The privatization of the train system in Germany was a particularly insane disaster that is only now, 30 years later, being undone/repaired.

If you look at an org chart of the DB these days, the most fascinating part is that DB consists of almost 600 separate corporate entities that are all supposed to invoice each other.

Speaking with insiders, it appears that when the privatization happened, the new corporate structure took what was essentially every mid-size branch of the org chart and created a separate corporate entity, with cross-invoicing for what would normally normal intra-company cooperation. I think the (misguided) goal was to obtain some form of accountability inside a large organisation that had been state-funded and not good at internal accounting.

This fragmentation lead to insane inflexibility, as each of the 600 entities has a separate PnL and is loathe to do anything that doesn’t look good on their books.

Add to this a history of incompetent leadership (Mehdorn, who also ran AirBerlin into the ground, and who was also responsible for the disastrous BER airport build-out), repeated rounds of cost-cutting that prioritized “efficiency” over “resiliency of the network” etc. etc.

DB is currently undergoing a massive corporate restructuring to simplify the 600+ entity structure, but there has been a massive loss of expertise, underinvestment in infrastructure, poor IT (if you see a job ad for a Windows NT4 admin, it’s likely DB), etc. etc. — it’ll take a decade or more to dig the org out of the hole it is in.

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wolframhempel 6 hours ago | parent [-]

It was a privatization in name only. The German state held 100% of its shares since the beginning. As such, it might have no longer been subject to the state specific demands of hiring etc. - but instead found itself in an uneasy tension as the only supplier of services to an entity that was something between a customer and a shareholder.

Which brings up an interesting question: How do you structure something with a large piece of infrastructure like a rail network in a way that could benefit from the market forces of competition and innovation?

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riffraff 3 minutes ago | parent | next [-]

keep the rails as a state-owned monopoly, let different train operators run on it. Basically we have that for airplanes, and it works well enough.

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toast0 4 hours ago | parent | prev | next [-]

> Which brings up an interesting question: How do you structure something with a large piece of infrastructure like a rail network in a way that could benefit from the market forces of competition and innovation?

A rail network is near to a natural monopoly. You can build overlapping rail networks, but it's complex and interconnecting instead of overlapping would usually offer better transportation outcomes and there's a lot less gauge diversity so interconnection is more likely than overlap.

All that to say, you can't really get market forces on the rails. Rails compete with other modes of transit, but roads and oceans and rivers and air aren't driven by market forces either.

Transit by rail does compete in the market for transit across modes. You can have multiple transportation companies running on the same rails, and have some market forces, but capacity constraints make it difficult to have significant competition.

	▲	solatic 2 hours ago \| parent [-]
		> capacity constraints make it difficult to have significant competition Thirty years ago, you would be correct. In the modern day, you could tie switch signalling to real-time auctions and let private rail's command centers decide how much to bid and thus whether or not they win the slot for putting their cars onto the shared rails. The public rail owner likely needs to set rules allowing passenger rail to pay a premium to secure slots in advance (say, a week) so that a timetable can be guaranteed to passengers during peak rush hour, but off-peak slots can and should be auctioned to naturally handle the difference between off-peak passenger rail and not-time-sensitive, more-cost-averse freight rail.

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rawgabbit 5 hours ago | parent | prev | next [-]

I believe modern economists are studying how ownership should be assigned. The thinking is that contracts and rules handle the majority of situations but emergencies and edge cases require an owner who has authority and whose interests align with the thing they control. And you want a mechanism to reassign ownership when the previous owner is incompetent.

In the case of a national train system, you may want to create a national entity to develop, coordinate, and make the physical trains and support technologies. You would create regional or metro entities to control the train network for their local area including the train stations. They coordinate with each other via negotiated contracts. Any edge cases or emergency falls under the purview of the owning entity. For example, the national entity controls the switch from diesel locomotives to the newest engine. The local authority is responsible for repairing the lines after a natural disaster.

If an entity is egregiously incompetent or failing, the national regulatory authority, with support of the majority of all the different train entities, takes control and reforms it.

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1718627440 5 hours ago | parent | prev | next [-]

> It was a privatization in name only.

Not, that "insight" again. Yes it was privatized and yes it is still completely owned by the state. "Privatization" is a term of art (in German) that refers to the corporate structure not the ownership. There are also public corporations in Germany, that are fully owned by random people: e.V. = registered association.

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marxisttemp 5 hours ago | parent | prev [-]

You can’t. Every attempt at privatizing rail is a failure with worse performance, higher prices, and an inevitable level of special treatment by the state due to the monopolistic utility-like nature of rail infrastructure. Not everything needs to or should be privatized.

	▲	airspresso 4 hours ago \| parent [-]
		This 100%. It should be seen as critical infrastructure because of everything it can enable when run well.