5 ms·

It's worth pointing out that the intent of transportation infrastructure isn't to turn a profit, but to be a potent multiplier for economic gains in other segme

It's worth pointing out that the intent of transportation infrastructure isn't to turn a profit, but to be a potent multiplier for economic gains in other segments of the economy. There's barely a road in the entire country that's turned a profit (gas and vehicle registration taxes don't come close to covering road construction costs, and of course most roads aren't tolled), yet we still rightly consider roads as being worth it. We should treat our rail, transit, and other transportation infrastructure similarly. Expecting a profit is completely missing the point, but doing so is a nice bonus.

bobthepanda 7y ago
Profits are nice though in that they will finally allow Amtrak to invest in more services and maintaining/upgrading the network, because that money is not coming from Congress any time soon.
bhk 7y ago
Computing is a multiplier, as is communication, etc.. That doesn't mean that providers thereof are exempt from the realities of business, the need to watch expenses and creatively respond to change and competition. I suppose if Intel had been nationalized then they would be loss-making and we would be hearing about how taxpayers should feel good about subsidizing their losses.
- dijit 7y ago
  It’s a false equivalence though, rails and roads (and the internet) are like arteries, you can have redundant arteries but it’s wasteful. So free market economics no longer apply. It also leads to natural monopolies.
  - bhk 7y ago
    Because it's a natural monopoly, they cannot be expected to break even, and therefore deserve taxpayer subsidies?
    - Ozzie_osman 7y ago
      A utility monopoly is different than a profit-seeking one. If Amtrak became exclusively profit-seeking, it might raise prices dramatically cut unprofitable routes (say, to poorer towns), etc. Those things might increase profits but undermine the economic benefit that was being provided.
      - maxjmartin 7y ago
        I expect that if they did raise prices dramatically, they would lose buisness to roads. This suggests that they are not, in fact, a monopoly.
1123581321 7y ago
Amtrak looks even less successful if viewed as an economic multiplier.
rayiner 7y ago
Nobody is expecting Amtrak to turn a real profit. Even when Amtrak breaks even in operating costs, Congress still pays all capital costs. Amtrak got a $1.8 billion subsidy in 2018. The real issue is how much we’re paying in subsidies compared to how much we’re paying in subsidies for other forms of transportation, and perhaps what other people are paying in subsidies for the same kinds of transport. Highways get about $75 billion in subsidies (what’s not covered by gas tax). A lot more than Amtrak for sure. But highways carried over 3 trillion passenger miles last year. Amtrak was just 6.3 billion. We spent 50x as much on highways as Amtrak, but got 500x as much mileage out of those highways. (You can throw in pollution externalities, etc., but even if you use current carbon recapture methods to suck out CO2 from driving, and ignore the fact that Amtrak’s mainly east coast operations are not powered by renewables, driving still comes out ahead.)
- scarmig 7y ago
  A counterargument is that both highways and trains benefit from economies of scale. If you gave highways 1.8 billion in subsidies and Amtrak 75 billion, I would expect the miles per dollar of subsidy to look substantially better for Amtrak than they do now, and worse for roads. That said, I suspect we overinvest in both subsidies because of romantic ideas and status quo bias.
  - bluejekyll 7y ago
    I’m sorry, but are you seriously suggesting that we over invest in rail/Amtrak? Public transit is far more capable of commuting more people in a shorter period of time than roads. What we really need is far more subsidies in urban and dense suburban areas. The problem is that with our bifurcated political system in the US the people who make up less than 50% of the population outside the cities will block investment in the cities because they will feel like they’re not getting equal investment.
    - lonelappde 7y ago
      Public transit is not the same as Amtrak. A fair accounting for Amtrak has to compare to the bus alternative. I suspect Amtrak is pretty efficient in the NE corridor (at 4x the ticket price of buses) due to density, and loses a lot on the long hauls cross country and the rest of the coasts. Also, on the side, remember that non-city dwellers get massive subsidies from city dwellers for their cost ineffective lifestyles. One can argue that this is justified to support the people working in critical agriculture and industry that can't be moved to the cities and we want low sticker prices on, but it's a much hard case to make for suburb dwellers.
