DOGE: Divorce Amtrak from the Government

Amtrak, a government passenger railroad corporation, has never made a profit since its inception in 1971. The government train company loses close to a billion dollars each year while sucking an extra $2-4 billion dollars a year from taxpayers to fund its failures. In addition to taxpayer funded bailouts, the continued losses Amtrak accumulates creates a far more deeper problem for everyone.

WHAT EFFICIENCY IS

Let's say you are in charge of constructing a train from City A to City B, but a mountain stands in the way of these two cities. As the manager of this project, you must choose to either build around the mountain or drill through it, in order to reach the other city. Building around this mountain will require a lot of steel but not as many engineers to design the extended railroad. On the contrary, drilling through the mountain will require less steel, but more engineers to design a tunnel.

Between these two, you must account for one factor: both steel and engineers are also needed in other parts of the economy. Steel is being used to build cars, ships, construction machines, etc. While engineers are being used to design and build bridges, roads, airplanes, etc. If you select going around the mountain, you would be taking the scarce resource of steel away from producing cars or buildings. If you select going through the mountain, you would be taking the scarce resource of engineering away from producing bridges and roads. Which option ensures that you are not using resources which could be better used elsewhere? What option is best for the good of the nation?

To solve your problem, you would need to identify which set of resources is less critical for other uses. Efficiency means allocating scarce resources (steel and engineering expertise) in a way that minimizes opportunity cost and ensures those resources are used where they provide the greatest benefit to the economy as a whole.

The only way to find the most efficient way of using scarce resources is from pricing. If you can calculate the cost of both building around and building through the mountain, you can find the most efficient way based on the cheaper option. As prices are derived from the relative supply and demand of something, prices tell you how much something is needed elsewhere in the economy. The cheaper option is signaling to us that the alternative is more valuable in other parts of the economy. To hammer this point home, an engineer might say that a car built out of titanium would be far superior than one built out of steel. But the entrepreneur will look at the prices of both and recognize that the price of titanium is significantly higher than steel, signaling that titanium is in greater demand or scarcer in other parts of the economy. You can make a replacement hip out of titanium, but try steel, and you might as well include a tetanus shot.

This leads to a second important piece of information: profit & loss calculation. A profit indicates that resources have been used efficiently to create value that exceeds the costs of production. It shows that the goods or services provided are highly valued by consumers, justifying the resources invested. A loss, on the other hand, signals inefficiency, meaning that the resources used in production could have been better allocated elsewhere in the economy to generate greater value for consumers. Losses are a warning that resources are being wasted on low-priority uses, and they encourage businesses to either improve their efficiency or exit the market, freeing up those resources for more productive purposes.

AMTRAK IS INEFFICIENT

Amtrak's continued losses signals that its currently used resources could be better utilized elsewhere in the economy. By consuming these scarce resources like labor, fuel, and steel, Amtrak prevents these materials from being used in industries where they could provide greater economic and social value, such as healthcare, housing construction, or energy production. Amtrak is hogging these resources and wasting them on operations people clearly do not want. The United States government needs to divorce itself from Amtrak and all its operations. Ending this corporate welfare will allow Amtrak to re-evaluate its operations, shutting down unprofitable lines and maintaining profitable routes. By allowing Amtrak to operate independently, resources like fuel and labor would flow to industries that create jobs, drive innovation, and provide goods and services that people actively demand.

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