Monday, March 2, 2015

Nixon's Internal Memos and the Birth of Amtrak

11 Historical Maps and Charts That Explain the Birth of Amtrak

Today America's passenger rail provider does still receive help from the federal government, but it also now recovers 93 percent of its operating costs through fares, and lately the service has broken ridership records year after year.

At it's inception, internal memos show Nixon’s calculated effort to score “political points”

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  1. That article repeats a fatal flaw in the OMB analysis - that less trains is the way to profitability. The problem is, much of the cost of running passenger trains is fixed costs. Run more trains and many of the fixed costs (stations, possibly the equipment fleet) remain the same -- but revenue goes up. Another problem is there is a network effect of added service: imagine for example, that the Chicago - LA train added a spur from Denver. That train might be unprofitable, yet increase the total system profit because the train funnels passengers onto the train going all the way to LA. The added revenue to the system would be greater than the added costs.

  2. Christopher - Great comment and yes I agree!