perspective1 7y ago
You could argue that roads ought to be fully funded according to use and therefore turn a profit. Something like a value-added tax. Just about every other essential business turns economic value into profit-- if Amtrak services were so valuable the business could raise its prices and people would pony up. But its services just aren't that much value-added and passengers have plenty of alternatives. Namely, buses.
- jeromegv 7y ago
  Catch 22. If you underinvest in rail, you end up with trains slower than bus, which makes them a bad option. If you actually invest in rail, you end up in a situation where the rail is faster than bus and has less externality on the environment
  - phlakaton 7y ago
    Worse: if you underinvest, you end up with an unreliable and cost-inefficient train service that becomes ever more difficult to support politically. Which is exactly what we're seeing in this thread, good news from Amtrak notwithstanding.
- neuland 7y ago
  This is a common libertarian argument. And I think it'd be very interesting to see in practice. I live in a state with many toll highways and people complain about the cost. But those highways are well maintained. And they complain about the potholes on the free roads. So I think it's more of an issue of people wanting everything for nothing. One problem with a private road system is that roads take up space and prevent people from using that space for something else. I think that property tax on road surface area would be prohibitively expensive if a private entity were to own it. Another problem is that building or expanding a road through an already populated area basically requires eminent domain.
  - frosted-flakes 7y ago
    Roads would still be built and planned by governments. But privately owned. See Highway 407 in Toronto, which was "sold" (100 year lease) to generate revenue.
maratd 7y ago
> It's worth pointing out that the intent of transportation infrastructure isn't to turn a profit It's also worth pointing out that transportation systems that do turn a profit are generally healthy and run well. It is difficult to turn a profit on a poorly run system. > Expecting a profit is completely missing the point On the contrary, expecting a profit is expecting excellence, which we should absolutely do. There is no reason not to have high standards and high expectations.
Aperocky 7y ago
Exactly this, the interstate wasn't built for profit - and the importance of interstates for US economy can't be understated. More recently, China have managed to build more high speed rail network than the rest of the world, and served it at loss. As I understand and having personally rode it, the effect of such transportation option to both the economy and personal convenience can be said to rival that of the interstate.
- deleted 7y ago
  [deleted]
- post_break 7y ago
  The government doesn't own the rail, it does own the roads.
microcolonel 7y ago
> the intent of transportation infrastructure isn't to turn a profit If you listen to some activists and look at the budget, you'd think that the intent of AmTrak is to lose as much money as possible without arousing suspicion. There's a big difference between not turning a consistent profit and losing more money than it could possibly save us. If the point was really to serve as transportation that can compete with the automobile at the point of sale (so that it would actually take cars off the road), or in terms of speed (increasing the economic output of passengers), most AmTrak lines and railcar-miles fail that test.
- bbanyc 7y ago
  The intent of Amtrak was to take the burden of passenger rail off the private railroads, lose money for a few years, and then quietly shut down. It's long been in a political gray area, just popular enough that the government wouldn't dare close it, but not popular enough to be funded and managed like "real" modes of transportation. So it's stuck in the '70s and probably always will be.
dredmorbius 7y ago
