Monday, November 17, 2014

Downeaster Economics vis-à-vis Brunswick: Gruber theory right before your eyes?

Maybe you recognize the individual pictured above, maybe you don’t.  Regardless, based on recent news, we think a very good case could be made that he is the ‘poster child’ for NNEPRA and it’s Downeaster; it’s relationship to Brunswick; and the BDA as well.

The individual pictured, the suddenly very high profile Professor Jonathan Gruber of MIT, embodies several principles that are apparent in our own midst, particularly as it relates to the Downeaster.  One, “lack of transparency is a huge political advantage.”  Two, the end justifies the means.  Three, the average American is stupid in matters of economics.  Four, if the truth were known, the program could not survive. 

Which, in the notation of Gruber economic theory, can be represented by this expression:

1 + 2 + 3 + 4 = you’ve been had, and you better like it.

Or symbolically, with this iconic image:


We could go on and on having fun with this, and we no doubt will before long.  As the hours go by, we’re feeling remarkably blessed that Professor Gruber has surfaced to personify our circumstances so perfectly and succinctly.

The above is by way of introduction to the fact that we spoke to our betters on the Brunswick town council tonight on exactly this subject – the economic consequences of the Downeaster for our local economy.  Herewith the text of our statement:

  • Good evening. I'm Mr. Schaeffer.

  • I'm here to talk about an idea I had; an idea involving the Amtrak Downeaster, Bowdoin College, and Brunswick

  • As background, NNEPRA (Northern New England Passenger Rail Authority), the state agency that operates the Downeaster, was created by Maine State Law in 1995.

  • The law mandated creation of the agency, directed that it establish passenger rail service, and obtain the funds to do so by whatever means it can find.

  • The law did not call for assessment before hand of public transportation needs; nor analysis of possible methods for meeting any credible needs; nor the creation of a viable, sustainable economic model for implementing and operating this service.

  • It simply directed that passenger rail service be established, without benefit of due diligence. As such, NNEPRA and the Downeaster are a fine example of government legislation that creates a solution, and then sends it off in search of a problem that may or may not exist.

  • It's almost as if a young Professor Gruber was involved in it's creation.

  • The Downeaster has been operating between Portland and Boston for more than ten years; the extension between Portland and Brunswick has been in operation for two years.

  • The service to Brunswick has received glowing praise, especially as regards its “great economic benefit” to our local economy. I'm not aware of any objective data to support that assertion. Brunswick residents provide a subsidy for the operation of roughly $100,000 a year on the debit side, or in the range of $300 a day. Various interests and community leaders are bursting with glee at plans to increase service to Brunswick from two round trips a day to five.

  • On another dimension, we are the home of Bowdoin College, a respected, highly selective institution with an Economics Department. And a stated commitment to service learning and engagement with the community. Brunswick is proud of its relationship with the College, which among other benefits, resulted in this building becoming our town hall.

  • To this observer's thinking, the utter lack of objective economic benefit data for the Downeaster provides an opportunity for a win-win town-gown collaborative effort. College students studying economics could engage in a real world study of the local economy, and the town could gain economic insights to underpin future decisions about Downeaster related policy and spending.

  • Points to consider in any such study include these.

    • A significant number of local businesses offer no attraction to visitors, and would seldom if ever benefit from their travel here on the Downeaster. I doubt anyone comes to town on the train to do banking, get their hair done, their shirts laundered, their eyes tested, or their health tended to at a walk-in clinic.

    • That 'long term parking lot,' if used as intended, holds cars of folks taking their discretionary dollars to points south to spend, rather than spending them locally.

    • Claims by any local business that they gain meaningful patronage from train-riders must be balanced by the fact that no-one can measure the offsetting opportunities lost because area residents take their patronage out of town.

    • For example, a local Inn manager says in a recent video that he attributes 400 room nights a year to the train. That's slightly more than one room per night, which is next to nothing. But how many room nights were booked elsewhere because of the same train, by area residents traveling south?

