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Source link: http://archive.mises.org/14032/14032/

All Aboard the King Subsidy Train!

September 27, 2010 by

Peter King, the Krugman of sportswriting, in his “football” column today:

Why don’t more of us take the train, and why doesn’t Washington invest in the rails across the country to give more of the country, and not just the northeast corridor, the pleasure of the Acela, with speeds up to 150 mph between Boston and Washington?

Why, Peter? Well let’s start with this explanation:

Take the Acela train. Here was a much-heralded, expensive project. Amtrak would ride it all the way to the terra incognita of all government enterprise: profitability. Acela, said one former Amtrak official, was going to “be the envy of all transportation providers,” an amazing miscalculation.

Actually, that envy comment would be a great gag line except for one fact: Amtrak spent billions of dollars on Acela, a train that didn’t meet American safety standards, and the people who are paying for this gross negligence are the U.S. taxpayers, 99 percent of whom seem to have little use for passenger trains.

But Acela, a service that was five years late in beginning, was a fraud from its inception. You can’t have high-speed service unless you have dedicated tracks. Yet Acela trains were always slated to share tracks with much-slower-moving trains. Consequently, Acela’s optimum speeds – already much lower than high-speed trains in other parts of the world – can be attained only in a small part of the journey through the Northeast Corridor. However, passengers riding these problem trains pay premium prices.

The Acela trains themselves have had many technical woes – such as undercarriage problems – that put them out of service. The problems began when Amtrak decided to buy the trains from a Canadian manufacturer, a controversial decision. Amtrak, which frequently made changes in the Acela design, was sued by the manufacturer, a lawsuit that was later settled, although Amtrak was saddled with trains that were not working properly.

But surely, King would say, these problems could be solved with more government “investment.” Unfortunately, King cannot distinguish between investment — the allocation of private capital according to market demand — with subsidy — the government’s forcible reallocation of capital according to political whims (such as the ramblings of a sports columnist who knows nothing about economics).

King’s problem is that he wants more people to ride trains — merely because he happens to enjoy riding trains — and since they won’t do it voluntarily, he wants the government to bribe them with subsidies (and perhaps, failing that, by force). He uses the word “invest” incorrectly to obscure the fact he simply wants the government to increase its subsidies for an industry with a long history of unprofitability. As Bob Murphy has said,

From the beginning, Amtrak was plagued by Congress’s conflicting goals: to both maintain intercity passenger rail service…and to become financially self-sufficient. Amtrak – surprise, surprise – has fulfilled neither of these objectives. Bowing to economic realities, Amtrak’s service has been repeatedly scaled back over the years. For example, Amtrak offers no rail service to the cities of Phoenix, Las Vegas, Nashville, Dayton, Tulsa, or Colorado Springs, even though these all have populations of over 500,000. Along with this lack of geographic availability, Amtrak fares aren’t exactly for the poor: …the round-trip fare from Penn Station in New York City to Union Station in Washington, D.C. runs from $134 to $346, depending on class. (The comparable fare for Peter Pan bus lines is $69, though of course the trip is longer.)

…Amtrak can’t defend its service cutbacks and high rates by appealing to economic efficiency, since it has lost money every single year of its history. In 2005 Amtrak received a whopping $1.2 billion from the federal government to help make ends meet. It loses money in every conceivable way – on ticket sales and even on its food and beverage concessions. On one of its worst lines, the Sunset Limited connecting Los Angeles and Orlando, Amtrak lost $433 per passenger. Your tax dollars would have been saved if the line had been scrapped and Amtrak’s customers given plane tickets instead.

But then we wouldn’t be “investing” the money, now would we?

In King’s defense, I understand why he thinks the answer to a failed subsidy scheme is more subsidies. He covers the NFL for a living — an entity built on stadium subsidies, bailing out incompetent owners, and random distribution of talent to historically underperforming teams. You could see why King might view this as a guide for the U.S. transportation network.

