There were significant benefit and problems with private ownership of transit services. Whatever the motivation and whoever was behind it, the conversion to buses of worn-out, old public passenger rail systems made sense at the time. It made more sense to those making money out of it (the scrappers, not the original stockholders) than to the public in general, but the public was ready to abandon what was left of the rail transit industry anyway. Many (and a growing number) of potential riders had cars, their taxes were building better roads, and the work needed to properly rebuild and improve the rail systems vastly exceeded the ability of private interests to raise money for given the expected (at the time) continuing decline in usage.

The few rail systems that survived had special circumstances: usually, they were publicly owned and relatively insulated from private funding issues; and they served areas that really needed (and used) the services. Sure, politics were involved too, but by the 1950s, in more cases than not, they favored retaining some minimal amount of rail service at least.

Rhetorical question for the house: given the choice today between riding (in regular commute/revenue service) a near-100-year-old PE red car that had been rebuilt so many times that original parts were few, with no air conditioning, steep steps (ADA compliance how?), uncomfortable seats, noisy, and rough-riding (yes, I know PCCs were not that bad, but PE didn't have many of them); and a modern LRV with a/c, decent lighting, seats that fit modern bodies, low-floor or otherwise accessible designs, and higher speeds (most PE trains ran at 45 mph or less, usually much less) - which would you choose? Continued private ownership or operation, if even possible, would be more like the former than the latter absent huge public subsidies equivalent to buying and rationalizing the system.

On the whole, I think I'd prefer riding LAMTA's light rail cars to Santa Monica, with convenient transfers to other lines and a reasonably well-integrated bus system, to PE's stuff. PE's old stuff is interesting in a museum, but nobody would ride anything that crude in regular service these days. And given the financial performance of the company and the needs of the system, it's unlikely that by itself it would have survived let alone rebuild and modernize itself. So it took 60+ years to bring the line back - a lot happened in that 60 years, some good, some bad, but overall I think the return of the line is a Good Thing, and will turn out far better than stringing the old PE along would have.