Gov. Jerry Brown Makes Another Appointment to CHSRA Board
Less than a week after appointing Dan Richard to the California High Speed Rail Board, Governor Jerry Brown has filled another vacancy. This time the appointee is Michael Rossi, the wealthy financial executive who Brown had just recently tapped as his jobs advisor. Rossi takes the place of David Crane, another financial executive who was a close advisor to former governor Arnold Schwarzenegger:
Gov. Jerry Brown appointed an advisor, Michael Rossi, to the board of the California High-Speed Rail Authority on Wednesday. Rossi is Brown’s senior advisor for jobs and business development and had a long banking and finance career prior to joining his Democratic administration….
Rossi is also the second financial expert that Brown has appointed to the project as it faces serious long-term issues over how it will secure all of the tens of billions of dollars it will need to complete the Los Angeles to San Francisco system.
Before joining the Brown administration, Rossi was an advisor and senior member to the operations team at Cerberus Capital Management, the private-equity firm best known for taking over Chrysler Corp. in 2007 and then giving up control in the bankruptcy of 2009. Rossi worked at Cerberus from 2005 to 2008.
I’ll confess that I was skeptical of Rossi as a jobs advisor, since financial executives have no experience in job creation. But as a member of the CHSRA board this seems like a very good move for Governor Brown, since Rossi has extensive experience with the world of high finance. That’s something the CHSRA absolutely needs going forward, as we are nearing the time where private investment is going to be actively sought.
There’s another reason I like this appointment – it shows Governor Brown is doubling down on his commitment to the California HSR project. By now it is becoming clear that the governor will not be the one to kill the project, as NIMBYs and opponents had been hoping. And that should be no surprise, given that HSR in California was Brown’s idea in the first place.
Gov. Brown’s recent appointments also raise another question – would he have any interest in signing SB 517, the bill from anti-HSR Senator Alan Lowenthal that would significantly undermine the project’s progress. (SB 517, as well as Assemblymember Cathleen Galgiani’s reform bill AB 145, are being considered today by the Appropriations Committee.) One of the core elements of SB 517 is that it would replace the entire membership of the CHSRA board. I am having a hard time imagining that Gov. Brown signing a bill that would remove people like Michael Rossi and Dan Richard from the board.
It is even less likely that the Legislature would override the veto. Veto overrides in Sacramento are extremely rare, with the last one happening in July 1979. True, the governor whose veto was reversed that time was Jerry Brown, but if a Democratic legislature wasn’t willing to attempt overrides of Schwarzenegger’s vetoes, it is very difficult to imagine they’d pick a fight with Brown over this.
Since giving a strong vote of confidence to the HSR project in Fresno earlier this month, Gov. Brown has been following through on his support. It’s a welcome sight to see, and bodes well for the future of passenger rail and sustainable transportation in California.
Can he appoint an engineer or infrastructure expert next. That would be nice.
elportonative77 Reply:
August 25th, 2011 at 9:52 am
Civil engineer to be specific.
Richard Mlynarik Reply:
August 25th, 2011 at 10:04 am
Civil engineers
Mike Reply:
August 25th, 2011 at 10:44 am
Who would you like to see appointed to the Authority, Richard? (Keeping in mind that appointees have to willingly agree to serve; have to relieve themselves of conflicts of interest; and, realistically, probably have to be California residents.)
Miles Bader Reply:
August 25th, 2011 at 4:18 pm
Surely the people in the video, no?
Richard lives for that sort of thing!
trentbridge Reply:
August 25th, 2011 at 4:21 pm
You employ engineers. My brother is an engineer, I’ve worked with engineers. My father was an engineer. Engineers are wonderful people but they see everything in black and white. It’s either ‘right” or “wrong” in their eyes. That’s fine when you’re building a high-speed rail line but when you’re dealing with land-owners, contractors, local authorities, interest groups, politicians etc. you need people who can negotiate between alternatives. There is not a right way or a wrong way to bring high speed rail over the Tehachapis: I5 Grapevine or Antelope Valley. There’s what works for most people. It isn’t an engineering decision.
jimsf Reply:
August 25th, 2011 at 6:12 pm
^exactly thank you.