(HT to the anti-King forces at KSK, which noted, “A ONE-WAY ticket from Union Station (DC) to Penn Station (NYC) on the Acela leaving this Friday at 6 am costs $135, with a travel time of 2 hours and 46 minutes. A one-way ticket on the Bolt Bus leaving on the same day at 8 am (scheduled to arrive at noon) costs $21.”)

{ 39 comments }

Phinn September 27, 2010 at 12:56 pm

I like trains. They kill a lot fewer people than the annual 100+ people per day that end up dead and permanently disabled from driving a car on America’s government-built roads.

I would prefer to live in an area where trains, subways and walking are the main ways to get around. I live in an area that has been built-up mostly since WWII, and it’s horrible. City and county land use restrictions require every house and building to be set on these enormous lots, with huge setbacks, with wide zoning areas drawn to benefit developers, and of course the government lays out and builds all the roads. The end result is an urban landscape that is 100% car-dependent, with mega-stores connected by mega-artery roads. The natural landscape is lovely here; the human one is hideous. People decry sprawl, and then go about supporting the government’s deliberate manufacture of it.

That said, America’s train industry is so thoroughly corrupt, its railroad system so thoroughly ruined by government, that they’re as dead as Julius Caesar.

Greg September 27, 2010 at 1:08 pm

I like skydiving. It kills a lot fewer people than the annual 100+ people per day that end up dead and permanently disabled from driving a car on America’s government-built roads.

I would prefer to live in an area where people are flown to altitude and dropped out of a plane to get around.

Phinn September 27, 2010 at 1:29 pm

When I said that I like trains, I meant that I like trains, not America’s train system. I like them aesthetically. I also enjoy the experience of riding on them.

As for transportation methods, I prefer trains to our current car-based highway system, which is every bit as statist and corrupt as the train system is, only more stressful and inefficient. I also prefer having one finger cut off to having two fingers cut off, but that doesn’t mean that I want one finger cut off.

I prefer economic freedom and property rights to both cars and trains. However the transportation works itself out under conditions of economic freedom and respect for property rights is fine by me, as I am certain it would eventually produce a transportation system that is the most desirable and most efficient of all, as with all economic goods.

As for skydiving, I don’t care for it, regardless of its other merits. I am not sure how many people it kills per mile traveled. But regardless of the risk of death, I would not prefer traveling by skydiving to travel by either trains or cars, because of the whole noise factor, plus the bugs-in-the-teeth thing.

Kalki September 28, 2010 at 10:27 am

The current road/car based system is itself a government construct that destroyed trains. The regulatory capture by the car industry around WW-2 resulted in the government allocating its “investment” in roads and bridges, thus benefitting the car industry to the detriment of trains. Later, the government “investment” in airports at the behest of airline companies finally sounded the death knell for trains.

Unlike the car industry and airline industry, the railroad industry built it’s own tracks with private investment. If Ford/GM/Delta had to build their own roads and airports, we would all be riding trains today, in a much less polluted world.

Kalki

J. Murray September 28, 2010 at 10:53 am

It’s highly unlikely trains would survive in a free market. They’re slower than planes, so people wouldn’t use them for long-distance trips. Planes also require far less capital infastructure to operate. All a plane needs is an airstrip in the departure point and destination, trains need rails built on every inch of land between the two points, making it prohibitively expensive to build and maintain a rail network compared to an airport network. They’re inflexible compared to automobiles, making them generally useless for short term trips as most of the probable destinations are not serviced by the train nor do trains run when you need them to.

Also, one of the earliest highways in the world was built privately from Indianapolis, IN to Miami, FL at a tiny fraction of the cost of a rail line the same length (and a tiny fraction of the cost of what the Eisenhower Administration spent on the highway system), with fewer accidents, and fewer deaths during construction, and was safter per-mile than the rail system. Further, Ford was selling automobiles in large quantities in regions where paved roads didn’t exist, like much of the Western states. Roadways were not absolutely necessary for vehicles back then that couldn’t move any faster over a smooth surface than they could over a dirt road.

