United Rail Passenger Alliance

This week: A brief report from each coast and then we look at some Amtrak finances.

On the right coast, some good news for the passenger rail manufacturing industry, and a lesson in perseverance. Around 1974 when I was in fourth grade my parents took me to a public meeting about Washington Metro. Even then, I loved studying maps; and one of the “future extensions” was to Dulles Airport. A mere 35 years later, that line may have a chance to finally be built — which is quite quick, really, compared to Boston’s extension of its Red Line past Harvard (proposed in 1912, with the Cambridge segment completed in 1985). In any case, here’s is part of WMATA’s press release:

Metro’s Board of Directors approved a contract today (May 27) to have Kawasaki Rail Car, Inc., manufacture 428 new generation Metrorail cars known as the Series 7000 cars at a cost of $886 million. The cars will address Metro’s number one safety priority to replace its oldest rail cars (Series 1000).Of the 428 cars, 128 of the cars will enable the expansion of Metro service on the Dulles rail corridor and 300 of the cars will be used to replace Metro’s oldest rail cars (Series 1000), which will improve safety and reliability of Metro’s fleet. The Dulles rail cars will be funded by the Metropolitan Washington Airports Authority…
The delivery schedule calls for the cars to start arriving on Metro property in 2013, and undergo a rigorous, months-long inspection process. All 428 cars are scheduled to go into service by 2016…. Kawasaki Rail Car, Inc., will manufacture the new rail cars in Lincoln, NE…

Kawasaki has built single and double level commuter railcars, as well as NYCTA subway cars, partially at the Lincoln plant with final assembly at Yonkers, New York. At least one factory in America will be busy for awhile.

Now to the left coast, where Democratic Congresswoman Anna Eshoo ponders in the San Francisco Chronicle what will happen to Caltrain’s nearly forty thousand daily riders in California’s anemic budget, even as plans for high speed trains in the same corridor proceed, threatening Caltrain on a variety of levels:

For many months, the people of the 14th Congressional District have been worried – and justifiably so – about what high-speed rail could mean to their communities. Now comes word of financial difficulties that threaten the future of Caltrain, the spine of the Peninsula transportation system and the little train that could, and does so much, to serve us…

The High Speed Rail Authority has to hit the reset button, improve its reputation and assuage Peninsula residents, who have every reason to fear that this project will be a nightmare…  We need to see what high-speed rail will do for us, not only to us. In other words, we need high-speed rail on the Peninsula to be a betterment, not a detriment. One of the betterments we expect is an improved Caltrain, and that is something that can be done right now…

Perhaps California will look at England’s “Javelin” trains, the long-anticipated high-speed commuter trains that only recently replaced a large part of the usual fleet of electric trains between London and the southeast Kent coast.  The Evening Standard reports:

The 140mph hour Southeastern trains linking Kent to London were launched with great fanfare [in] December [2009]… [the fleet of] 29 Japanese Javelin trains were expected to be embraced by commuters as they cut an hour from the London-to-Dover route…

But [train operator] Southeastern has now halved the length of six of its trains because not enough people are using the services following complaints they are too expensive and uncomfortable. The fares cost a third more than those of conventional trains….

Commuters have complained the trains only take them to St Pancras and they then must cram on to “normal” Victoria or Cannon Street-bound services, which have been reduced to accommodate the Javelin trains.

Commuter John Cherry, from Chatham, said the new service had proved a “disaster” for many.

He said: “Passengers for Victoria lost their peak period services and now pack on the remaining reduced services or the Cannon Street services as people do not wish to go to St Pancras.”

Another traveller said passengers have “rebelled against being forced to use an even more expensive service with uncomfortable trains which terminate in a place no one wants to be…”

This is exactly what could happen in California if new high-speed trains bypass many existing stations and run to a new terminal that does not connect to BART and Muni properly. One could also maintain the same thing has happened with Acela from its inception.

Finally this week we look at the wonderful world of Amtrak-o-nomics. Bruce Chapman of the Discovery Institute wrote on June 1 of a “Developing scandal at Amtrak” –

I served on the Amtrak Reform Council ten years ago and was frustrated, ultimately, by the failure of the Bush Administration and the Republican Congress to press harder for changes to Amtrak that would have made that entity more transparent in its finances and more collaborative with the private sector…

The Bush folks knew we needed reform, but couldn’t deliver it, and wouldn’t fund the transition to a public-private partnership. The Obama people are prepared to spend plenty, but not to reform the system.

