Sunday, January 10, 2016

“Making your numbers”…..Government style….

   

Many of us are familiar with the concept of ‘making your numbers’ in the business sense.  Once an enterprise moves beyond the ‘mom and pop’ level, and such things as outside financing become part of the operating plan, financial forecasts for the business become mandatory to document performance expectations, and to have something against which management performance can be measured and assessed.

This is especially true if private venture capital is part of the mix.  The business must have goals, and leadership that can realize those goals, or evn exceed them.  Once a business becomes publicly held via stock ownership, analysts from various entities begin to demand such forecasts so they can evaluate performance against them, and decide whether they should recommend buying, selling, or holding shares in the company.

One of the great philosophical debates in this regard is whether or not we should expect Government to be run ‘like a business.’  Which is to say, in the general sense, whether it should be financially viable and self-sustaining.  Or not.

This is a complex subject, and one worthy of much considered and thoughtful debate.

That is, of course, until Government decides to get itself into fields historically operated under private ownership.

Take, for example, intercity passenger rail service, like the Amtrak Downeaster, operated by the Northern New England Passenger Rail Authority, an agency of Maine State Government.  Passenger rail service largely died 50 or more years ago because it was no longer a viable business to operate.  Demand and revenue could not come close to balancing operating expenses, so the business, such as it was, disappeared.

But if you really like riding on trains, such things don’t matter.  Whether doing so makes fiscal sense or not, all too many believe Government exists to trump such realities, and provide the wants of the few at the expense of the many.

And there you have the Downeaster in a nutshell.  A few hundred million dollars in capital expenditures, and next thing you know, you have a passenger rail service operating well under capacity, and with operating losses well over 50%.  How can you argue with that?

Apparently, the Downeaster is not achieving the levels of passenger demand we hear about from those who run the operation, and their lobbyist, TrainRiders Northeast.  The latter, as they will repeatedly tell you, single-handedly brought the Downeaster into existence, and keep it a favored ‘service’ of Maine State Government.

This must be why some loss leader fare deals are being offered recently.  For example:

Amtrak $16 fares anywhere

Which was preceded by this:

Amtrak five for $5

All of which seems odd, because as the map maintained by Departure Center staff in Brunswick shows, visitors to our perfect little town ‘span the country and the globe.’

  
A MAP at the visitor’s center in Brunswick shows where folks who have visited the town in 2015 have hailed from. 
DARCIE MOORE / THE TIMES RECORD

But lest we all forget, NNEPRA has some numbers to meet for the current fiscal year.  First and foremost is an operating deficit of $13 million, against an operating budget of $22.6 million.

You can’t “make those numbers” without some special promotions.

We’ll close with this: we’re confident that a map of those who travel on Maine Street would ‘span the country and the globe.’  In other words, the Downeaster has about as much to do with who visits our town as milk has to do with men turning bald and women getting gray hair.

2 comments:

  1. "One of the great philosophical debates in this regard is whether or not we should expect Government to be run ‘like a business.’ Which is to say, in the general sense, whether it should be financially viable and self-sustaining. Or not."

    Well, it can't be, because that is not government's legitimate function. Why, then, concede the planners' premise? It frames the debate as a question of which goods and services, whom to offer & distribute these goods and services to, and to what degree efficiency and utility matter in quantity, delivery and distribution. But this is question-begging. Government does not manufacture or produce goods and services, they merely coerce, expropriate and distribute them. The function of 'business' (i.e., the voluntary exchange of goods and services) is directly contrary to the function of government (the use of force). Government's legitimate function is not the provision of goods & services, nor is it the encouragement/inducement/direction/decree/enforcement to produce them, its legitimate function is to protect its citizens' ability to do so, free from interference or coercion.

    Right???

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  2. What to do if you don't "make your numbers"? Well, you just attribute losses to:

    --damages and lost revenue stemming from derailments that kill people (oopsie!),

    --expenses and lost revenue related to extensive repairs,

    --and a backlog of construction projects and repairs.

    Then, in a brilliant maneuver of deception (Hey, it's always worked before!), you write the excuses off as "extraordinary items", as if derailments, maintenance and backlogs were out-of-your-control acts of God.

    Even when the most optimistic outcome is to lose millions of taxpayer dollars, failure to "make your numbers" just means writing up creative excuses, justifying next year's losses, and moving on. Amtrak has honed this into a science for more than 40 years.

    http://www.wsj.com/articles/amtraks-losses-widen-in-fiscal-2015-1449032400#livefyre-comment

    (Be sure to read the comments!)

    ReplyDelete