The U.S. ought to Privatize Amtrak
| Voting Style: | Open | Point System: | 7 Point | ||
| Started: | 7/29/2014 | Category: | Politics | ||
| Updated: | 7 years ago | Status: | Post Voting Period | ||
| Viewed: | 3,730 times | Debate No: | 59736 | ||
 Pro R1: Definitions and Acceptance R2: Arguments and Rebuttals R3: Rebuttals and Conclusions *No semantics *No original arguments last round *No forfeiting -----A violation of any of these three rules is an automatic forfeiture of all points. Amtrak Subsidies: Amtrak is a railroad corporation which receives approximately $1.5 billion in federal subsidies every year, to increase railroad usage among the American population. In this debate, the contenders will argue whether or not the federal government ought to subsidize Amtrak, or if Amtrak should be privatized and "cut off" from federal subsidies, amounting to approximately $1.5 billion every year. Good luck.  Con I accept this debate under your rules. I will debate that Amtrak should continue to be subsidized and supported by the government as necessary. |
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Pro Thanks for accepting Con, you seem to be a very worthy opponent. I'll put forth my arguments supporting the privatization of Amtrak. C1: Reduces Wasteful Spending One reason Amtrak should be privatized is because the federal subsidies are simply a waste of money. The Amtrak Corporation — funded by the federal government — has "generated huge losses... each and every year of its existence" [1]. In FY2015 alone, U.S. taxpayers are projected to spend $1.5 billion for Amtrak subsidies [2]. The federal government, which has overspent its revenue by over $630 billion in this year alone [3], should cut unnecessary expenditures. C2: Improves the Economy The economy can be defined as, "the aggregate activities of production and consumption which determines the allocation of scarce resources" [4]. The U.S. has a market economy, where consumers decide the production and consumption patterns of the U.S. economy. To imagine, consider the case of shirts. If consumers increase their aggregate demand for shirts, profits will signal this shortage, and suppliers will respond promptly by increasing their production of shirts, until supply matches demand. The efficiency of the market economy is exceptional. The Amtrak subsidies distort the economy. The federal gov't directs more resources to rail transportation than would be desired by consumers. The result is inefficiency. Consequently, the cost of products throughout the economy is manipulated -- resources have been wasted on a government project (Amtrak). ----------Important Information---------- In the current United States, the government subsidizes many modes of transportation. However, utilizing the Bureau of Transportation statistics, Amtrak subsidies "per-passenger mile... [are] nearly 9 times [the] subsidies to air travel and nearly 22 times subsidies to highway travel" [5] [6] [7]. Therefore, by privatizing Amtrak and 'equalizing' subsidy levels across the transportation industry, prices will be less distorted, consumers' preferences will be more clearly conveyed, and the allocation of resources will more accurately reflect the preferences of America's consumers. In other words, the economy will gain efficiency as wasteful subsidies are eliminated. C3: Improves Energy Efficiency Amtrak is less energy efficient than different modes of transportation. The Congressional Research Service found that cars use less energy than Amtrak [8], due to the fact that Amtrak has many empty passenger cars. Due to the fuel economy standards implemented in the last several years, light trucks will also have lower energy consumption than Amtrak in the near future[9]. Also, since airline energy efficiency has grown at approximately 3.1% per year (compared to Amtrak's rate of 1.3%), airlines will become more energy efficient than Amtrak by 2023 [10]. Furthermore, empirical evidence from the Congressional Research Service and another independent institution found that intercity buses use about 60% less energy than Amtrak [11]. Therefore, by eliminating Amtrak subsidies, it will lead consumers to utilize different modes of transportation, which will thereby increase energy efficiency and reduce polluntants in our atmosphere. C4: Improves Amtrak's Corporate