Moneybox
A blog about business and economics.

July 13 2017 2:34 PM

Visa Boldly Ushers in the Cashless Future (Where Everyone Uses Visa)

There is something knowing in the title of Visa’s latest initiative, the Visa Challenge, in which the payment company will offer 50 restaurants, cafes and food trucks $10,000 each to eliminate cash payments. “We are declaring war on cash,” a Visa spokesman told the Associated Press.

It’s a bit like if GM issued a Chevrolet Challenge, and gave you money to drive around in a Silverado, or Anheuser Busch InBev paid you to drink exclusively Modelo. Despite Visa’s exhortations about the perks of running a cashless business, it's an admission that for merchants, reliance on the American credit card triopoly is an unpleasant predicament.

Why would food service establishments need a $10,000 incentive to stop collecting cash?

July 13 2017 10:08 AM

The Sharing Economy Is Much Trickier With Products That Are Smaller Than a Bike

It is easy enough these days, in countless metropolises, to pick up and pay for a bike or car in one place and drop it off in another—so easy that an entrepreneurial sort might conclude that the model could be applied to other consumer products that city-dwellers often require. Like umbrellas. Or basketballs.

But the recent foibles of two Chinese companies illustrate how hard it is to translate the bike-sharing model to items that are, well, smaller than a bike. One Shenzen startup, Sharing E Umbrella, earned the internet’s mockery earlier this week after almost all of the 300,000 umbrellas it placed in 11 cities went missing. (It placed its colorful umbrellas on railings within 100 feet of subway exits; customers paid a small fee and deposit to rent them.) Another company, the Zhejiang-based Zhulegeqiu, ran into a similar problem in testing when one of its competitors walked off with one of the basketballs it rented to consumers via lockers that they unlocked with their smartphones.

One big difference, of course, is that these umbrellas and basketballs were not traceable. One way to prevent thefts is by installing GPS trackers on the basketballs or umbrellas that you offer, and Zhulegqiu debated installing GPS trackers on all of its products. But the company realized it would actually be less expensive to hire employees to hound the thieves on their cell phones until the basketballs were returned. Because basketballs and umbrellas cost so little, it probably costs almost as much to install a GPS on them as it does to purchase new ones. Because cars and bicycles cost far more, installing a GPS device makes much more sense.

Cars and bicycles also are more valuable than the other smaller product, and even if it takes a little time to get to one, they cut commute time. It may be annoying to carry around an umbrella, but it also feels silly investing too much time renting one and then finding the right rail to dock it once done.

Or maybe the problem was the storage system: Another Chinese company, Molisan, was more successful at with its umbrella-renting idea. It installed cabinets where its customers could return umbrellas when they were done with them, and found that only eight out of 1,000 umbrellas that they originally provided went missing. But 1,000 umbrellas is a pretty small sample size, and the cost of providing the cabinets is similar to the cost of installing GPS trackers on every basketball. At scale, building all of those umbrella cabinets may not make sense.

And then there’s the network problem. There may be increased demand for cars or bicycles during peak commute times, but there’s still at least some demand throughout a given day. With umbrellas, the problem is that everyone needs them at the same time, and renters need them until they get home, which lessens the incentive to return them. There’s also the issue of having a rainy season and dry season, which is the case in China and almost eliminates the need for umbrellas for months at a time. These issues in use and perceived value make it hard to sustainably loan out small products.

Bike-share systems, of course, aren’t immune to theft, though it hasn’t stopped them from proliferating around the globe. But the temptation to keep or discard what you just rented via smartphone app is greater, it seems, when the thing fits under your arm.

July 12 2017 5:56 PM

Qatar Enlists a New Ally in Its Diplomatic Crisis: 4,000 Cows

Qatar, the subject of a crippling blockade by Saudi Arabia and other Gulf countries, will welcome 4,000 herbivorous foreigners in the coming months to help fulfill the country’s dairy demands. Arriving on a Qatar Airways flight from Germany via Budapest, the first batch of 165 cows landed in the tiny Gulf nation on Tuesday and were promptly transported to a newly built dairy facility.