And no, the railroad didn’t build those tracks with private investment. Railroads in the 1800s were heavily subsidized, given land grants, and promoted by the government. One in particular, the Northern-Pacific and its owner, Jay Cooke & Company, was a key reason behind the bank failure of 1873. This railroad was a darling to D.C. politicians and even got special Army protection against native attacks, large land grants, and taxpayer subsidized funds.

ABR September 28, 2010 at 12:01 pm

Commercial craft are flying these days at a top speed of around 550 knots. That is painfully slow. How fast could a train travel in a vacuum? The sky’s the limit. :)

Kalki September 28, 2010 at 2:39 pm

JM,

Be that as it may, the proportion of railway lines built with private investment was far far higher than the proportion of roads and airports, without which there would be far fewer cars/planes, and more trains.

J. Murray September 28, 2010 at 3:55 pm

If by far higher you mean like 1 or 2%, then I’d agree.

J. Murray September 27, 2010 at 3:57 pm

I prefer riding dolphins. It kills a lot fewer people than the annual 100+ people per day that end up dead and permanently disabled from driving a car on America’s government-built roads.

I would prefer to live in an area with an adequate canal system where I can ride my marine mammal and tie it up to a post like an old west horse.

RG September 27, 2010 at 4:15 pm

Ah, that graceful alluminum panel bejeweled with rivet buttons and tree branch dents; the heavily oxidized wheels schreeching and rumbling through residential neighborhoods; the graying and rusticly tattered accordian trim; the elegance of the molded ABS covered with luxurious space age burbur; I can fully relate to your aesthetic pleasure for these nimble and soothing vehicles.

Phinn September 27, 2010 at 4:51 pm

Sounds lovely. But it doesn’t compare to the sights that my old commute up and down the Interstate used to provide me. Over the 40-mile or so trip, up and down, there and back, each day, providing me such a wondrous collection of memories …

Let’s see — the high point would have to be the exhilaration of watching a U-Haul box truck drift into the median, roll over, and seeing an entire family ejected from the cabin, parents and children flung into the air, and all their belongings, too, and then seeing them plummet to their deaths. I have had to testify about that one a couple of times. It never gets old.

And the car fires! Oh, the car fires! You can tell when they have bodies inside — they bring the ambulances along with the fire trucks. And they leave such unmistakable scorch marks on the road, which will remind you of the event, as you pass by the spot, for months.

And how could I forget the drug addict escaping from the police, crossing over the median, mud and grass flying skyward, as he entered the opposing lane of traffic? Where I was driving! Oh, that was a moment to treasure — the imminent head-on collision at a combined speed of 150 miles per. If you haven’t seen that, you haven’t lived.

And that’s nothing compared to the events you only get to hear about — the severed limbs, the brain injuries, the decapitations.

Yeah, nothing like it.

Phinn September 27, 2010 at 4:35 pm

Man, tough room.

I like riding trains because I like reading and writing while I’m traveling. I have done some of my best writing while in transit. I did a one-hour commute by train routine for about 8-9 months when I was younger, and I got a lot done. I also used to do a one-hour commute by car, and it was intensely stressful and life-threatening on more than one occasion.

I used to enjoy airplane travel for the same reason — some time to myself with no responsibility for keeping myself alert at all times, so as to protect myself and my family safe from a fiery death, as I do when we drive. (But air travel has deteriorated steadily over the years to become ridiculously expensive, intensely uncomfortable and personally invasive.)

You can’t travel and read/write while either skydiving or riding dolphins, as far as I know.

Brent September 28, 2010 at 1:47 am

Oh, I don’t think they were picking on you so much as it was just funny to keep it going.

J. Murray September 28, 2010 at 5:55 am

Precisely.

Phinn September 28, 2010 at 6:07 am

Ah, right, sorry. I guess I’ve had too many run-ins with a few certain unmentionable frequent commenters. They’ve ruined my sense of humor.

Horst Muhlmann September 28, 2010 at 1:37 pm

I don’t care who you are; Greg’s post was LOL funny.

