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Breakfast links: Not very ethical
Photo by arbyreed on Flickr.
An abrupt end: Harry Thomas, Jr. resigned from the DC Council after being formally charged with embezzling and filing false tax returns. He will plead guilty to the charges today. (Examiner) 
Kwame vs. press, part 1: Kwame Brown and his staff cut off a press conference when Mark Segraves asked about ethics, then apparently edited the online video to delete the segment. (Georgetown Dish)
Kwame vs. press, part 2: WTOP says Kwame Brown "got in the face" of Mark Plotkin and they "had to be separated" after an interview last night; Plotkin said Brown had been charged with crimes, but is actually just under investigation. WTOP wanted the video from Fox 5 but was rebuffed. (Twitter)
Neighbors want retail: At a public meeting, Calvary Women's Services seemed oblivious to community desires for actual retail in the storefronts of Anacostia's main street rather than a residential-only shelter. (City Paper)
Neighbors and Cafritz get closer: Cafritz has made some changes to its proposed Whole Foods in Riverdale Park. Adjoining towns still want more open space and street connections in and out of the complex. (Patch)
Fight for the transit benefit: The federal transit tax benefit could come back to $230 by March. Sen. Chuck Schumer announced he will fight to include the benefit with payroll tax cut legislation. (Streetsblog)
Fairfax school crumbling: Falls Church High School needs renovations, but it likely won't see them until 2024 at the soonest. Fairfax County argues it doesn't have the money in its budget to renovate the school sooner. (Post)
How to fix Amtrak: Amtrak is historically unprofitable, but the reasons are obscure. Five transportation pundits offer their ideas for fixing the system. But is profitability even the right question? Arlines and highways aren't profitable either. (Freakonomics, Slate)
And...: Home prices in Prince George's County drop 35%. (Examiner) ... A drunk driver was sentenced to 20 years for a fatal crash. (Washington Times) ... Retail near the Chinatown Arch will finally be filled, for the highest retail rent in DC. (Post)
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 | David Edmondson is a transportation and urban affairs enthusiast living in Mount Vernon Square. He blogs about Marin County, California, at The Greater Marin.  |
 | David Alpert is the Founder and Editor-in-Chief of Greater Greater Washington and Greater Greater Education. He worked as a Product Manager for Google for six years and has lived in the Boston, San Francisco, and New York metro areas in addition to Washington, DC. He loves the area which is, in many ways, greater than those others, and wants to see it become even greater. |
Comments
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AMtrak is a company. Highways, well, they are a system.
I suspect most toll highways in this country -- and worldwide -- make a profit.
Many passenger train systes around the world are profitable. Many are not.
The best way forward for Amtrak is killing long distance rail. I was reading about the Amtrak Lake Shore limited, which has something like 1000 daily passengers. Perhaps there is a way that can be contracted out. I"m sure for those 1000 passengers it is a useful service, not sure why Amtrak should be one running it.
Airlines are a better example. Strangely enough, the only profitable domestic airline (southwest) goes against the indsutry grain and doesn't go crazy economic theories on pricing every seat by demand. How many billions have been wasted on that pricing model. CF performance parking, variable HOT lanes, and metro fares.
K.I.S.S.
by charlie on Jan 6, 2012 10:24 am • link • report
Southwest does price seat by demand, it uses a much simpler fare coding system. For the record, Southwest was profitable for 2 of the past 5 years because of good fuel hedging. At market prices they had an operating loss.
by elmothehobo on Jan 6, 2012 10:43 am • link • report
It's pretty sad that Calvary (the great organization) didn't think their meeting with Anacostians deserved to move forward with a least a smidget of dignity.
by HogWash on Jan 6, 2012 10:43 am • link • report
I doubt the fuel hedges helped much since 2008 and the collapse of jet fuel prices. Before that, yes.
Also, I'd love to see a breakdown of international vs. domestic operation of US carriers. I'd guess the international is covering a lot of losses.
by charlie on Jan 6, 2012 10:46 am • link • report
by Fitz on Jan 6, 2012 10:58 am • link • report
by Crickey7 on Jan 6, 2012 11:05 am • link • report
I suspect you are right tolls road are profitable but this is becuase they can cherry pick the best routes. Amtrak could do that as well, but it would make the system a lot less useful. These tolls roads are profitable becuase people can take the roads and streets the government subsidizes to get to them. The Pennsylvania Turnpike works becuase after someone gets off, they can drive another 50 miles to wherever they are going. IF the train doesn't at least deliever you to the city you are going to it isn't useful. Thus it order for it to really work you need some unprofitable feeder routes.