Dairy products found in Qatari supermarkets used to be imported from neighboring Saudi Arabia. But on June 5, Saudi Arabia, the United Arab Emirates, Egypt, and Bahrain cut off diplomatic ties with Qatar and imposed the land, air, and sea blockade of their neighbor. Doha, the capital of the primarily oil-exporting economy, rejected a list of 13 demands as preconditions for lifting the sanctions, so the blockade continues.

According to one estimate, more than 99 percent of Qatar’s food is imported, primarily through its land border with Saudi Arabia. Although the Qatari government promises that there’s enough Ben & Jerry’s to keep the country of 2.7 million people happy, news of the blockade led many Qataris to stock up on supplies. “I’ve never seen anything like it – people have trolleys full of food and water,” one Qatari shopper told Doha News on the day the blockade was announced. Even as the blockade put Qatari shoppers on edge, it presented a business opportunity for others.

According to Bloomberg, the Qatari firm Power International Holding purchased the cows from Europe to be flown in via 60 flights. Chairman Moutaz al-Khayyat says he expects the cows to meet 30 percent of the country’s dairy demand. Qatar has also been seeking new trade routes, importing yogurt from Turkey and meat and fruit from Morocco and Iran. A rival to Saudi Arabia’s ambitions in the Middle East, Iran has also granted Qatar access to three of its ports, and Turkey flew four cargo planes of food to Qatar immediately after the blockade began. “New import arrangements have been made with different countries including Turkey to ensure uninterrupted supply of food products,” a representative of Qatar’s Lulu supermarket chain told the Peninsula in June.

Qatar, which currently boasts the highest per capita income in the world, has continued to dismiss the blockade’s economic toll. Even as the Gulf country has been hit with a ratings downgrade over the crisis, its leaders and people insist on its resilience.

“Even if we don’t import or export for the next year, we have enough materials to cover our infrastructure and private sector projects,” Qatari Foreign Minister Sheikh Ahmed bin Jassim Al Thani told Al Jazeera earlier this month.

“It’s a message of defiance, that we don’t need others. Our government has made sure we have no shortages and we are grateful for that. We have no fear. No one will die of hunger,” Qatari resident Umma Issa told Bloomberg.

And although the cows might enjoy their new surroundings, hundreds of camels have reportedly died from starvation and thirst after their Qatari farmers were kicked out of Saudi Arabia. According to the Independent, the Qatari government was able to save 8,000 stranded camels, but many died en route across the desert.

Maybe Qatar Airways’ cattle car isn’t a bad way to travel after all.

July 11 2017 7:27 PM

Trump Is Already Driving Up the Cost of Health Insurance for Millions of Americans

Even if he fails to repeal Obamacare, it looks like Donald Trump will be responsible for ratcheting up insurance premiums for millions of Americans in 2018.

That much is becoming clear now that insurers have started requesting their annual rate increases. The numbers so far are staggering. With filings submitted in 18 states, carriers have asked regulators to let them hike premiums by an average of 34 percent next year, according data compiled by Charles Gaba of ACAsignups.net. By comparison, premiums jumped just 22 percent this year as insurers attempted to finally fix their unprofitable exchange businesses, which had lost money covering an older, sicker, more costly pool of customers than companies had anticipated. (That was just slightly below their average requested hike of about 25 percent.)

Why are carriers asking for such dramatic rate increases? To borrow Gaba's phrase, Americans are paying a “Trump tax.”

For months now, the president has threatened to throw the individual insurance market into chaos by cutting off key subsidies—known as cost-sharing reduction, or CSR, payments—that the government is supposed to pay to insurers under the Affordable Care Act. Those funds are worth billions to the industry, and while the White House has continued dolling them out while deciding whether to keep defending a lawsuit over their legality, it hasn't committed to doing so in the long term. So insurers seem to have started pricing in the possibility that the subsidies will in fact disappear, along with other looming uncertainties, such as whether the government will keep enforcing the individual mandate.

Some insurers have tiptoed around this issue in public. But others have been explicit about it. In May, after Blue Cross Blue Shield of North Carolina submitted a 22.9 percent rate increase to its state regulators, executives said the hike would have been a mere 8.8 percent if the subsidy payments weren't in question. “2017 is so far, so good,” CEO Brad Wilson told Vox. “It’s still early and our numbers for the year run about 30 to 45 days behind. But the analysis underway so far in 2017 appears to show stability in the market in terms of price, utilization, and the customer base.” But unfortunately, Blue Cross Blue Shield needed to tack on the Trump tax.

