"Federal funding typically covers 80% of bus purchases, with agencies responsible for the remainder."
Well, there is your answer. The one making the purchase isn't the one primarily paying for the purchase. This makes them less sensitive to pricing.
Kinda like how expensive healthcare is since it is paid for by insurance.
Or how you don't care how much you put on your plate or what you choose to eat at an all you can eat buffet.
The second you detach the consumer from the price of something, even through an intermediary such as health insurance, that is when they stop caring about how much something costs, and so the price jumps.
> The second you detach the consumer from the
> price of something, even through an
> intermediary such as health insurance, that
> is when they stop caring about how much
> something costs, and so the price jumps.
In reality, this claim doesn't survive a cursory glance at the OECD's numbers for health expenditure per capita[1].
You'll find that (even ignoring the outlier that is the US health care system) that in some countries where consumers bear at least some of the cost directly via mandatory insurance and deductibles, the spending per capita (and which survives a comparison with overall life expectancy etc.) is higher than in some countries where the consumer is even further detached from spending, via single-payer universal healthcare systems.
Or, the other way around, it's almost like it's a very complex issue that resists reducing the problem to an Econ 101 parable.
I have a $6500 deductible. I definitely care what things cost because my insurance almost never actually helps pay for anything unless I have an unbelievably bad year.
The problem is that literally nobody can tell me how much anything is going to cost until I get the bill in a month. Not even because they don't want to tell me. Nobody at the desk even knows what my price is going to be because it's all numberwang.
> Kinda like how expensive healthcare is since it is paid for by insurance.
If your argument were correct, socialized medicine would lead to higher costs, but it usually does the opposite. Insurance profit margins are a small portion of the overall cost in the US. In inelastic markets, when profit is removed, often you can see lower costs because profit by itself is purely extractive and in an inelastic market competitive forces are weaker.
I don't know. I live in a country with excellent healthcare, excellent public transport, overall excellent quality of life - yeah, and so much of it is funded from our taxes. Granted, the country was rich to begin with, but it seems to be perfectly sustainable.
Posts like these on Hacker News are quite interesting bc if this scenario comes up in any "left vs right" debate, it's always shot down as a terrible concept and idea to keep the government out of it.
Isnt it a little onesided to put blame on the payers for price insensitivity?
> The second you detach the consumer from the price of something, that is when they stop caring about how much something costs, and so the price jumps.
Why should nobody care about prices? The customer gets subsidizes by another payer, in this case governments that have to authorize budgets.
The reverse could be true too, companies raise their prices in lock step because they want to 'detach' more profits off of production and so, the government steps in to subsidize. So what is the causality chain here? Still the government not caring?
IMO you are putting blame onesidedly on payers and not on the ones in charge of price policy, which would include companies too. I dont understand why people dont apply their critizism of large organisations, like a government, to other large organisations, like a company.
It could also be like health care, where the cost goes down when the government is paying for it. In fact my knee jerk reaction to the title of the thread was: Let the government buy generic buses in volume and give them to the localities.
> Kinda like how expensive healthcare is since it is paid for by insurance.
This seems different. A healthcare consumer (in the US) is overpaying in large part because (1) they need the coverage (2) they lack the expertise to distinguish between offerings and (3) there simply aren't more affordable offerings.
Single payer healthcare systems feature significantly lower costs and better quality despite that the payer is not the consumer.
- Govt beaureucreats spending taxpayer money
- Availability of cheap credit for the US govt (the spender is other countries buying the debt)
- Availabiulity of cheap student loans
> The second you detach the consumer from the price of something, even through an intermediary such as health insurance, that is when they stop caring about how much something costs, and so the price jumps.
That's not the only problem with health. It's a very inelastic resource.
If you and your neighbor's have cancer, and I promise to treat whoever pays most, I can safely assume I'm going to be filthy rich. After all, money is pointless if you die, so barring money for descendants, the logical thing is to give me as much money as you can.
It's not just about not caring. It's a system that is wide open for grift. For example, the mayor awards the contract to X, and X in return donates to his campaign reelection.