Structure The private sector is more efficient than the public sector. This fact is due to several principles, such as (1) Productive behavior is aligned with profit (2) Individuals confront the consequences of their decisions (3) Decision-making is devolved to the most effective parties Allowing Amtrak to have private governance would allow Amtrak the opportunity to have a flexible, innovative business design, which would spur profitability and increase efficiency, both for the enterprise and the economy as a whole. An independent analysis of Amtrak's operations found that 41 of Amtrak's 44 routes were losing cash in 2008 [13]. Furthermore, despite charging $16 per hamburger [12], Amtrak still hemorrhages cash. The notion that government can run a railway better than the private sector is absurd. Conclusion Amtrak currently consumes $1.5 billion in taxpayer money every year, with no end in sight. This has been Amtrak's track record for over forty years straight. This is simply another instance of wasteful government spending. Privatizing Amtrak is not only (1) fiscally responsible, (2) good for passengers, (3) good for the American people, and (4) good for energy policy, but will allow Amtrak, as a private enterprise, to gain the efficiency, flexibility, and tools to reinvent its approach, and to build an image of success, instead of an image of failure and perpetual disappointment. Sources: [1] (http://tinyurl.com...) [2] (http://tinyurl.com...) [3] The Budget and Economic Outlook, Fiscal Years 2013 and 2023, PDF. [4] (http://tinyurl.com...) [5] (Calculated from National Transportation Statistics, tables 1-40 (“Passenger Miles”), 3-33 (“Transportation Revenues by Mode and Level of Government”), and 3-37 (“Transportation Expenditures by Mode and Level of Government”) [6] (Calculated from National Transportation Statistics, tables 1-40, 3-33, and 3-37; passenger miles based on light-duty vehicles, motorcycles, and buses from table 1-40. ) [7] (Calculated by taking 'total Amtrak subsidies [2]' and dividing this figure by 'total passenger miles [6]'. [8] Stephen J. Thompson, “Amtrak and Energy Conservation in Intercity Passenger Transportation,” Congressional Research Service report 96- 22E, September 3, 1996, p. 1. [9] The White House, “Administration Finalizes Historic 54.5 MPG Fuel Efficiency Standards,” news release, August 28, 2012, tinyurl. com/94v3e2a. [10] Transportation Energy Data Book, Edition 31 (Oak Ridge, TN: Department of Energy, 2012), table 2-14. [11] Thompson, p. 1; Transportation for Tomorrow: Report of the National Surface Transportation Revenue and Policy Study Commission (Washington: Department of Transporation, 2007), p. 3-20. [12] (http://tinyurl.com...) [13] (http://tinyurl.com...) Con Argument: The United States is sadly behind in public transportation development. Most developed countries around the world have advanced and extensive public transportation systems. Japan, South Korea, and Europe all have some of the most advanced in the world meanwhile the United States has little to show. The United States should not be this far behind and could learn something from the international community on how to manage this form of transportation. All of the leading nations in railway transportation heavily subsidize and even manage their railway system with great success. Japan, South Korea, and the European Union all greatly subsidize or even own their railway system. Japan’s Japanese National Railways is owned by their government and is it is the most successful and advanced in the world. [1]
I see no evidence that ending government subsidies will help Amtrak become a more efficient or effective company. Amtrak executives already invest a great deal of effort in managing the organization to create success and have accomplished continuing success. [2] According to Amtrak’s National Fact Sheet FY: 2012 they made $2.877 billion in revenue and covered 88% of their own expenses without subsidies. [3] However, they can use the additional subsidy money for further development to quickly become a more successful railway mass transit system. Amtrak’s management has proven time and time again that they are competent as they are. You fail to cite sources to prove your case on how ending subsidies will result in improving Amtrak’s management. Your BoP is not fulfilled in that regard.