Further I think we need to stop looking at transportation as a profit making exercise, but rather as a way to move people. Part of what should be looking at is not just the train and the people on, but the people still on the roads who suffer less congestion becuase there is less cars. WE also need to look at the environment and how there is less pollution due to these less cars.
by nathaniel on Jan 6, 2012 11:11 am • link • report
That may be true, but I doubt it. Anyway everyone knows trains run on coal. How do air carriers compare with Amtrak?!
by elmothemofo on Jan 6, 2012 11:14 am • link • report
by Terpitine on Jan 6, 2012 11:22 am • link • report
WTF That's not true! We import coal from China to fuel our domestically owned CSX trains and foreign owned Amtrak trains.
We're the number one importer of coal in the work for that reason.
by elmothemofo on Jan 6, 2012 11:24 am • link • report
by goldfish on Jan 6, 2012 11:25 am • link • report
Instead of capitalizing on the most profitable routes, this caused a precipitous drop in ridership on these "profitable" trunk lines, as few people were willing to travel considerable distances to a train station, and arguably didn't actually save the country any money at all.
by andrew on Jan 6, 2012 11:32 am • link • report
electricity comes from coal power plants
by Ronald on Jan 6, 2012 11:33 am • link • report
Ironically, much of what CSX hauls using those diesel trains is good old fashioned American coal. Not sure that's a great environmental statement though...
by Tim Krepp on Jan 6, 2012 11:38 am • link • report
On the NEC, Amtrak buys most of its electricity from commercial power companies, and operates two of their own hydroelectric generators in Pennsylvania. As far as the commercial power grid goes, most of the power is generated from domestically-mined coal.
The US exports more coal than it imports, and to my knowledge, does not trade meaningful amounts of coal with China, given the long shipping distances involved.
Coal-fired trains are a thing of the past. Maybe you're confusing the fact that CSX and NS happen to haul a lot of coal from mines to power stations?
by andrew on Jan 6, 2012 11:47 am • link • report
by Rupert on Jan 6, 2012 11:48 am • link • report
by Graham on Jan 6, 2012 11:49 am • link • report
CSX is owned by Arabs. They're most likely using trains to transport WMDs into America's heartland. I'd agree with GOP conservatives when they call heavy rail America's most unpatriotic industry.
by Phil Wyden on Jan 6, 2012 11:52 am • link • report
by Tina on Jan 6, 2012 12:01 pm • link • report
by Ronald on Jan 6, 2012 12:09 pm • link • report
Amtrak doesn't own much. The NE corridor yes -- and that turns a (small) profit. But the rest is just rights to operate on other people's railroad. That isn't at all like a highway system.
The Penn turnpike is a bad comparsion. I've noticed that a lot of the roads NEXT to the turnpike are state highways that local residents can use. I'd love to see a breakdown of revenue, but you have to think a huge part is just trucks, where cost incentives are different than passenger traffic.
by charlie on Jan 6, 2012 12:57 pm • link • report
1. Making the Northeast Corridor a true high-speed corridor. I think most agree that if you could achieve the speeds laid out in Amtrak's $120 billion plan, you could generate significant profit.
2. This one is a little more under the radar. For the ridiculous long-distance trains designed primarily to serve rural communities, like the Southwest Chief, Sunset Limited, etc., the schedules and service could be redone to try to attract tourists on segments of those lines. On the California Zephyr, the segments between Denver and Salt Lake City and Salt Lake City and Reno are really quite interesting visually. Yet the service schedule makes it difficult to enjoy those routes. There is a stop right by Rocky Mountain National Park in Granby, CO, but no bus connection to the park or rental car facility. If someone in Amtrak were thinking about tourists, they would do better.
by thesixteenwords on Jan 6, 2012 1:20 pm • link • report
When your train departs at 2AM and arrives at 6AM, it's not really all that attractive. This is particularly an issue on East Coast routes such as the Silver Service, and Palmetto, which are fantastic if they happen to fit within your timetable, and useless if they don't.
Realistically, the answer to making Amtrak profitable (or at least boosting ridership) would likely be more trains, rather than fewer.