There's a whole slew of what are effectively network-effect activities (including VC), often with a risk-based element and/or winner-take-all dynamics, in which we have come to expect "tent-pole" successes to bolster numerous indirectly-profitable ventures. Film, television, publishing, and music are classic examples of this. A huge and often unrecognised role that the gatekeepers play (studios, distribution companies, broadcast and cable networks, presses, recording labels) is to assume risk on the part of individual ventures. VC operates on a similar logic, where of ten efforts, 1 hit and 2-3 merely profitable ones account for another 6-7 failures. (I suspect the actual success rate is much lower, with increasingly decadal megahits seeming prevalent.) Those are time-based bets. In geographic networks -- canals, railroads, highways, air travel, telegraph (often co-tenant with railroad rights of way -- 19th century maps of each are fascinating), telephone, electricity, even water, oil, gas, and other pipeline networks -- a few major success/concentration points support numerous others. Transit systems in particular seem to go through an evolution of private venture to public-subsidy, to wholly-publicly-owned. Though it's more complex than even that. Postal subsidies played a massive role in supporting rail and early air transport. Through the mid-1960s, the US Post Office ran mail-sorting cars on trains where mail was sorted en route. The introduction of Zone Instant Postal Codes, better known as ZIP Codes, as well as pre-sorted mail, allowed for routing at origin (or regional) postal hubs, rather than in transit. The loss of this subsidy proved fatal to trains. Many city transit systems -- bus and streetcar -- were cooperative ventures serving factory and office employers, retailers, and real estate developers, more than the actual daily riders of the systems. It was the creation of a viable transport link between locations that induced the resultant value of those locations. In the Chicago region, a network of electric-powered commuter rail systems emerged in the late 19th and early 20th centuries. Not only the above dynamic came into play, but these transit links created new linear bands of viable "bedroom community" suburbs surrounding the urban core. Transit times from 30 miles out were less than an hour, shorter than today's commutes. Construction of highways (notably the Eisenhower Expressway) lead to a sudden collapse in 1956. https://www.american-rails.com/aurora.html https://www.american-rails.com/aurora.html https://en.wikipedia.org/wiki/Chicago_Aurora_and_Elgin_Railroad https://en.wikipedia.org/wiki/Chicago_Aurora_and_Elgin_Railr... Rural electric and telephone service have long been at best marginally profitable, and development of infrastructure (as well as considerable generating and mainline distribution) were enabled through rural electric and telephone cooperatives, supported by surcharges on urban/suburban service. Private enterprise enjoys cherry-picking profitable areas/regions for operation. Reality is that a functional country and economy require some level of subsidy. The gyrations of PG&E over the past two decades may be preamble to a transfer to public (state) control of electricity services in California, possibly elsewhere. This may be a more general trend in such services: originating as private operators, shifting to government services over time.
baddox 7y ago
> yet we still rightly consider roads as being worth it. You correctly point out a double standard, but perhaps it’s worth a bit of thought before choosing which way we want to resolve the double standard.
curiousgal 7y ago
> but to be a potent multiplier for economic gains in other segments of the economy. Why can't the same logic be applied to power and telecommunication?
shrubble 7y ago
Do you have a source for the statement that 'there's barely a road in the entire country that's turned a profit' ?
WC3w6pXxgGd 7y ago
Whether you like it or not, the laws of economics always apply. The profit signal informs individuals/organizations how to properly allocate resources. If you provide value and efficiently use your resources, you generate profit. Further, all economic activities generate wealth, therefore are "multipliers for economic gains."
gms 7y ago
Mass transit can both be profitable and a multiplier (just like any other set of goods and services). See Japan: excellent train systems that are private and profitable.
dwighttk 7y ago
Amtrak isn’t infrastructure though. It is a “business” that operates on rail infrastructure. Rail is treated like highways by the real businesses that actually make money using it.
briandear 7y ago
Transportation is an enabler or economic activity. Your point is correct. That being said, there is an obligation to ensure there is fiscal responsibility in its construction. The 2nd Ave subway line comes to mind.
rocky1138 7y ago
