not motivated and they don’t pick up on the training very good.” Years before that, I had watched a program on the American public broadcasting network about a man’s effort to prepare inner-city black people for job interviews. Midway through his talk, the man admitted to the folks attending, “from your attitude even here, I have to admit I can’t see how anyone would hire you, so I don’t see any reason to continue here.” The man ended the workshop at that point. Doubtless his decision prompted little if any self-criticism from the participants. A bad attitude is perhaps almost impossible to correct from the outside—even with the inducement of money!—given the nature of a bad attitude. Regarding people under thirty, perhaps a year or two at a military “boot-camp” might break down the attitude’s intransience and build up self-confidence and self-respect, not to mention basic civility. Absent such a strategy, perhaps the segment of the American population unwilling (or able) to become part of the “knowledge economy” is inevitably lost—not being able to compete even on a factory floor. The cost to the rest of society goes well beyond money.

While visiting Miami, I witnessed repeated incidents on the buses from the mainland to Miami Beach of black men shouting and even hitting each other, as well as bumping into (and even falling on!) tourists. The black drivers ignored the shouts (including a drunk black man loudly and repeatedly calling a pregnant white woman a “fucking bitch”) and even fist-fights. Even with tourists begging the drivers that the aggressive passenger be dismissed from the bus, the drivers just drove on. In two cases, the drivers asked the men being hit if they wanted to press charges. They replied that they did not, so rather than get the aggressor off the buses or call the police, the drivers simply started driving again. This happened twice in the last 24 hours of my visit!  Near the beginning of my visit, I myself was pushed against the open bus door of a bus at a rail station while I was attempting to board a bus because I had not allowed all of the black passengers to enter first. The black driver refused to call the police or even tell the aggressive black man who had squeezed me to leave the bus. The driver simply replied to me—as I was pinned to the open front-door—“no, I won’t call the police. You shouldn’t have gotten on then. That’s how it is here.” I should have called the police! I was so stunned at the violence and systemic cover-up that I simply wanted to get to my destination. Just after I took my seat, a nice older black woman asked me where I was from. I told her that I had grown up in Illinois. “It must be worse in Chicago,” she remarked. “No,” I countered, “it is worse here. The blacks there are better.” In spite of being the only white person on the bus, I went on. “Even with the blacks killing each other in south Chicago, the people are better there.” She asked if north Chicago was white and the south part black. “No, the north part of the city itself is integrated, while I think the south is black. I was referring to the north—the blacks there are much better than the ones here. Here—I can’t leave soon enough.” Silence . . . complete silence. It then occurred to me that the entire bus—which still had not left the tri-county rail station—had been listening to this white guy talk about blacks very directly.

As it happened, a month or so later I was in Chicago taking a bus when a black man tried to enter the bus by pushing three old white women in line in front of him. The driver, who was also black, saw the attempt and quickly said, “Hey, what do you think you are doing? Get back out of the bus and let those women on first. Who do you think you are?” Then the driver turned to us in the bus and remarked, “It’s all about him, isn’t it?” The offender must have been startled, for he merely replied, “But it is cold out.” The driver pointed out that it was cold for the women too. The three women ended up sitting near me, and I told them (and the front half of the bus) about what I had witnessed in Miami on the buses there—and that it really was better in Chicago and even warmer despite the cold—even in terms of people moving past each other in the isle. “In Miami, the driver would not have intervened and you all would have been pushed out of the way of the guy who was behind you in line. Even complaining to the driver would have had no effect, and the man would have gotten away with it—whereas here that attitude is an exception. It was therefore countered, or pushed back, and therefore not allowed to become the default.” I don’t know whether the driver heard my compliment.

While it is easy to point to the bad attitude of many of the black passengers in Miami, I contend that the incompetence and attitude of the bus drivers there were just as problematic, and my anecdote from a bus in Chicago demonstrates that the attitude need not be enabled rather than challenged. The fact that the drivers in Miami all reacted the virtually the same way suggests that the decadence is systemic there. Put another way, the rudeness and aggression had become the norm and thus could not be checked. Perhaps this is why the drivers simply ignored even the violence—though this is hardly a viable excuse.

