John WR So all of the people involved acted in their own best interest. Which is something all human beings do.
So all of the people involved acted in their own best interest. Which is something all human beings do.
Have you never seen "Dr. Phil"?
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
oltmanndHave you never seen "Dr. Phil"?
Yes, I have never seen Dr. Phil. I looked him up on Wiki. I hope to continue never seeing him.
oltmanndYes, and maybe it isn't quite as stiff as we think it is..
Well, if in fact operating cost is in no way a factor used in calculating fares (obligatory mention that I have seen no actual proof of that here, btw) then the true foundation of Amtrak's shortcomings become more obvious
Convicted One oltmanndYes, and maybe it isn't quite as stiff as we think it is.. Well, if in fact operating cost is in no way a factor used in calculating fares (obligatory mention that I have seen no actual proof of that here, btw) then the true foundation of Amtrak's shortcomings become more obvious
Thanks to Chris / CopCarSS for my avatar.
Murphy SidingThe selling price of anything is dependant on what the market will bear, based on supply and demand. For example, my opinions are woth nothing, as opinions are everywhere, and everyone gives them away for free
You make a fascinating observation, Murphy. Do you mean that if I stop offering my opinions her the supply will go to zero. That will push up the demand so I will be able to sell them?
John
The difference is significant.
In a free will/free market transaction there is a welfare gain by all parties involved. Otherwise, the transaction would not occur.
I'll give a trivial example that demonstrates the point, then expand it to explain why government economic transportation regulation hurts the people. The government types, acting in their own best interest, will seek to expand their power by prohibiting free market transactions. That's how they hurt the people while pursuing their own best interest. This is different from free people pursuing their own best interest by making free will, free market transactions which benefit all involved.
Example:
I really like bi-color fresh picked sweet corn. I go to farmers' markets and buy it when I can. When I make the exchange of my money for the corn I realize a gain in my wellbeing. The corn is worth more to me than the money I have. Otherwise, I wouldn't buy it.
Conversely, the farmer values my money more than he/she does his/her corn. When we freely exchange for a what we know to be a greater value to us we both realize a wellbeing gain. Expand this small transaction out to include all products and services in the US economy and you get a overall net welfare gain for the society as a whole.
By each of us non-government types acting in our own best interest we not only improve our own situation, we improve the overall wellbeing of the nation's people by growing the economy. The wealth of a nation is created by such free will, free market transactions.
End Example.
On the other hand, government types involved in economic regulation seek to pursue their own best interests (gain power) by prohibiting free will/free market transactions. This reduces the wealth of the nation but benefits the government types. While my purchase of the corn benefited all involved, government economic regulation harms people, except for the government types and groups with political connections. Very unlike the free will, free market transaction.
In transportation (rail, truck, air, etc.) the government types were more than willing to embrace the chants of groups seeking economic gain by restricting free market transactions. Why not? The government types wanted power and the public be damned.
Think of what a railroad does. The railroad corporation pursues its own best interest by enabling others to pursue their own best interest. (No one would ship anything on a railroad unless they realized a net benefit in doing so. Kind of like my purchase of the corn.) By using a railroad a Kansas wheat farmer has access to buyers all over the world. He/she can sell to the buyer who will most benefit from the wheat while gaining the most from the sale. This increases the wealth of our nation. Which is a good thing. Without that wealth creation we have no money (wealth) for schools or hospitals.
When the government gets involved it restricts the ability of the railroad (or trucking company, airline, etc.) to enable others to pursue their own best interests. This harms our people.
That's the difference. Government acting in its own best interest is harmful. A free people freely acting in their own economic best interest is beneficial.
Every known society in the history of the world has had government. Government is not going to go away. Not only railroads but also all businesses must live with government. That is simply the way things are.
Government is a great many people on a great many levels engaged in governing. This is what you call regulation. Sometimes people in government make mistakes. Sometimes people in private industry make mistakes. When it comes to American railroads I think people on both sides have at times made mistakes.
