Envisioning the Amtrak Transition Process to Private Enterprise

[Caesar La Rock]

How about................. FEC? LOL That's all I can think of.

 

[railiner]

Conrail?

Conrail certainly 'cut' itself of a vast network of unnecessary lines, but what it did retain, they restored to state-of-the-art condition, and brought their service level to the top of the industry. Their IPO was a trememdous success, and the government got back more than what they invested. They were so successful, that two of the industry giants got into a fierce battle to acquire them, ultimately resulting in a compromise where each got a portion.....

 

[Aaron]

Can anyone name a company that has "cut" itself to profitability? Everyone I can think of that has tried is either out of business or

been merged into another company.

Apple? There was plenty of bloodletting both before and after Steve Jobs came back, both in terms of people and cutting of whole much-loved product lines. Last I checked, they've started showing a modest profit since then.

 

[jis]

Another one that comes to mind is Continental Airlines under Gordon Bethune.

 

[jis]

When I think of privatization, I don't think of assuming that someone is just going to come in and start running trains for profit. There's really not much stopping them from doing that today. Instead, I see it more as an idea of getting someone to provide contracted services for the government, perhaps at a lower cost.

The British experience shows that at least initially it is at a higher cost. Then with a good regulatory agency things do get to a lower cost, with many private operators lying dead on the wayside.

 

[anir dendroica]

That's not why I'm betting on it. I'm betting on it because people that have made their life's work studying it are betting on it. If you say something about track geometry and some random guest poster that thinks a switch is what he uses to turn on the lights claims the opposite, I'm going to go ahead and assume that you're right because experience and knowledge counts for a lot. Why you can't expand that to areas outside your area of expertise is simply baffling. I wouldn't presume to lecture you on how to build a railroad, so I'm not sure why you'd take issue with commonly accepted economic thinking by recognized experts in the field.

The problem with this analogy is that railroad construction is based on invariant laws of physics. Once we understand the laws we can theoretically build track that never fails. Of course that doesn't happen in practice because some tie plates are always a bit looser than others, humans make mistakes, etc. But I think we can agree that if all the specs remain as specified in the construction guidelines, the track is going to hold up.

Economics, on the other hand, is based on the study of human behavior, and is therefore much more prone to errors in its laws or changes in fundamental properties of the system that render its laws ineffective. As an example, economics as a modern discipline has developed during an anomalous period of economic growth, and many of its "rules" only hold true in a growth economy. Growth, in turn, is based on population growth and growth in access to energy resources, both of which are forecast to flatline in the next 10-60 years. While those changes will be a good thing for the long-term future of our planet, they will render many supposed economic "laws" invalid.

 

[Paulus]

Caltrans could simply be like Amtrak was in its infancy....just an authority contracting out a coordinated network of subsidized trains run by their former operators, with the employees working for the operators, and only headquarters staff working for Caltrans.

That's how it is already actually, Amtrak is simply the operator of the Amtrak CA routes. There's nothing which would prevent Caltrans from giving the contract to someone else.

 

[Ryan]

That's not why I'm betting on it. I'm betting on it because people that have made their life's work studying it are betting on it. If you say something about track geometry and some random guest poster that thinks a switch is what he uses to turn on the lights claims the opposite, I'm going to go ahead and assume that you're right because experience and knowledge counts for a lot. Why you can't expand that to areas outside your area of expertise is simply baffling. I wouldn't presume to lecture you on how to build a railroad, so I'm not sure why you'd take issue with commonly accepted economic thinking by recognized experts in the field.

The problem with this analogy is that railroad construction is based on invariant laws of physics. Once we understand the laws we can theoretically build track that never fails. Of course that doesn't happen in practice because some tie plates are always a bit looser than others, humans make mistakes, etc. But I think we can agree that if all the specs remain as specified in the construction guidelines, the track is going to hold up.

