RC non PT(non copy right) Transit privatization

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RC non PT(non copy right) Transit privatization

Postby Examhacker1 » Wed Nov 23, 2016 2:15 pm

Transit privatization is highly controversial, with proponents claiming great potential benefits and detractors pointing to cases where privatization has been very problematic. One critical consideration in this argument is the concept of merit good. The rationale behind this concept is that governments should guarantee basic service in public transportation to deprived customer groups despite the fact that it is economically irrational.

Today, the question among most observers is not whether public transportation should be subsidized, but what the optimal level of subsidy should be. All public transportation systems need some degree of subsidy to run, but some are more privatized than others. The U.S. air transportation system is an example where “privatization” has worked well: very little government subsidy goes to the airlines, but tickets are both inexpensive and readily available.

However, in markets where there is no economic incentive for airlines to fly, the government has instituted a program called Essential Air Service. Unlike airline privatization as a whole, this program, a holdover from the days of bloated airline regulation, has been a disastrous example of overspending and inefficiency. Across Alaska and many other rural states like Maine and North Dakota, airports and airlines are subsidized so that unprofitable routes are flown in the name of “merit good.” However, in most of these places, airports are neither required nor important to deprived customer groups; they are simply an economic boon to important special interest groups that support congressmen and senators.

While there is a place for subsidy and even direct government involvement beyond the required minimum – when true merit good issues are concerned – most transportation systems are better today after privatization than they were in the days of total government control. All you need to do is look at the “Essential Air Service” program to understand the wastefulness and inefficiency that existed in the 60’s and 70’s when most public transportation systems were under full government control.

1.The author most probably believes that:

A. government subsidies have no place in public transportation
B. privatization is more important in public transportation than in other industries.
C. merit good is an essential consideration in the use of government subsidies in public transportation.
D.government subsidies and control are always inefficient and wasteful.
E.the Essential Air Service program is unique as a government subsidy program.

Can we discuss choice B here.

2. The author uses quotations around the word “privatization” in the second paragraph in order to:

A. show that the airlines are still really government controlled.
B.highlight how little the airlines have really been privatized
C. emphasize that the airlines are not completely privatized.
D.emphasize how poorly the privatization process has worked.
E.support his view on the privatization process in public transportation.

What is flaw in E here ? Please help

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