What Sowing Subsidies Reaps

When the state give subsidies to a business they are sending a market signal: the businesses failure to make a profit is rewarded. Amtrak is a company that can’t operate on its own, it requires government money to stay afloat. Needless to say since they’re receiving government money they have no motivation to find ways to actually make money:

Taxpayers lost $833 million over the last decade on the food and beverages supplied by Amtrak, which managed to spend $1.70 for every dollar that received in revenue.

“Over the last ten years, these losses have amounted to a staggering $833.8 million,” said Rep.John Mica, R-Fla., in a statement previewing a House hearing today. “It costs passengers $9.50 to buy a cheeseburger on Amtrak, but the cost to taxpayers is $16.15. Riders pay $2.00 for a Pepsi, but each of these sodas costs the U.S. Treasury $3.40.”

If you can’t make a profit off of selling hamburgers at $9.50 you don’t deserve to be in business. I can go to my local butcher and get a pound of ground beef for $4.00 to $5.00 and if I buy a cow directly from a farmer and pay to have him butcher it I can get the entire animal for roughly $3.00 a pound. Since most hamburgers are usually between a quarter pound and half of a pound of ground beef Amtrak is seriously screwing up either procurement or preparation.

Why should they change though? The government keeps transferring money from individuals to Amtrak. Every tax victim is, in essence, a forced customer of Amtrak. Until the subsidies are taken away from Amtrak there is absolutely no motivation for them to offer a product people want at a price they’re willing to pay. Because of their inability to make a profit they will continue to get more government subsidies. Subsidies are a reward for failing, they tell producers that making products consumers want is unnecessary and may actually be detrimental (why risk making $1 million in profit when you’re guaranteed $100 million in subsidies).