You'd also want to remove any major bottlenecks and improve speeds along the way. Right now, due to some sort of insane political compromise, the Vermonter takes a 1+ hour detour, and requires trains to be equipped with two locomotives.
FRA standards don't help the state of passenger trains in the US either. Due to the extremely-stringent crashworthiness standards (that are based on weight more than anything else), we can't buy trains "off the shelf" from other countries, which raises costs. Furthermore, Amtrak has literally no options for purchasing FRA-compliant DMUs, which are very cost-effective on low-volume rural routes.
by andrew on Jan 6, 2012 1:45 pm • link • report
Typical liberal bail outs. The American people have spoken and they want cars. Expanding I-95 to 7 lanes through metropolitan areas would be a cost effective alternative to high speed trains.
Cars are the future.
by Phil Weiden on Jan 6, 2012 2:11 pm • link • report
Amtrak is a company owned entirely by the government. Highways are also owned entirely by the government. Amtrak Fares are user fees. Gasoline taxes are an approximation of a user's fee (though not perfect). Neither of the user fees cover the cost of operation.
by David C on Jan 6, 2012 2:18 pm • link • report
http://greatergreaterwashington.org/post/12208/funding-amtrak-is-more-cost-effective-than-subsidizing-roads/
Also, the US is a net exporter of coal and our reserves are enormous. As is often noted in the press, we are the "saudi arabia of coal".
China has been a net importer of coal since 2009.
by Falls Church on Jan 6, 2012 2:18 pm • link • report
"The best way forward for Amtrak is killing long distance rail. I was reading about the Amtrak Lake Shore limited, which has something like 1000 daily passengers. "
Two major problems with this:
1) As you pointed out, the long distance service is small beans. Running a train 3 times a week is obviously not that expensive...because youre only doing it 3 times a week! Compare to the 20-something departures a day on the regional.
2) Airlines make a load of their profit on business and first class sales. Amtrak makes big money on their sleeper fares. Cut sleepers, you cut profits.
" I"m sure for those 1000 passengers it is a useful service, not sure why Amtrak should be one running it."
Then who will? We connect famrville nebraska with cottonmill north dakota by road....why is that expense ok, but allowing people who cant drive tot ravel not ok?
by JJJJJ on Jan 6, 2012 2:18 pm • link • report
No, it isn't.
A business cares about profitability. Amtrak isn't really a business because its owned by the US Government - and the US government doesn't care about a profit. The government cares about benefits. The point is to get the maximum benefit for the money spent, and stop spending when a dollar spent gives less than a dollar of benefit.
The goal should be to hit the optimum net benefit. For an example of this, see this paper on WMATA and Figure 5 on page 19. It shows that if WMATA provided more service and lost more money it would provide more net benefit. So trying to reduce losses is actually counter to the larger goals of the government. The same might be true of Amtrak.
So Amtrak should be run with a goal of getting the optimum net benefit, and that point will almost surely not result in a profit. It probably shouldn't. In fact, we'd probably be better served in all of our goals if Amtrak spent and lost more money.
by David C on Jan 6, 2012 2:26 pm • link • report
Amtrak is a waste of money and can't compete with free-market solutions like the Interstates or the privately owned and profitable airline industry. America is too big for passenger rail to work and Amtrak shows it will always be an utter failure outside of a few overcrowded, high tax, "urban" parts of the country like the Mid-Atlantic.
by Reggie McPhee on Jan 6, 2012 2:28 pm • link • report
Not that it matters, but that's not true. The government owns less that a quarter of Amtrak stock. I say it doesn't matter because all of the governments shares are preferred stock, and all privately owned stock is non-voting common stock, and it's not traded anyway. Who are these private stockholders? Railroads, or successors to, railroads.
Every railroad that ran passenger trains when Amtrak was formed had the option to take Amtrak stock or a tax break. Penn Central, Burlington Northern, Canadian Pacific and Canadian National took the stock. The successor to Penn Central, American Financial Group, owns over half. And Warren Buffet (well, Berkshire Hathaway) owns a third or so, as owner of BNSF. The two Canadian lines own a much smaller percentage.
This situation is a legal mess, there is a lawsuit that has been going on for four years now, and the whole situation has to be resolved before anyone can even think of 'privatizing' Amtrak or the NEC. So maybe it matters after all.
by kinverson on Jan 6, 2012 3:53 pm • link • report
by kinverson on Jan 6, 2012 3:54 pm • link • report
by David C on Jan 6, 2012 4:04 pm • link • report
Right, that's why at first I said it doesn't matter. But as thought about it in the context of 'privatization', it occurred to me that it could be a legal quagmire.
by kinverson on Jan 6, 2012 4:25 pm • link • report
It doesn't show any such thing. The net benefit would increase only if capital costs are ignored. Capital costs are real costs. You can't ignore them.