We need to shut down the government until buses and other wasteful borrowing and spending is eliminated. Local governments should pay for 100% of their buses rather than 20%.
It's even worse, I will use my healthcare just because it is free. I would feel like a moron not get my free physical, bloodwork and other labs every year. If it was $20 I wouldn't bother but its almost obligatory to take something "because its free".
Once I learn something is free it is like I already own it, so now I don't get it if I take it, I lose it if I don't.
I think that the authors solution, outsourcing production is not quite right, they gloss over other issues.
>In a large country like the US, some variation in bus design is inevitable due to differences in conditions like weather and topography. But Silverberg said that many customizations are cosmetic, reflecting agency preferences or color schemes but not affecting vehicle performance.
This is kind of absurd, I have been on busses all over the country, a metro bus, is a metro bus. There are not really differences based on topography or climate.
>Two US transit agencies, RTD and SORTA, bought similar 40-foot, diesel-powered buses from the same manufacturer in 2023, but RTD's 10 buses cost $432,028 each, while SORTA's 17 cost $939,388 each.
The issue here appears to be: Why is SORTA's purchasing so incompetent that they are buying 17 busses for the price of 35? They are over double the price of RTD.
> That same year, Singapore’s Land Transport Authority also bought buses. Their order called for 240 fully electric vehicles — which are typically twice as expensive as diesel ones in the US. List price: Just $333,000 each.
Singapore has a very efficient, highly trained, highly educated, highly paid administrative staff, and their competency is what is being shown here. They thought to get a reduction in price because of the large number of busses they are ordering.
One solution the author doesn't point out is that Federal funds often come coupled with a large amount of bureaucratic red tape. It could be cheaper in the long run to have more tax collection and expenditure at the local level, and not rely as much on federal grants.
Don't be fooled, paying less won't help much since the cost of a bus is a small part of the costs of running a bus route. about half your costs are the bus driver. The most expensive bus is still only 1/3rd of your hourly cost of running the bus. If a more expensive bus is more reliable that could more than make up for a more expensive bus (I don't have any numbers to do math on though).
Half the costs of running a bus route are the driver's labor. The other half needs to pay for maintenance, the cost of the bus, and all the other overhead.
Tompkins County bought Proterra buses, they had some serious problems. When they jacked one up to work on it the axle came off and they immediately took all our electric buses out of the fleet -- and Proterra was bankrupt and not able to make it right.
TCAT is still scrambling to find diesel buses to replace those and older diesel buses that are aging out. Lately they've added some ugly-looking buses which are the wrong color which I guess they didn't customize but it means they can run the routes.
One of the issues that AC Transit (SF East Bay bus agency) has is that it purchased a lot of Hydrogen Fuel Cell busses which have issues which dramatically impact their reliability. It's also very expensive technology. There's a decent argument that public agencies _should_ invest in early emerging technologies like that but the costs should not be borne by the transit agency alone, at the cost of poor service for its riders.
Make the argument why the bus company that provides bus-based transportation near one's home/work should spend marginal income on fancy emerging technologies instead of on higher-quality service (or lowering ticket prices if somehow service quality has reached an upper limit)?
Sure if the state or feds want to pay the extra costs to get such technology out there into production, make them an offer as the local bus company how much they'd have to chip in for you to deploy that.
I think this shows one of the downsides of trade barriers very well: You get stuck with undesirable industries (diesel bus manufacturing), binding capital and labor better used elsewhere (and you easily end up with underperforming, overpriced solutions, too).
But I'm curious how much this actually affects transport costs. If such a bus is used 12h/day, then even overpaying 100% for the vehicle should get outscaled by labor + maintenance pretty quickly, long before the vehicle is replaced...
So the authors basic argument is to offshore bus production. As if that doesn’t carry any negative side effects.
This is exactly what the majority of Americans voted against and exactly why the left can’t find its footing. Everyone is now fully aware that offshoring for a cheap sticker price comes with higher, harder to price costs elsewhere.
> So the authors basic argument is to offshore bus production.
