I don't know which side should win this dispute. Either way, our situation could be better. Imagine if you could still get a bus ride because there was a competing company called "Da-Bus" that tried to win your business by charging less for tickets than TheBus.

Unfortunately, that's illegal. One cannot start a private bus company to compete against TheBus, and, even if one could, TheBus's subsidies from the government would give it an unfair advantage.

This problem began in the 1940s. Back then, Honolulu had two major bus companies, with competition from transportation services using smaller vehicles called "jitney buses." Then the head of one of those major bus corporations, the late Harry Weinberg, convinced Hawaii's Public Utility Commission (PUC) that this cutthroat, dog-eat-dog competition was madness.

Invoking "the public good," Weinberg persuaded the PUC to grant his own organization, Hawaii Rapid Transit, Ltd. (HRT), a regulated monopoly through prohibiting any company from directly competing against it.

The PUC, which actually had the authority to make laws because the Legislature gave it that power, agreed. It forced jitneys off the street. (tour buses aren't direct competition; they're only for visitors.)

Since HRT had no true competition, its service was terrible, and it treated its drivers shoddily (they had no competing bus service to defect to), causing strikes like the one we have now.

In 1971, Honolulu's then-Mayor Frank Fasi purchased HRT from Weinberg and converted it into today's government-owned corporation: TheBus. The laws against competition remained.

Many people believed TheBus's tickets were cheaper than HRT's because the TheBus's were cheaper "up front" (i.e., "at the door"). They failed to notice that what really paid for TheBus's operations came out of their skyrocketing taxes. When factoring taxes into the price, TheBus's services were actually more expensive.

If TheBus were privatized and competition re-legalized, prospects would improve. Strikes would be less frequent because, if drivers were dissatisfied with pay at one company like TheBus, our hypothetical "Da-Bus" could lure away TheBus's best drivers by offering superior compensation. And if drivers for one company did go on strike, at least you could catch a ride on the competitor's vehicles.

Plus, only people who actually ride buses would have to pay for their services, which is fairer than taxing non-riders (if poorer people cannot afford tickets, then private charity can help).

But what if competing bus firms made arrangements with one another to charge the same high price for tickets?

After all, Hawaii-based leftist Robert Rees snidely reminds us that even Adam Smith said, "People of the same trade seldom meet together...but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

So? Contrary to political orthodoxy, that's been historically impractical under unrestrained capitalism. J.D. Rockefeller's Standard Oil proves it.

Myth: "Unencumbered markets gave Rockefeller an exploitative monopoly until regulators stopped him."

Reality: In the years before Standard's government-imposed breakup in 1911, it already competed against eight gigantic oil-refining corporations and a total of 146 refining firms. Its 90 percent market share from 1880 dropped to 64 percent by 1907.

Standard actually drove prices down. When Standard began in 1870, kerosene cost consumers 30 cents/gallon; it cost 6 cents/gallon by 1897. In 2002 dollars, that's a price reduction from $4.25/gallon in 1870 to $1.30/gallon in 1897.

Why mention Standard Oil? Because Rockefeller occasionally tried to fix prices with competing oil refiners, but, every time that happened, greed tempted some "co-conspiring" firm to "cheat" and undersell the "price-fixers," restarting competitive pricing. The same happened when the steel industry tried collusion in 1907.

And, if free-market competition were restored for Honolulu's bus industry and its members then attempted collusion, the same would likely occur.

Thus, it would be optimal to privatize TheBus and re-legalize direct competition -- with no government subsidies allowed.

That wouldn't strongly threaten jobs either; a private bus company could save money by hiring experienced bus drivers instead of paying for the training of new ones, so a private company would likely rehire the government bus drivers now on strike.

In the end, privatization would allow all of us -- bus drivers and passengers alike -- to triumphantly ride off into the sunset.

Stuart K. Hayashi graduated from Hawaii Pacific University as an Entrepreneurial Studies major in May 2003, and he is the former president of the Reason Club of Honolulu, though his opinions do not necessarily reflect that of either organization. He is the founder of a news Web log, "The Fiftieth Star," at: http://50thstar.blogspot.com to be unofficially centered around activities at the University of Hawaii at Manoa, and he can be reached at: mailto:radical_individualist@hotmail.com

Recommended links:

"It's Time to Rethink TheBus" by Cliff Slater http://lava.net/cslater/busesfoot.htm

"Bring Back Bus Competition" by Cliff Slater http://lava.net/cslater/Curable2.htm

Jitney buses of the 1930s http://lava.net/cslater/Rosecrans1.jpg

"Where Have All the Jitneys Gone, Long Time Passing?" by Ken Schoolland http://www.hawaiireporter.com/story.aspx?262f6bfd-3ced-47dc-aaf7-1cd340d11c0f

"Privatized Systems, Public Benefits" by Stuart K. Hayashi http://www.hawaiireporter.com/story.aspx?b11d7f97-65b7-453b-abad-830c597f4e1f

To adjust for inflation/deflation when discussing kerosene prices, I based my calculations on the Consumer Price Index at http://minneapolisfed.org/Research/data/us/calc/hist1800.cfm

"Abolish Antitrust!" by Edwin A. Locke, Ph.D. http://www.capmag.com/article.asp?ID=623

"The Ghost of John D. Rockefeller" by Thomas J. DiLorenzo, Ph.D. (short version) http://www.dailyobjectivist.com/Extro/ghostofrockefeller.asp

"The Ghost of John D. Rockefeller" by Thomas J. DiLorenzo, Ph.D. (longer version) http://www.fee.org/vnews.php?nid=207

"Monopoly" by Dominick T. Armentano, Ph.D. http://www.fff.org/freedom/0592c.asp

"Antitrust's Greatest Hits" by David Kopel and Joseph Bast http://reason.com/0111/fe.dk.antitrusts.shtml

"Creating Monopolies That Control Us" by Mary Ruwart, Ph.D. http://www.ruwart.com/Healing/chap7.html (Note: The overall tone of Dr. Ruwart's book is sappy and much of the book online is filled with collectivist flakiness, but her points about monopolies are valid.)

The Ayn Rand Institute's Microsoft Defense Site http://microsoft.aynrand.org (Note: This is much better than the Dr. Ruwart link; the Ayn Rand Institute is much more to-the-point.)

All of Cliff Slater's Great Articles on Transportation and Markets http://lava.net/cslater/

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