There is growing demand for railway transport in the United States and around the world. Railways can be seen as a transportation system for the future. Amtrak as broken nine ridership records in the last ten years from 2012 and is at its highest since they started operations in 1971. From FY 2000 to FT 2012, Amtrak saw a 49% increase in ridership. Amtrak carried 31.2 million passengers in 2012 alone; that is over 85,000 passengers a day. Joe Boardman, President and CEO of Amtrak, said, "Ridership will continue to grow because of key investments made by Amtrak and our federal and state partners to improve on-time performance, reliability, capacity and train speeds." He emphasized their need to keep their government subsidies in order to continue to develop their continued success as a mass transit system should be. [4]
Even Amtrak’s long distance routes, the focus of Amtrak’s apparent failures, are seeing a steady increase in ridership. Amtrak saw a 4.7% increase in ridership on those particular routes in 2012. There has been a boom in attraction toward train travel in recent years as reflected in Amtrak’s reports. July 2012 was Amtrak’s best month in their entire history. The government should continue to invest in this organization because it is in our economic interest. [5]
[6]
Amtrak is continuing to evolve further in technology and effectiveness as a mass transit system with government subsidized backing. Amtrak is building the equipment, infrastructure and organization it needs to sustain growing ridership. They are investing in projects that will enhance passenger experience, sustain the national passenger network, provide much-needed capacity and improve reliability and safety. [7] In 2013 Amtrak unveiled new locomotives built by Siemens that will be operating in the Northeastern U.S. on some of their busiest rails. The trains cost about $466 million and would not have been possible without significant government subsidy. The trains are built to be far more energy efficient, greener, easier to maintain, and have higher performance than many of their older, obsolete models. [8] Works Cited:
[3] Amtrak. http://www.amtrak.com.... May 2013. 2 August 2014. [4] —. http://www.amtrak.com.... 10 October 2012. 2 August 2014. [8] —. http://www.amtrak.com.... 13 May 2013. 2 August 2014. [7] —. http://www.amtrak.com.... 2013. 2 August 2014. [1] Expatior. http://expatior.com.... 2014. 2 August 2014. [5] Jaffe, Eric. http://www.citylab.com.... 19 October 2012. 2 August 2014. [2] Stolberg, John. http://www.railroad.net.... 6 February 2014. 2 August 2014. [6] Wikipedia. http://en.wikipedia.org.... 26 July 2014. 2 August 2014. Rebuttals:
“One reason Amtrak should be privatized is because the federal subsidies are simply a waste of money. The Amtrak Corporation — funded by the federal government — has "generated huge losses... each and every year of its existence" [1]. In FY2015 alone, U.S. taxpayers are projected to spend $1.5 billion for Amtrak subsidies [2].”
I would argue that “huge losses” is an exaggeration. While $1.5 is projected for Amtrak’s subsidy in 2015 it is actually quite insignificant when compared to other transit budgets. In 2008 the government funds the Highway Trust Fund $10 billion, the FAA $2.7 billion (I covered earlier that Amtrak is more efficient domestically), and $8 billion goes to safety on cruise ships (private cruise liners). Additionally, the annual $1.5 billion that would go to Amtrak only accounts to less than $5 per American citizen in taxes.
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Pro Thanks for your arguments Con. For the purpose of brevity, I'll try to keep my case short. Rebuttals "All of the leading nations in railway transportation heavily subsidize and even manage their railway system with great success." Only two high-speed rail routes in the world are profitable [1], with these routes being Tokyo-Osaka and Parisk-Lyon. The vast array of "advanced" railroad networks in France, Germany, Japan, China, etc., are not only hemorrhaging taxpayer's funds, but only account for approximately 8% of all transportation usage [2]. Amtrak's subsidies, as I said earlier, far exceed the subsidies for highways and air travel [3]: Your link shows nothing to support your claim. Second, Japan is a densely populated island, compared to the United States, which has a larger population diffused across thousands of miles, across deserts, rivers, mountain ranges, and different natural barriers. "Amtrak executives already ... have accomplished continuing success" As proved in R2, Amtrak has been operating at a loss for 43 years in a row. Furthermore, an operating loss of 12% indicates business failure. A business in the private sector cannot run at a major loss for