No, their recommendation are transit subsidies with strings attached aimed at driving domestic economies of scale. Of course, depending on how a model is defined, 100 offshore unit cap can absolutely be gamed by making a "custom" model for each city or year.
> Finally, they recommend that foreign bus manufacturers be allowed to sell up to 100 vehicles of a given model, at which point they would need to establish a US manufacturing facility to expand sales further.
> To reduce costs, the researchers suggest that the federal reimbursements for bus purchases be capped at the 25th percentile cost of similar vehicles
There's more than one way to accomplish the goals of protectionists, and the different options are usually not created equal. Some economic policies have worse side effects than others to accomplish similar tasks.
In this case, I think that placing a tax on imports (tariff) is always preferable to an inflexible ban on imports. This is not an unusual approach in economics; it is in fact very common that economists recommend replacing bans with taxes. In fact, even the current administration, which is radical by modern standards, basically always prefers tariffs to bans.
The left? The US doesn't have a leftist party. Any time a leftist starts looking like they are gaining both parties do everything possible to shut them down.
> This is exactly what the majority of Americans voted against
Hardly. Less than two thirds of Americans actually bothered to vote. And a slight minority of those voted for the current government.
In any case, why does this need to be about identity politics? And if so, why are you suggesting that only the left is committed to an open, free market? Isn't that more traditionally a right-wing position?
Blaming this on the amorphous "left" is extraordinary, when offshoring has been a 40 year project of corporate America and "shareholder returns at any cost". A neoliberal global order has been the traditional Republican platform.
> This is exactly what the majority of Americans voted against and exactly why the left can’t find its footing.
They voted against trans rights and they voted to cause harm to people they dislike. It had absolutely nothing with buss prices or generic this. The vote for conservatives and Trump is ideological, about wish to wage culture war. It is about cruelty being the goal.
And I mean this 100% seriously. It is absurd to pretend it was about something like this.
Worth watching Modern MBA on the inefficiencies of transit in USA. Detailed analysis and comparison against Asian, European and Latin American systems along with private and government run operations: https://www.youtube.com/watch?v=eQ3LSNXwZ2Y
Our buses are also less comfortable and "rattle" more that busses I've ridden in many other first world countries. I'm not sure if this is an economics thing but the standard New Flyer buses feel a bit dated.
Ever since I first looked at the Oshkosh NGDV for the USPS I couldn't help but wonder WHY there was a need for a custom vehicle?*
European parcel delivery firms and postal systems (Deutsche Post DHL, La Poste, Royal Mail, PostNL and all the non-legacy competitors) generally do not commission purpose-built vehicles, they buy off the shelf small vans and light commercial vehicles.
* of course I do know why, "because jobs and politics"...
There's also a bunch of PE money in the space for specialized vehicles, leading to the usual consequences. Fire trucks are the canonical example. Shittier trucks that take 3x longer to get and are dramatically less reliable.
This problem is not unique to buses it's in almost all markets or industries in the US. Almost every industry has monopolies or virtual monopolies. Incubants pay/finance politicians to make rules that make it harder for new entrants to get into the market or use false free market narrative to hamper community inniatives. The attack on wind and solar by the current administration is part of the same play.
Outsourcing is not a good solution, we should support our local manufacturers who have to follow our ethical rules on labor treatment, safety, and environmental damage. Outsourcing just allows the worst abuses to happen elsewhere. We should get rid of labor and environmental rules if we want to allow outsourcing.
The biggest killer are all the specific changes each city decides they need.
If a standard feature set could be achieved mass production would be easier to arrange.
Perhaps with a module system to remove or add some subset of feature that are easily to adapt to it.
The 80% of federal funding¹ should be based on a "universal common standard",
and cities pay 20% plus the city pays 100% for various customisations they
need.
¹ I have not made any effort to verify this data but it's in hte article. It seems more generous than the federal government tend to be.
Well, what did you expect? if competition is banned, they can churn out whatever, charge whatever they want, and it'll still get bought with tax money.
Ultimately due to a lack of transit competition. Municipal transit will be bloated and inefficient on every level because no amount of failure will put them out of business. Indeed, most agencies' main goal is to increase budget (any increase in service or customer satisfaction is incidental) because more budget equals bigger projects and more staff which is more prestigious and higher paying.