Derek Reply:
August 26th, 2011 at 10:37 pm
“Engineers are wonderful people but they see everything in black and white. It’s either ‘right’ or ‘wrong’ in their eyes.”
The world isn’t a black and white place, so an engineer who thinks it is isn’t worth his or her salt.
Please don’t be prejudiced against all engineers just because the few you’ve been exposed to didn’t have a firm grasp on reality.
Beta Magellan Reply:
August 27th, 2011 at 12:06 pm
“Land-owners, contractors, local authorities, interest groups” are generally not the people we should want dictating public policy, even if too often that’s the case. And I’m pretty sure if we were talking about a different issue (health care or the deficit, for example) most of you would agree. Would you rather have our politicians taking advice from the wonks at the Center for Budget and Policy Priorities, not Big Pharma or golden-parachuted ex-CEOs.
Beta Magellan Reply:
August 27th, 2011 at 12:06 pm
Editing fail—OR Big Pharma or golden-parachuted ex-CEOs?
VBobier Reply:
August 25th, 2011 at 12:55 pm
If there’s an opening, He could. As to the two appointments and the 2 bills, even if they pass I think Governor Brown has laid the gauntlet down, I’d bet He’d veto one or both bills if they threaten to remove or alter the HSR board and HSR itself, and Robert is right, there has been no veto overrides in 32 years in California and heed My words I don’t see It happening anytime soon either and I’ve been around this state for 51 years and if someone thinks He’ll help the Nimbys(and You know who Ya are), Good Luck, cause It ain’t gonna happen. ;p
New article on Reason.org: What Does Opposition to Government Rail Projects Have to Do With Individual Liberty?
Nothing really earth-shattering or surprising here:
synonymouse Reply:
August 25th, 2011 at 2:57 pm
“fashionable make-believe.” is a phenomenon common to both the contemporary right and left:
The right contends the rich are inherently superior.(meritocracy)
The left contends the “underclass” is inherently superior.(welfare state)
VBobier Reply:
August 25th, 2011 at 6:19 pm
And Yer a Moron. ;p
Miles Bader Reply:
August 25th, 2011 at 4:17 pm
Hahaha, whatta bunch of loons… “It’s teh liberty1!1″
OTOH, at least they’re showing their true face for a change, rather than trying to hide behind bogus technical “arguments.”
Derek Reply:
August 25th, 2011 at 4:33 pm
“… when the Republican governor of California, in the teeth of a looming fiscal crisis, helps push through a multi-billion-dollar high speed train to nowhere…”
When is it the wrong time to make a good investment?
Similarly, when is it a good time to make a bad investment?
So as you can see, the fact that we’re in a fiscal crisis is irrelevant.
“Pro-rail policy is often the explicit foe of individual liberty. All you have to do is consider the enduring fondness among planners and transit enthusiasts (of which I’m one!) for the phrase ‘get people out of their cars.’”
Planners don’t mean by this phrase eto force people out of their cars. They mean to liberate people from their cars. That means give them a new ability to choose whether or not to drive.
So no, pro-rail policy isn’t the foe of individual liberty. It’s quite the opposite.
joe Reply:
August 27th, 2011 at 8:16 am
When inflation is low and Gov’t demand doesn’t compete with private demand, it’s a better time.
When there is 20% unemployment, it is a better time.
When there is a global economic downturn, it is a better time.
“get people out of their cars.”
