Much has been said about the subsidy Amtrak gets. A bit was also mentioned about the subsidies the airlines get.
Another industry recieving a subsidy is the trucking industry. The highways are paid for by the public yet the trucking industry uses them at very little cost. When a highway needs repair I have never seen a trucking company paying for or making the repair. When the winter snows need plowed to clear the highway I never have seen a trucking company plow doing it. All the costs are paid for by the public.
The illegal and over weight trucks are the cause of most of the damage to the highways. Maybe the trucking industry needs to pay 75% of the cost to build and maintain the highways instead of the public.
Maglev Water traffic is an important concern. In touring Scotland, we took about as many ferry trips as train trips. Washington State Ferries carries as many passengers per year as Amtrak (about 25 million). And the condition of the system is about as dire as Amtrak. See Seattle Times June 26: "Waiting for a ferry at Orcas Island and pondering our incompetence" http://seattletimes.nwsource.com/html/ronjudd/2009385642_trailmix26.html First, I must defend the Amtrak and ferry workers. The Times article says the worker at the terminal here looked at Mr. Judd as if he were from outer space. Well, I am sure she knew who he was and that whatever she said would end up in the Seattle Times. Mr. Judd, whose photo accompanies all his by-lines, is a resident and journalist, and certainly should not need to ask what is wrong with the ferry system. Now, I know you all actually think I'm from outer space, going off about cold fusion and orbiting cabooses... But once public infrastructure is gone, things are hard to replace. People in Washington State seem to believe that our ferries are vital and they will be saved by the government. People in Washington D. C. seem to believe health care is vital and can be saved by the government. That is certainly not how we are treating Amtrak.
Water traffic is an important concern. In touring Scotland, we took about as many ferry trips as train trips.
Washington State Ferries carries as many passengers per year as Amtrak (about 25 million). And the condition of the system is about as dire as Amtrak. See Seattle Times June 26:
http://seattletimes.nwsource.com/html/ronjudd/2009385642_trailmix26.html
First, I must defend the Amtrak and ferry workers. The Times article says the worker at the terminal here looked at Mr. Judd as if he were from outer space. Well, I am sure she knew who he was and that whatever she said would end up in the Seattle Times. Mr. Judd, whose photo accompanies all his by-lines, is a resident and journalist, and certainly should not need to ask what is wrong with the ferry system.
Now, I know you all actually think I'm from outer space, going off about cold fusion and orbiting cabooses... But once public infrastructure is gone, things are hard to replace. People in Washington State seem to believe that our ferries are vital and they will be saved by the government. People in Washington D. C. seem to believe health care is vital and can be saved by the government. That is certainly not how we are treating Amtrak.
Compare that with BC Ferries, which is proud to serve decent food on modern ships (according to members of the local Ferry Advisory Council). And Via Rail, which is supported by CN dispatching (see this August Trains, p. 38), in contrast to Amtrak.
"Make no little plans; they have no magic to stir men's blood." Daniel Burnham
Paul M.:
I agree with much of what you say in your thoughtful posting. Buses of various types seem fairly plentiful in some parts of Europe. The postal buses (I recall those yellow buses with the hunting horn on the side also), I think are a relic. But some private concerns (not sure how much subsidy they get) have gotten pretty big (the Eurolines consortium, Deutsche-Touring, National Express, etc.) with nice, roomy, almost luxurious coaches, often cheaper prices, though usually not as fast as rail. The discount airline have also made longer distance travel within Europe and even within some countries pretty fast and cheap. In May I flew on good ol' British Air, Frankfurt to London for $13.00 + taxes, total $74 - much cheaper than the Eurostar under the channel. Clearly they have found a mix of all three depending on factors like distance and city vs. more rural areas to work. Europeans drive shorter distances (each country is pretty small) than we do and they use transit much more because it is usually quicker and cheaper than auto commuting, parking being terrible. London has a punitive charge for driving into the city on weekdays. In Germany, at least, but I think this is true in France as well, around 1/2 or more of autos are Diesel. Germans drive fast, but mostly on Autobahns and even there traffic (and some speed zones) limit the formerly unlimited speed. Nothing like seeing a Benz or BMW flashing its lights at you from behind in your mirror and then whizzing by at 120+ mph.
