By Sean Davis
He is the author of Slate's "Moneybox" column which focuses on business, economics, and finance. Brookings released a great report today on the route-by-route finances of Amtrak. Matt Yglesias read it and demonstrated that he knows literally nothing about basic accounting.
- The part of Amtrak that people actually use makes money—then it’s wasted subsidizing the rest: slate.com/blogs/moneybox/20...
- @mattyglesias Table 6 (income by route) shows $2.7B in 2011 costs. Amtrak expenses were $3.9B that year. What happened to other $1.2B?
- @mattyglesias And if you allocate that $1.2B per route by %revenue generated (or even half that), the "profits" go bye-bye.
I read his post, but it turns out that Matt Yglesias didn't read the whole report. How do we know this? Because although his column uses the term "operating profits" multiple times, the phrase doesn't appear a single time in the Brookings report. And why not? Because the Brookings authors know that there are no "operating profits" due to -- you guessed it -- $1.2 billion in overhead costs.
Keep this exchange in mind next time Yglesias opines on stocks and company valuations. After all, he's an expert.
[ADDENDUM: The following hilarious and depressing exchange happened after the Storify story was initially published]
- @mattyglesias Re: your question, I'm still trying to figure out how an unprofitable/cash flow negative operation can "subsidize" another.