Historically, wheat farmers and farmers who raised other grains have not always agreed that they were best served by unregulated railroads. Because of that the Grange movement emerged and that movement was a strong force for the regulation of railroads. The farmers did not regard themselves as worse off because railroads were regulated.
The United States has always had government. We have had railroads for most of our history. At different times there have been different relationships between the government and railroads. While the relationship has not by a long shot been perfect I think it has not been a complete failure either.
Bravo Greyhounds!
Mac
John WR Every known society in the history of the world has had government. Government is not going to go away. Not only railroads but also all businesses must live with government. That is simply the way things are. Government is a great many people on a great many levels engaged in governing. This is what you call regulation. Sometimes people in government make mistakes. Sometimes people in private industry make mistakes. When it comes to American railroads I think people on both sides have at times made mistakes. Historically, wheat farmers and farmers who raised other grains have not always agreed that they were best served by unregulated railroads. Because of that the Grange movement emerged and that movement was a strong force for the regulation of railroads. The farmers did not regard themselves as worse off because railroads were regulated. The United States has always had government. We have had railroads for most of our history. At different times there have been different relationships between the government and railroads. While the relationship has not by a long shot been perfect I think it has not been a complete failure either.
C&NW, CA&E, MILW, CGW and IC fan
Murphy Siding, the cost is somewhat of a factor,
Well, I finally read Phillip's June article, and there is not a doubt in my mind that he is spot-on about Amtrak's Inclusion of EVERY CONCEIVABLE COST charged against it's long distance trains (including sleeper service) in it's accounting. And it wouldn't surprise me if they were likewise cherry picking their ACELA figures to make their pet project look better than it is.
I used to have an extremely wealthy and cost savy employer. (Iron fisted sole proprietorship), and a large part of my job was to establish working budgets for projects we were contemplating.
And the disparity was amazing just how ruthlessly cost conscious he was (at the 'build-it/pass-on-it' point of consideration) for projects he really wasn't all that interested in, while at the same time reckless to the point of cost negligence for projects he had a personal favor for. In the former he would insist upon charging costs against the project which he was going to have to pay regardless if the project was done or not. While in the latter, he would scoff at my inclusion of the very same costs to be charged against his pet projects.
Since I've "been there, done that", it requires no imagination what so ever on my part to believe Phillips knows what he is talking about here. This will likely be a big part of any consideration whether or not to abolish the long distance services.
Convicted One Well, I finally read Phillip's June article, and there is not a doubt in my mind that he is spot-on about Amtrak's Inclusion of EVERY CONCEIVABLE COST charged against it's long distance trains (including sleeper service) in it's accounting. And it wouldn't surprise me if they were likewise cherry picking their ACELA figures to make their pet project look better than it is. I used to have an extremely wealthy and cost savy employer. (Iron fisted sole proprietorship), and a large part of my job was to establish working budgets for projects we were contemplating.
While your previous employer may have engaged in certain questionable practices it does not follow that Amtrak does. After all, all of us can lie, cheat and steal. But all of us do not do so.
It is hard to understand how the costs of many long distance trains can be charged to Northeast service when many such trains do not come remotely near the Northeast corridor.
Amtrak may we well able to explain its accounting practices. However, Don Phillips never asked Amtrak to respond to his allegations. As a result the article is kind of one sided.
John WR oltmanndHave you never seen "Dr. Phil"? Yes, I have never seen Dr. Phil. I looked him up on Wiki. I hope to continue never seeing him.
There are no shortage of folk who don't think - or at least act - rationally.
John WR it does not follow that Amtrak does. After all, all of us can lie, cheat and steal. But all of us do not do so.
Nor,I might add, is your preferred outlook any assurance that they don't.
And, let me be abundantly clear about this, I am in no way accusing Amtrak of unlawful or illegal conduct. There is ample opportunity to shade the books within the law, while perhaps only skirting issues that touch more on ethics, than law.
Bottom line, if an authority having the final say has the inclination to sift through the books and make creative allocations and slanted amortization schedules to penalize their perceived 'red headed stepchild' segments of their operations, while giving "fair haired son" segments of their operations completely different treatment.....neither your nor my personal preferences are going to be able to do a thing to stop them.