C&NW, CA&E, MILW, CGW and IC fan
I have among my bookmarks the Web site http://ec.europa.eu/dgs/energy_transport/figures/pocketbook/2006_en.htm
which has a document (click on Statistical Pocketbook 2006 Transport)
http://ec.europa.eu/dgs/energy_transport/figures/pocketbook/doc/2006/2006_transport_en.pdf
that has a modal market share chart on p 30. Yes, what I have reported about the share for water borne passenger transport is way to high, I may have been thinking of another site. On the other hand, the charts show that air has had a comparable market share to rail for a very long time although air has been growing.
I suppose that Europe has the kind of "balanced" transportation system the advocacy community here has been asking for. The chart on p 30 has a different scale for auto passenger miles because in Europe as here, auto is orders of magnitude bigger than any common carrier mode.
This "balance" is that if you want a common carrier alternative to driving, instead of pretty much having one as in the US, the airlines, with buses a distant second and Amtrak a far distant third choice, in Europe you have three common carrier choices: buses, airplanes second but growing, and rail, all with pretty much an even split. Based on what I had seen in the Vision Report appendices, providing the rail choice to air travel is expensive in terms of public funding, with subsidy rates per passenger mile comparable to our much smaller Amtrak.
The other part of European "balance" is the strong market share of buses. My guess is that intercity bus is subsidized in a way that buses in the US are not, in order to get that much patronage. Many European countries have Postal Buses -- you see this big hunting horn emblem on the side of intercity buses, which is the emblem on mail boxes, carried over from the day when letter carriers rode horses. So just as the Post Office is regarded as one of these necessary services to be run at a loss, intercity buses are part of the post office.
There is a passenger train advocacy community which kinda, sorta supports the idea of public transportation in all forms in the US, but I don't see much passion on this Web site for Federal subsidy of intercity passenger buses. The advocacy community draws heavily on rail fans, who frankly, are not thrilled about the prospect of taking long journeys on buses. I don't think Europe has anything at all like the more-than-one-overnight continent-spanning Empire Builder, although if you add in Asiatic Russia, there is the Trans Siberian Express.
In terms of public policy choices, Europeans have long felt themselves vulnerable in terms of lack of domestic oil and in some cases coal supplies, and there is a long Mercantilist tradition predating Adam Smith among European countries about avoiding imports. Europe perhaps avoids importing oil by having the high gasoline tax and the large subsidized rail network, but the policy may be carried well beyond the economic break-even point. Similarly in Japan, they try to grow their own rice on a patchwork of small plots, where it would be much cheaper to import rice from Arkansas, USA.
France is both oil-poor and coal-poor, and back in the day they had de Glehn four-cylinder compounds and later Andre Chapelon building those nifty higher thermal efficiency steamers. The US back in the day had abundant coal and oil (until the 1970's) and built such affronts to CO2 emission such as the Big Boy and other high-power, lower thermal efficiency, let's burn tons of coal to make tractive effort machines. Today France is 80 percent nuclear electric power whereas in the US we dither about the moral implications of nuclear power, mire it in environmental regulation, and build natural gas fired plants. One thing you have to admire, perhaps, about France, is that it is a much more technocractic meritocratic society driven by their elite schools, and when they, the leadership class trained in those schools, decides to get something done, they go ahead and do it. Many in the advocacy community would like to see this "get it done" attitude on these shores with trains and admire the French for "not wasting money as we do on the military", but the French are also not deterred by environmental protesters in rubber boats and are not shy about blowing one up "to send a message."
If Europe has, say, a 10 percent market share on trains, 10 percent is mere window dressing if you are serious of cutting back on oil imports or saving the environment from Global Warming. They get much more bang-for-the-buck from their high gasoline taxes. Their cars are smaller, but they also drive much faster, and I don't see they use much less auto fuel per passenger mile, but it seems they have half the passenger miles per capita than the US. The main effect of their policies is that they simply get around less, with implications for here if the worry is that people will not be able to get around here in the US.
I don't see European levels of trains here because I don't see willingness for European levels of expenditure on something with marginal payback in terms of the environmental effects, imported oil, and Global Warming. I think we need to look hard at the costs of intercity rail instead of simply throwing money at it. Yes, I heard, knowing the cost of everything and the value of nothing, but when the value is outside the market economy of what people are willing to pay, the cost goes ever upward.
If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
Your figures sound similar to the ones I got for Europe 2003, except air seems to have grown a lot in just a couple of years. I am curious then what you were previously referring to in the 25/25/25/25% split? I doubt boats would account for much passenger traffic. Even on the Rhine, Danube, Elbe or Mosel, where there are extensive tourist river lines, the load seems much less than on even only the parallel rail lines, let alone the other lines.
