Introduction
The government’s interference in the transportation industry is characterized by monopolistic restrictions, corruption, and gross inefficiency, leaving a gap between public demand and service delivery. Although some studies conclude that government ownership of transportation has greatly contributed to restoring order and improving the sector, the evidence is insufficient to rule out its negative contribution.
People, especially those living in remote areas, continue to have poor access to transport services; private companies face unhealthy competition, lack of innovation, and underdeveloped systems. These challenges have contributed to retardation in the transportation sector as fewer investors are attracted to this industry. Therefore, this essay supports that government ownership of the transportation industry is characterized by monopolistic restrictions, corruption, and gross inefficiency.
Government Ownership of the Transportation Industry
Monopolistic business environments attract less competition, although incredibly high profits are realized by the single or group of organizations practicing monopoly. Under normal circumstances, ventures with high-profit margins should attract more competitors, but this is not the case with a monopoly.
Several barriers to market entry keep private ownerships from investing in such ventures, which include extreme legal requirements and technological and market forces (Yoshino et al., 2019). Government ownership of transportation has led to the erection of restraining legal requirements that ensure that private sectors cannot enter the market. These laws severely limit competition in the transportation sector, thus limiting innovation and improvements in the industry.
Additionally, Yoshino et al. (2019) argue that government ownership in the transportation industry is insufficient to cater to the demand of the general public. However, the law enforcement and control in aerospace, sea, and roads discourage private sectors from bridging the gaps. Taxation policies, control over motor ownership, and traffic restrictions have contributed to a legal monopoly. On the other hand, the law strictly prohibits approaches such as predatory pricing, which play a significant role in promoting unhealthy competition and monopoly in the private sectors. Thus, allowing private ownership of the transportation industry may not directly contribute to unhealthy competition.
Second, government ownership of the transportation sector is characterized by high corruption levels in all industry areas. Although the law highly prohibits corruption, it is quite challenging for the law to act against its government. By this practice, government-owned industries such as transportation, water distribution, and power and lighting companies continue to lag in contributing to economic growth, yet they serve every citizen.
According to Liu & Lee (2020), private sectors are more focused on the profit margin and total market share, which ensures that they remain focused on the main objectives and deliver high-quality services to the customers. Corruption is less tolerated in private companies as it limits the growth potential.
Bribery is one of the common corrupt acts in the government agencies owning transportation sectors in developed and developing countries. According to Liu & Lee (2020), most motorists bribe their way out after violation of traffic laws and consider the matter to be settled outside the court. Consequently, this propagates orderlessness in the transportation sector as the law no longer abides nor is it executed to the latter.
Similarly, the embezzlement of funds meant to support government-sponsored projects in the transportation sector by the officials is increasing at an alarming rate. Poor road construction, law enforcement, and incomplete projects due to funds misuse and misappropriation have left the transportation industry in shatters, and this continues to be the case until the government withdraws its ownership.
Lastly, government ownership of the transportation industry is characterized by gross inefficiency. The rapidly growing global demand for transportation services dictates the need for more efficient and reliable transportation services. For instance, the high population of middle-class people in the US often use road transport when going about daily activities. Although a huge number use private means of transport, the need for reduced traffic regulations and the availability of adequate public transport means cannot be overlooked (Chen et al., 2020).
Generally, several other sectors depend on the transportation industry for them to continue thriving. The market sector can only perform when the transport sector is reliable due to the need for quick movement of goods within the country and cross-border transfer of goods. Unfortunately, corruption and monopolistic restrictions in the transportation industry have limited the potential expansion of trade due to unreliability.
Additionally, remote areas continue to face poor access to reliable transport means. This is primarily a huge problem in the less developed countries where infrastructure development is poor. Government ownership is the main cause of this inefficiency as more time is taken to deliver its projects if at all they happen. Another way government ownership contributes to inefficiency in the transportation sector is through unrealistic traffic regulations, which only limit private sectors from becoming stakeholders. Finally, funds misappropriation and misuse by public agencies have left many incomplete projects which could otherwise be useful to the public (Chen et al., 2020).
Conclusion
In conclusion, corruption, gross inefficiency, and monopolistic restrictions characterize government ownership of the transportation industry and other government-owned sectors and continue to offer setbacks in overall economic growth.
References
Chen, C., Liu, C., & Lee, J. (2020). Corruption and the quality of transportation infrastructure: Evidence from the US states.International Review of Administrative Sciences, 002085232095318.
Liu, C., & Lee, J. (2020). Public corruption and organizational performance: Evidence from highway transportation. SSRN Electronic Journal.
Yoshino, N., Hendriyetty, N. S., & Lakhia, S. (2019). Quality infrastructure investment: Ways to increase the rate of return for infrastructure investments.SSRN Electronic Journal.