Convicted OneI am in no way accusing Amtrak of unlawful or illegal conduct.
OK. But there is a snag. Based on the information Don Phillips provides, in order to reduce the losses or show a profit on the Acela it is necessary to increase the losses shown for the long distance trains that use those tracks. By increasing the long distance losses the arguments of those who say long distance passenger trains cost too much are supported. And by showing a profit or small loss for Acela you the arguments for those who say it should be sold to the private sector are supported. It seems like a lose -- lose strategy.
A thought occurred to me while I was awaiting your reply. Phillips states that the costs triple once the long distance trains are on home rails.
I wonder if the cost structure that the long distance trains incur once on the NEC varies from that which they must support when running on lines owned by the freight railroads BECAUSE of the nature of the agreement with the freights?
In theory, with more trains using the freight lines, fixed costs are spread over more trains POSSIBLY resulting in the passenger trains having a smaller share to support? Anyone know?
John WR .............. It seems like a loose -- loose strategy.
.............. It seems like a loose -- loose strategy.
Convicted One A thought occurred to me while I was awaiting your reply. Phillips states that the costs triple once the long distance trains are on home rails. I wonder if the cost structure that the long distance trains incur once on the NEC varies from that which they must support when running on lines owned by the freight railroads BECAUSE of the nature of the agreement with the freights? In theory, with more trains using the freight lines, fixed costs are spread over more trains POSSIBLY resulting in the passenger trains having a smaller share to support? Anyone know?
Hey Murphy, that's a very long word.
Murphy SidingI wonder if the cost structure that the long distance trains incur once on the NEC varies from that which they must support when running on lines owned by the freight railroads BECAUSE of the nature of the agreement with the freights?
Yes. Partly. The other part is that 125 mph class 6 ROW is mucho costly to keep. Class 4 track is much simpler.
Three things are happening.
First the LD trains are paying only a small (5-10%) fraction of the market value of the capacity they consume. The freight carriers are subsidizing the LD trains to the tune of hundreds of millions of dollars per year.
Second, since ATK owns the NEC it is faced with the full cost of ownership of the line. No subsidy from the freight carriers.
Third, the commuter carriers are in the same situation as ATK is on the freight carriers, the commuters pay only marginal cost of the capacity they consume. That is far less than full cost so ATK is subsidizing the commuters. As an example assume full cost of ownership is $110,000 per mile. Assume 40 ATK moves per average day and 80 commuter moves per average day. The 80 commuters pay only marginal cost which we will assume to be $10,000 per year, so ATK has net cost of $100,000. For simplicity allocate on basis of train miles, or train count since we are only dealing with 1 mile. Each ATK train is charged $2,500 for this mile per year. If all trains were charged at the full rate. would be $110K/120 or $916.66 per train. Huge subsidy to commuters.
A separate issue is the basis of allocation as between a LD train on NEC and Acela. Different basis will yield different results. We did train miles above. Car miles would charge long trains more than short ones. If I was trying to make Acela look good, and assuming it is lighter than LD trains, then I would allocate on ton-miles, or tons in this case. Choice of allocation method is probably allowed under the accounting rules. Left to myself, I would allocate on train miles since it is best single proxy for use and can be reasonably applied to a variety of expenses like dispatch and supervision. Ton-mile basis makes sense for track maintenance, but not for fixed plant depreciation and not for dispatching and supervision.
Mac McCulloch
The bottom line {pun sort of intended} is that we don't really know the breakout for depreciation for Acela (NEC) vs. LD routes, as sam1 pointed out. And we do not know if Don Phillips is accurate or what his agenda is, just as Joe Boardman undoubtedly has one also.
schlimm The bottom line {pun sort of intended} is that we don't really know the breakout for depreciation for Acela (NEC) vs. LD routes, as sam1 pointed out. And we do not know if Don Phillips is accurate or what his agenda is, just as Joe Boardman undoubtedly has one also.