Correction--I see that Minneapolis is on the HSR map. Let's say that Denver is a city that might want some more service, like to Cheyenne / Portland or to Las Vegas / Los Angeles??
Those percentages pretty much reflect my family's travel patterns. For our wedding, my aunt flew from Florida to Eastsound--and stayed one night, because my cousin was getting married two days later back in Florida. The hotel where I worked here on Orcas Island catered many weddings; guests from the east coast or midwest were comon, and they almost always traveled by air.
In three and a half years working at the hotel here, I met only a few people who traveled here by train, or indeed had ever been on Amtrak. There was a constant stream of seasonal and short-term employees in and out of there, and they were about the only people I know who would travel by long distances bus. However, there is an airport shuttle bus between the San Juan Islands Ferry and SeaTac that was frequently used by those traveling without cars.
So, again, I know how the numbers add up. I am familiar with Amtrak, and know how the costs don't add up. But Amtrak is necessary, because we keep finding that segments outside the corridor system need expansion of service, and so the system must be preserved. For example, Des Moines seems to have realized that they are not in a "corridor," (see other thread) and highways are getting clogged. Orbitz shows fares of $1,026 for non-stop Des Moines to Chicago; there is a low fare of $224 but it's to Madison, WI...
We will soon see that one train a day to cities like Minneapolis Denver and Des Moines is not sufficient.
Figures are from http://www.irfnet.eu/media/press_release/statistics/erfeuropean_road_statistics_2008_booklet_150x210mm_v08_press_passenger_transport.pdf
under http://www.irfnet.eu/en/2008-road-statistics/
In terms of the general notion of a transportation crisis and rights to mobility and lifeline transportation services talked about on this thread, the societies with much heavier rail usage have much lower per capita passenger miles. In the US, we travel more than anyone. Does this mean we get more done? Have more suburban sprawl? Have a more spread out country? Some combination of factors?
But the numbers show that 1) other societies rely on cars as their major mode, 2) Europe has trains, but it is the minority common-carrier mode to air and buses, 3) US has common carrier transportation, but it is mainly airlines.
I had seen numbers that water borne passenger travel is a significant market in Europe, and I can come up with passenger boardings but cannot find the passenger miles.
"What's misleading or silly about anything I have said? Europe has a 25%/25%/25%/25% split between air, rail, bus, and boats. Their government support of passenger trains is about at the level of our highway program, with of course, orders of magnitude fewer passenger miles."
I wonder about the accuracy of the split you cite. That sounds awfully high for boats. What's the split here?
According to the European Commission for 2003 the split on market shares of passenger transport was rail and rail-based transit 6.9%, buses 8.6%, air 1.6% and autos 78.2%. No figures given for boats and ships.
The Feds' estimate of vehicle miles in the US is 933 Bil. On funding the 2004 total national US spending on highways was $147.5 Bil., $33 Bil from the Feds. Also in 2004, total US spending on "transit" was $39.5 Bil., only $7 Bil. was from the Feds, $11 Bil. system generated.
schlimm BTW, the FAA alone typically has a budget of $14-16.7 Bil., much of it covered by ticket tax. Airport improvements have averaged $13 Bil./yr., funded primarily by capital improvement bonds. Though only some of these nearly $30 Bil. in costs come out of the airlines pockets, they still are having trouble even breaking even. So clearly it costs a lot of subsidy to keep our essential air transport system operating. I'm only saying some larger subsidy to have a decent up-to ~1000 mile passenger rail net is also needed. We surely don't need more Superliner sleepers.
BTW, the FAA alone typically has a budget of $14-16.7 Bil., much of it covered by ticket tax. Airport improvements have averaged $13 Bil./yr., funded primarily by capital improvement bonds. Though only some of these nearly $30 Bil. in costs come out of the airlines pockets, they still are having trouble even breaking even. So clearly it costs a lot of subsidy to keep our essential air transport system operating. I'm only saying some larger subsidy to have a decent up-to ~1000 mile passenger rail net is also needed. We surely don't need more Superliner sleepers.
In FY08 the FAA required a General Fund transfer of approximately $2.7 billion to cover the difference between its budgeted costs and the receipts generated by ticket taxes and other revenues. This gap (19 per cent) reflects the numbers for previous years.
Approximately 26 per cent of take-offs and landings controlled by the FAA involved the airlines, whilst 35 per cent of center traffic was attributable to airline traffic. Contrary to popular belief, the airlines do not make up the majority of controlled air traffic movements in the U.S. The biggest user is general aviation in all of its forms.
