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All Aboard the King Subsidy Train!

September 27, 2010

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.”)

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