When are we going to see the end of the ridiculous argument that high-speed rail has anything to doing away with cars? High speed rail is not about commuting. It is not about getting to work by rail – see BART, Caltrain, Metrolink etc. It is about intercity travel. I was a commuter into London from Chelmsford and commuting is a railroad’s nightmare. It’s all one direction for two peak periods of the day and the intermediate traffic is almost non-existent. It requires enormous investment in rolling stock that was used for four hours a day. HSR in California won’t stop traffic congestion in SF, San Jose, Los Angeles, Anaheim, Sacramento or San Diego. It’s about getting people across California without using airports or driving yourself. It’s an alternative -not a replacement.
Derek Reply:
August 25th, 2011 at 4:36 pm
In San Diego, a lot of people commute from University City and Escondido to downtown San Diego. Some of them will use HSR for commuting.
trentbridge Reply:
August 25th, 2011 at 4:53 pm
Yes, but I would suspect that the fares for HSR service on such a short distance would be high – you’d want people travelling longer distances filling the seats. Commuters should never be the primary reason you build a 550 mile ground transportation system. Like I said – it wastes capital on excess rolling stock.
Derek Reply:
August 25th, 2011 at 5:40 pm
If the fares are set correctly, every segment on every trip will be nearly full. Yes, it would probably mean higher fares in highly populous areas and lower fares in the Central Valley, but since the train would be nearly full at all times, there would be no excess rolling stock, even if a lot of the riders on some segments are commuters.
Miles Bader Reply:
August 25th, 2011 at 5:46 pm
Hmm, surely you need some spare rolling stock, to accommodate periods of extreme demand … e.g. the friday evening before a major holiday…
Derek Reply:
August 25th, 2011 at 6:34 pm
Nope. Adding supply isn’t the only way to prevent a shortage: http://en.wikipedia.org/wiki/Demand_curve
Miles Bader Reply:
August 25th, 2011 at 10:47 pm
Sure, but reality is often rather more complicated than simplistic models, and there are other factors involved — a system where you simply pump up the price or turn away customers in large numbers during extreme peaks is likely going to leave a bad taste in people’s mouths, and give the system a reputation as an unreliable resource.
I think in practice you do want to have some spare capacity that isn’t always used (and certainly real railroads do tend to run many more, or much bigger, trains during certain periods than others).
Derek Reply:
August 26th, 2011 at 12:03 am
“a system where you simply…turn away customers in large numbers during extreme peaks…”
Is a sign that the prices aren’t set at their optimum levels.
“a system where you simply pump up the price…during extreme peaks is likely going to leave a bad taste in people’s mouths, and give the system a reputation as an unreliable resource.”
If, as I wrote earlier, “every segment on every trip will be nearly full,” then what’s the problem?
Miles Bader Reply:
August 26th, 2011 at 1:16 am
“If, as I wrote earlier, “every segment on every trip will be nearly full,” then what’s the problem?”
If you run lots of trains, always, and simply drop prices like crazy in periods of very low demand, then at some point, the costs of running the train, wear and tear, etc, will simply be not be justified by the amount of income.
Conversely, if you run only a few trains, but pump up prices like crazy at time of peak demand, then at some point people will be unwilling to pay (and not just that — the system will get a reputation as an unreliable method of travel, and lose more passengers in the future, who will shift to more accommodating modes).
So you run a “medium” amount of trains, and vary the prices to keep them full. Then if the peaks in demand are strong enough, there will be lots of passengers you can’t accommodate at those times — but you can’t simply pump up prices arbitrarily, there’s a limit to what individuals will pay, because they’re really not forced to travel or to use your mode. However at the maximum reasonable price you can charge, if those demand peaks are strong enough, at some point, the cost of keeping around normally unused rolling stock will be exceeded by the possible income from the extra passengers…
Furthermore, I think passengers like somewhat reliable pricing — the crazy roller-coaster-like pricing of airlines is very off-putting — so to build a strong and loyal passenger base over time, it helps to damp price swings. The result may be less income in the short term but more in the long term.
