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by C. William Chattin
Judging from his article over at The Daily Beast, the brilliant James Langenfeld apparently read my June 3rd item here at Obama Pundit. My take:
The effect of rail nationalization is well-documented: popular routes are overpriced to subsidize the less popular ones; cost-benefit decision-making and efficient pricing is cast aside in favor of political expediency; and, the nationalized monopoly obstructs any prospective competitor from entering the market.
Langenfeld’s take:
Amtrak had a government-affairs department rather than a finance department, which proved to be an omen: Train service was provided to states with powerful senators, even if this involved huge losses and few passengers.
The talk then was all about becoming profitable, but the reality has been anything but. Amtrak is now 38 years old, and in middle age shows no sign of moving out of the taxpayer’s house. The government gives Amtrak about $1.5 billion per year, not including an additional $1.3 billion from the recently passed American Recovery and Reinvestment Act.
The bottom line, to me, is that there simply is no compelling reason for the federal government to have nationalized GM; no reason that GM should be picked as a “winner,” as compared to, e.g., Circuit City; no reason to think that the federal government will be able to turn a profit where the private sector had failed; and, perhaps most importantly, no reason to believe that the operation of GM by the federal government will be insulated from political pressures such that Washington politics is elevated over market-driven decision-making — indeed, evidence of Washington pressure has already surfaced in GM’s decision not to close a plant in Barney Frank’s district.