The controlled movements are a pretty good indication of the percentage of all air facilities, i.e. airways, airports, buildings, etc. used by commercial carriers. Of course, in some locations, e.g. LaGuardia, Kennedy, DFW, a higher percentage of the traffic is commercial air, but in many other locations, e.g. Austin, Dallas Love Field, El Paso, the percentage of traffic attributable to commercial air carriers is lower than the national average.
On a prorated basis, the amount of the federal transfer attributable to commercial airline operations was in the neighborhood of $826 million. In addition, the Essential Air Services Program required a General Fund transfer of approximately $141 million, whilst the TSA required a transfer of approximately $1.6 billion to close the gap between the security fees paid by airline passengers and the cost of providing airport screening. All up the general fund transferred approximately $2.6 billion for FAA activities used by the commercial airlines that were not covered by fees and taxes. This amounted to an average federal subsidy per airline traveler of $3.92 or .45 cents per passenger mile. For comparative purpose, Amtrak's got an average system subsidy of $48.50 per passenger and 22.61 cents per passenger mile.
The cost of constructing airports in the United States has been covered for the most part through the issuance of tax free, municipal bonds. They are usually issued by an airport authority. The bonds are serviced from landing fees, vendor revenues, fees and investments.
The ability to finance airport construction with tax free bonds means that the costs are lower than they would have been had the airport authorities been required to issue fully taxable bonds. These lower costs can be passed on to the airlines, as well as all users, in the form of lower landing fees. However, the spread between fully taxable bonds and tax free bonds, depending on when they were issued, is not as significant as might be imagined. Moreover, what a commercial operator saves in lower landing fees, as well as other fees, would be made up in part by the higher taxes paid on higher than otherwise taxable income.
schlimm Entrenched positions. NOBODY I know of would support a rail net at the tune of $150 Bil/year. I never suggested that Amtrak (or some other rail net) could or should replace the air transport net. That is a rahter misleading and silly reductio ad absurdum (straw man) argument. We clearly need road, rail and air, but in a more sensible balance than currently exists. And the point of my and others' pointing out the financial difficulties in the air business is to show that even as lousy as Amtrak is, transportation nets really don't work very well as "free markets." I actually believe it would be better to phase out Amtrak and phase in other methods of getting up-to-date rail passenger surface transport, probably largely parallel to the major freight lines.
Entrenched positions. NOBODY I know of would support a rail net at the tune of $150 Bil/year. I never suggested that Amtrak (or some other rail net) could or should replace the air transport net. That is a rahter misleading and silly reductio ad absurdum (straw man) argument. We clearly need road, rail and air, but in a more sensible balance than currently exists. And the point of my and others' pointing out the financial difficulties in the air business is to show that even as lousy as Amtrak is, transportation nets really don't work very well as "free markets." I actually believe it would be better to phase out Amtrak and phase in other methods of getting up-to-date rail passenger surface transport, probably largely parallel to the major freight lines.
Strawman argument? Nobody you know advocating such a position? I do in fact know people who advocate just that -- European level of gas taxation with all of the proceeds earmarked for passenger rail of some form or another.
What is the sensible balance? Is the Vision Report proposal with a 90%/10% split between air and rail, with air and rail getting comparable levels of Federal funding a sensible balance? Does a a 90%/10% split between air and rail do anything meaningful of alleviating the problems associated with air?
What is misleading or silly about anything I have said? Europe has a 25%/25%/25%/25% split between air, rail, bus, and boats. Their government support of passenger trains is about at the level of our highway program, with of course, orders of magnitude fewer passenger miles.
schlimmMr. SP does make an important point. Whether or not we can tolerate airline service (largely no choice) that there is, of course, the enormous subsidy in physical plant (airports, ATC) and operating expenses (airports, ATC workers, etc.)that the airlines are getting . Even so, most are laying off workers like crazy (check Dallas for American layoffs) and service declines while losses mount. I suppose the accountant types are fine with disposable contract workers (no loyalty to employees, let them go if costs mount just like closing a door). Or if worse comes to worse, let the legacy carriers (remember Pan Am, TWA, Eastern, etc.?) go out of business and replace them with more "low cost, start up" airlines. Great! Look how short most of their lifespans are. Even Southwest (hardly a start up - 37 years old) is having some troubles (3 straight quarterly losses). IMHO, that's no way to run an airline transport net any more than Amtrak is the way to run passenger service.