I see a lot of people saying this is due to lack of competition. I hate to break this to you but it isn't that. A lot of European countries thinking the competition will drive the costs down, including on the supply side, and liberalizing the market realized not long after that this did nothing to reduce the cost. More often than not it drove the cost up.
The problem is that the public transportation is never truly free market, as they are always heavily subsidized. More companies relying on subsidies to do business doesn't change the fact. On the supply side, bus manufacturers have the same. US federal govrhas strict requirements to buy American made busses. I think NAFTA might be ok too, but not sure. In any case, what the US government paying for is manufacturing jobs and this is not necessarily a bad thing. Or let's put it another way. Those busses can be produced in China or Japan for much cheaper. But then you will let go of this industry, and have more dead towns and small cities without jobs.
> Two US transit agencies, RTD and SORTA, bought similar 40-foot, diesel-powered buses from the same manufacturer in 2023, but RTD's 10 buses cost $432,028 each, while SORTA's 17 cost $939,388 each.
Huh. TFI, the Irish transport authority, currently has a deal to pay 400 million euro for 800 electric buses, mostly double deckers (so a lot bigger than these ones). Diesel double deckers cost them significantly less (about 250-350k IIRC), but obviously cost more to operate. That's for custom jobs (in particular TFI has weird beliefs about what shape windscreens should be).
I wonder if part of it is just that these US transit agencies are buying them on such a small scale; a state-level agency responsible for sourcing the buses might be more effective.
[+] [-] RobKohr|5 months ago|reply
Well, there is your answer. The one making the purchase isn't the one primarily paying for the purchase. This makes them less sensitive to pricing.
Kinda like how expensive healthcare is since it is paid for by insurance.
Or how you don't care how much you put on your plate or what you choose to eat at an all you can eat buffet.
The second you detach the consumer from the price of something, even through an intermediary such as health insurance, that is when they stop caring about how much something costs, and so the price jumps.
[+] [-] Y_Y|5 months ago|reply
https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble...
[+] [-] avar|5 months ago|reply
You'll find that (even ignoring the outlier that is the US health care system) that in some countries where consumers bear at least some of the cost directly via mandatory insurance and deductibles, the spending per capita (and which survives a comparison with overall life expectancy etc.) is higher than in some countries where the consumer is even further detached from spending, via single-payer universal healthcare systems.
Or, the other way around, it's almost like it's a very complex issue that resists reducing the problem to an Econ 101 parable.
1. https://www.oecd.org/en/publications/2023/11/health-at-a-gla...
[+] [-] qgin|5 months ago|reply
The problem is that literally nobody can tell me how much anything is going to cost until I get the bill in a month. Not even because they don't want to tell me. Nobody at the desk even knows what my price is going to be because it's all numberwang.
[+] [-] grafmax|5 months ago|reply
If your argument were correct, socialized medicine would lead to higher costs, but it usually does the opposite. Insurance profit margins are a small portion of the overall cost in the US. In inelastic markets, when profit is removed, often you can see lower costs because profit by itself is purely extractive and in an inelastic market competitive forces are weaker.
[+] [-] rollcat|5 months ago|reply
Just my €0.03.
[+] [-] thegreatpeter|5 months ago|reply
[+] [-] frollogaston|5 months ago|reply
[+] [-] throwawayqqq11|5 months ago|reply
> The second you detach the consumer from the price of something, that is when they stop caring about how much something costs, and so the price jumps.
Why should nobody care about prices? The customer gets subsidizes by another payer, in this case governments that have to authorize budgets.
The reverse could be true too, companies raise their prices in lock step because they want to 'detach' more profits off of production and so, the government steps in to subsidize. So what is the causality chain here? Still the government not caring?
IMO you are putting blame onesidedly on payers and not on the ones in charge of price policy, which would include companies too. I dont understand why people dont apply their critizism of large organisations, like a government, to other large organisations, like a company.
