Amtrak’s ridership and revenue has been steadily increasing over the last 10 years, and 2011 set a new ridership record with 30.2 million passengers, and $1.9 billion in ticket revenue. But, even though it took in $1.42 billion from Congress last year, it still manages to lose $1 billion annually. This is hardly a new development. Amtrak has a long and storied history of functioning at a loss despite government subsidies.
So, as we enter what appears to be a new era (maybe?) of government austerity, it seems worth asking if Amtrak can ever turn a profit without government help. We rounded up some people who pay attention to this issue and asked for their ideas to fix Amtrak, if it can be fixed at all.
On Jan. 1, 1999, the euro was launched in electronic form. A few years later, amidst much fanfare, 12 European countries began replacing beloved national currencies with the euro, and the currency rapidly became the tender of choice across Europe. Wim Duisenberg, the then-president of the European Central Bank applauded the new currency: “By using the euro notes and coins we give a clear signal of the confidence and hope we have in tomorrow’s Europe.”
Almost ten years later, things look a little different. The financial crisis that has brought much of the developed world to its knees looks poised to bring down Europe’s single currency as well. The cover of this week‘s Economist reads “Is this really the end?” Inside, the magazine offers the following observation:
The chances of the euro zone being smashed apart have risen alarmingly, thanks to financial panic, a rapidly weakening economic outlook and pigheaded brinkmanship. The odds of a safe landing are dwindling fast.
The term “merit pay” has gained a prominent place in the debate over education reform. First it was former D.C. schools chancellor Michelle Rhee trumpeting it as a key to fixing D.C.’s ailing public schools. Then a handful of other districts gave it a go, including Denver, New York City, and Nashville. Merit pay is a big plank in Education Secretary Arne Duncan‘s platform; and Chicago mayor Rahm Emanuel has just launched his own version of merit pay that focuses incentives toward principals.
There’s just one problem: educators almost universally hate merit pay, and have been adamantly opposed to it from day one. Simply, teachers say merit pay won’t work.
In the last year, there’s been some pretty damning evidence proving them right; research showing that merit pay, in a variety of shapes and sizes, fails to raise student performance. In the worst of cases, such as the scandal in Atlanta, it’s contributed to flat-out cheating on the part of teachers and administrators. So, are we surprised that educators don’t respond to monetary incentives? What makes teachers different?
For answers to these and related questions, we decided to convene a Freakonomics Quorum.
Earlier this summer, ESPN’s Buster Olneyreported that Major League Baseball and the players’ association had recently discussed a form of realignment that would result in two leagues of 15 teams, rather than the current structure of 14 teams in the American League, and 16 in the National League. This sent the sports world into a tizzy as baseball geeks everywhere weighed in on how best to realign MLB. There are a lot of ideas out there: shorten the season so each team gets one day off a week (said to be a favored position of Commissioner Bud Selig), move the Houston Astros or Florida Marlins to the American League; create three divisions of five teams each; do away with the divisions entirely; add an extra wild-card team to expand the playoffs.
There’s also a discussion about finding ways to address the disparity in miles traveled. According to this neat interactive graphic put together by Paul Robbinsat the New York Times, in 2009, the Dodgers traveled a league-high 59,742 miles, while the Nationals traveled less than half that, 26,266 miles.
Not to be left out, we decided it was a good time to convene a Freakonomics Quorum. We rounded up a handful of sports economists and asked them the following question:
What proposed realignment changes seem to make the most sense from a competitive and economic standpoint for Major League Baseball?
You don’t have to be all that sharp to see that there’s a lot of hacking going on lately. As I type, Rupert Murdoch and his allies are testifying before British Parliament over the mushrooming News of the World disaster. It seems like everyone on earth is getting hacked: consultants and cops, Sony and the Senate, the IMF and Citi, and firms ranging from Lockheed Martin (China suspected) to Google (ditto) to dowdy old PBS. But is there really more hacking than usual of late, or are we just more observant?
To answer this question, we put together a Freakonomics Quorum of cyber-security and I.T. experts (see past Quorums here) and asked them the following:
Why has there been such a spike in hacking recently? Or is it merely a function of us paying closer attention and of institutions being more open about reporting security breaches?
A few years ago, we wrote a column (related material here) about the unintended consequences of Jane Fonda — that is, how anti-nuclear-power activism as epitomized by Fonda’s character in the nuclear thriller The China Syndrome helped halt the growth of nuclear power in the U.S. The timing of the film couldn’t have been better: 12 days after its release, an accident at the Three Mile Island nuclear plant in Pennsylvania spooked the nation into Fonda’s arms — even though, in retrospect, that accident was far less serious than initially thought.