If the above quote represents the position of the mainstream passenger train advocacy community, and I am by no means singling out Mr. Schlimm as that argument is pretty much mainstream among the bricks-and-morter community with whom I have contact, the days of Amtrak are pretty much over and done with.
I will grant you all of the problems with the airlines -- intrusive security checks, poor service, airline workers losing their jobs. Lets say that Amtrak and passenger travel have minimal security checks (for now), great service (?), and Amtrak workers have secure jobs. Sam1 might chime in that no one is entitled to a secure job, or at least not at the cost of government subsidy, but for the sake of discussion, let's assume all the good things of Amtrak are worth some level of subsidy.
Airlines are to Amtrak in passenger miles in the ratio of 100:1. Let's leave aside whether all the money spent on airports and air traffic control, etc, etc constitutes a direct subsidy or whether the ticket tax and the av-gas tax constitute taxes or user fees and so on. Let's just say that we are going to ramp up the Amtrak subsidy of about 1.5 billion/year to replace what the airlines are doing.
We are talking about subsidizing Amtrak at the rate of 150 billion per year. That's right, about 3-4 times the amount of the current Federal Highway budget. There are people in the advocacy community who would have no problem with spending 150 billion/year on rail if that is what it would take, and an added dollar a gallon in gas tax would raise that amount of money, if it could be spent only on passenger rail, and I know some people in the bricks-and-morter community who think that would be an absolutely great idea.
But 150 billion/year on trains is not gonna happen. Not . . . gonna.
The notion behind the Vision report is that someone had the bright idea that 150 billion/year is completely unrealistic, but about 10 billion/year could somehow be snuck into the budget. That 10 billion/year would pay for infrastructure improvements to bring Amtrak from 1 percent of airline travel to 10 percent of airline travel. And that money didn't account for any subsidy. Everyone in the advocacy community was hootin' and hollerin' that someone was finally listening to us and we are going to get all kinds of trains. I don't think that 10 billion/year for the next 40 years is going to happen either.
The community is going to have to get over picking at the airline industry or the highway and auto situation and get our own house in order before anything is going to get off dead center with trains. The 8 billion we are getting out of ARRA needs to be spent wisely, and the first person to suggest any of it to be spent on new Superliner sleeprs will be further evidence of what I am warning about.
TRAINS ONLINE
PARIS - France's state-owned railway SNCF would be interested in operating a high-speed rail network in the United States, the French newspaper Les Echos reported Thursday, according to Reuters.In France's experience, high-speed rail systems are most efficient when they link large cities 600 to 900 miles apart, the newspaper quoted SNCF International President Jean-Pierre Loubinoux as saying.Such conditions exist on the U.S. East coast, in California, and in Texas and Florida. "We could have more than a track, we could have a network," Loubinoux said. "If there is the possibility (of operating this network), we would definitely study it with great interest."
I guess the SNCF think they could do it. Go for it!!
Airline tickets are greatly underpriced and don't cover the cost of the service. All the gimmicks like "Free Flyer Miles" need to be done away with too. Every trip needs to be paid for and the price of a ticket must cover ALL the costs.
Mr. SP How about those of us who won't fly. There is no way I will give any of the lousy and unsafe airlines any of my money. Service is very poor to say the least. I don't care to be strip searched and my suitcase dumped out on the floor. If I have a ticket for a certain date and time I expect to go on that plane not another when the airline gets around to it. As for subsidies all airports are owned and operated by a taxing district of some kind. Portland Oregon Airport is owned by the Port of Portland which collects taxes from the residents of Portland for operating the airport. The air traffic control system is tax supported and is operated by the FAA that gets it's money from the Federal income tax. IMHO the airlines are very poorly operated and should be shut down tomorrow. The railroads get no federal money and pay taxes. When the track needs repair the railroad companies pay for it. When a runway at a airport needs repair the taxpayers pay for it. The airlines should own and operate the airports at the airlines expense. I'm not afraid to fly I just don't care for the hassle and lousy service.
How about those of us who won't fly. There is no way I will give any of the lousy and unsafe airlines any of my money. Service is very poor to say the least. I don't care to be strip searched and my suitcase dumped out on the floor. If I have a ticket for a certain date and time I expect to go on that plane not another when the airline gets around to it.
As for subsidies all airports are owned and operated by a taxing district of some kind. Portland Oregon Airport is owned by the Port of Portland which collects taxes from the residents of Portland for operating the airport. The air traffic control system is tax supported and is operated by the FAA that gets it's money from the Federal income tax. IMHO the airlines are very poorly operated and should be shut down tomorrow.