And why should the goal be "optimum net benefit," anyway? The word "optimum" here is used to refer to an aggregate economic effect, ignoring the distribution of costs and benefits. Warren Buffett could probably generate a higher economic return on $100 than you could. Does that mean it would be right to take $100 of your money and give it Warren Buffett?
by Bertie on Jan 7, 2012 8:42 pm • link • report
Except that it does.
And why should the goal be "optimum net benefit," anyway?
Do you believe the goal should be sub-obtimum net benefit?
by David C on Jan 7, 2012 10:00 pm • link • report
No it doesn't. The authors explicitly say that their conclusion assumes that capital costs are ignored ("When ignoring capital costs...")
Do you believe the goal should be sub-obtimum net benefit?
I believe the goal should take into account the distribution of costs and benefits as well as the total amount of the net benefit. I believe the goal of simply maximizing net benefit regardless of who pays the costs and who gets the benefits is a bad goal.
by Bertie on Jan 7, 2012 10:17 pm • link • report
Oh, but it does.
I believe the goal should take into account the distribution of costs and benefits as well as the total amount of the net benefit. I believe the goal of simply maximizing net benefit regardless of who pays the costs and who gets the benefits is a bad goal.
So then yes, you believe the goal should be to achieve some level of sub-optimal benefit. We should aim lower than maximum benefit. Interesting position to take.
by David C on Jan 7, 2012 11:15 pm • link • report
No, it doesn't. The claim you're referring to explicitly excludes capital costs.
So then yes, you believe the goal should be to achieve some level of sub-optimal benefit.
No, I believe the optimal benefit is one that takes into account the distribution of costs and benefits as well as their magnitudes. The goal should be maximize optimal benefit defined in that way. The definition you're using ignores distribution.
by Bertie on Jan 8, 2012 1:16 am • link • report
Amtrak is constrained from making capital improvements necessary to improving service and making rail travel more attractive because of legislation limiting them to more or less pay-as-you-go capital spending. Whose responsible for keeping Amtrak from "running more like a successful business"? "Market oriented" Republicans in Congress. Amtrak could do more with popular corridors like SF-LA-SD if it could make these investments. In the case of California, the state may eventually make this happen, but Amtrak could have done it ages ago. The Lake Shore Limited (which I've used) varies in ridership over the course of a year, but could easily increase that if it could run faster trains and not be picking people up in say Cleveland in the middle of the night.
by Rich on Jan 8, 2012 8:54 am • link • report
So you agree that the optimal benefit should be the goal, you just disagree with the way net optimal benefit is measured. Again with you and the definition of terms. Good gravy.
So you think it should take "into account the distribution of costs and benefits as well as their magnitudes." How would that be quantified?
The claim you're referring to explicitly excludes capital costs.
Right. It is the net optimal benefit ignoring capital costs. But it is still the net optimal benefit. You're attempt to say it isn't is more of your arrogant belief that your definition is always the right one. Even when it is someone else's term in their analysis. Do you try to tell your friends that their kid Thomas is actually named Peter? What am I talking about, you..and friends. Crazy talk.
by David C on Jan 8, 2012 11:50 am • link • report
In dollars. Do you think net benefit should NOT take into account into account the distribution of costs and benefits, as well as their magnitudes? Do you think it doesn't matter who pays the costs and who gets the benefits?
It is the net optimal benefit ignoring capital costs. But it is still the net optimal benefit.
No it isn't the net optimal benefit. Calculation of the net optimal benefit has to include all costs, not just operating costs. Ignoring the capital costs is like trying to calculate the net optimal benefit of airline service without considering the cost of purchasing the planes.
by Bertie on Jan 8, 2012 6:11 pm • link • report
Let me more clear, what is the specific methodology for making this calculation? Has someone done it?
Calculation of the net optimal benefit has to include all costs, not just operating costs.
You're opinion is noted in the place where I record your opinion. Obviously the experts who authored that report disagree. I guess you'll just have to agree to disagree with them.
by David C on Jan 8, 2012 6:27 pm • link • report
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