The Economist says the same things I did a bit ago (only The Economist does so more concisely and clearly) about Senator Mica’s proposal that they privatize the Northeast corridor. There are some problems with the Economist’s argument, though:
Critics of Mr Mica note that Amtrak’s profitable north-east corridor operations subsidise less popular, less useful routes elsewhere in the country. Thus, selling off the north-east corridor could provoke a “domino effect,” leaving other, less profitable routes at risk, Rep. Nick Rahall (D-W.Va.) warned earlier this month. But that argument, which Mr Rahall apparently sees as a defence of Amtrak, is actually a bit of an indictment of the company. Economics, not nostalgia or politics, should determine where Amtrak operates. Right now, it’s often the opposite. Is it really necessary that Amtrak service Dodge City, Kansas (pop. 27,340)?
Ok, yes, it’s easy pickings to make fun of stops along the lines of the Dodge City types. Sure, no, they don’t really merit a stop, yeah, whatevs. But you can only carry the logic so far.
Network economics tends not to be like simple micro; there are useful hierarchies within networks, and it’s not always apparent where the efficient spatialcutoff for distributed, low-volume customers are, whether that means providing cable tv to low-density suburbs or Amtrack to Boston when the DC-NYC corridor probably pays the freight while NYC to Boston may not (it’s a matter of convention to lump the East Coast together, but it may not be the case that the whole of the corridor runs a profit, or enough of a profit that you’d want to run the whole corridor.) There comes a point where you can and do make money cross-subsidizing from your trunks to your distributors.
We’ve got history to work from: Amtrak didn’t start out as a gummint project. When the US deregulated intercity rail, the first thing all the rail companies did, besides jump up and down, was ditch their intercity passenger service because they couldn’t make any money on it. That’s why Amtrak doesn’t own its own tracks, and one of the reasons why, as a service, it’s running at a major disadvantage. Maybe everything has changed in the interim, but…
Edited to add:
Please see comments for the Transportationist, David Levinson, giving a history of Amtrak. I didn’t mean to say that Amtrak arose from the ashes of deregulation (but I wrote it that way…sloppy writing)…I meant to say that nobody has wanted the job of running anything remotely related to intercity passenger rail for about 50 years (though there are many HSR hopefuls), even though freight rail has stayed on as a profitable enterprise (except when I invest in it rrrrrr–not that I am bitter). Amtrack become an gummint problem after intercity passenger service was a lousy private sector problem. So why it would change at this point I have trouble understanding.