Rail Privatization

I found this article in the FT: Deutsche Bahn IPO to proceed

The Germans may perhaps look to Japan's experience with rail privatization. What seems to have happened here is vast improvements in efficiency in running existing lines but something of a stagnation in capital investment in new lines or services, and what gains have been made have had hidden costs.

One thing that Japan Rail (JR) has become heavily involved in since privatization is residential real estate construction and sales - i.e. promoting, advertising, supporting and profiting from suburban sprawl. They have a program of subdividing massive areas around outlying stations, and advertising these lots on their trains, sometimes in tandem with a new express line etc. The powerful synergies are undoubtable - a fantastic sales and advertising networks, insider knowledge on any new lines or service, the ability to add carparks to stations to facilitate these sprawling suburban lifestyles, and once they sell a house in these outlying suburbs, they have a lifetime of outer suburban commuting revenue from that owner, who would probably otherwise be an inner city renter. The profit potential is certainly fat. However, clearly the national rail network provider's focus has shifted away from providing a public good towards a stronger profit motive. On the whole, is it REALLY a good thing if rail services can be improved using profits garnered by raping society on another front? By creating vast new bed towns and feeding suburban sprawl, with all the well-known and documented social and environmental ills that this involves, the overall outcome is debatable.

Note to the Germans: Beware of unwitting externalizations such as this when considering, or when measuring the success of your new experiment. Many of these things rear their ugly heads many years on, although with proper oversight some may be avoided.