  • We're quick to mention dollars wafting in on breezes blowing to the north, but fail to acknowledge dollars leaving the area on winds blowing south. There is, surely, a sucking sound, but identifying the specifics is uncomfortable, if not impolitic.

  • Another truism associated with our circumstances is that someone coming to town ON THE TRAIN does not mean they come to town BECAUSE of the train. Diversion from one travel mode to another yields no economic benefit.

  • The lack of specificity in ridership reporting only makes things worse. Virtually every rider is on a round-trip, some originating here, and some originating at points south. So to begin with, one traveler shows up as two in ridership figures.

  • One wonders what effect the Downeaster has on Concord Coach ridership, a service established long before Amtrak started coming to town. That bus service, by the way, is far more economical, flexible, convenient, versatile, and environmentally friendly than the train.

  • Let's get to the punch line. In view of the above, I proposed the idea of a collaborative 'town-gown' economic study effort on Downeaster local consequences; I even made some notes on a 'framework' for the study, and suggested unique parameters that would apply.

  • My hope was to make the proposal a formal agenda item for council discussion and a vote. For the first time in all my years coming before you, I talked to four councilors about the possibility of sponsoring a motion so it could come before the council and the public. None signed on.

  • So here I am, with a dead-letter idea, left to ponder why. Are those I spoke to unwilling to face what could be disappointing realities? Has too much personal capital been invested in the groundwork for Maine Street Station and the Downeaster service? Are you fearful of offending various town leaders, of both the official and unofficial sort? Are you concerned that developing a factual basis for future policy and funding could cause NNEPRA to discontinue service here?

  • More to the point, are you afraid of the truth? Or that such a study could not be conducted objectively? If so, what a sad story that tells about elected leadership, and what a pall it casts upon other discussions of governance that come before this body. Not to mention the perceived academic integrity of Bowdoin.

  • In closing, as someone said recently, lack of transparency is a huge political advantage, and this situation may be as simple as that.

  • Thank you. And I hope you have a chance to read the brief material added as an Appendix.

Appendix to Statement:

The points below are excerpted from:

1. Transportation spending can stimulate economic development only if it generates new travel that didn’t exist before. Transportation projects that merely persuade people to change from one mode to another or one corridor to another might influence where economic development takes place, but will not produce any net additional development.

(A corollary to this rule is that the dreaded “induced travel” that comes from building new roads in congested regions is exactly the kind of desirable result that should come from transportation spending. Such new travel creates new economic opportunities for landowners, employers, and entrepreneurs that are the best indication of whether a transportation project was worthwhile.)

2. Transportation spending will generate new travel only if the project provides transportation that is faster, cheaper, and more convenient than what existed before. Projects that reduce people’s costs (both in hours and dollars) will encourage people to travel more.

3. Most rail transit, and virtually all streetcars and light rail, provide transportation that is slower, more costly, and less convenient than the alternatives. Even if most of the costs are paid by taxpayers, rather than travelers, the higher taxes place a burden on the community that slows economic growth.

4. Even where rail transit is paid for by federal taxpayers (thus relieving local taxpayers of the burden) and carries huge numbers of people (which almost requires that it be subways or elevateds, not light rail or streetcars), any new development stimulated by the transit project will probably be limited to the downtown area (see p. 3). The rest of the region will end up suffering because even if the feds pay for construction, locals will probably have to pay high cost of maintaining the rail line.


That’s it for tonight, students.  Make sure your slide-rules are well waxed, so you can follow the next class on precision in economic analysis.  And don’t worry, Professor Gruber has already declined our invitation to be the visiting lecturer.  Seems he was worried he wouldn’t be able to get a seat on the Downeaster because it’s ‘sold our farther down the line.’ 

But he did send along his calling card:


Oh, and if you’re wondering what the reaction from the council was, you can watch the video once it’s posted.  In a word, a perfunctory comment we were already aware of.

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