more than a few years. The average American's rail usage hasn't budged in recent years [3]: "However, they can use the additional subsidy money for further development to quickly become a more successful railway mass transit system." The European experience of offering railroads abundant subsidies "suggests that there are diminishing returns to passenger rail subsidies" [3]. So if subsidies are increased by say a factor of two, ridership probably won't match the subsidy increases. "Railways can be seen as a transportation system for the future." I'd have to disagree with this claim. "Amtrak's energy efficiency" After adjusting for the fact that Amtrak's passenger's cars are underutilized, Amtrak used an average of 2,271 BTUs per passenger mile (from empirical data) [4] [3]. "You fail to cite sources to prove your case on how ending subsidies will result in improving Amtrak’s management." A study across 41 enterprises among 15 nations found that privatization "increased returns on sales, assets, and equity, raised internal efficiency, improved capital structure, and increased capital expenditures [5]. The World Bank summarizes saying, "privatization, when done right, works well" [5]. Amtrak would benefit from privatization because it would have the flexibility and incentives to restructure its business structure. It could shut down the 41 railway routes which operate at a loss, and invest in its 3 profitable routes in New England (source in R2). However, the federal government prohibits this. The political constraints of the gov't restricts Amtrak's potential. Consider an analogy. The Soviet Union — a massive communist state in the 20th century — had gross inefficiency and widespread poverty from state ownership of enterprise. Yet, the United States had a mostly market economy, and reached unprecedented levels of prosperity, ingenuity, and living standards. Why would we adhere to the American model for most of the economy, but when it comes to railroad usage, apply the Soviet model? Railroad usage can function using competition and devolved markets. Conclusions - Amtrak costs taxpayers over $1.5 billion every year - Amtrak has operated at a loss for over 43 years straight - Amtrak (adjusting for passenger-usage) isn't more energy efficient - Amtrak — if left in government hands — will continue to falter - Amtrak subsidies distort the economy, harming all American consumers - Amtrak would benefit operating as a private enterprise ---------- Thanks for the debate Con. Sources [1] David Randall Peterman et al., "High Speed Rail (HSR) in the United States," Congressional Research Service, December 8, 2009, p. 19. [2] “Panorama of Transport: 2009 Edition,” pp. 101, 103, 104, 105, 108. [3] (http://tinyurl.com...) [4] Transportation Energy Data Book, Edition 31 (Oak Ridge, TN: Department of Energy, 2012), table 2-14. [5] (http://tinyurl.com...) Con Rebuttals:
“Only two high-speed rail routes in the world are profitable [1], with these routes being Tokyo-Osaka and Parisk-Lyon.
The vast array of "advanced" railroad networks in France, Germany, Japan, China, etc., are not only hemorrhaging taxpayer's funds, but only account for approximately 8% of all transportation usage [2].”
I was not talking about profitability when I was saying they were a success. They are successful in the sense of technology, efficiency, usage, and their extensive networks. That 8% you claim is the total (I question that number since I found nothing to support it) still apparently adds up to 397.8 billion passenger-kilometers out of population of 505.7 (European Union) million people. Most of the railway infrastructure is in Western Europe with the majority of its usage in Germany and France.
Sources: - http://epp.eurostat.ec.europa.eu...
“Amtrak's subsidies, as I said earlier, far exceed the subsidies for highways and air travel [3]:”
First, I would like to point out that your source is from the Cato Institute which is a libertarian and conservative bias think tank. It is obvious that the Cato Institute would oppose Amtrak subsidies and try to exaggerate every apparent flaw. Additionally, your graph shows their subsidy in relation to per passenger mile. However, I have also pointed out earlier that Amtrak boasts the highest revenue by passenger mile over doubling the next highest which is domestic airlines. Therefore, Amtrak actually makes the most money out of all of them.
I believe you may have misinterpreted the data in the graph. I have already proven in my former argument that Amtrak’s subsidy is nearly half of that of the FAA and almost one tenth of the Highway Trust Fund. Your graph technically does not refute that but does display its information in a misleading way by comparing the numbers to per passenger mile.