That seems to be what's happening across much of the insurance industry. Accoring to a report released this week by the Kaiser Family Foundation, by almost all measures carriers have been faring far better on the Affordable Care Act's exchanges this year than in the past. Medical loss ratios—the percentage of premiums carriers spend covering insurance claims—plummeted in the first quarter, and are now even lower than they were before the Affordable Care Act was in place. Gross margins—the average amount by which premiums top claims—more than doubled. “Early results from 2017 suggest the individual market is stabilizing and insurers in this market are regaining profitability,” the authors concluded.

To be clear, even with higher prices, insurers seem to have been unable to make money selling Obamacare coverage in certain areas of the country—particularly rural regions with thinner customer bases. That, combined with political uncertainty over health care, has led many carriers to pull out of these markets, and a handful of counties are at risk of being left without an insurer on their exchanges next year. But given the broad national trends, there is no way Americans should be facing anything close to an average 34 percent premium hike next year. They might be, thanks to the Trump tax.

Exactly how much more are Americans paying because of the president's saber-rattling? A Kaiser analysis previously found that killing the CSRs would push up the cost of a benchmark silver plan by 19 percent—almost as much as last year's total hikes. Blue Cross Blue Shield's announcement suggests insurers are building in a buffer roughly around that figure.

Thankfully, low- and middle-income Americans who receive tax credits to pay for coverage on Obamacare's exchanges won't be affected by the hikes, since those subsidies cap their premiums as a percentage of their income. But there are millions of Americans who purchase Obamacare-compliant plans either on or off the exchanges who don't receive any subsidies, and who will bear the full brunt of any price increase.

And for what? Initially, Trump appeared to be threatening the CSRs as part of a half-baked strategy aimed at making Democrats negotiate on an Obamacare replacement. That flopped when Nancy Pelosi and Chuck Schumer refused to come to the table. Now, from all appearances, Trump seems to want to sow enough havoc in the insurance markets to create the impression that Obamacare is collapsing on its own and needs to be replaced. After all, if he’s going to keep nattering on about Obamacare being “dead,” it helps if something’s killed it.

So far, that tactic doesn't seem to have moved many of the senators withholding their support of the Better Care Reconciliation Act, or made the Republicans’ various proposals any more popular with public. As of now, it’s just families who will pay, quite literally, for Trump's pointless and cruel political gambit.

July 11 2017 2:54 PM

Urban America Is Driving More. Rural America Is Driving Less. What Gives?

 

For a few years following the recession, there was some speculation that America had reached peak driving. Possible reasons for this epochal shift included reurbanization, telecommuting, and the stall of southbound migration patterns (we like our towns denser up north).

It now appears the shift was a blip. The past three years have all but erased a 10-year decline in driving that began in 2004; in both 2015 and 2016, vehicle miles traveled, or VMT, per capita rose by more than 2 percent, a higher rate than at any time in the past quarter-century.

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Michael Sivak and Brandon Schoettle/The University of Michigan Sustainable Worldwide Transportation

Basically, we’re driving as much (per person) as we were in 2000, and the rate is rising. But a meaningful, long-term shift is occurring in driving patterns, as a new paper by Michael Sivak and Brandon Schoettle of the University of Michigan makes clear. Urban driving is up 33 percent in that time; rural driving has fallen 12 percent.

That enormous divergence can’t be explained by the country’s ongoing urbanization and population growth. America’s cities (by which I mean, mostly, their sprawling exurbs) have grown by 19 percent in that time—meaning that bigger cities account for just 58 percent of the urban driving mileage increase. Rural areas, meanwhile, have seen their distance driven fall by double digits even as population has held flat.

This jibes with a trend I wrote about in April: The miles of road lanes classified as urban is increasing while the miles of road lanes classified as rural is decreasing. But part of that shift, as Tony Dutzik, a senior policy analyst at the Frontier Group, pointed out to me then, can be explained by the ongoing classification battles that occur on the exurban fringes of growing cities, where rural roads become urban as cities expand. When a busy “rural” interstate in an Austin, Texas, exurb gets reclassified, it may shift more drivers from the “rural” to “urban” category than it does residents. Dutzik has previously shown that rural VMT decline can in large part be attributed to these boundary changes. (To make matters more complicated, the criteria vary from state to state.)