Economics, on the other hand, is based on the study of human behavior, and is therefore much more prone to errors in its laws or changes in fundamental properties of the system that render its laws ineffective. As an example, economics as a modern discipline has developed during an anomalous period of economic growth, and many of its "rules" only hold true in a growth economy. Growth, in turn, is based on population growth and growth in access to energy resources, both of which are forecast to flatline in the next 10-60 years. While those changes will be a good thing for the long-term future of our planet, they will render many supposed economic "laws" invalid.

Valid point.

They're still a million times smarter in their area of expertise than anyone posting here, and tossing out their knowledge because it doesn't fit your preferred ideology doesn't really end well.

 

[jis]

But it does provide considerable entertainment at times :lol:

 

[Trogdor]

But it does provide considerable entertainment at times :lol:

The problem is when the masses can't tell the difference between entertainment and reality.

 

[jis]

So true Trog! So true! Unfortunately often, they don't know enough themselves to tell the difference. This specially true of complex, esoteric subject areas.

 

[Nathanael]

If you laid all the economists in the world end to end, you would not be able to reach to a conclusion. (not original with me.)

However, how about those who do not learn from history are doomed to repeat it.

Indeed. I am very sorry that you have failed to learn from history.

There are many countries, quite a few of them no longer with us in their form at that time that have tried the printing press solution to defecit spending. It leads to inflation and if not turned around to economic collapse.

This is simply not true. Please do study history, *because you haven't*.

We've been printing money since 2008. See any inflation? No you don't -- it's at 1% or less. Japan's been printing money since about 1990. Japan has no inflation to speak of. (This shows that printing money alone will not deal with a recession -- you have to put the money in the hands of the right people. Both the US and Japan handed the money directly to insolvent banks, which turns out to be a really bad choice.)

Now, using the printing press during *boom times* -- as Reagan did, with his massive military deficit spending, and as George W. Bush did, with his massive military deficit spending -- can cause inflation. It's not a good idea.

Also, using the printing press as a substitute for dealing with *real resource shortages* will fail catastrophically, as in Zimbabwe.

But using the printing press during a period with high unemployment, inactive factories, plenty of raw materials, etc. -- that works. (We do have one real and major resource shortage to deal with, and if we don't get off of oil, we will be screwed -- the printing press won't help deal with that, unless the money is put directly into renewable energy.)

I am well aware of the economic theory that a government does not have to ever pay its debts as that hsa been the standard theory for many years. Being a generally accepted theory is no gurantee of being correct.

History proves, however, that it is correct. Really, the number of examples of governments which abrogated their debts with no ill effects, or with major success, is legion.

There is, however a lot of value to a government which pays down its debts -- or otherwise reduces the money supply -- during *economic boom times*, as John Maynard Keynes explained (with ample historic references). Try doing your research.

As to the dream for the restoration of the "Eisenhower Era' tax rates: I think those rates were left overs from the Rooseveldt era, not a concept of Eisenhower's.

Think what you like, but rates were higher under Eisenhower than under FDR.

The reason that few people other than the very rich mourned their passing was because the reality was very different. There were so many exemptions, deductions, and other escape hatches that the reality was very different from teh appearance.

...The reality was that the very rich, even with the deductions, paid 45% or more. You haven't done your research. If you want an amusing proof, go look up the articles from the 50s about how the richest Americans could no longer afford large yachts, could only afford one or two servants, etc., in contrast to the stylings of the rich of the 1920s.

Generally anybody that could afford an accountant could find a way to avoid taxes. As a result income taxes fell even more then than now primarily on people drawing paychecks.

*COMPLETELY* untrue.

The fact is that the high taxes on investment income led, after decades, to a situation where most people made their money from "middle income" paychecks -- the "golden era" of the middle class, when we had verty little in the way of superrich. At that point, only a small portion of government income was from the high taxes on the superrich, *because the superrich no longer had most of the money*.