Russ the Apostate September 27, 2010 at 7:42 pm

I used to use trains while I worked in the Washington DC area. They are much better there than in most places. And I still hated every second of it. I couldn’t go where I wanted to go, if no train went there. I couldn’t go where I wanted to, except at the times the train system was open for business. Oh, and I just looooooved being squished like a sardine in a can, much less being able to get a seat. And talk about places connected by mega-arteries! If you didn’t have a car, you were pretty much stuck within walking distance of the Metro stops. I’d much rather have the freedom of a car.

Now, for long distance travel, I wouldn’t mind trains, especially if they brought back sleeper cars. And if they stopped near a car rental agency, so I could have a car for local travel once I got to my destination, that would be nice. I’ve always hated airplane travel, even before 9/11. (I’ve heard old-timers say that airplane travel used to be fun, but I have trouble believing it.)

ABR September 27, 2010 at 8:57 pm

Airplane travel was wonderful in the early to mid 60s. Then again, I was a little kid travelling with my older brother, and we were fawned over by cute stewardesses. The food was better than your average home-cooked meal.

I love trains. I loved riding the subway in NYC. I’m all in favour of Walter Block’s idea to privatise the roads and bridges. Ditto trains and subways. Let the market figure it out.

Unfortunately, govt. interference has skewed the market. We can’t undo the past.

JFF September 27, 2010 at 7:44 pm

I like cars cars. Period. They allow me to come and go as I please – for the most part – and keep me from falling victim to the poor service and inconvenient scheduling of trains and subway services.

Fephisto September 27, 2010 at 1:01 pm

I like trains as well…but, Oliva makes a point :( .

Fephisto September 27, 2010 at 1:08 pm

I like trains as well, and, I gotta wonder if the U.S.govt got out of transportation entirely where would we be? I.e., is bus travel so much cheaper because of the huge subsidy from the Federal Highways program? (insert link dump to Block’s “privatizing Roads” book).

Although Oliva makes strong points :( .

(FIRST YOU GUYS MAKE ME READ “THE DRIVER” AND MAKE ME THINK IT’S AWESOME, AND NOW THIS.)

Carcinogen September 27, 2010 at 1:17 pm

The Federal Railroad Administration is the source of many of Amtrak’s, and Acela’s, woes.

http://www.ebbc.org/rail/fra.html

I’d love to see a more detailed article on this nefarious agency’s mucking around, especially when freight carriers such as Norfolk Southern and Union Pacific have expressed interest in starting their own passenger services to compete with Amtrak.

james b. longacre September 27, 2010 at 3:17 pm

However, again, the saving grace for Amtrak is the collection of longer short distance trains (such as the Carolinian) and the long distance system.
http://www.unitedrail.org/2007/06/05/this-week-at-amtrak-2007-06-05/

On one of its worst lines, the Sunset Limited connecting Los Angeles and Orlando, Amtrak lost $433 per passenger. Your tax dollars would have been saved if the line had been scrapped and Amtrak’s customers given plane tickets instead.
http://www.lewrockwell.com/murphy/murphy126.html

the info from these two links seems to be saying different things. i dont know of one or both claims are lies or if one or both are just wrong about what they claim.

james b. longacre September 27, 2010 at 3:21 pm

To determine revenue, you then calculate what is charged per mile for each seat or berth, and multiply that by the amount of seat miles occupied by travelers. This is known as calculating revenue passenger miles. It does not matter how many warm bodies are on a train; that figure is not relevant except for body counts for publicity purposes.
Revenue seat miles are the only true indication of prosperity or failure.

Some who are unfamiliar with true transportation economics try to pin on Amtrak a “loss per seat mile,” which is almost as silly as the “loss per passenger” misinformed politicians and journalists attempt to use to make some sense of Amtrak losses. Those who use such a stand-alone figure merely demonstrate their utter lack of knowledge regarding real accounting and real accountability. http://www.unitedrail.org/2007/06/05/this-week-at-amtrak-2007-06-05/can anyone speak to actual losses as refrenced in the above linked excerpt?

