[M]y point was that while Fung Wah was an innovator in this space, it has been followed by better-capitalized corporates that, as it happens, have a much stronger safety record. This is an important thing to remember about about competition: a mom-and-pop can have a great idea, but this great idea will soon imitated by others who will do their best to out-execute the first movers.
Touché. Another common criticism from readers:
It's not "either entrepreneurs start stuff and help the economy" or "government invests" – it's both. Fung Wah is a great story, but they didn't exactly rebuild the highways they're driving on.
As a resident of an East Coast city, I applaud the success of Fung Wah and the business model of cheap city-to-city bus travel. Fung Wah, along with companies like Megabus, MVP and BoltBus, have made DC-BOS travel extraordinarily affordable and heavily patronized.
But, come on, is Reihan really knocking public infrastructure investment in rail? Would Fung Wah have been able to achieve this level of success without President Eisenhower's championing of the National Interstate and Defense Highways Act of 1956 and the trillions we have invested in upgrading and maintaining the system in the decades since?
I am often skeptical of public investment on bells and whistles, but it seems that an investment in our passenger rail system to make it capable of handling more traffic and moving people faster – much like adding lanes to an interstate highway – would lead to more patronage, more revenues for the carrier, and, eventually, a success story along the lines of Fung Wah.
And to ignore how much we've put into our highways versus what we've spent on rail is disingenuous. Government investment of tax dollars in infrastructure is precisely the type of investment the only actor who has the power of eminent domain should be making.
While Amtrak and the airlines do receive direct subsidies, the discount bus companies wouldn't be able to operate without significant government spending either. Fuel taxes only pay for a part of the costs of the roads that the buses use – the amount is debatable but it's under 50%.
Furthermore, buses are some of the most damaging vehicles to the roads, and since the maintenance costs of roads are in proportion to the damage, buses do more of the wear and tear than they pay for. Engineering tests conducted by the American Association of State Highway and Transportation Officials (AASHTO) in the 1950s established that damage to road surfaces scales as the *fourth* power of vehicle axle weight, and a 44,000-pound bus easily does 15,000 times as much damage to the road as even a large car. Buses pay more than cars in registration fees, but not 15,000 times as much.
Finally, the Chinatown buses got their start – and some still operate this way – by loading and unloading curbside in Chinatown neighborhoods. This worked well when the buses were relatively unknown, but if scaled to the passenger volume of, say, Amtrak, it would involve substantial use of valuable city curbside space without paying for it, space that could also be used for parking or travel lanes or loading zones, and so forth.