Back when the high taxes were first instituted, however -- FDR -- it is absolutely clear that a MUCH larger portion of the federal government income came from taxes on the very rich than they do now. Back then, the superrich *did* have most of the money, just as they do now. Go look up historical wealth and income distribution charts, and the IRS sources-of-government-income charts, to verify this. I have.

The reality is that the simplification of the tax code under Reagan did not reduce the proportion paid by the very rich.

Actually, it did. Go look up historical IRS numbers

.

Anyone with FACTS to the contray feel free to prove me wrong.

I have proven you wrong.

 

[Nathanael]

Economics, on the other hand, is based on the study of human behavior, and is therefore much more prone to errors in its laws or changes in fundamental properties of the system that render its laws ineffective. As an example, economics as a modern discipline has developed during an anomalous period of economic growth, and many of its "rules" only hold true in a growth economy. Growth, in turn, is based on population growth and growth in access to energy resources, both of which are forecast to flatline in the next 10-60 years. While those changes will be a good thing for the long-term future of our planet, they will render many supposed economic "laws" invalid.

There *are* people who have studied economics under true resource constraints; it's happened in localized isolated areas historically. Environmental economics has had some fairly good success figuring out this stuff since the 1970s. The one absolutely key feature is that there must be *some* force stabilizing the population. Enless population growth requires endless resource growth; without endless resource growth, you must stabilize your population.

But the basic principles Keynes found for macroeconomic management of "money" still hold. Money's a tool for lubricating commerce; if there's too much circulating you get bubbles, mass speculation, and unsustainable building, if there's too little circulating you get unemployment and factories not operating even though people want their products. "Circulating" means not just being transferred from person to person, but spread around among the great mass of people, not concentrated in a small group.

The results of good management of the money supply in a steady-state economy are a bit different, though, because without population growth, the labor of the industrial economy is geared mostly towards replacement of deteriorating infrastructure, not the "more more more" we are so used to.

As for population growth, people have done long historical and cross-cultural studies on *that*, and the way to get population stability is pretty simple. Provide reliable birth control *to women*, educate women, and give women legal and practical control over their own lives. Within a couple of generations, they'll decide to have fewer kids, and the birth rate will stabilize to match the death rate. Reducing infant mortality helps a bit too as it stabilizes the death rate. (The birth rate generally goes up whenever the death rate of young people goes up.)

 

[Nathanael]

If I agreed with everything that you said, then how do we pay off the $14 trillion deficit? How do we stop borrowing 40 cents of every dollar that we spend?

Glad you asked!

First, cut the military budget, massively. It's what is called "low-multiplier" spending -- you get very little for your buck. Basically, we're blowing money up. There's also *far more* of it than there is of any other government spending, so if you're interested in cutting government spending, this is really the first place to look. (Technically Social Security is of comparable size, but it's separately funded, and it's high-multiplier, since the majority of retirees generally spend their social security checks immediately on food & shelter.) Ending the foreign wars would be a good start, but then there's the foreign bases, and the huge sums paid to military contractors for fancy equipment (which often doesn't even have a use in a modern military campaign), and so on...

Second, raise taxes on the 0.1%, and preferably the whole 1%. They don't spend most of their money, therefore raising taxes on them *does not reduce the amount of money they spend*. (There is a whole pile of empirical studies about this.) That's why this won't hurt the economy.

Third, print money and spend the printed money on *high-multiplier* activities.

For instance, insulate everyone's homes and install lots of solar panels, eliminating wasteful spending on fossil fuels for heating, and thus giving everyone more money to spend on "good stuff". (Obama did a little teeny tiny bit of this, but not enough to be significant.) As that money gets spent on "good stuff", the companies which produce the "good stuff" will employ more people, make more profits, and pay more taxes. The people they employ will also pay more taxes. Economic boom == more government revenue. Yes, people in the fossil fuel industry will make less money (and so pay less in taxes), but most of them were overseas, and even the domestic ones were not paying much in taxes anyway, and we have to get off of fossil fuels anyway for environmental reasons.