And yet: The divergence is a little too large to boil down to terminology. Sivak and Schoettle put forth four questions for future research: What characteristics of new urban arrivals might influence their driving habits? How have urban and rural economies diverged? Who drives in which places and why? And how has the internet changed driving needs, particularly in rural areas?

We know that urban growth—especially over the past few years—has been concentrated in sprawling Sun Belt metropolises, so it would make sense for driving to outpace urban population growth. Other culprits to look out for: the metropolitan character of the ongoing economic recovery (urban driving is also more likely to involve commuting), declining transit use, the (almost exclusively urban) rise of ride-hail companies, and the big mystery of how e-commerce affects driving (warehouses where consumer goods are stored, boxed, and shipped are increasingly urban).

What’s going on here? Something to ponder on your next long drive.

July 10 2017 6:08 PM

Central Bankers Think Their Job Is Done Fixing the Global Economy. Why Are They Still Letting Greece Suffer?

In the two developed-world economies that suffered the most during the 2008 financial crisis and the ensuing recession, the central banks are at last declaring victory. The Federal Reserve has raised interest rates three times in the past seven months and has telegraphed its intention to start shrinking its massive balance sheet this year. Federal Reserve Chair Janet Yellen remarked in June that another financial crisis was unlikely “in our lifetime.” And the European Central Bank, confronting rising interest rates and a continuing economic expansion, is hinting that it may start to taper its asset purchases and will begin to consider raising interest rates, moves that suggest it thinks the eurozone’s economy can now function just fine with less of its help.

After failing miserably to forecast the severity of the global recession of 2009, central bankers are recovering some of their self-esteem. Looking back on the past decade, they succeeded in averting a total crash, setting the stage for a recovery, and sustaining the type of long expansion that generates jobs and, it is still hoped, income growth. While the economies of Europe and the U.S. are not quite firing on all cylinders, there is now a sense that they are chugging along just fine.

And then there’s Greece. While I was in Athens last week, the oppressive heat—107 at midday—felt like a metaphor for the heavy air of resignation and stagnation that blanketed the city. Garbage was piling up in the streets off Syntagma Square thanks to a strike by sanitation workers. We hastened to tour the Acropolis because we wanted to get there ahead of a strike by security guards that would shut down the site in the cool morning hours.

I know it’s the worst kind of reporting to drop in for a couple of days and make grand statements. (In the Financial Times, Simon Kuper’s latest Greece dispatch pulls it off quite nicely.) But there’s also the data, which speaks to a continuing financial and human crisis on a scale unimaginable in developed countries. Ten years after the onset of the crisis, Greece, which has a population of 11 million—roughly equivalent to that of Ohio—is far worse off than any U.S. state or European country was at their depths. The unemployment rate in April was 21.7 percent. The country has seen its population shrink for six straight years. The country’s total output has shrunk about 25 percent from its 2008 peak. GDP per capita is on par with Hungary and Latvia. And this is eight years into an expansion.

Growth cures a host of social, political, and economic ills, while stagnation exacerbates them. The best way to work your way out from under a massive pile of debt is to have a little inflation and some growth. But Greece, with its monetary fate tied to Europe (and hence to Germany), has had virtually no inflation and no growth whatsoever. If your debt is 100 percent of GDP and you hold it steady while the economy shrinks 25 percent, then your debt rises to 133 percent of GDP. That’s effectively what has happened to Greece, whose debt now stands at an astounding 177 percent of GDP.

Of course, Greece got itself into its debt trouble, and its political system has been generally ineffective at restructuring the country’s economy and reigniting growth. But they’ve lacked the most powerful tool a a struggling country has at its disposal—a central bank that will set accommodative policies.

And the technocrats at the European Central Bank haven’t done the country any favors. Greece continues to labor under the absurd austerity terms set by its creditors. Usually, when you foolishly lend money to entities that can’t pay it back, your lenders accept that they won’t get 100 cents on the dollar and write down a portion of the debt as part of a restructuring. The entities that have come to Greece’s rescue—the troika of the European Central Bank, the International Monetary Fund, and the World Bank—have refused to countenance serious write-downs. (Largely for fear of how doing so would affect the health of the German banks that binged on Greek debt.) And so the country is required to run a primary surplus of 3.5 percent of GDP so that it generate sufficient interest payments to service its debt load. That would be like the U.S. running a $570 billion surplus every year.

