Sunday, June 21, 2009

Amtrak and GM

Let’s learn from history and save free enterprise, before it’s too late!
In 1970, Congress partially nationalized and bailed out America’s passenger rail system for $340 million, forecasting that Amtrak would become profitable by 1975. But government officials, with zero transit experience, got involved in all decision-making. Unable to get tough on unions, they failed to rein in labor costs.
Since its creation 39 years ago, Amtrak has drained $30 billion from U.S. taxpayers. Last year Amtrak lost $1 billion on $2.5 billion in revenues.
So what did Congress do? Our representatives committed another $13 billion in taxpayer bailouts for Amtrak, suggesting that this new “stimulus” will finally “rebuild” Amtrak.
Ignoring this history, the U.S. government has basically nationalized General Motors — astonishingly reminiscent of the Amtrak debacle. The government’s Auto Task Force has zero auto experience, like the federal government’s 1970s Amtrak gang.
But this time we’re spending $50 billion in six months, more than we did in four decades with Amtrak. And the United Auto Workers union owns 17 percent of this new GM (Government Motors)!


Jim said...

An additional point, nationalized companies become a source for political patronage that breeds incompetent management (see failured presidential candidate Michael Dukakis' role with Amtrak).

The failures at both Freddie Mac and Fannie Mae are also associated with mismanagement from political appointees.

Note: such poor appointments, which undermine corporate governance, are associated with the political movement for independent directors on corporate boards.