“The average American's rail usage hasn't budged in recent years [3]:”
Again, I question both your source and misleading statistics. The graph you used is, as you said, for the average American. It is obvious that Amtrak is not used as much as domestic airlines or passenger cars because passenger railways are not accessible to everyone. The average American probably doesn’t use rail transport every day throughout the U.S. There are entire western states such as Idaho, Wyoming, and South Dakota that does not even have a rail going through them yet. While Amtrak is becoming increasingly popular in the last decade, especially in the Northeastern United States, they are not yet an average American’s form of transportation in most of America.
“Furthermore, after adjusting for the fact that vehicles (in intercity travel) typically have 2.4 passengers [3], vehicles on average used fewer BTUs per passenger mile — ipso facto, vehicles overall had greater energy efficiency.”
Your source states, “At 2.4 people per car, the average car used 2,226 BTUs per passenger mile in intercity travel in 2010.” 2,226 BTUs is still less than my data that says Amtrak uses 1,735 BTUs per passenger-kilometer. Additionally, your source is in “passenger-miles” which is greater than a “passenger-kilometer” which makes the passenger car even less efficient in comparison.
Again, I greatly question Cato Institute “research” due to their clear bias and unaccredited status for valid research. Your source claims that 2,226 BTUs is less than what Amtrak’s energy consumption while my source is based off of objectively collected data that says Amtrak uses significantly less. My source for energy usage is from the United States Bureau of Transportation I collected through a Wikipedia article.
“Moreover, both vehicles and air travel are gaining energy efficiency much more rapidly than Amtrak, and will both exceed Amtrak within the next several years [3]:”
Your graph does not exactly seem to support your claim. The graph is based on data from former statements such as their passenger car efficiency claim that I refute. Also, the trend on the graph shows all modes of transportation lowering. While airlines may become more efficient by 2023 as you claim I see little to prove it. Airliners went down significantly until 1980 and then slow similarly to its competing modes.
In reference to privatization:
Your World Bank source does not support your argument. There is nothing in the source that says anything against subsidizing. I believe the article is suggesting making government-owned entities private meanwhile Amtrak is a publically-held corporation with common and preferred stock on the stock market. They are officially part of the private sector. Many corporations in the United States get subsidies as government investment. Therefore, this article does not apply to this situation and your argument goes unsupported.
Your source also states, “Revenue maximization should not be the primary goal of privatization.” This goes against your theory that privatization would make them more efficient at making profits. There is no evidence to suggest that Amtrak would financially benefit from being released from subsidies.
Concluding Rebuttals:
“Amtrak — if left in government hands — will continue to falter” “Amtrak would benefit operating as a private enterprise”
Amtrak is not governed by the government and operates like any other corporation in the private sector. There is nothing to support these claims.
I thank Contra for this very interesting debate. I greatly enjoyed it. |
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| Total points awarded: | 0 | 5 |
Subutai's RFD is questionable. I would like to know how my arguments were "either irrelevant or off target."
Pro outlines a clear case for why subsidies create economic inefficiency and backs it up with a concise case that Amtrak operates at a loss. Con's economic rebuttals are not well articulated- I don't understand what it means for rails to be a success in terms of "efficiency" and "networks" without an explanation of what that means compared to the 12% deficit Pro is pointing to as a market indicator that rails are inefficient. I'm not saying Con could not have won this argument, only that he did not make a compelling case here.
With that being said, the energy efficiency argument is sort of irrelevant. Whichever side won this part of the debate won it fairly narrowly. The impression I get is that neither mode of transportation vastly outperforms the others and that technology is rapidly changing how different modes of transportation perform. I buy that Amtrak is less efficient than cars and airlines, but I think Pro makes the case that technology makes this an evolving issue that does not weigh heavily against the economic benefits pointed out above.
I think Con makes a good argument that Pro's privatization research is concerned with how government owned enterprise while Amtrak is already a for-profit entity. I don't think Con effectively leverages this argument against Pro's argument about the benefits of privatization though. I think this is a point Con should have handily won but Con let Pro get away with a lot here.
In the end I think this was a clean Pro win.