Rather than pat themselves on the back for engineering growth and banishing financial crises forever, it would be nice if the world’s most powerful central bankers would acknowledge the continuing financial crisis in their midst. And then they could start arguing for a real resolution of the problem. The ECB (and the Fed) have spent enough resources and extended enough aid to the world’s banking system. It’s time to give Greece a break.

July 10 2017 4:54 PM

Navigation Apps Are Killing Our Sense of Direction. What if They Could Help Us Remember Places Instead?

Navigation technology is making you dumb—or at least dumber than you would be if you were using a traditional paper map.

This process, which experts call “spatial cognitive deskilling,” has been demonstrated over and over again: As we grow more and more dependent on sophisticated navigation services like Waze, our brains stop doing the heavy lifting necessary to create and maintain mental maps. We become what the Japanese call hōkō onchi, or “deaf to direction.”

Hippocampus be damned, none of us is going back to Rand McNally if we can help it. You can set up digital mapping software in a way that requires slightly more effort: Leaving the map static, with north facing up, for example—rather than have it rotate as your steering wheel turns. But what if there were a way to modify GPS turn-by-turn directions in a way that made navigation more enriching but not more onerous?

That’s what Klaus Gramann, a psychologist at the Berlin Institute of Technology, has been working on. His experiment, published this winter in Frontiers in Psychology, was essentially to invent new ways of giving directions.

July 7 2017 3:37 PM

St. Louis Gave Workers a Wage Hike. Missouri Republicans Are Taking it Away.

On Aug. 28, St. Louis may become the first city in the United States to see its minimum wage fall, from $10 an hour to $7.70 an hour, as the Missouri Statehouse enables a pay cut for some 35,000 workers.

That’s the date when a new state pre-emption law, drafted specifically to target St. Louis, is scheduled to take effect. The Missouri measure will override the city’s own minimum wage increase, which was implemented in May after a two-year court battle, and end a three-month period during which fast food, retail, and other workers in the city were required to be paid hundreds of dollars in additional income.

Republican-run states forcing Democrat-run cities to not raise the minimum wage is a story we’ve seen before, of course. Alabama thwarted Birmingham’s efforts in February of last year; Ohio stopped Cleveland in December. More than a dozen other states have passed pre-emptive pre-emptions, abolishing municipal wage laws before any cities or counties consider them. GOP politicians usually say minimum wage ordinances won’t actually help workers, but they also defend the pre-emptions in principle, because they preserve a “uniform regulatory environment.”

June 30 2017 11:12 AM

Horizon Air Is Canceling Hundreds of Flights Because of the “Pilot Shortage” It Helped Create

On the one hand, we’re told, robots are coming to take all our jobs any day now. But then there are 6 million job openings in the U.S., and large companies in a range of industries are telling us they are running out of humans to perform labor.

The reality, of course, is somewhere in between. Automation is substituting for human labor in ways large and small. The productivity engine isn’t completely broken. The volume of coal mined this year is up 17 percent, though employment in coal mining is up only two 2 percent. But American companies don’t have a shortage of people. They have a shortage of wages, benefits, and training. Companies could fix that problem, but they haven’t.

Take Horizon Air, a regional airline that services the Pacific Northwest, which the Seattle Times reports is “cutting its flight schedule this summer because of a severe shortage of pilots for its Q400 turboprop planes. The shortage became a crisis this past month when Horizon was forced to cancel more than 318 flights because it didn’t have enough pilots to fly all its planes.” That represents 6.2 percent of the flights Horizon runs between Seattle and places like Boise, Spokane, and Portland.

Think about that. Flying these routes isn’t some ancillary or side business for Horizon. It’s the only business it is in. Canceling flights is damaging to your brand and your company’s long-term prospects—it alienates and annoys customers who have already purchased tickets. And it’s damaging to your short-term profits. You’re in the business of moving people from point A to point B, the more you can move the better. You’re already committed to pay for the overhead—the planes, insurance, the gate slots at airports, the maintenance, and the ground crews. You need volume to be as high as it can. Choosing not to run flights that have paying passengers is an enormous own goal. It’s the equivalent of Starbucks deciding not to open several hundred stores for which it is paying rent because it doesn’t have enough managers.