In terms of passive aggression, I witnessed drivers of buses going between downtown and Miami Beach regularly and knowingly cram too many passengers (even tourists!) on the buses and then demand that the extra passengers (who had already paid) shout back into the bus for others to step back so the extras could “get behind the yellow line.” To allow passengers known to be beyond capacity on board and then put them in an impossible situation while refusing to take control of the bus by making an announcement for people standing to move back evinces not only incompetence, but also an almost-sadistic mindset. On several occasions, I saw order itself fall apart on buses there as frustrated passengers—even tourists!—openly challenged the unjust and incompetent drivers on this very point.

Leaving Miami, my overall conclusion was that that county should not be part of the United States of America because of the rudeness, aggression and even the break-down in order—all tacitly sanctioned by county managers and employees. The rudeness, by the way, was nearly everywhere, rather than just on buses. I could not imagine any of the aggressive passengers or enabling drivers lasting more than a few days working in a factory, and the bus company managers (who knew of the incidents, according to local passengers) were doubtless virtually unemployable in the private sector too.

In short, the serial merchandise trade-deficits may point to an America that even many Americans do not know exists. That is, the structural imbalance may reflect a decline in American society—both in terms of labor and management—that manifests in a significant number of Americans compromising manufacturing or even being virtually unemployable. Put another way, I suspect that the condition in the American factory was at least as of 2012 part of a much more serious problem wherein even the social contract itself was under threat, or at the very least the American empire was in decline.

Source:

The Associated Press, “US Shirks Trade Deficit As Oil Falls,” The New York Times, December 19, 2012.

A Planned Chinese Supercity Hinging on Technology

A Kansas-sized supercity of 82,000 square miles and 130 million people, with Beijing at the center, is in the vanguard of economic reform, Liu Gang said from Nankai University in mid-2015.[1] Six times the size of New York City’s metropolitan area, the planned regional economy would require nothing short of a feat of urban planning. The economic synergy anticipated from the planned integration is the main benefit. The sheer scale alone presents its own challenges, however, and the complexity in coordinating the various shifts of people and services suggests that unintended excesses and shortages will demand immediate action. Even so, I contend that the application of technology will make or break the viability of the anticipated supercity.

The economic diversity within the region gives economic integration tremendous potential. Lui Gang explains that the supercity, named Jing-Jin-Ji, “reflects the senior leadership’s views on the need for integration, innovation and environmental protection.”[2] The plan calls for regional integration of Beijing’s research facilities and creative culture with Tianjin’s port-city economy. “Beijing is to focus on culture and technology. Tianjin will become a research base for manufacturing.”[3] In other words, the links from university and industrial research to manufacturing are to be tightened. Hebei province is also included—the relatively cheap land being fertile ground for relieving the environmentally-hostile population density in Beijing.

The project relies on constructing a subway and a high-speed rail, and connecting 18 dead-end highways to link the major cities, including Beijing, Yanjiao, Handan, Xingtai, Tangshan, and Zhengijakou. With speeds of 150 to 185 miles per hour, 37 minutes will get a commuter from Tianjin to Beijing (and vice versa) by rail.[4] The geographical scope of the supercity, or urban region, consistent with tight economic integration can thus expand, much as military technology extended the reach and thus territory of early-modern European kings. The Chinese urban-policymakers were essentially pinning their hopes on the shift of practical integrative scope—in particular, that the technology will make the energy needed to transport people over so large an area worthwhile. The true cost may be an externality if the carbon emissions increase substantially as a result. Yet even in this respect, communications technology, such as the ability to hold meetings in virtual reality, may make it possible for the planned supercity to reap the benefits of the added economic integration without warming the planet appreciably more.

---

[1] Ian Johnson, “Pain and Hope as China Molds Its Capital into New Supercity,” The New York Times, July 20, 2015.

[2] Ibid.

[3] Ibid.

[4] Ibid.