The railroads get no federal money and pay taxes. When the track needs repair the railroad companies pay for it. When a runway at a airport needs repair the taxpayers pay for it. The airlines should own and operate the airports at the airlines expense.
I'm not afraid to fly I just don't care for the hassle and lousy service.
Unfortunately for you, that puts you in a small and shrinking minority. The security hassle is not so much the fault of the airlines as the fact that the citizenry of the United States expects perfect security and is apparently willing to put up with a lot of indignities to assume that they're getting it. As far as service is concerned, I find it adequate.
The previous photo, and that below, are from the 100th Anniversary of Rosario celebration on June 21, 2009. I am not sure what railroad was preferred by Robert Moran for travel East from Seattle, but he understood how industry must be of service to our nation, and vice-versa. The plaque below refers to his yacht SanWan, which he built at Rosario; it is on the fireplace of Moran's final cottage and is rarely seen. Rosario is open daily to the public.
By maui_67photos, shot with Canon EOS DIGITAL REBEL XT at 2009-06-26
You want to see traffic jams, try Beijing, Shanghai or almost any other Chinese city. Lots of folks have cars now and all in the last 15 years. But they are building or have completed several high speed lines where none existed plus much subway construction. It is really something to hear all this chest-thumping about how everything here is so great and we can't or shouldn't do anything to change that when in many areas of infrastructure, we are beginning to look like some underdeveloped country in the 3rd world. The USA has many things to feel proud of. But that doesn't mean we need to retreat to a defensive jingoistic narcissism where we are unable to "borrow" foreign concepts. "Welcome to Lake Wobegone, where everything is above average!!"
oltmannd schlimmWhy is China, a large country not like Europe or Japan in distances, but more like the USA, building an advanced network all over the land at a considerable infrastructure cost? I'll hazard a guess or two. They have the 3X the populaton of the US. They don't have automobile - based suburban sprawl. So, China looks more like Europe in terms of populaton density and concentration. Trains make more sense than highways because the population doesn't already own automobiles to go the first and last miles. schlimm For example, how successful in the end has deregulation of the airlines been? Bad for the legacy carriers. Good for consumers. Everybody flies now, not just businessmen and upper middle class vacationers. The cost to start up an airline is so ridiculously low and start ups aren't budened with large pension costs. So startups can eat the legacy carrier's lunch - at least until they are no longer a start-up and some new start-up comes along and eats their lunch. Deregulation plus not having to own any of the equipment or infrastructure makes this so. Everything is pay as you go. The lousy service comes from how the patrons value the service. More room and better service reliability can be had at a cost (more planes, better staffing, more spacious seating, even an airline going and building their own terminal). If people were willing to pay the extra cost for this, we'd have it. But people who fly value trip time and cost most. Trip time doesn't (and can't) vary much airline to airline, so the big variable is cost. I'd say the market is working pretty well for consumers. The market space set up by the government by what services they provide and the mechanism they provide for paying for them plus the constraints of labor laws, etc. causes the working business model to be one of continued cycles of start-ups. There really are no level playing fields anywhere, nor any such thing as a "free market". There are only spaces bounded by and conformed to regulation, law and custom within which "free market forces" act. They can be small, large, have hard or soft edges, be tilted, irregularly shaped, lumpy and can change in the middle of the game. But, they are never dead-flat-level and unbounded. The biggest trouble comes when playing field is so badly contructed that the market forces cause badly skewed results. A contract operator of a transit agency would be an example. He only has control of the cost side of the equation. Revenues are fixed. The only remedy is to layer on a whole bunch of incentives based on performance measures. No free market forces here - just a very strictly defined set of targeted forces trying to emulate a free market. The construction, maintenance and subsequent negotiations over the performance measures add a layer of "no value added" work to the whole process. (I better watch my step here. This is what I do for a living!) This guy will do the bare minimum to fulfill his contract and cherry pick the performance payments he thinks he can get. He'll also try to "manage the measures" and question the data since this is usually easier than really doing something. Another example is Amtrak. The forces that act on them cause them to concentrate on getting their subsidy each year. Cutting cost is a zero sum game - it just means less subsidy. So is improving revenue. Customer satisfaction is only required to keep the noise level of complaints to congress down.
schlimmWhy is China, a large country not like Europe or Japan in distances, but more like the USA, building an advanced network all over the land at a considerable infrastructure cost?
