Friday, April 15, 2005

Let Amtrak die

The AP reports that Amtrak is in more trouble:
WASHINGTON - The Acela Express, Amtrak's much-ballyhooed hope for high-speed train travel, was shut down indefinitely Friday because of brake problems, leaving thousands of travelers scrambling for other transportation.

The beleaguered rail service pressed slower trains into use between Washington, New York and Boston. It could not say how long the Acela trains would be disabled by newly discovered cracks in disc brakes.

Acela's average weekday ridership is about 9,000, and on Fridays it usually moves about 10,000 passengers along the Northeast corridor.

The cracked brakes come at a bad time for Amtrak. A Senate committee will debate next week whether to end the rail service's federal subsidy — as the Bush administration has recommended — and radically reshape train travel in the United States.
The federal government is pouring money into a business that just doesn't work. A century ago, would we have subsidized horse carriage manufacturers, or whip-makers, because they couldn't compete against the new automobiles?

Of course not. Nor should we do that today, so it's time to let Amtrak die since it clearly cannot stand on its own two feet. The quick story is that the price of its tickets aren't enough to cover its operating costs, let alone make a profit, and Amtrak operates so inefficiently with poor management, so Amtrak needs government subsidies to make up the gap. That's morally wrong, because everyone who doesn't ride Amtrak (like me) has to pay for part of Amtrak passengers' tickets. Why should any people have to pay for a service they don't use? Amtrak is not a public good, because it is a rivalrous service: if you ride on it, that's one less seat available to others.

If Amtrak had to run purely on its own revenues, its tickets would be considerably more expensive; the current subsidy of $1.2 billion would have to be distributed among its passengers. Many of the passengers, I'm sure, would stop riding Amtrak because it would be more expensive than airlines; or, airline ticket prices wouldn't be that much more expensive, making them more worth the extra speed. So, it's time to let the Amtrak dinosaur become extinct. (I won't get too much into this, but the federal bailout of airlines must also stop. Let the inefficient airlines die out too, because they also can't compete.)

But we can always count on big government to stand in the way of real progress, to subsidize yesterday's technology that no longer works. There are a lot of idiot politicians who want to do the equivalent of saving the horse carriage maker:
"When Amtrak is terribly underfunded and has to operate on a shoestring budget, these kinds of things will keep happening, which will really disrupt people's lives and our economy," said Sen. Charles Schumer, D-N.Y.
Why doesn't my aunt start running her wine store as "underfunded"? She can charge less than cost, making her artificially more competitive, and the federal government can give her a subsidy so she'll still make a profit. That's unfair, isn't it? She would be operating only because the government is helping her, when, after all, she should charge enough to stay in business. And if she does but her prices are higher than her competitors, well, that's not anyone's problem but her own? Why should we support someone with a poor business model, right?

So why is Amtrak so different? The simple answer: it's not.

And why does Schumer act like Amtrak is the only option for both its employees and passengers? If Amtrak employees are laid off, certainly they can find work elsewhere. Amtrak passengers can start flying. Schumer, though, is a schmuck who wants to save Amtrak for Amtrak's sake. He thinks it's fine that people who'll never ride Amtrak in their lives will pay for others -- like him -- to ride Amtrak.

Schumer, my senior senator, is the ultimate liberal. He's literally liberal, as in generous -- generous with other people's money. He regularly rides Amtrak between New York and Washington, but would he be willing to pay higher ticket prices to keep it solvent? I doubt it.

It's the whole liberal idea that if you take a penny from everyone, you can give it to a special interest group, and taxpayers won't notice it too much. If taxpayers grumble, it's not worth their time to fight about the penny. Meanwhile, big government makes sure they can never fight over whole dollars. If you complain about paying taxes, you're accused of not wanting to pay your "fair share." Or you're accused of not wanting to "help the poor" and others who benefit from tax revenues.

Today, Tax Day, remember how much of your taxes go to pay for goods and services that other people use. I know Cato reported in 2001 that federal subsidies to private businesses were already up to $87 billion per year. God only knows what it is now. Sadly, as Dr. Richard Ebeling of FEE once said to me, "This government makes criminals of us all." Even when trying to engage in nothing but honest commerce, we inevitably take advantage of subsidies paid for by others.

To paraphrase Walter Williams, how about completely eliminating subsidies to everyone: you pay full price for what you buy and consume, and I'll pay full price for my own purchases and consumption. Isn't that the fair thing to do? If not, explain why should I have to pay for any part of your life, and you for any part of mine?

5 Comments:

Blogger John A said...

Well... Yes and no. Depends. And so on...
There are still places that are hundreds of miles from anyplace [else] for which Amtrak is a lifeline.
And commuting, say from Providence to Boston, keeps a lot of cars out of the two cities.
But high-speed rail? Using a French design even the French do not? From Maine to Florida with perhaps three stops, maybe, but it can't even get up to full speed from Hartford to Providence.

Sunday, April 17, 2005 4:54:00 PM  
Blogger Perry Eidelbus said...

Amtrak's ticket prices are artificially cheap, however. It's unfair to everyone else who doesn't ride Amtrak. Furthermore we need to remember what Bastiat said. At best, it's only a transfer, not an increase. It might enables economic growth in one part of the country, but at the expense of everywhere else.

Eliminating Amtrak's federal subsidy would certainly raise the ticket prices, but it would also force Amtrak to be more efficient. Once a company finds government allies that will continually get it the requested subsidies, the company can grow fat and lazy.

Considering the cost of gasoline and parking on the routes you mentioned, Amtrak regulars would probably still commute by train. This assumes they would still bother to commute to those jobs. They might start working closer to home, because the higher ticket prices aren't worth it. Meanwhile, there's no economic loss. Everyone else has that additional income to spend or save. And if we do the right thing and eliminate all other subsidies, then Amtrak riders might pay higher fees, but that will be offset because they won't have to pay subsidies for other people.

The rationale is that Amtrak's subsidies are spread out among many people, so we don't notice the few dollars that each of us pays to keep Amtrak solvent. But all the subsidies together add up to a lot.

Sunday, April 17, 2005 6:43:00 PM  
Blogger Quincy said...

Part of me wonders how the books would balance out if all business subsidies (including perverse subsidies like agricultural price supports) and all business taxes were eliminated simultaneously.

In addition to the basic equation of one less cost to cover, there would be the inevitable drop in prices. And since all businesses patronize other businesses in some fashion, there would most like be additional savings.
Many of those savings, of course, would be passed on to consumers, making life better for them as well.

Personally, I can't imagine a greater boon to the nation's so-called working poor than this. Of course, the advocates for the poor will never support it because it helps business.

Saturday, April 23, 2005 5:26:00 PM  
Blogger Chase said...

The quality of passenger services at the present time is rather important. The company should necessarily operate across the whole country to be able to stay on the market. At www.pissedconsumer.com I found out that Amtrak is the National Railroad Passenger Corporation. The company operates passenger service on routes across the continental United States of America connecting hundreds of destinations in 48 states; routes to Vancouver, Toronto and Montreal. In addition to the passenger service, Amtrak expanded into freight transportation market and now operates a captive bus service. I think the company is worth trusting.

Wednesday, July 09, 2008 3:40:00 PM  
Blogger Perry Eidelbus said...

So what are you saying, Chase? That the federal government should waste more billions of dollars on Amtrak?

"I think the company is worth trusting." Trusting how? Certainly not with the ability to make a profit.

I don't use Amtrak. I either drive or fly. Why should my tax dollars go to pay for a business that I don't use?

Wednesday, July 09, 2008 6:59:00 PM  

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