We know with regard to fixed plant. Anything operating on freight carrier is ZERO depreciation. On NEC ATK is exposed to 100% of the depreciation. ATK can not manipulate those figures. What they can do is choose a basis of allocation that favors one service over another on the NEC.
Mac,
Phillips argues that Amtrak benefits my minimizing Acela losses or even showing an Acela profit while maximizing losses on long distance trains that use the Northeast Corridor. I just don't see how Amtrak benefits.
John,
I do not see how ATK as a whole benefits. I do see how it supports the narrative that ATK needs more Acela train sets.
PNWRMNMI do not see how ATK as a whole benefits. I do see how it supports the narrative that ATK needs more Acela train sets.
I agree, Mac. Amtrak is taking this narrative and running with it. They propose not only to buy more Acela trainsets; they also want to build a whole new rail line between New York and Boston. This line, if built, would be a sort of corridor line that would serve the end points. Under current legislation it should be built by the states it passes through but there is no suggestion here that anyone but the Federal Government would fund it. Of course, Connecticut and Rhode Island might be reluctant to fund it since it would not serve those states. Would New York and Massachusetts fund such a line? Well, Amtrak does not propose that.
But the narrative is still there. And I think it will stay simply because so many people agree with this particular narrative.
PS. Where does this leave Don Phillips' point? If the current Acela has a large but hidden deficit then certainly new Acela service on a whole new rail line would have a much larger deficit. Yet many people -- and I confess to being one of them -- believe northeast rail service must be continued because we simply have run out of space for more roads and planes. So deficit or no we need northeast rail service.
That whole LD cost sharing of the NEC thing is most likely about cost allocation rules within Amtrak.
Remember, now, that the NEC has all this nice class 6 track that cost a bundle to keep in shape for 125+ mph service.
You absolutely have to have this for Acela, and even the conventional service to work.
It's "nice to have" for the commuter operators but it doesn't kill their business not to have it.
The LD trains don't really need it at all. 80 mph up the NEC would only add an hour or so to 20+ hour trips. Nobody's buying tickets because of the speedy trip times. You only need to have class 4 track track for this.
So, how does Amtrak allocate their cost of owning and maintaining this high speed track appropriately? Probably the most straightforward way - linearly by train-mile or car mile since all traffic takes advantage of the high speeds available as best they can.
So, it is "unfair" that those LD trains have to pay for a proportional share of track ownership and maintenance that they don't "need". But, to try to add a factor based on commercial need or, to a lesser extent, exactly which trains are causing the most wear and tear would be a nightmare.
Mac:Great explanation on the depreciation of the NEC and how it effects Amtrak. Owning your own railroad is an expensive proposition.
Ed
MP173 Mac:Great explanation on the depreciation of the NEC and how it effects Amtrak. Owning your own railroad is an expensive proposition. Ed
...when you can only charge the tenets your marginal cost for hosting them. That's like a hotel only changing you for the cost to wash your towels and power the TV.
Of course, Amtrak's NEC is like staying at the Plaza for NJT et.al. and like the Taj Mahal for NS!
oltmannd Probably the most straightforward way - linearly by train-mile or car mile since all traffic takes advantage of the high speeds available as best they can. So, it is "unfair" that those LD trains have to pay for a proportional share of track ownership and maintenance that they don't "need". But, to try to add a factor based on commercial need or, to a lesser extent, exactly which trains are causing the most wear and tear would be a nightmare.
Probably the most straightforward way - linearly by train-mile or car mile since all traffic takes advantage of the high speeds available as best they can.
Or perhaps several nightmares. But it is also an opportunity for commenters who want to take a somewhat different position. The obvious reason is that a person has a different political position. But there is another reason. There is a group of people -- some call them the "chattering classes --" who earn their living because of their writing skills and often have limited knowledge of their subject. They need things to write about. No one is going to pay you money for saying "Amtrak is doing all the right things." They have got to charge Amtrak is doing some wrong things if they hope to get attention. So the nightmares can pay off.
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