[+] [-] analog31|5 months ago|reply
[+] [-] throwaway894345|5 months ago|reply
This seems different. A healthcare consumer (in the US) is overpaying in large part because (1) they need the coverage (2) they lack the expertise to distinguish between offerings and (3) there simply aren't more affordable offerings.
Single payer healthcare systems feature significantly lower costs and better quality despite that the payer is not the consumer.
[+] [-] smath|5 months ago|reply
- Govt beaureucreats spending taxpayer money - Availability of cheap credit for the US govt (the spender is other countries buying the debt) - Availabiulity of cheap student loans
[+] [-] Ygg2|5 months ago|reply
That's not the only problem with health. It's a very inelastic resource.
If you and your neighbor's have cancer, and I promise to treat whoever pays most, I can safely assume I'm going to be filthy rich. After all, money is pointless if you die, so barring money for descendants, the logical thing is to give me as much money as you can.
[+] [-] unknown|5 months ago|reply
[deleted]
[+] [-] WalterBright|5 months ago|reply
[+] [-] cowsandmilk|5 months ago|reply
[+] [-] barchar|5 months ago|reply
[+] [-] cyanydeez|5 months ago|reply
[+] [-] sam345|5 months ago|reply
[+] [-] marbro|5 months ago|reply
[+] [-] ericmcer|5 months ago|reply
Once I learn something is free it is like I already own it, so now I don't get it if I take it, I lose it if I don't.
[+] [-] ecshafer|5 months ago|reply
>In a large country like the US, some variation in bus design is inevitable due to differences in conditions like weather and topography. But Silverberg said that many customizations are cosmetic, reflecting agency preferences or color schemes but not affecting vehicle performance.
This is kind of absurd, I have been on busses all over the country, a metro bus, is a metro bus. There are not really differences based on topography or climate.
>Two US transit agencies, RTD and SORTA, bought similar 40-foot, diesel-powered buses from the same manufacturer in 2023, but RTD's 10 buses cost $432,028 each, while SORTA's 17 cost $939,388 each.
The issue here appears to be: Why is SORTA's purchasing so incompetent that they are buying 17 busses for the price of 35? They are over double the price of RTD.
> That same year, Singapore’s Land Transport Authority also bought buses. Their order called for 240 fully electric vehicles — which are typically twice as expensive as diesel ones in the US. List price: Just $333,000 each.
Singapore has a very efficient, highly trained, highly educated, highly paid administrative staff, and their competency is what is being shown here. They thought to get a reduction in price because of the large number of busses they are ordering.
One solution the author doesn't point out is that Federal funds often come coupled with a large amount of bureaucratic red tape. It could be cheaper in the long run to have more tax collection and expenditure at the local level, and not rely as much on federal grants.
[+] [-] bluGill|5 months ago|reply
Half the costs of running a bus route are the driver's labor. The other half needs to pay for maintenance, the cost of the bus, and all the other overhead.
[+] [-] PaulHoule|5 months ago|reply
TCAT is still scrambling to find diesel buses to replace those and older diesel buses that are aging out. Lately they've added some ugly-looking buses which are the wrong color which I guess they didn't customize but it means they can run the routes.
[+] [-] jlhawn|5 months ago|reply
[+] [-] namibj|5 months ago|reply
[+] [-] myrmidon|5 months ago|reply
But I'm curious how much this actually affects transport costs. If such a bus is used 12h/day, then even overpaying 100% for the vehicle should get outscaled by labor + maintenance pretty quickly, long before the vehicle is replaced...
[+] [-] isthispermanent|5 months ago|reply
This is exactly what the majority of Americans voted against and exactly why the left can’t find its footing. Everyone is now fully aware that offshoring for a cheap sticker price comes with higher, harder to price costs elsewhere.
[+] [-] twoodfin|5 months ago|reply
If the Chinese want to subsidize our mass transit buildout, why not let them? Are busses really critical national security concerns?
If we needed the existing NA producers to build military busses it sounds like we’d be screwed!
