The Economy

Good Week/Bad Week: Be Sure You’re Right

House committee okays funding for Amtrak; ''moral courage'' of lawmakers hailed by cow-catcher lobby. Plus Kozlowski on art, Disney on parade, and ...
John GoffMay 6, 2005

Disclaimer: This column, such as it is, does not, in any way shape or form, purport to adhere to traditional journalistic concepts. It has not been approved by the European Commission, the Warren Commission, the Cato Institute, the Ponds Institute, the House of Burgess, the House of Burgers, or any regulatory or standards-setting body associated with the Comics Code Authority. In addition, the prose contained within does not meet the august literary standards set by Earl Stanley Gardner, Earl Morrall, Earl Grey, Zane Grey, the Old Grey Mare, or Mare Winningham.

While the items in this column are based on real events, most everything else is made up. Some quotes are real, some are phony as a two-dollar nickel. Please, no lawsuits.


Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

1. Amtrak

Things appear to be looking up for Amtrak, the for-profit-har-dee-har-har-har national railroad corporation. Late last week, the House Transportation Committee voted unanimously to authorize $6 billion over the next three years to fund the struggling train operator. The committee members, who seemed to be in an avuncular mood, also authorized $1 billion to carpet Guam, then tried to see how many legislative assistants they could squeeze into the Dirksen cloakroom.

The vote was seen as a slap in the face to the Bush Administration, which is keen to transfer control of the struggling railway to states. Congressional Republicans have repeatedly bashed Amtrak’s poor performance, including a laggardly 72 percent on-time record for the Acela, the company’s flagship high-speed service. All 27 of the Acela engines, however, are currently out of commission due to brake problems.

Officials at the railroad now say many of the high-tech trains, which cost nearly $1 billion to build, will not be back in service for at least another three months. Initially, officials at the railroad indicated all the trains would be in service by early May, In announcing the set back, an Amtrak spokesman noted: “Due to a lack of parts, many of the trains won’t be placed in service until sometime in mid to late July,” adding that the delay is “no biggie. Summer’s not a peak travel period, anyhow.”

Ultimately, the White House would like to see the loss-making national railroad privatized and opened up to competition. Sources close to the White House, however, say some advisors to the president question if privatization will save Amtrak or merely delay its demise. In addition, Administration officials are thought to be deeply divided over what to do about loud talkers in the quiet car.

Certainly, a look at Amtrak’s finances does not paint a pretty picture. Last year the railroad lost $600 million. In 2003, the GAO detailed Amtrak’s finances in a 200-page report to Congress. It made for fascinating reading. That year, Amtrak generated $1.6 billion in revenues, but had $2.1 billion in costs. Of the $2.1 billion in outgoing funds, nearly $1.3 went for salaries and benefits for Amtrak’s highly unionized workforce.

When asked to discuss the exorbitant salaries and cushy benefits going to the railroad’s mostly nonskilled employees, Train Workers Union chief Paul Panograf replied: “This country does not support railroads. Look at France. Look at Belgium. They have excellent trains in Belgium. You know what else? They have these little chocolates over there — I forget what you call ’em. But they’re just delicious, very dark and flavorful with just a hint of clove. I don’t know why we can’t make chocolate like that in this country. All we’ve got is Hershey’s kisses. You call that chocolate?”

When reporters pressed the union head to discuss the $100,000 annual salaries of some of Amtrak’s conductors, Panograf replied that he does not condone the use of steroids in any form.

In its hearings on Amtrak’s finances, the Transportation Committee also looked into the poor safety records at several of the railway’s feeder lines. In one heated discussion, committee members grilled S.T. Hat, controller at IOS Railway Corp., about the shocking number of accidents occurring on that branch line. Said an angry Sen. George Brofsky (R-Idaho, D-Elsewhere): “I mean, you’ve had tank engines that got covered in chocolate and skidded right through bumpers. You’ve had express engines that fell off bridges. You’ve got cracks in the track. We’re hearing reports that one engine is constantly in service despite a well-documented history of boiler aches. I ask you sir, is this any way to run a railroad?”

In response, IOS’s Hat said he would look into the charge. He insisted, however, that, despite some problems, the branch line “was a very useful railroad.”


1. Dennis Kozlowski

On Monday, prosecutors in the ongoing fraud trial of L. Dennis Kozlowski grilled the former Tyco International CEO about his spending habits. Specifically, Assistant District Attorney Ann Donnelly asked Kozlowski about the $12 million in art and decorations the company spent furnishing his swank apartment in New York City.

Donnelly reminded the jury that the costly renovations — done in 2001 — came at a time when Kozlowski was telling Tyco shareholders he was making a big push to cut costs throughout the company. She asked Kozlowski if the decorations (including a $15,000 umbrella stand) were inconsistent with “a relentless push to cut costs.”

“That’s correct,” Kozlowski answered. “It was overspent, and I take responsibility for that. On the other hand, I thought it would appreciate in value.”

Besides the umbrella stand, Tyco-funded furnishings at Kozlowski’s Manhattan duplex included a $6,000 gold-threaded shower curtain, a $2,900 set of coat hangers, and a $2,665 satin pillow. Other personal items found at the Fifth Avenue apartment included an ermine-lined La-Z-Boy and a black velvet painting of naked Elvis doing a side kick.