Some of those factors can be quantified, but others like loyalty and preference over time are harder to put into numbers…
Derek Reply:
August 26th, 2011 at 7:26 am
“if you run only a few trains, but pump up prices like crazy at time of peak demand, then at some point people will be unwilling to pay…”
That reminds me of the old Yogi Berra quote: “Nobody goes there anymore. It’s too crowded.”
With every segment on every trip nearly full, doesn’t it PROVE that people are willing to pay?
“Furthermore, I think passengers like somewhat reliable pricing…
More than they like low prices during off periods and tickets that aren’t sold out during peak periods?
“…so to build a strong and loyal passenger base over time…”
But is that really necessary when every segment on every trip is already nearly full?
Miles Bader Reply:
August 26th, 2011 at 9:02 pm
The point is that there is a price at which many will stop paying, so you can’t increase the price arbitrarily, even with very high demand.
Since this is the case where you’re running only a few trains, then the overall income will thus be less than possible, as you’re carrying few passengers at a capped price.
I think they like both, so some middle ground is probably optimal — and the point which captures both what passengers like while maximizing income may (or may not) be a regime where there more trains are available at some times.
Er, well the point here is that people aren’t memoryless automatons; by giving them confidence in your system, you can build loyalty, and loyalty allows you to (some extent) charge somewhat more for the same trips than a system which people hate. When people don’t trust or like your system, that incurs a penalty!
Also keep in mind that there are additional goals imposed externally. The CAHSR system has been sold as a solution to certain societal needs, so even if you end up calculating that maximum income can be achieved with many fewer trains, carrying many fewer passengers than want to travel — that might not fly politically. Such political pressure doesn’t completely trump profitability, but it is a factor to take into consideration.
Anyway, as I mentioned, keeping additional rolling stock around has a cost which can be used as part of the calculation, and there are certainly scenarios where the additional income it enables is greater than that cost. Fixing the number of trains and only varying ticket cost does not necessarily yield the greatest profit.
Derek Reply:
August 26th, 2011 at 10:09 pm
“The point is that there is a price at which many will stop paying, so you can’t increase the price arbitrarily, even with very high demand.”
It appears that you don’t understand the concept of “economic equilibrium”. Here’s a primer, but if you after all this you STILL can’t understand the concept, then you REALLY need to take a beginning economics course at your local community college. http://en.wikipedia.org/wiki/Economic_equilibrium
Miles Bader Reply:
August 26th, 2011 at 11:12 pm
Er, Derek, just saying “you don’t get it!” doesn’t help your argument…
Do you claim there isn’t a price point at which most people will stop paying for tickets? I mean seriously, that doesn’t seem a particularly absurd claim.
Derek Reply:
August 27th, 2011 at 12:01 am
“Do you claim there isn’t a price point at which most people will stop paying for tickets?”
No, I never claimed that. I only claimed that there’s a price point where “every segment on every trip will be nearly full.”
Do you not believe this?
Richard Mlynarik Reply:
August 26th, 2011 at 9:12 pm
This is all micro-economics undergraduate nuttiness.
There’s a value to riders (uh, “customers”) in predictable ticket prices, and in regular and interchangeable departure times. Sure, you can dynamically reprice every seat on every train every millisecond, but at some point people are going to say “screw you!” (This happened in Germany.)
The further you descend into the “yield management is all” black hole (abuse by airline ticketing being all that un-cosmopiltan un-travelled Americans have ever experienced) the less advantage rail offers over air.
If you operate and price and ticket trains the same way as airlines, all you end up with is a slower and uncompetitive airline.
Derek Reply:
August 26th, 2011 at 10:14 pm
“but at some point people are going to say “screw you!” (This happened in Germany.)”
If people abandoned the trains in droves such that some segments on some trips were not nearly full, then what does that say about the price? You may cheat by referring to a demand curve: http://en.wikipedia.org/wiki/Demand_curve
If you still can’t understand these concepts, I recommend taking a beginning economics course at your local community college.
