In Government, Failure Is The Way To Get Yourself More Money

I have noted previously on many occasions the remarkable extent to which total failure by a bureaucracy is actually the main strategy used to squeeze more money out of the taxpayers and thereby grow the agency.  See for example my Poverty tag.  For today's subject, consider the state of public transit in New York.

It's seemingly been a bad few months for New York's MTA, operator of the subway system and also of two of the three commuter railroads.  (The third commuter railroad, NJ Transit, is run by the state of New Jersey.)  Here is a timeline of some of the problems from DNAInfo.  In most years there are no train derailments at all, but this year it's been one after the next.  Going back to the beginning of the year, on January 4, a Long Island Rail Road train blew through the end of the line and crashed into the Brooklyn terminal, injuring dozens.  On March 24 a train derailed going over the switches in Penn Station, and then another train did the same on April 3, and yet another one on July 6.  (These were Amtrak and NJ Transit trains, but the derailments screwed things up for the MTA's Long Island Rail Road as well, since it shares Penn Station.)  On the subway, there was a big derailment of an A train in Harlem on June 27, again with dozens of injuries; and then a derailment of a Q train in Brooklyn on July 21.  A derailment generally shuts down the line or station affected for at least a day, and often multiple days; so these are major events.  Outside of the derailments, subway delays have seen a big increase this year over the recent past.  And then on July 10, Amtrak began a major round of repairs at Penn Station, causing diversion to more remote terminals of many LIRR trains that normally would come into Manhattan.

Needless to say, all of this chaos has brought an outcry that the situation needs to be fixed.  And, this being progressive New York, everybody can agree on how to fix things:  They need more money!

Governor Cuomo -- the guy who appoints the MTA Board members, and thus looks to be on the wrong end of the political firestorm -- has now brought back former MTA Chairman Joe Lhota to resume the job.  (Lhota's previous tenure in 2011-12, although relatively brief, was widely regarded as a success.)  On Tuesday Lhota came up with his so-called "rescue plan."  Here is the New York Times report on the plan.  You won't be surprised to learn that the basic idea is more money, more money, and more money.

The authority’s chairman, Joseph J. Lhota, outlined a sweeping set of fixes that he vowed would turn around steadily deteriorating service. The plan included at least 30 separate measures to address the major problems plaguing the system, including antiquated signals and subway fires, and called for hiring 2,700 new workers. . . .  The improvements come with a steep bill — about $450 million in operating costs and $380 million in capital investment — and Mr. Lhota called on Mayor Bill de Blasio to help fund the plan.     

The genius of this is that, in the crisis of the moment, with derailments and delays constantly in the news, nobody stops to ask why the vast sums of money they were already getting were not sufficient to maintain the system.  Is the current budget being used effectively?  This question is just too crude to be asked in the middle of such a crisis.  Certainly, the politicians are unanimous in their view that this is not the time to start blaming the inefficiency of the unionized work force, but rather is an opportunity to hit up the taxpayers.  From E.J. McMahon in the New York Post on June 26:

Amid all the finger-pointing over who’s to blame for the subway “summer of hell,” New York’s leading politicians at least agree on this much: The transit system needs more money. 

But of course the big problem in New York is that the current budget is not being used effectively at all.  Getting a handle on just how ineffective the spending is is not easy, but I can give a few data points.  In a post back in November 2014, titled "MTA Reinvention Commission Misses The Elephant In The Room," I pointed to data collected by Alon Levy of Pedestrian Observations that New York's construction costs for transit projects were in the range of five to ten times those of major international cities (like London and Paris) for comparable projects.  Levy points to union work rules and benefits (not so much base pay) as the main reason for the differential.  

Are operations and maintenance in the New York transit system subject to the same level of inefficiency?  Well, consider just the part we can see.  In the world of automobiles, many innovators are approaching the goal of perfecting the self-driving automobile, with all the myriad complexities that that entails.  If automobiles no longer need a driver, surely subway trains do not either.  Yet on every subway train we have not one but two workers operating it -- and a subway train runs on a fixed route that is completely pre-determined from one end to the other.  Is anybody even considering automating this function on the subway?  Not that I have heard of.  Similarly, thousands of subway workers make change in stations for pay plus benefits approaching $100,000 per year on average.  These people seem to be on the way to getting phased out -- in a process that is taking decades.

In today's New York Post, Nicole Gelinas of the Manhattan Institute points out that over the past decade or so the MTA has gotten its hands on several new sources of revenue (dedicated taxes); and essentially all of the money has gone into increased pension and benefits for the work force, with no or minimal improvements in service or maintenance:

So what is the MTA spending its money on?  The biggest culprit in skyrocketing costs is employee benefits.  Consider that in 1985, retirement and health benefits for New York City Transit personnel cost $1.2 billion in today's dollars.  Today, they cost nearly $3.1 billion annually. . . .  This increase in benefit costs alone consumes all the additional revenue that the MTA takes in from the payroll tax the Legislature implemented in 2009.  Should the Legislature enact a new tax, ever-increasing benefits likely will consume that, too.

And as of now, the strategy of getting more money to compensate for failure, and then diverting the money to totally non-productive purposes, continues to work.  The problem is that some day someone will wake up and realize that we can't afford this any more.