During Donnelly’s questioning, the former Tyco top man also defended as “appropriate” the company’s $1 million expense for a week-long celebration on the Italian island of Sardinia. At that party, Kozlowski apparently hired unemployed workers from a nearby copper extraction-and-removal company to dress up in togas and dance around an ice statue of David, which urinated a stream of Vodka into the air. Local reports indicate that at least one of the idle copper workers lost his eligibility for unemployment compensation because of the week of work — a story which became front-page news in local Sardinian papers.

Kozlowski, who is charged with fraud, grand larceny, and endangering the welfare of a miner, drew nervous laughs from several jurors when he said he didn’t like some of the decorations in the New York apartment. The proceedings turned serious, however, when prosecutors pointed out that Kozlowski spent over $10 million in company money on paintings for the flat. In his defense, Kozlowski insisted he tried to “get good rollbacks on the merchandise,” noting he once hired a broker to dicker with a salesman at a London art gallery over the $2 million asking price for one painting. The dealer, Kozlowski said, eventually knocked $50,000 off the price and threw in a set of beach towels.

In explaining the haggling over the cost of the painting, Kozlowski told jurors: “It’s just like buying a car — a very, very expensive car, except it’s much smaller and doesn’t have to meet any emissions requirements.”

The jury, which is composed of six women, four men, and two insurance salesmen, is expected to begin deliberations as soon as they regain their senses.

2. The Walt Disney Co.

Early in the week, management at The Walt Disney Co. denied a report that the entertainment company is planning to build a theme park in India. The published article indicated that representatives from Disney had already lobbied government officials about the prospects of constructing an amusement park in either New Delhi or Bombay (Mumbai).

The company did acknowledge that outgoing Disney CEO Michael Eisner and incoming CEO Robert Iger visited India last week and met with Prime Minister Manmohan Singh. The executives were in India, according to a press release issued by the company, “to explore and discuss future opportunities for Disney in the burgeoning market of India.” Iger has also indicated that international expansion will be a key component of his strategy for the company when he takes the helm in September.

But in response to rumors coming from Mumbai (Bombay), Jay Rasulo, president of Walt Disney Parks and Resorts, issued a press release, insisting that “we have not had any discussions in India regarding the opening of a theme park or purchasing land and do not plan any in the foreseeable future.”

Nevertheless, sources in Calcutta (Kolkata) insist that Disney was interested in building a park in India, and had already shown preliminary sketches of the park to members of India’s Urban Development Ministry. According to one source in Bombay (Mumbai), the deal hit a snag when officials in Bangalore (Bangalore) saw the types of rides Disney was planning to build.

Says the source: “They had this one attraction called ‘Hello Dahl,’ which was a miniature replica of 19th century Jaipur constructed entirely out of chick peas. We all thought it was some sort of a joke, an ice-breaker, you know. But they were serious.”

The insider claims that other Disney ideas for the park fell flat as well. One supposed planned ride, “Papadum Preach,” was said to be similar to the Mad Tea Party in Disneyland, except the cups were made to resemble the different breast plates worn by Madonna during various stages in her career. “It was like they were making up these outlandish rides just so they could work in all these puns about Indian food they’d been saving up for years,” says the source. “It was preposterous. I mean, who’d do something like that?”

And now…

This Date (More or Less) in History

On May 6, (actually, April 25), 1684, the very first patent was awarded for the thimble. The same year, the Truce of Ratisbon was signed between the Holy Roman Empire and France, and the last witch was executed in England. Things have never been quite the same since.

These days, people don’t give much thought to the humble thimble — or the himble thumble, for that matter. But thimbles have played an important role in world commerce. According to historians, the first crude thimbles were made of stone, bone, or ivory, and were used with the first crude needles to fashion the first crude sweater vests.

The modern concept of thimbles derives from the Etruscans, who became famous for making thimbles even though their copper-rich thimbles tended to leave fingers horribly discolored. One thimble historian — OK, the thimble historian — notes that the first real breakthrough in thimble technology came in the 1500s when coppersmiths in Cologne, Germany, figured out a way to make thimbles that didn’t stain upon contact. Ironically, the breakthrough manufacturing process in Cologne created such a foul-smelling odor that the copper smiths were beaten by club-wielding townsfolk. That tended to dampen the smithies’ enthusiasm for thinking up new ways to make thimbles.

Later, mass production came to thimbles. The 19th century was known as the golden age of thimbles. By that point, designs were die-stamped. Paul Revere, noted silversmith and rabble-rouser, made a gold thimble for his daughter, Maria. You can see it at the Boston Museum of Fine Arts.

In Victorian England, thimbles were considered tokens of good luck. At Christmas, a tiny silver thimble was often folded into the family pudding. It was said that the finder would enjoy good fortune throughout the year — assuming he survived the night. [Editor’s note: To this day, many Britishers say “What’s for pudding?” when they mean “What’s for dessert?” By our lights, this only confuses matters.]

In the 1940s, thimbles were used as corporate marketing devices. Businesses soon found out, however, that when it comes to brand-building, thimbles lack that certain something.

Today, thimbles aren’t so popular. Most modern thimbles are meant to be collected, not used (people who collect thimbles are known as digitabulists, or nutters). You’ll occasionally see a digitabulist in an antiques shop getting all excited about finding an old thimble. But since thimbles have been mass produced for hundreds of years — and were usually made of inexpensive, long-lasting materials — the digitabulist may be overstating the importance of the find. In auctioneer’s parlance, thimbles are what’s known as dead wood.

There’s a museum in Germany dedicated to the thimble. It’s called the Fingerhut museum. Yes, it is.