It'd be great if profit was the goal, but limit the source, by legislation, to only increasing rider hapiness.
chrischen 7y ago
I'd argue that all businesses should be reinvesting profits (into growth, research, etc).
- akho 7y ago
  This only works for certain types of businesses (which are, for some reason, particularly well-positioned to take advantage of the additional investment). Most long-established businesses should pay me my dividend, I can decide where to invest it without their management’s help.
shisowkend 7y ago
It is remarkable that so few across many countries in the world see the strength of that argument for healthcare. Healthcare fundamentally, aside from its intrinsic value, additionally, is perhaps the most ‘potent multiplier for economic gains’ in the wider economy. Shame it’s often treated as a burden.
- CryptoPunk 7y ago
  Anything is a multiplier by this line of logic. Good jobs lead to surplus income, which leads to higher quality food, which leads to better health, which is a.. multiplier! More product distribution centres leads to shorter commute times, which leads to less traffic and lower consumer prices, which are both multipliers!
fennecfoxen 7y ago
This is a tendentious, statist philosophy of infrastructure. America's freight railroads are private infrastructure. They are a paragon of excellence and efficiency, the envy of the world, and they do a damn fine job of turning a profit and being a multiplier at the same time. If infrastructure is really such a multiplier, people should be able pay for it from the multiples they earn, and the infrastructure owners will turn a profit. This means that more infrastructure gets built, and higher multipliers achieved, until the multiplier is not so big, and they stop. (This is a state where owners earn an accounting profit, but not what the economists call an "economic" profit, that is, it's not any more money than you could make investing anywhere else.) This is how the price mechanism works, and how the pursuit of profit in a market works, and why capitalism is actually good at making things happen. The alternatives to using the pricing mechanism generally leave you underprovisioning infrastructure (leaving these potential profits on the table), or overprovisioning infrastructure (wasting money), or in a state where people overuse infrastructure in wasteful ways (see the nation's road system, which is very good at connecting things -- but socializing its construction and access has led to ridiculous traffic jams in many cities, and many segments that are heavily accessed by trucks charge extra for the wear and tear through the use of tolls.) Are there obstacles to realizing this capitalist utopia of efficiency in practice? Yes. Definitely, lots of them, and especially for network-y infrastructure like railroads. Is state intervention warranted sometimes? Yes. Is abandoning the pricing mechanism entirely, because multipliers exist, the only thing to do? No. And even when it is, it is a fraught endeavor. Among other things, the people who benefit are not the same as the people who pay, and the transfers involved can be unfair.
- michaelt 7y ago
  > If infrastructure is really such a multiplier, people should be able pay for it from the multiples they earn, and the infrastructure owners will turn a profit. Let's say a good quality rail link from Town X to some big center of employment has the following effects: * Raises attorney Alice's salary from $150,000 to $175,000 * Raises barista Bob's salary from $23,000 to $28,000 * Raises retiree Clive's home price from $300,000 to $400,000 although he'll never set foot on a train himself. * Allows business-owner Doris to fill a specialist job that previously she hadn't been able to fill, indirectly leading to a better product and improved sales in ways that are hard to quantify, but are probably several times that employee's salary. Which of those should the rail link owners capture, and how would you propose they do so? The challenge of for-profit infrastructure is, even if you choose ticket prices to capture 50% of Bob's benefit, you only capture 10% of Alice's benefit, and ~0% of Clive and Doris's benefits.
CryptoPunk 7y ago
Transportion is no more a multplier than any other economic resource. Every single economic resource generates positive externalities, and benefits to the direct consumer that can incentivize payments for consumption of the economic resource. The only reason we provide transportation through public funding is that it enables us to overcome the problems that arise from private capture of natural monopolies.