I'll hazard a guess or two. They have the 3X the populaton of the US. They don't have automobile - based suburban sprawl. So, China looks more like Europe in terms of populaton density and concentration. Trains make more sense than highways because the population doesn't already own automobiles to go the first and last miles.
schlimm For example, how successful in the end has deregulation of the airlines been?
Bad for the legacy carriers. Good for consumers. Everybody flies now, not just businessmen and upper middle class vacationers. The cost to start up an airline is so ridiculously low and start ups aren't budened with large pension costs. So startups can eat the legacy carrier's lunch - at least until they are no longer a start-up and some new start-up comes along and eats their lunch. Deregulation plus not having to own any of the equipment or infrastructure makes this so. Everything is pay as you go.
The lousy service comes from how the patrons value the service. More room and better service reliability can be had at a cost (more planes, better staffing, more spacious seating, even an airline going and building their own terminal). If people were willing to pay the extra cost for this, we'd have it. But people who fly value trip time and cost most. Trip time doesn't (and can't) vary much airline to airline, so the big variable is cost.
I'd say the market is working pretty well for consumers. The market space set up by the government by what services they provide and the mechanism they provide for paying for them plus the constraints of labor laws, etc. causes the working business model to be one of continued cycles of start-ups.
There really are no level playing fields anywhere, nor any such thing as a "free market". There are only spaces bounded by and conformed to regulation, law and custom within which "free market forces" act. They can be small, large, have hard or soft edges, be tilted, irregularly shaped, lumpy and can change in the middle of the game. But, they are never dead-flat-level and unbounded.
The biggest trouble comes when playing field is so badly contructed that the market forces cause badly skewed results.
A contract operator of a transit agency would be an example. He only has control of the cost side of the equation. Revenues are fixed. The only remedy is to layer on a whole bunch of incentives based on performance measures. No free market forces here - just a very strictly defined set of targeted forces trying to emulate a free market. The construction, maintenance and subsequent negotiations over the performance measures add a layer of "no value added" work to the whole process. (I better watch my step here. This is what I do for a living!) This guy will do the bare minimum to fulfill his contract and cherry pick the performance payments he thinks he can get. He'll also try to "manage the measures" and question the data since this is usually easier than really doing something.
Another example is Amtrak. The forces that act on them cause them to concentrate on getting their subsidy each year. Cutting cost is a zero sum game - it just means less subsidy. So is improving revenue. Customer satisfaction is only required to keep the noise level of complaints to congress down.
Excellent summation! Thank you.
I'd like to add that reports show Chinese auto sales are strong.
http://news.xinhuanet.com/english/2009-05/08/content_11338765.htm
http://www.chinacartimes.com/2008/04/08/how-many-drivers-in-china/
Sam1This leaves approximately 485 firms in the Fortune 500, not to mention tens of thousands of others, that have played by the rules.
We hope. Maybe a bunch of them haven't been caught.
Sam1 Deep down where they live, I suspect, many of Amtrak's apologists, as well as supporters of passenger rail projects that have little probability of covering their costs (high speed rail), know that they could not compete in the market place. This is why they seem to take delight in digging out the bad actors, which make up a minority of the players, and ignore those who do the right thing. Or find 101 reasons why passenger trains are not and should not be subject to market forces.
Deep down where they live, I suspect, many of Amtrak's apologists, as well as supporters of passenger rail projects that have little probability of covering their costs (high speed rail), know that they could not compete in the market place. This is why they seem to take delight in digging out the bad actors, which make up a minority of the players, and ignore those who do the right thing. Or find 101 reasons why passenger trains are not and should not be subject to market forces.
I think you are pretty much on target, here. Although Amtrak sure doesn't seem to act like they know they are in a market place -- or the market place they operate in has little to do with moving passengers. They seem dead on their feet and the only time they change is when they are shoved into it.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Maglev:
I agree; a sound ground transportation system (including speedy passenger rail) is essential for a strong nation. It is not just a heritage luxury belonging only in Hollywood. Why is China, a large country not like Europe or Japan in distances, but more like the USA, building an advanced network all over the land at a considerable infrastructure cost?