For another instance, spend money to directly employ unemployed people, Civilian Conservation Corps style. They will spend every dollar they get instantly -- unlike money in the hands of rich people -- thus creating more demand for consumer products, etc. etc., as above. Unfortunately cutting the military budget would probably unemploy a lot of people, so it's very important to set up a big civilian employment program first. Preferably one which does something *useful* like insulating homes.

As for the overhang of old government debt -- currently it is paying interest rates less than inflation. So it will dwindle into insignificance on its own if the economy booms enough for inflation to go up a little, into the 3%-7% range. Historically, this is how Britain shrunk the massive, massive levels of government debt it had during the Victorian era, and after WWI, and to a great extent also after WWII (though there was some other stuff going on then).

Next question: how to get a government in power which would do *any* of this? I have no idea! From my cynical POV, Obama seems to be content with the status quo, and Romney sounds intent on making things worse! Similar situation in Congress, where most of the Democrats aren't trying to make things better, and nearly all of the Republicans are trying to make things worse!

As a result, I expect things to get worse. :-( We may see our transportation system simply continue to deteriorate, period; get prepared for travel by dirt roads. OK, I guess I've outed myself as a Dmitri Orlov style "doomer"....

 

[henryj]

Your entire argument is based on a false premise.

A country that issues its own currency cannot run out of money.

It can't run out but it certainly will render it worthless. Did you flunk eco101?

 

[henryj]

If I agreed with everything that you said, then how do we pay off the $14 trillion deficit? How do we stop borrowing 40 cents of every dollar that we spend?

Glad you asked!

First, cut the military budget, massively.

Wait until I am gone to do this will you please. I don't want to live in a third rate country militarily that can be overrun and controlled buy someone else. "Better red than dead" is not my motto. Once the US is gone there is no power that can keep world order. Chaos will reign.

 

[Trogdor]

Once the US is gone there is no power that can keep world order. Chaos will reign.

Thanks for the comedy. I needed that.

 

[henryj]

Once the US is gone there is no power that can keep world order. Chaos will reign.

Thanks for the comedy. I needed that.

Your welcome, of course. lol

 

[johnny.menhennet]

Once the US is gone there is no power that can keep world order. Chaos will reign.

Thanks for the comedy. I needed that.

Hahaha Trog filling in with the comedic relief again! Thank YOU.

 

[Swadian Hardcore]

Your entire argument is based on a false premise.

A country that issues its own currency cannot run out of money.

It can't run out but it certainly will render it worthless. Did you flunk eco101?

One big reason for the decline of the Spanish Empire was fiscal manuevering and government "bankruptcies" causing them to take long-term loans and currency to inflate hugely. This was mainly caused by the huge amount of troops required that had to be manned in Spanish garrisons, plus much pike-and-shot tercios that were very expensive to maintian.

 

[cirdan]

Your entire argument is based on a false premise.

A country that issues its own currency cannot run out of money.

Agreed.

Dlagrua, I know you live in the NY area, I suggest you read any editorial by Paul Krugman at the New York Times. He is a nobel prize winning economist and a professor at Princeton. I am going to believe him on this issue.

This is true-But, I've also been to many places where it cost 50,000,000 blivits (insert local currency here) to buy a sandwhich. Guess how nice a place it was? True, we can't run out of money. But we can run out of things that money can buy when it's devalued to the point it's worthless. I remember buying coffee in Italy in the late 90's when it was still the Lira-I recall around $3000 Lira for a cappuchino. Cars were in the millions or billions.

The numbers on the banknotes are ultimately arbitrary. If all bank notes had an extra zero or two, what difference would it make? Some people may be accustomed to paying 2$ for a coffee, others 2000$, but seeing their salaries and other costs are also probably offset by the same number of zeroes, it doesn't make anybody richer or poorer.