Horizon Air isn’t some tiny operation unable to cope with the vagaries of the marketplace. It’s a unit of Alaska Air, a publicly held company that has a market capitalization of $11 billion and that chalked up $1.7 billion in revenue and $99 million in net income in its most recent quarter. It has a big balance sheet, vast resources, stock, borrowing capacity, and access to all kinds of services.

A big airline intentionally grounding flights because it can’t find pilots is a great metaphor. Horizon and other companies in this situation are paying the price for a decade or more of corporate pathology surrounding wages. Labor is a commodity. It’s why we call it a labor market. When labor is in abundant supply, when lots of people with the requisite skills are looking for jobs and openings are few, you don’t have to pay as much to fill positions. That’s the world looked like from 2008 to 2012.  But when labor is in short supply, when few people with the requisite skills are seeking work and there are lots of openings, you have to pay a lot more. That’s what the world has looked like for the last few years.

But many businesses seem blind to the reality. They’ve become accustomed to thinking they have can have all the labor they want, with all the skills they need, without having to pay much for it or offer long-term job security or help fund the training.

We’ve been hearing complaints about a pilot shortage for a few years now. The problem seems particularly acute at regional airlines, which often pay exceedingly low wages for jobs that require training and education that can cost up to $100,000. To weather its current problems, Horizon will pay some pilots overtime to fly extra hours. That’s a Band-Aid, not a permanent fix.

There is no pilot shortage in America. There is a shortage of airlines—big, well-heeled, profitable companies—who are willing to do what it takes to recruit, train, and retain the necessary labor. If you have positions to fill, there’s a relatively simple solution. Offer higher wages to people who already have jobs so they will walk across the street. Offer existing employees better long-term incentives, profit-sharing, stock, pensions, and other benefits so they’ll be less likely to leave. To recruit new employees, offer to train them yourselves, or to pay back the loans they incur while getting the training that will enable you to run your business, or offer to split the flight school tuition in exchange for a commitment to work for the airline for several years.

There’s a phrase people in companies use when colleagues complain of a challenging situation. “You’re a businessperson. Figure it out.” Managers and leaders get paid to figure out how to solve the problems they face. Coping with a shortage of skilled workers by shuttering a portion of your operations doesn’t seem like much of a solution.

June 29 2017 5:21 PM

The Political Ghost That Should Haunt Andrew Cuomo as He Again Pledges to Fix the New York City Subway

New York Gov. Andrew Cuomo was in Manhattan on Thursday to declare a “state of emergency” at the Metropolitan Transportation Authority, the beleaguered agency that moves millions, some of them to the office and some of them to tears, every workday.

The event in question was the launch of the MTA Genius Transit Challenge, a yearlong quest to figure out how to run a big city subway system. Three $1 million prizes will be distributed. (Nobody tell Tokyo, Beijing, Moscow, London, or Paris—we want to keep this a fair fight.)

It’s part of Gov. Cuomo’s campaign to show the world he really does run the MTA, at least when he feels like it. This new effort to disrupt the status quo might have a little more credibility had he not, three years ago this week, established a commission of 22 experts to reinvent the MTA. (Reader, they didn’t.) This year’s task is reimagining. It is at once an odd diversion, since managing a subway system is not rocket science, and a welcome one, since it reinforces a sense of political accountability at a time when it feels like the system has reached a crisis point.

It’s also an interesting turn for Cuomo, who came into office with a transit system functioning in high gear, with annual record ridership on shiny new trains. He inherited credit for finally completing the Second Avenue Subway, adding the most new track mileage to the subway system in decades. His relationship with the unions was good. He made cheap, cosmetic improvements like installing Wi-Fi in stations as service steadily languished.

It all left him free to focus on his true love: cars. (Or so he thought …) In an effort to brand himself a modern-day Robert Moses, Cuomo built new bridges—one of which, the State Assembly decided today, will be named after his late father, Gov. Mario Cuomo—invested half a billion in tolling technology, and spent billions on highway construction in upstate New York while shorting the city’s own infrastructural needs.