bobthepanda 7y ago

Profits are nice though in that they will finally allow Amtrak to invest in more services and maintaining/upgrading the network, because that money is not coming from Congress any time soon.

bhk 7y ago

Computing is a multiplier, as is communication, etc.. That doesn't mean that providers thereof are exempt from the realities of business, the need to watch expenses and creatively respond to change and competition. I suppose if Intel had been nationalized then they would be loss-making and we would be hearing about how taxpayers should feel good about subsidizing their losses.

dijit 7y ago
It’s a false equivalence though, rails and roads (and the internet) are like arteries, you can have redundant arteries but it’s wasteful. So free market economics no longer apply. It also leads to natural monopolies.
- bhk 7y ago
  Because it's a natural monopoly, they cannot be expected to break even, and therefore deserve taxpayer subsidies?
  - Ozzie_osman 7y ago
    A utility monopoly is different than a profit-seeking one. If Amtrak became exclusively profit-seeking, it might raise prices dramatically cut unprofitable routes (say, to poorer towns), etc. Those things might increase profits but undermine the economic benefit that was being provided.
    - maxjmartin 7y ago
      I expect that if they did raise prices dramatically, they would lose buisness to roads. This suggests that they are not, in fact, a monopoly.

1123581321 7y ago

Amtrak looks even less successful if viewed as an economic multiplier.

rayiner 7y ago

Nobody is expecting Amtrak to turn a real profit. Even when Amtrak breaks even in operating costs, Congress still pays all capital costs. Amtrak got a $1.8 billion subsidy in 2018. The real issue is how much we’re paying in subsidies compared to how much we’re paying in subsidies for other forms of transportation, and perhaps what other people are paying in subsidies for the same kinds of transport. Highways get about $75 billion in subsidies (what’s not covered by gas tax). A lot more than Amtrak for sure. But highways carried over 3 trillion passenger miles last year. Amtrak was just 6.3 billion. We spent 50x as much on highways as Amtrak, but got 500x as much mileage out of those highways. (You can throw in pollution externalities, etc., but even if you use current carbon recapture methods to suck out CO2 from driving, and ignore the fact that Amtrak’s mainly east coast operations are not powered by renewables, driving still comes out ahead.)

scarmig 7y ago
A counterargument is that both highways and trains benefit from economies of scale. If you gave highways 1.8 billion in subsidies and Amtrak 75 billion, I would expect the miles per dollar of subsidy to look substantially better for Amtrak than they do now, and worse for roads. That said, I suspect we overinvest in both subsidies because of romantic ideas and status quo bias.
- bluejekyll 7y ago
  I’m sorry, but are you seriously suggesting that we over invest in rail/Amtrak? Public transit is far more capable of commuting more people in a shorter period of time than roads. What we really need is far more subsidies in urban and dense suburban areas. The problem is that with our bifurcated political system in the US the people who make up less than 50% of the population outside the cities will block investment in the cities because they will feel like they’re not getting equal investment.
  - lonelappde 7y ago
    Public transit is not the same as Amtrak. A fair accounting for Amtrak has to compare to the bus alternative. I suspect Amtrak is pretty efficient in the NE corridor (at 4x the ticket price of buses) due to density, and loses a lot on the long hauls cross country and the rest of the coasts. Also, on the side, remember that non-city dwellers get massive subsidies from city dwellers for their cost ineffective lifestyles. One can argue that this is justified to support the people working in critical agriculture and industry that can't be moved to the cities and we want low sticker prices on, but it's a much hard case to make for suburb dwellers.

perspective1 7y ago

You could argue that roads ought to be fully funded according to use and therefore turn a profit. Something like a value-added tax. Just about every other essential business turns economic value into profit-- if Amtrak services were so valuable the business could raise its prices and people would pony up. But its services just aren't that much value-added and passengers have plenty of alternatives. Namely, buses.

jeromegv 7y ago
Catch 22. If you underinvest in rail, you end up with trains slower than bus, which makes them a bad option. If you actually invest in rail, you end up in a situation where the rail is faster than bus and has less externality on the environment
- phlakaton 7y ago
  Worse: if you underinvest, you end up with an unreliable and cost-inefficient train service that becomes ever more difficult to support politically. Which is exactly what we're seeing in this thread, good news from Amtrak notwithstanding.
neuland 7y ago
This is a common libertarian argument. And I think it'd be very interesting to see in practice. I live in a state with many toll highways and people complain about the cost. But those highways are well maintained. And they complain about the potholes on the free roads. So I think it's more of an issue of people wanting everything for nothing. One problem with a private road system is that roads take up space and prevent people from using that space for something else. I think that property tax on road surface area would be prohibitively expensive if a private entity were to own it. Another problem is that building or expanding a road through an already populated area basically requires eminent domain.
- frosted-flakes 7y ago
  Roads would still be built and planned by governments. But privately owned. See Highway 407 in Toronto, which was "sold" (100 year lease) to generate revenue.

maratd 7y ago

> It's worth pointing out that the intent of transportation infrastructure isn't to turn a profit It's also worth pointing out that transportation systems that do turn a profit are generally healthy and run well. It is difficult to turn a profit on a poorly run system. > Expecting a profit is completely missing the point On the contrary, expecting a profit is expecting excellence, which we should absolutely do. There is no reason not to have high standards and high expectations.