Printing money reduces its value, this is true. But many people draw the wrong conclusion from that. They think if you reduce the value enough it might hit zero or become negative. They fail to understand the nature of an asymptotic regression.

If you have a piece of paper and cut it in half, and cut it in half again, and do that 1000 times, will the size of the paper be negative? Of course not.

 

[Ryan]

Your entire argument is based on a false premise.

A country that issues its own currency cannot run out of money.

It can't run out but it certainly will render it worthless. Did you flunk eco101?

Did you bother to actually read the thread?

I actually got an "A" in both maco and micro, not that it's any of your business.

 

[jis]

Your entire argument is based on a false premise.

A country that issues its own currency cannot run out of money.

It can't run out but it certainly will render it worthless. Did you flunk eco101?

Did you bother to actually read the thread?

I actually got an "A" in both macro and micro, not that it's any of your business.

We already know that in this comic thread many believe that ones ignorance is equivalent to another's knowledge or expertise and therefore one is substitutable by the other. And the comedy continues. I am considering starting a peanut and popcorn business on this thread. :lol:

 

[henryj]

The numbers on the banknotes are ultimately arbitrary. If all bank notes had an extra zero or two, what difference would it make? Some people may be accustomed to paying 2$ for a coffee, others 2000$, but seeing their salaries and other costs are also probably offset by the same number of zeroes, it doesn't make anybody richer or poorer.

Printing money reduces its value, this is true. But many people draw the wrong conclusion from that. They think if you reduce the value enough it might hit zero or become negative. They fail to understand the nature of an asymptotic regression.

If you have a piece of paper and cut it in half, and cut it in half again, and do that 1000 times, will the size of the paper be negative? Of course not.

Amazing bit of analogy there. You want the US to resemble Zimbabwe, right? There a hundred trillion dollar note is worth about $5 US. It's the largest denomination note ever issued and a collectable. lol. People on fixed incomes do not get zeros added to there income. http://online.wsj.com/article/SB10001424052748703730804576314953091790360.html

If this is the attitude of young people today, the future is going to be very interesting. Don't turn in your firearms yet. lol. Who needs trains when you are eating dog food just to stay alive.

And just for fun I ordered one of those 100 trillion dollar notes off Ebay for $3.85 with free shipping. lol.

 

[cirdan]

The numbers on the banknotes are ultimately arbitrary. If all bank notes had an extra zero or two, what difference would it make? Some people may be accustomed to paying 2$ for a coffee, others 2000$, but seeing their salaries and other costs are also probably offset by the same number of zeroes, it doesn't make anybody richer or poorer.

Printing money reduces its value, this is true. But many people draw the wrong conclusion from that. They think if you reduce the value enough it might hit zero or become negative. They fail to understand the nature of an asymptotic regression.

If you have a piece of paper and cut it in half, and cut it in half again, and do that 1000 times, will the size of the paper be negative? Of course not.

Amazing bit of analogy there. You want the US to resemble Zimbabwe, right? There a hundred trillion dollar note is worth about $5 US. It's the largest denomination note ever issued and a collectable. lol. People on fixed incomes do not get zeros added to there income. http://online.wsj.co...3091790360.html

If this is the attitude of young people today, the future is going to be very interesting. Don't turn in your firearms yet. lol. Who needs trains when you are eating dog food just to stay alive.

And just for fun I ordered one of those 100 trillion dollar notes off Ebay for $3.85 with free shipping. lol.

There is a world of difference between moderate inflation and hyperinflation. A moderate restrained inflation can be a good thing (under certain circumstances, for example because it penalizes those who store cash in their mattress and encourages them to go out and invest it), A hyperinflation is hugely damaging to virtually everybody. The two are not at all the same beast.

Moderate inflation does not add zeroes to prices from one day to the next but may do so over a period of decades. Whether or not salaries keep up with prices does not primarily have to do with inflation but with macro-economic developments such as the supply and demand of different skillsets. Even in a zero inflation scenario, salaries can shrink.