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John Howard Brown's avatar

Again, a view of the political economy in addition to the economics would be useful. Amtrak is to a degree a victim of its government ownership. Because Congress has a role in determing Amtrak's fate, large numbers of non-NEC members must be persuaded to support any legislation. Too much support for the NEC reads in the flyover country as a subsidy by good Christian Midwesterners of those rich, liberal Eastern cities. Those uneconomic routes in the Midwest and coast to coast are a political ploy to obtain Congressional support. Amtrak management trims it's sails to garner that support. An effective solution would be to spin out the NEC services to a multi-state compact with limited federal support. The politics would be messy, but at least all parties would have incentives to run an effective HSR system.

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John from FL's avatar

I would propose something different: Privatize Amtrak. Almost all of Matt's complaints with Amtrak would benefit from the efficiency gains a for-profit enterprise brings. Cost escalation, wasteful consultants, silly labor rules and bloated management would all be reduced. Doing this work is hard and we should incentivize talented people to tackle that work.

To get private-enterprise benefits, the government should provide a Revenue support guarantee. The government could look back at the previous 5 years, determine how much revenue support ($/rider) would have been needed to ensure a modest return (or even to break-even), then guarantee that amount in $/rider for the next 5 year period. Then, management and ownership of Amtrak would be incentivized to increase the number of riders, increase revenue and lower costs so they could keep the profits. After 5 years, re-evaluate the support level to re-set the performance bar and repeat.

The profit motive is a powerful force. Our government should use that force to improve rail service.

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