As a result, Cuomo now finds himself celebrating two new bridges whose predecessors together carried 320,000 cars a day, while a derailment snarls the A and C trains, which clock 800,000 rides per day. (Oh, and the city bus system is in terminal decline, which has helped contribute to subway crowding problems.)

It’s déjà vu all over again, as Cuomo follows in the footsteps of his counterpart across the Hudson River, New Jersey Gov. Chris Christie. When Christie took office, the state’s commuter rail system, New Jersey Transit, was a model. Now it’s a mockery. When he took office, the state had billions in federal money ready to build a second trans-Hudson rail tunnel. Now it has one, deteriorating tunnel whose imminent failure will irreparably damage the state’s economy.

That Gov. Christie is now the least-popular governor in the long, misruled history of the Garden State has much to do with his alleged involvement in a scheme to punish a political rival with a traffic jam. But Christie also did his part to punish the state’s transit commuters.

First, in 2010, he canceled that tunnel, then the nation’s largest public works project. Whatever its faults, Access to the Region’s Core, as it was known, would have provided a back-up to the 107-year-old North River Tunnels to Penn Station. Christie spent the state’s own contribution on roads. Decried as shortsighted then, the decision has looked even more dumb since 2012, when the existing, ancient tunnel was flooded by Superstorm Sandy. Amtrak subsequently announced the tunnel must be shut down for repairs. Senators from both New York and New Jersey are desperately trying to procure federal support for a new tunnel before that happens.

Confronted with the delays caused by the aging tunnel, the two governors spent a while trying to dodge that problem as well, though they eventually came around, as I wrote last year:

In July [of 2015], Christie had called on his attorney general to investigate Amtrak. In August, Cuomo had said the tunnel was not his problem. “It’s not my tunnel!” he told reporters. “Why don’t you pay for it?” But by September, the men agreed their states would pay for half the new project. “Our shovels are ready,” a joint letter proclaimed.

Meanwhile, New Jersey Transit—the commuter rail system that shares the tunnel with Amtrak—underwent its own decline. NJT was been the country’s fastest-growing commuter railroad between 1980 and 2016, a period during which rail passengers crossing under the Hudson to New York more than tripled. In 1980, 9 percent of New Jersey travelers bound for Manhattan used commuter rail. By 2014, that figure was 16 percent.

It has since become, the Newark Star-Ledger wrote in a scathing May editorial, a “dystopian nightmare”:

In the past year, the agency had a $45 million shortfall, the director's office was empty, its board hid from the public, it had a fatal crash and several derailments, and its grim safety records were marked by federal fines, an alarming breakdown rate, and slow installation of an automatic braking system.

Over the past 12 years, even as ridership has risen 20 percent, capital expenditures have gone down 19 percent. “The agency has been starved,” its co-founder and former director Martin Robins said last year, after a commuter train came screaming into Hoboken and half-destroyed the station. State subsidy to NJT has fallen 90 percent on Christie’s watch.

Now, it’s hard to know how much of Christie’s decline can be attributed to this—his approval rating has been volatile, spiking with Sandy and plummetting with Bridgegate. But it has continued to slide since. According to a Quinnipiac poll released last month, the percentage of New Jerseyans who approve of Christie’s handling of trans-Hudson mass transit is 18—the same percent that think he’s handling his job well. Just 18 months earlier, he was at a more respectable 39 percent, according to a Rutgers poll. Meanwhile, transit has been a big issue in the current gubernatorial race—a subject of real debate in a way that would surprise anyone accustomed to transit’s quiet political profile. Crashing trains look bad even if they don’t personally snarl your commute.

Cuomo doesn’t need me telling him he doesn’t want to end up like the guy who fetches President Trump’s chicken nuggets. He had a 41 percent approval rating in June, according to Marist, and it’s up to 51 percent in heavily Democratic (and subway-dependent) New York City. He isn’t embroiled in a federal conspiracy trial.

But it’s hard to avoid the sense that New York, under Cuomo, is living a delayed version of New Jersey under Christie. Christie took office in 2010, Cuomo in 2011. Two governors, each of whom saw himself as a moderate capable of bridging the political divide, each had presidential ambitions, each mistook “infrastructure” to just mean “roads,” and each failed to make the trains run on time.

Christie has paid the price. Can Cuomo learn from his example?

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