Craig September 27, 2010 at 6:21 pm

Some who are unfamiliar with true transportation economics try to pin on Amtrak a “loss per seat mile,” which is almost as silly as the “loss per passenger” misinformed politicians and journalists attempt to use to make some sense of Amtrak losses.

Amtrak loses money — lots of it. Is that clear enough?

Oh, your link leads to a big, fat blank page.

Scott September 27, 2010 at 4:57 pm

This isn’t the first time King has spoken about Amtrak. A few years ago he bewailed the state of a Boston Amtrak station to that of Union Station in downtown D.C., the latter being consumer friendly and far more aesthetically appealing and well-kept. The fact that legions of wonks daily pass through Union Station and hence ensure that it will get the lion’s share of government funds never occurred to him.

Franklin September 27, 2010 at 8:58 pm

This was extraordinarily astute.
The story is always within the story, Scott, and you nailed it.
It ain’t just about football.
Any celebrity writer (sports , politics, academia, entertainment…) has his platform for spouting gibberish, which often does little to expose systemic problems but, rather, discloses the writer’s lifestyle preferences, paradigms and prejudices (not meant as a pejorative, by the way).
And the fact that Peter has his platform is supposed to lend weight to some policy wonk who heralds in a new era for the Orient Express.
The subtle observation of yours was right on the money. Worth a chuckle and applause.

james b. longacre September 27, 2010 at 9:19 pm

http://www.unitedrail.org/2007/06/05/this-week-at-amtrak-2007-06-05/

the linked worked fine for me.

http://www.lewrockwell.com/murphy/murphy126.html

as does this one.

it seems that some of the routes or lines..i dont know the exact difference in rr parlance, may actually take in more money than it costs to operate. i also dont know if “loss per passenger” is even a truthful measure of accoutng for amtrak. that is what i was trying to find out. i expect teh murphy article at lrc is a lie. sad.

if the govt goal was to give amtrak enough to get them to operate as a company that would seem a subsidy. if it has been a govt grant money to amtrak every year to continue operations its probably more accurate to call amtrak a part of the DoT. it may be that private amtrak inititives that require govt approval are more harmful than plain old govt control and management. i dont know teh exact interactions between congress and amtrak.

i will we riding on amtrak cross country soon. a total of about 260 bucks from reno to raleigh..excludign meals. 15.oo for a bike box and 10 dollars to have the bike go with me….3.5 days travel time.

the linked i posted mentioned that amtraks long distance lines or routes? are amtraks ‘most postive cash flow like’. i dont know if thats true or not. if they know there will be some empty seats it may be somewhat worthwhile to have a lower cross country fare where some shorter lines or sections within that line may actually be full. loss per passenger may be completely untrue and deliberaly false.

james b. longacre September 27, 2010 at 9:21 pm

when you say a huge subsidy from highway programs..isnt that money being taken from highway users via fuel taxes, weigh stations, various charges for border crossings, etc???

how does a bus get a subsidy that your own car doesnt???

Ohhh Henry September 27, 2010 at 9:46 pm

The problems began when Amtrak decided to buy the trains from a Canadian manufacturer

That would be I assume Bombardier, Inc. To call it a “company” is a bit misleading. It’s been practically a government department since at least the 1960s, when the Canadian government started buying it’s “high speed”, “advanced” trains. The first one that I remember was called the Turbo Train, because it was propelled (bizarrely) by an aviation turbine engine. Besides all the usual technical problems (breakdowns, unable to operate at full speed on shared tracks) it was, as I recall, an unusually cramped, noisy, bumpy and smelly train. That didn’t last long, but I believe they did scam Amtrak or whoever was running trains in the BosNyWash corridor circa 1970 to buy a few of them.

By around 1980 Bombardier came up with what looked like a more reasonable design, the “LRT” (light rapid train) but the Bombardier-designed diesel engines were a complete failure and had to be yanked from the tracks, never to be seen again. The sleek, low-profile coaches ended up being pulled by the same tall, boxy (reliable) engines that haul freight trains. The only thing that they successfully produced, after all that money (purchase orders from government-owned corporations plus direct subsidies and loans) was the coaches, which were not exactly a marvel of engineering, just a cabin on wheels with plastic, airplane-style fittings.

