Amtrak Sucks; Publics are Terrible at Choice.

The other day, I spent $312 dollars on a short distance train ticket. This is because the congress of the United States is a scoundrel and a thief. Let me explain.

Every year, Amtrak makes a loss and has to be subsidized by the federal government. However, one part of AmTrak lessens the blow: the NorthEast corridor. 

A plurality of Amtrak’s riders are on the roughly 600 miles of Track that Amtrak operates between Boston and DC. In 2019, Amtrak made more than half of its revenue from northeast corridor service.

That’s because the North East is uniquely suited to train travel.

Most of America is not. That’s why very few Americans use trains. Many transitheads would beg to differ. But they are wrong. American transit fans are mostly just big nerds who had a really good time on their semester abroad in Copenhagen and want to exactly recreate those 4 pleasantly buzzed months for the rest of their lives. Railsexuals. But this is unrealistic.

For long distance trains to be a viable method of travel, the environment has to have a few essential features:

1. Large, dense cities close enough to each other that you’d rather travel at train speeds than hop in a plane
2. Some reason not to drive – either the straight, well maintained tracks needed for high speed rail, awful traffic, or a lot of people who don’t have cars.
3. Enough urban public transit/taxi density that people can easily get from the train station to their house.

Most of America does not have these things. Even other population dense regions: California, Florida, and Eastish Texas, aren’t nearly as suitable as the Northeast. That’s because their cities are post-car. Even though the regions are population dense, the cities aren’t dense enough to support the last-mile public transit needed to make long distance rail feasible. The density needed for train travel is pretty special – you need a hyperdense urban core with also-pretty-dense inner ring suburbs surrounding it. And that really doesn’t happen beyond the borscht belt.

So, a reasonable government would, like the boy scouts, accept what it cannot change, and focus train provision where train provision actually has a purpose, admitting that rail isn’t going to be useful in other parts of the country.

HA LOL.

No no no. In America, what we do instead is lose a ton of money on a bunch of trains that nobody rides, then pay for it by spiking up prices where trains are actually useful.

Look at this table again, and see if there’s anything that strikes you as funny:

You might notice that in 2019, The Northeast Corridor was only 38% of the riders, but 56% of the revenue. That means that the average trip in the NEC cost 107% more than the average trip outside of it. Perhaps that could be because trips in the northeast corridor are longer and more expensive to run.

Except, they’re not, as should be apparent from this map:

You see that tiny blue line? You just can’t have trips that long strong on a blue line that tine. North East corridor trips are shorter than the average trip, and are cheaper to run for another reason: the trains are full. A typical train outside the NEC is almost entirely empty, but in the NEC the trains run close to capacity. And AmTrak owns most of the track it operates on in the North East, while it has to rent track from freight in other parts. This saves a ton of money in operating costs. The only thing that can make trips in the Northeast more expensive to operate is the presence of the high-speed ACELA line, but that doesn’t even nearly make up for it. All in all, Amtrak makes a profit of $90 for every single passenger in the northeast. 40% of every ticket goes to line the pockets of the system, even accounting for the capital costs of operating the track.

Let me rephrase that. The United States government steals $90 from you every single time that you ride a train in the Northeast.

And it’s even worse than that. It’s not that a few train riders are being bilked to subsidize the vast majority. Most of the Non-NEC rides are on “state supported” local intercity rail in California, Pennsylvania, and New York. These only lose a little money, and the denser coastal ones can be profitable in some years. The massive losses are on the basically useless long distance rail,  like the California Zephyr, which covers the 2,438 miles from Chicago to San Francisco but takes more than 10 times as long as a plane. These cost twice as much to maintain as they can generate in tickets.

So, why does this happen?

Well, between them, New York, Massachusetts, Pennsylvania, Connecticut, Maryland, and New Jersey have 12 senators. The rest of the country has 88.

And that’s all she wrote.

Every year, Amtrak runs at a loss and has to beg congress for money. They’re not going to cut down to only the profitable lines because that would piss off 80% of congress. So, they need to jack up prices wherever they can to shrink their headline deficit and let them subsidize the useless but politically unassailable lines.

It’s especially vexing because, as everyone learned in Econ 101, the right thing for the government to do in industries with natural monopolies and low marginal costs is to operate them at a loss. Fixed costs are high for train service, marginal costs are low. So, monopoly exploitation hurts even more than in a normal industry, since every ticket unsold is almost pure deadweight loss. Amtrak should have cheap tickets year round except for holidays, when the trains start to fill up and we have to sort who gets to ride and who doesn’t. The marginal social cost of a trainride might be even less than $0 because it lessens traffic.

And it’s even more upsetting because America has a great way to deliver pork-barrel funds to flyover states: ag subsidies. Throwing money at Iowa by filling it with riderless trains wastes the oil, labor, and capital costs required to run them, but subsidies to farmers aren’t nearly as destructive. Sure, they inefficiently shift some land from beans and carrots to soy, but the effect is maybe small, and only a little of the bribe money leaks out of the bucket (except for what we lose paying off the WTO). In contrast, almost all the money going to pointless Amtrak lines is spent providing the unwanted service. No agent likes this outcome, it’s just the Schelling point we landed on, and if they tried to renegotiate someone might be unable to tell whether they’re getting screwed.

Now, I haven’t even mentioned Amtrak’s inefficient management, but that’s a story for another day.