Aperocky 7y ago

Exactly this, the interstate wasn't built for profit - and the importance of interstates for US economy can't be understated. More recently, China have managed to build more high speed rail network than the rest of the world, and served it at loss. As I understand and having personally rode it, the effect of such transportation option to both the economy and personal convenience can be said to rival that of the interstate.

deleted 7y ago
[deleted]
post_break 7y ago
The government doesn't own the rail, it does own the roads.

microcolonel 7y ago

> the intent of transportation infrastructure isn't to turn a profit If you listen to some activists and look at the budget, you'd think that the intent of AmTrak is to lose as much money as possible without arousing suspicion. There's a big difference between not turning a consistent profit and losing more money than it could possibly save us. If the point was really to serve as transportation that can compete with the automobile at the point of sale (so that it would actually take cars off the road), or in terms of speed (increasing the economic output of passengers), most AmTrak lines and railcar-miles fail that test.

bbanyc 7y ago
The intent of Amtrak was to take the burden of passenger rail off the private railroads, lose money for a few years, and then quietly shut down. It's long been in a political gray area, just popular enough that the government wouldn't dare close it, but not popular enough to be funded and managed like "real" modes of transportation. So it's stuck in the '70s and probably always will be.

dredmorbius 7y ago

There's a whole slew of what are effectively network-effect activities (including VC), often with a risk-based element and/or winner-take-all dynamics, in which we have come to expect "tent-pole" successes to bolster numerous indirectly-profitable ventures. Film, television, publishing, and music are classic examples of this. A huge and often unrecognised role that the gatekeepers play (studios, distribution companies, broadcast and cable networks, presses, recording labels) is to assume risk on the part of individual ventures. VC operates on a similar logic, where of ten efforts, 1 hit and 2-3 merely profitable ones account for another 6-7 failures. (I suspect the actual success rate is much lower, with increasingly decadal megahits seeming prevalent.) Those are time-based bets. In geographic networks -- canals, railroads, highways, air travel, telegraph (often co-tenant with railroad rights of way -- 19th century maps of each are fascinating), telephone, electricity, even water, oil, gas, and other pipeline networks -- a few major success/concentration points support numerous others. Transit systems in particular seem to go through an evolution of private venture to public-subsidy, to wholly-publicly-owned. Though it's more complex than even that. Postal subsidies played a massive role in supporting rail and early air transport. Through the mid-1960s, the US Post Office ran mail-sorting cars on trains where mail was sorted en route. The introduction of Zone Instant Postal Codes, better known as ZIP Codes, as well as pre-sorted mail, allowed for routing at origin (or regional) postal hubs, rather than in transit. The loss of this subsidy proved fatal to trains. Many city transit systems -- bus and streetcar -- were cooperative ventures serving factory and office employers, retailers, and real estate developers, more than the actual daily riders of the systems. It was the creation of a viable transport link between locations that induced the resultant value of those locations. In the Chicago region, a network of electric-powered commuter rail systems emerged in the late 19th and early 20th centuries. Not only the above dynamic came into play, but these transit links created new linear bands of viable "bedroom community" suburbs surrounding the urban core. Transit times from 30 miles out were less than an hour, shorter than today's commutes. Construction of highways (notably the Eisenhower Expressway) lead to a sudden collapse in 1956. https://www.american-rails.com/aurora.html https://www.american-rails.com/aurora.html https://en.wikipedia.org/wiki/Chicago_Aurora_and_Elgin_Railroad https://en.wikipedia.org/wiki/Chicago_Aurora_and_Elgin_Railr... Rural electric and telephone service have long been at best marginally profitable, and development of infrastructure (as well as considerable generating and mainline distribution) were enabled through rural electric and telephone cooperatives, supported by surcharges on urban/suburban service. Private enterprise enjoys cherry-picking profitable areas/regions for operation. Reality is that a functional country and economy require some level of subsidy. The gyrations of PG&E over the past two decades may be preamble to a transfer to public (state) control of electricity services in California, possibly elsewhere. This may be a more general trend in such services: originating as private operators, shifting to government services over time.

baddox 7y ago

> yet we still rightly consider roads as being worth it. You correctly point out a double standard, but perhaps it’s worth a bit of thought before choosing which way we want to resolve the double standard.

curiousgal 7y ago

> but to be a potent multiplier for economic gains in other segments of the economy. Why can't the same logic be applied to power and telecommunication?

shrubble 7y ago

Do you have a source for the statement that 'there's barely a road in the entire country that's turned a profit' ?