Many other countries, in the meantime, embraced nuclear power. But if you thought the China Syndrome/Three Mile Island combo was devastating to a nuclear future, consider the aftermath of the Fukushima Daiichi nuclear disaster in Japan. On May 11, Japan announced that it was shelving plans to scale up its nuclear energy capacity. Two weeks later, Germany announced plans to end all nuclear power generation by 2022. The Swiss have vowed to end nuclear power by 2034; and the Italians voted down plans to restart the country’s nuclear power program.
The FBI recently announced that the number of violent crimes fell 5.5 percent in 2010, with property crimes falling 2.8 percent. This extends the dramatic reduction in crime that began in the 1990s. The Times declared that criminologists were baffled by the news, and Levitt was baffled by their bafflement:
Apparently, everyone expected crime to rise because of the weak economy, which I find strange, because there is zero evidence of any relationship between violent crime and the economy, and a relatively weak one between property crime and the economy. Plus, relative to 2009, the economy in 2010 was substantially improved.
We spent an entire chapter in Freakonomics exploring the factors that do and do not seem to have brought down the rate of violent crime in the U.S. In short, factors that matter include: number of police; number of prisoners; changes in drug markets; and the availability of abortion. And those that don’t seem to much matter: the economy; innovative policing strategies; most gun laws; capital punishment; and demographics.
There is of course no reason for anyone to have complete confidence in the arguments we presented, even if they were more empirical than most arguments about crime. Still, as Levitt said in the excerpt above, it is surprising that so many people seem wedded to the view that the economy drives violent crime even when the evidence supports the contrary.
So, given the amount of bafflement on the issue, it seemed like a good time to convene a Freakonomics Quorum.
As I type these words, the biggest insider-trading trial in years, that of Raj Rajaratnam, has just gone to the jury. I haven’t followed the trial too closely, but the gist is evident: the line between “insider trading” and the legitimate, if sharp-elbowed, acquisition of useful trading information is extremely blurry. This is hardly the only insider case at the moment. Preet Bharara, U.S. Attorney for the Southern District of New York, famously said last fall that “illegal insider trading is rampant and may even be on the rise.” So it seemed a good time to put together a Freakonomics Quorum and ask a couple of straightforward questions.
This year’s midterm elections promise to be a bit more eventful than usual, with predictions of seismic change in Congress and in many statehouses, most of it in a blue-to-red direction. But predictions aren’t elections; and even if the predictions hold true, what happens next?
While the New York Yankees’ 2010 season came to a disappointing close, it would still appear inevitable that the team will want to re-sign Derek Jeter, their franchise shortstop. But it appears just as inevitable that his on-field performance isn’t worth nearly as much as he will likely want to be paid.
Consider the ingredients: a frail economy, a toxic political environment, looming hard deadlines and massive uncertainty in the business community – the perfect circumstances under which to write some great federal tax policy!
But tax-code writing will be done – on the expiring Bush-era tax cuts, the estate tax, the Alternative Minimum Tax, capital-gains taxes and more.
Last month, roughly two years into a global financial maelstrom, the U.S. Congress passed a financial-reform bill. It was more than 2,300 pages long, addressing everything from derivatives to consumer financial products to oversized banks. We asked a few clever people a simple question.
Iran’s citizens take to the streets en masse after a disputed election. Gay men in Salt Lake City hold a kissing protest. Members of the Westboro Baptist Church voice their anti-just-about-everything views to military funerals and elsewhere.
Beyond the media attention they inevitably garner, what do protests actually accomplish?
So we asked a group of people — Paul Armentano, Mike Braun, Joel W. Hay, Jeffrey Miron, and Robert Platshorn — to think about a national decriminalization of marijuana (unlikely, let’s be honest) and answer the following: What would be some of the most powerful economic, social, and criminal-justice effects?
Photo: hoggardb The Internal Revenue Service presumably never likes tax cheats, but when money is tight there is more pressure put on the I.R.S. to step up enforcement and collect more money. The most recent gambit, reported today, is an amnesty program designed to root out offshore tax havens. We once wrote of another I.R.S. measure that produced $3 billion . . .
The notion of micropayments — a pay-per-click/download web model — is hardly a new one. But as a business model it hasn’t exactly caught fire, or even generated more than an occasional spark. Lately, however, the journalism community has become obsessed with the idea. This is what happens when an existing business model begins to collapse: alternative models are desperately . . .
Way back when in 2006, here’s what venture-capital legend John Doerr had to say about clean technology: “This field of greentech could be the largest economic opportunity of the 21st century.” As recently as early 2008, plenty of investors and technology companies were still predicting a clean-tech boom. But now? With a recession that has scrambled nearly everyone’s spending and . . .
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