Drunk Engineer Reply:
August 26th, 2011 at 10:37 pm
Airline-style pricing means airline-style mandatory reservation.
Meaning: forget about attracting people out of their cars. Cars have the advantage of leave anytime, no reservations required. If trains want to compete with cars, they better provide the same quality of service. Otherwise, may as well give up on regional service (i.e. intermediate cities), and only run airline-style LA-SF expresses.
Derek Reply:
August 26th, 2011 at 11:54 pm
“Airline-style pricing means airline-style mandatory reservation.”
No, it doesn’t. If you can’t get a seat because all the seats are full, it like any other shortage means the price is “below the going rate determined by supply and demand”. http://en.wikipedia.org/wiki/Economic_shortage
There’s no reason why prices have to be set below the equilibrium price. Therefore, there’s no reason why reservations must be mandatory.
Alon Levy Reply:
August 27th, 2011 at 5:38 am
Derek, you misunderstand what Drunk Engineer is saying. High-speed trains can require all passengers to reserve a seat (TGV, most long-distance Shinkansen cars) or not (ICE, commuter Shinkansen). This isn’t about economic shortage, but about passengers paying extra to be guaranteed a seat.
This is independent of yield management. Under yield-managed systems, if you buy a ticket in a cheap fare class, it comes with restrictions about rebooking if you miss your train or want to change your schedule – and forget about show-up-and-go passengers outside the business class. If you buy an Amtrak ticket in advance, and show up at the station early and want to get on an earlier train, you’ll have to pay extra money. Airline tickets are even worse. The airlines get away with it because on most of their markets, there’s no alternative to flying. Trains rarely have this privilege. People will sacrifice the flexibility of cars on trips from New York to Chicago; they won’t sacrifice it on trips from Fresno to Los Angeles.
Derek Reply:
August 27th, 2011 at 7:53 am
You can pay extra on the Shinkansen for a reserved seat. If you don’t pay, you’ll have to stand if there’s a shortage of unreserved seats on the train. So yes, it’s about an economic shortage.
jimsf Reply:
August 27th, 2011 at 11:30 am
This is independent of yield management. Under yield-managed systems, if you buy a ticket in a cheap fare class, it comes with restrictions about rebooking if you miss your train or want to change your schedule – and forget about show-up-and-go passengers outside the business class. If you buy an Amtrak ticket in advance, and show up at the station early and want to get on an earlier train, you’ll have to pay extra money
There are no fees to change tickets on amtrak. The only time you pay anything is when there is a fare difference. And there isn’t always a fare difference expecially in california.
Max Wyss Reply:
August 27th, 2011 at 11:32 am
“If you operate and price and ticket trains the same way as airlines, all you end up with is a slower and uncompetitive airline.”
You can do that as long as demand is way bigger than what you can offer.
Several European operators chose to go the “global price” path, where the price includes a seat reservation, and is more or less restricted. Those operators simply don’t get the “system” idea, and the freedom a good train system offers. Of course, with two trains per day (that’s what the SNCF has with certain TGV services), that “freedom” element can, of course, not be used. This is opposed tothe German model where you have a connection at least every hour, if not more frequent.
Yes, the Deutsche Bahn tried to introduce that “global price” model (don’t forget, the at the time CEO, Mr. Mehdorn, came from the airline industry). But the reduction of freedom was so great that the public indeed went for the “screw you” way. (and if I remember correctly, the revenues of the Deutsche Bahn dropped by 15% or so). No wonder the CEO had to look for a new job.
Anyway, the denser the schedules are, the less you get through with yield management etc. (those “global price” schemes are essentially the result of airline-style yield management). I fear we will get that way, because passenger transportation managers are thinking “airline”; they never learned anything else…
Paulus Magnus Reply:
August 25th, 2011 at 4:56 pm
A lot of the infrastructure can be used for commuting however (LA-IRV and Altamont for instance).