WC3w6pXxgGd 7y ago

Whether you like it or not, the laws of economics always apply. The profit signal informs individuals/organizations how to properly allocate resources. If you provide value and efficiently use your resources, you generate profit. Further, all economic activities generate wealth, therefore are "multipliers for economic gains."

gms 7y ago

Mass transit can both be profitable and a multiplier (just like any other set of goods and services). See Japan: excellent train systems that are private and profitable.

dwighttk 7y ago

Amtrak isn’t infrastructure though. It is a “business” that operates on rail infrastructure. Rail is treated like highways by the real businesses that actually make money using it.

briandear 7y ago

Transportation is an enabler or economic activity. Your point is correct. That being said, there is an obligation to ensure there is fiscal responsibility in its construction. The 2nd Ave subway line comes to mind.

rocky1138 7y ago

It'd be great if profit was the goal, but limit the source, by legislation, to only increasing rider hapiness.

chrischen 7y ago

I'd argue that all businesses should be reinvesting profits (into growth, research, etc).

akho 7y ago
This only works for certain types of businesses (which are, for some reason, particularly well-positioned to take advantage of the additional investment). Most long-established businesses should pay me my dividend, I can decide where to invest it without their management’s help.

shisowkend 7y ago

It is remarkable that so few across many countries in the world see the strength of that argument for healthcare. Healthcare fundamentally, aside from its intrinsic value, additionally, is perhaps the most ‘potent multiplier for economic gains’ in the wider economy. Shame it’s often treated as a burden.

CryptoPunk 7y ago
Anything is a multiplier by this line of logic. Good jobs lead to surplus income, which leads to higher quality food, which leads to better health, which is a.. multiplier! More product distribution centres leads to shorter commute times, which leads to less traffic and lower consumer prices, which are both multipliers!

fennecfoxen 7y ago

This is a tendentious, statist philosophy of infrastructure. America's freight railroads are private infrastructure. They are a paragon of excellence and efficiency, the envy of the world, and they do a damn fine job of turning a profit and being a multiplier at the same time. If infrastructure is really such a multiplier, people should be able pay for it from the multiples they earn, and the infrastructure owners will turn a profit. This means that more infrastructure gets built, and higher multipliers achieved, until the multiplier is not so big, and they stop. (This is a state where owners earn an accounting profit, but not what the economists call an "economic" profit, that is, it's not any more money than you could make investing anywhere else.) This is how the price mechanism works, and how the pursuit of profit in a market works, and why capitalism is actually good at making things happen. The alternatives to using the pricing mechanism generally leave you underprovisioning infrastructure (leaving these potential profits on the table), or overprovisioning infrastructure (wasting money), or in a state where people overuse infrastructure in wasteful ways (see the nation's road system, which is very good at connecting things -- but socializing its construction and access has led to ridiculous traffic jams in many cities, and many segments that are heavily accessed by trucks charge extra for the wear and tear through the use of tolls.) Are there obstacles to realizing this capitalist utopia of efficiency in practice? Yes. Definitely, lots of them, and especially for network-y infrastructure like railroads. Is state intervention warranted sometimes? Yes. Is abandoning the pricing mechanism entirely, because multipliers exist, the only thing to do? No. And even when it is, it is a fraught endeavor. Among other things, the people who benefit are not the same as the people who pay, and the transfers involved can be unfair.

michaelt 7y ago
> If infrastructure is really such a multiplier, people should be able pay for it from the multiples they earn, and the infrastructure owners will turn a profit. Let's say a good quality rail link from Town X to some big center of employment has the following effects: * Raises attorney Alice's salary from $150,000 to $175,000 * Raises barista Bob's salary from $23,000 to $28,000 * Raises retiree Clive's home price from $300,000 to $400,000 although he'll never set foot on a train himself. * Allows business-owner Doris to fill a specialist job that previously she hadn't been able to fill, indirectly leading to a better product and improved sales in ways that are hard to quantify, but are probably several times that employee's salary. Which of those should the rail link owners capture, and how would you propose they do so? The challenge of for-profit infrastructure is, even if you choose ticket prices to capture 50% of Bob's benefit, you only capture 10% of Alice's benefit, and ~0% of Clive and Doris's benefits.

CryptoPunk 7y ago

Transportion is no more a multplier than any other economic resource. Every single economic resource generates positive externalities, and benefits to the direct consumer that can incentivize payments for consumption of the economic resource. The only reason we provide transportation through public funding is that it enables us to overcome the problems that arise from private capture of natural monopolies.