After that I got a car and quit taking the train and stopped paying close attention to Bombardier, but I heard that a friend of a friend was canned from the board of directors of the Canadian equivalent of Amtrak (Via Rail) because he suggested they should quit wasting time and taxpayer money operating as a free proving ground for Bombardier’s engineering experiments.

Bombardier seems to be some kind of dumping-ground for Canadian and Quebec government hopes and dreams of advanced manufacturing glory. Stripped of the PR hype, it’s your standard-issue porkbarrel project to steal money from actual entrepreneurs and give it to pretend ones.

Yorkie September 27, 2010 at 11:48 pm

Let’s focus on Amtrak’s food service for a moment: overpriced, limited and unappetizing selection, surly service.

All aboard, America! Enjoy your microwaved ham and cheese sandwich.

james b. longacre September 29, 2010 at 1:10 am

are airplanes much superior to train food?

PK September 28, 2010 at 5:52 am

“(HT to the anti-King forces at KSK, which noted, “A ONE-WAY ticket from Union Station (DC) to Penn Station (NYC) on the Acela leaving this Friday at 6 am costs $135, with a travel time of 2 hours and 46 minutes. A one-way ticket on the Bolt Bus leaving on the same day at 8 am (scheduled to arrive at noon) costs $21.”)”

The only objection with this analogy is that having a bus going through the I-95 corridor 8am on a weekday will take more 3 hours to reach its designation. For those who cannot fly (either fear, lack of resources or scheduling conflicts) this is a viable option to arrive at their designation at the appropriate time.Other than that, great article!

zrated September 28, 2010 at 9:38 am

it says that the bus takes 4 hours. 8 a.m. to noon.

Shama Lama Ding Dong September 28, 2010 at 9:09 am

I rode the trains as a child when they were private, when they had soul, good food, and impeccable service. Where I met country ham, grits and red-eyed gravy, and men who labored with good humor and dignity.

I couldn’t wait to travel the Florida East Coast RR, to ride the “Champion” from NYC to West Palm Beach
in the Fall and the return trip in the Spring. I saw the same men usually every trip and couldn’t wait. They became this child’s friends. But the thing I really wanted to get as close to as I could were the great diesel engines as they rumbled and roared into the station. I wanted that power to penetrate every fiber of my being.

Rick September 28, 2010 at 1:23 pm

I like riding my bicycle sometimes. I also enjoy walking to the store on occasion. However, a city like Portland OR has recently spent $600 million on bike lanes. Let me repeat that… $600 million on bike lanes. Mayor Sam Adams – when he isn’t busy “mentoring” teenage boys, updating his Twitter stream, or watching his home go into foreclosure – wants to force the Max light rail on Vancouver, WA as part of the I-5 bridge expansion. And oh yeah, the bridge has to have “bike lanes” too. Otherwise, screw motorists. $600 million… on bike lanes!

And then city bosses and their naive popular supporters wonder why there is gang crime, high unemployment, embarrassing youth unemployment, homeless, horrible schools, awful graduation rates, and why companies don’t line up to do business in Portland.

james b. longacre September 29, 2010 at 1:08 am

Otherwise, screw motorists. $600 million… on bike lanes!

that seems like a very large figure. i am not sure if thats true. that must be an extensive bike lane development.

but i suppose bicyclists and motor vehicles to some extent have been screwed by share the road.

if a significant bike travel increases it may reduce costs that vehilces incur…parking, insurance and fuel.

Mr. Printing Press September 28, 2010 at 4:12 pm

Just build trains to nowhere. That’ll “put people to work” and stimulate the economy.

hobbies for men December 7, 2010 at 9:24 pm

There are numerous various pastime suggestions and actions that you could appreciate either on your own or as component of a group.
hobbytown

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