[+] [-] gruez|5 months ago|reply
How's American shipbuilding faring, after companies were forced to "buy american" for domestic shipping?
https://en.wikipedia.org/wiki/Merchant_Marine_Act_of_1920
[+] [-] TrainedMonkey|5 months ago|reply
No, their recommendation are transit subsidies with strings attached aimed at driving domestic economies of scale. Of course, depending on how a model is defined, 100 offshore unit cap can absolutely be gamed by making a "custom" model for each city or year.
> Finally, they recommend that foreign bus manufacturers be allowed to sell up to 100 vehicles of a given model, at which point they would need to establish a US manufacturing facility to expand sales further.
> To reduce costs, the researchers suggest that the federal reimbursements for bus purchases be capped at the 25th percentile cost of similar vehicles
[+] [-] scythe|5 months ago|reply
In this case, I think that placing a tax on imports (tariff) is always preferable to an inflexible ban on imports. This is not an unusual approach in economics; it is in fact very common that economists recommend replacing bans with taxes. In fact, even the current administration, which is radical by modern standards, basically always prefers tariffs to bans.
[+] [-] AngryData|5 months ago|reply
[+] [-] rootusrootus|5 months ago|reply
Hardly. Less than two thirds of Americans actually bothered to vote. And a slight minority of those voted for the current government.
In any case, why does this need to be about identity politics? And if so, why are you suggesting that only the left is committed to an open, free market? Isn't that more traditionally a right-wing position?
[+] [-] rfrey|5 months ago|reply
[+] [-] watwut|5 months ago|reply
They voted against trans rights and they voted to cause harm to people they dislike. It had absolutely nothing with buss prices or generic this. The vote for conservatives and Trump is ideological, about wish to wage culture war. It is about cruelty being the goal.
And I mean this 100% seriously. It is absurd to pretend it was about something like this.
[+] [-] carliFigaroFiga|5 months ago|reply
[deleted]
[+] [-] dayvid|5 months ago|reply
[+] [-] tdeck|5 months ago|reply
[+] [-] logifail|5 months ago|reply
European parcel delivery firms and postal systems (Deutsche Post DHL, La Poste, Royal Mail, PostNL and all the non-legacy competitors) generally do not commission purpose-built vehicles, they buy off the shelf small vans and light commercial vehicles.
* of course I do know why, "because jobs and politics"...
[+] [-] Spooky23|5 months ago|reply
[+] [-] xbmcuser|5 months ago|reply
[+] [-] iamtheworstdev|5 months ago|reply
[+] [-] silexia|5 months ago|reply
[+] [-] ThinkBeat|5 months ago|reply
Perhaps with a module system to remove or add some subset of feature that are easily to adapt to it.
The 80% of federal funding¹ should be based on a "universal common standard", and cities pay 20% plus the city pays 100% for various customisations they need.
¹ I have not made any effort to verify this data but it's in hte article. It seems more generous than the federal government tend to be.
[+] [-] tclover|5 months ago|reply
[+] [-] ksynwa|5 months ago|reply
It's a feature of the economic setup.
[+] [-] xnx|5 months ago|reply
[+] [-] bgnn|5 months ago|reply
The problem is that the public transportation is never truly free market, as they are always heavily subsidized. More companies relying on subsidies to do business doesn't change the fact. On the supply side, bus manufacturers have the same. US federal govrhas strict requirements to buy American made busses. I think NAFTA might be ok too, but not sure. In any case, what the US government paying for is manufacturing jobs and this is not necessarily a bad thing. Or let's put it another way. Those busses can be produced in China or Japan for much cheaper. But then you will let go of this industry, and have more dead towns and small cities without jobs.
[+] [-] rsynnott|5 months ago|reply
Huh. TFI, the Irish transport authority, currently has a deal to pay 400 million euro for 800 electric buses, mostly double deckers (so a lot bigger than these ones). Diesel double deckers cost them significantly less (about 250-350k IIRC), but obviously cost more to operate. That's for custom jobs (in particular TFI has weird beliefs about what shape windscreens should be).
I wonder if part of it is just that these US transit agencies are buying them on such a small scale; a state-level agency responsible for sourcing the buses might be more effective.