Now we are seeing the public beginning to a scandal of unknown proportions at Amtrak. It broke in the Washington Times today.

The scandal could be the grounds for a true new beginning in passenger rail. America needs rail, not just as an alternative choice to roads and airplanes in carrying freight, but also in carrying people on many inter-city corridors.

The article to which he refers is from the Washington Times via Mass Transit Magazine, and titled Amtrak ‘Misled’ Congress on Finance

When Amtrak assured Congress it was on a “glide path” to free itself of federal subsidies early last decade [2001], a handful of top executives secretly had reason to know better. In fact, the rail service was on the verge of bankruptcy.But Amtrak’s public assurances were based on far more than overly rosy financial projections… What authorities ultimately unraveled was that two former Amtrak officials, in fiscal 2001, either booked false or incorrect accounting entries in Amtrak’s monthly financial statements or failed to report the activities.

Mr. Chapman sees hope in this adversity, and perhaps there may be some; but let us remember that “Amtrak accounting,” like “military intelligence,” is at best a questionable subject.  If you have not recently read Ayn Rand’s Atlas Shrugged, please hasten to your local library or bookstore for a copy. This tome of over a thousand pages is well worth the reading, or re-reading. Published in 1957, and focusing on American national politics and economic structure, it recounts the tale of a Dagny Taggart who struggles to keep her family’s transcontinental railroad afloat against a tide of socialism and nationalization, and a Hank Rearden who invents a revolutionary steel-replacing metal only to encounter the same destructive forces.

In the book, Wesley Mouch’s Steel Unification Board is proposed to lift the heavy restrictions previously imposed on Rearden, with a Plan explained by the government representative:

“Our Plan is really very simple,” said Tinky Holloway, “…every company will produce all it can, according to its ability [with all earnings collected and assembled by the government]; at the end of the year… [we will] distribute these earnings by totaling the nation’s steel output and dividing it by the number of open-hearth furnaces in existence… The preservation of its furnaces being the basic need, every company will be paid according to the number of furnaces it owns…”

Rearden, who heads the nation’s only remaining innovative steel-making plant, retorts:

“Well, let me see,” said Rearden. “Orren Boyle’s Associated Steel owns 60 open-hearth furnaces, one-third of them standing idle and the rest producing an average of 300 tons of steel per furnace per day. I own 20 open-hearth furnaces, working at capacity, producing 750 tons of Rearden Metal per furnace per day. So we own 80 ‘pooled’ furnaces with a ‘pooled’ output of 27,000 tons, which makes an average of 337.5 tons per furnace. Each day of the year, I, producing 15,000 tons, will be paid for 6,750 tons. Boyle, producing 12,000 tons, will be paid for 20,250 tons… Now how long do you expect me to last under your Plan?”

You may recognize here the accounting basis for Amtrak’s “Route Profitability System,” which derived from the federal Interstate Commerce Commission’s formulas for determining passenger train profits and losses.  Amtrak, in a 1997 National Association of Railroad Passengers meeting, admitted that revenues were pooled, and expenses were allocated to trains “subjectively” [sic].

In this as in every instance where Karl Marx’s “from each according to his ability, to each according to his need” has been applied, the doom of failure is not far off.

Case in point: My apartment complex sends me a water bill each month. The total number of gallons used by the complex — for each apartment, plus the pool and irrigation — is added up, and divided by a formula involving the square footage of each unit and the number of registered occupants. This means that if I do my part and conserve water, I am punished because my parsimony is a microscopic fraction of the total, so I am charged effectively the same amount; yet if I squander water and let it run all day, my bill is again hardly unchanged. Clearly, then, the incentive is to waste water.

The manager of an Amtrak train is faced with the same quandry. Carry more passengers and you are allocated a much larger share of expenses, even though your revenues increase only slightly. Ideally you would carry zero passengers, because then your train would have zero expenses on an allocated basis.

Is it any wonder Amtrak has gone precisely no-where in its almost forty years of existence?

Please do read Atlas Shrugged, for we will be looking at it again quite soon.

Meanwhile: The moment someone says, “Don’t worry, I’m from the government, I’m here to help!” is the moment you should look for the exit.