New Zealand’s Slide Back Towards State Ownership of Transportation

Tyler Cowen is writing about the New Zealand government’s renationalization of its railways and its 2001 bailout of Air New Zealand in exchange for an 83% ownership stake.

    Did privatization fail? It is unlikely that New Zealand should have a rail system in the first place. Imagine 3.6 million people living in a country about the size of California. About one-third of them live in or near Auckland. The rest are widely scattered across two (technically, three) islands. When you privatize something that shouldn’t exist in the first place, you are asking for political and economic trouble. It is no surprise that the company wouldn’t invest much in the system.

    It was never the case that flights to and from New Zealand would cease or even dry up. But there was never any guarantee that a New Zealand company would be controlling those flights; read this whinge about a possible Qantas takeover. Again, privatization may well have been economically efficient, but it didn’t deliver what people expected or demanded.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community Milepoint.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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