Sam1:
I guess I have failed to make clear my underlying point. It is simply that there actually are efficient mechanisms of resource allocation besides the free market, smartly regulated or totally unregulated. Sometimes the marketplace may not be the most appropriate choice in certain theaters. I'm only saying, therefore, that we cannot look at this with the unchallenged assumption that "one size fits all." In any case, the trend in the USA and elsewhere over the past 30-40 years has been a gradual erosion of regulatory safeguards, new instruments beyond the existing regulations, etc. that have led to an almost total current breakdown. For example, how successful in the end has deregulation of the airlines been? Many are nearly insolvent, service is getting worse and worse. There was a period of great prosperity for them, but no more.
blue streak 1 SAM1::::Enron was not a utility. It was a wholesale power broker. Its management operated outside the law and was caught. The responsible executives paid a stiff price for their malfeasance, as did many innocent victims, e.g. employees, buyers, suppliers, etc. My memory is somewhatr fuzzy on this: Agreeded -- But by their very power brokering the caused certain generating plants to go off line and had other long distant plants take up the slack at an excess charge with Enron getting a healthy cut.?? My question is "did your utility ever benefit directly or indirectly from these "tricks"?. Of course you may not have been in that end of the accounting stream. Also did any of your executives ever get charged in any of Enron's schemes? SAM1:::::Ironically, those who point out the flaws in the competitive market system, at least on these forums, are writing their thoughts on computers that were designed and brought to market by some of the best corporate examples our system has to offer. Do you really believe that these products would have surfaced in a tightly controlled non-competitive market? They never seem to get mentioned. I/ll agree that Steve Jobs and Bill Gates did an excellent job of developing computers but even their companys are now getting the once over (EU fine) SAM1:::::As I have noted consistently, the key to a level playing field, whether is for passenger railroads or any other economic entity, is smart but not crushing regulation. Agreeded but how do you define a level playing field?. My main concern is that we (the US) does not put all its marbles in one basket. I feel that is going on too much as present whether it be GPS, Automobiles, petroleum energy, one source for anything, etc..
SAM1::::Enron was not a utility. It was a wholesale power broker. Its management operated outside the law and was caught. The responsible executives paid a stiff price for their malfeasance, as did many innocent victims, e.g. employees, buyers, suppliers, etc.
My memory is somewhatr fuzzy on this:
Agreeded -- But by their very power brokering the caused certain generating plants to go off line and had other long distant plants take up the slack at an excess charge with Enron getting a healthy cut.?? My question is "did your utility ever benefit directly or indirectly from these "tricks"?. Of course you may not have been in that end of the accounting stream. Also did any of your executives ever get charged in any of Enron's schemes?
SAM1:::::Ironically, those who point out the flaws in the competitive market system, at least on these forums, are writing their thoughts on computers that were designed and brought to market by some of the best corporate examples our system has to offer. Do you really believe that these products would have surfaced in a tightly controlled non-competitive market? They never seem to get mentioned.
I/ll agree that Steve Jobs and Bill Gates did an excellent job of developing computers but even their companys are now getting the once over (EU fine)
SAM1:::::As I have noted consistently, the key to a level playing field, whether is for passenger railroads or any other economic entity, is smart but not crushing regulation.
Agreeded but how do you define a level playing field?. My main concern is that we (the US) does not put all its marbles in one basket. I feel that is going on too much as present whether it be GPS, Automobiles, petroleum energy, one source for anything, etc..
The company I worked for did not have any inappropriate dealings with Enron. Neither did most other electric utilities. And to the best of my remembrance, the California utilities that were fleeced by Enron did not knowingly participate in any wrong doing.
I favor retaining or adding passenger rail to our transport mix where it makes sense. From my perspective that means relatively short, high density corridors. It should be able to cover its operating expenses and contribute to the capital costs ala the NEC.
Ideally, all forms of transport would be required to pay their share of the facilities cost at the pump or ticket counter. And all forms would be required to cover the tab without any subsidies. Unfortunately, given the political nature of transport in the U.S., it is not likely to happen.
I see no economic or social justification for long distance trains. Some argue that the Empire Builder, for example, is part of our national heritage. Following this line of argument, the Butterfield Stage Coach lines and the Pony Express should be put back in service. Surely someone thinks that they are national heritages. Well, at least Hollywood did when I was a kid.
Long-distance trains such as the Empire Builder need to be preserved for the following reasons:
--to preserve rights-of-way and stations for possible future need;
--for educational utility and historical continuity;
--and because it does serve some transportation need not supplied by autos, planes, buses, or ships.
In another thread, I have tried to argue that a core national passenger network was necessary for civil and military defense, but the idea wasn't supported by anyone. I honestly sense our freedom of transportation is threatened now.
By maui_67photos, shot with Canon EOS DIGITAL REBEL XT at 2009-06-25
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