Geoff Gannon October 6, 2010

Infrastructure Spending: High Speed Rail, High Speed Internet – And Paul Krugman

Paul Krugman blogs about Republicans railing against rail. He links to an article by Jonathan Cohn who says:

The Recovery Act, of course, has a lot of transportation funding in it–with a particular emphasis on high-speed rail, the area in which the U.S. may be most conspicuously behind other countries. It’s one of those investments that virtually every reasonable expert, from left to right, would agree is worthwhile. But reasonable people appear to be in short supply in the Republican Party these days. 

I’m not an expert. And I’m not reasonable. Because I think building high-speed rail in the U.S. ranks somewhere behind digging ditches and filling them in.

I have no problem with infrastructure spending. Should we build nuclear power plants, solar panels, broadband networks, and a million other things? Sure. But I’m with Charlie Munger on this one. High speed rail is basically spending billions of dollars today to give some folks subsidized taxi rides tomorrow.

Trains moving stuff is a great idea. Planes moving people is a great idea. Trains moving people is a dumb idea.

Krugman is honest about why he likes high-speed rail:

I suppose there’s some echo of this attitude on the other side; people like me probably have a slight affinity for rail because it’s a kind of socially provided good. But I don’t think it’s comparably irrational: rail just makes a lot of sense for densely populated regions, especially but not only the Northeast Corridor. 

High-speed rail is a kind of socially provided good society doesn’t want. They want planes. And they want cars. And the private sector gives them both – often bankrupting itself in the process.

And – no – high speed rail doesn’t make sense for densely populated regions. It makes sense for cities. Like Krugman: I live in New Jersey. I take trains. You know where I never go? New York.

In New Jersey: most people don’t go to New York. They go from town to town. Is that the kind of high-speed rail we want? We’re going to crisscrosss a state more densely populated than Japan with railroads so I can get to Summit or Madison in 5 minutes?

Railroads don’t work in densely populated regions. They work in cities. And New Jersey isn’t a city. What Krugman wants is fast travel to New York, Boston, D.C, and Chicago. We have that. It’s called a plane.

At the end of his post, Krugman touches on a useful socially provided good:

…rail makes even more sense in the digital age. I almost always take trains both to New York and to Washington, and consider the time spent on those trains part of my productive hours — with notebooks and 3G, an Amtrak quiet car is basically a moving office. And I don’t think I’m alone in that.

No. I’m right there with you. But is Krugman using rail infrastructure? Or is he using internet infrastructure?

If Krugman wants to spend money bringing fast trains to Americans – he’s on his own. If he wants to bring fast internet to Americans – I’m right there with him.

Fast internet is a socially provided good society actually wants. It’s more flexible than high speed trains. Will tommorow’s workers need to commute to a city? Who knows? But they will need to telecommute.

Now – living where I do – the rugged individualists known as the Dolan family bring me my fast internet. I don’t need Uncle Sam. Most Americans aren’t so lucky. Uncle Sam can help.

Not with rail. But with cable.

Talk to Geoff about Infrastructure Spending

Barnes & Noble: Hypothetical Vote Totals from Riggio vs. Burkle Election – Voting Mistakes

In my earlier post, I showed the actual vote totals from the Barnes & Noble board election:

Candidate Votes Percent
David Wilson (R) 26,478,668 52.84%
David Golden (R) 26,475,809 52.83%
Leonard Riggio (R) 26,469,641 52.82%
Stephen Bollenbach (B) 23,058,542 46.01%
Michael McQuary (B) 22,826,210 45.55%
Ronald Burkle (B) 22,731,679 45.36%

Today:  I’m looking at the voting mistakes made by Burkle supporters reported in the Deal Professor blog.

Did these mistakes save Len Riggio?

Deal Professor said 3 things we care about. These are direct quotes:

  • However, according to people close to Barnes & Noble, Aletheia did not vote 1.7 million of its shares. The remainder of approximately 7.3 million shares were voted for Mr. Burkle’s nominees.
  • Among other shareholders, State Street held approximately one million shares and voted its shares late at the meeting, according to people close to Mr. Burkle. They were thus not counted. State Street would have voted these shares as withhold for Mr. Burkle, in favor of his two other nominees and against the company’s poison pill proposal.
  • According to people close to Barnes & Noble, this would have made the race much tighter, but Mr. Burkle still would have lost all of the director elections by 1 to 2 percent of the vote.

Here’s what the vote totals would’ve looked like if Aletheia voted all its shares and State Street’s votes were counted:

Candidate Votes Percent
David Wilson (R) 26,478,668 50.14%
David Golden (R) 26,475,809 50.13%
Leonard Riggio (R) 26,469,641 50.12%
Stephen Bollenbach (B) 25,758,542 48.77%
Michael McQuary (B) 25,526,210 48.33%
Ronald Burkle (B) 24,431,679 46.26%

Len Riggio still would have won. Riggio’s margin without voting mistakes would’ve been 700,000 shares.

Talk to Geoff about Barnes & Noble (BKS)

Barnes & Noble: Exact Vote Totals from the Riggio vs. Burkle Board Election 

Barnes & Noble (BKS) reported its board election results to the SEC. The top 3 candidates win board seats. Here is the vote count:

Candidate Votes Percent
David Wilson (R) 26,478,668 52.84%
David Golden (R) 26,475,809 52.83%
Leonard Riggio (R) 26,469,641 52.82%
Stephen Bollenbach (B) 23,058,542 46.01%
Michael McQuary (B) 22,826,210 45.55%
Ronald Burkle (B) 22,731,679 45.36%


My best estimate is that there were 58,856,320 shares eligible to vote. Turnout was 50,383,455. Only 50,113,458 answered the board election question. And only 49,346,850 of those votes mattered. Here’s why:

  • 8,472,865 shares ignored election day entirely
  • 766,608 shares threw away their votes
  • 269,997 shares skipped the board election part of the ballot

Len Riggio survived by 3,411,099 votes.

Riggio’s closest threat was Stephen Bollenbach. On a personal level: Bollenbach was clearly the favorite candidate. He polled better on every measure than his party. Burkle and Riggio both ran behind their parties.

There was ticket splitting on the poison pill. Remember: a vote “for” the amendment is a vote against the current poison pill. Amending the poison pill outperformed all Burkle party candidates. That’s expected. The weird part is that votes against the poison pill amendment outperformed Riggio party candidates.

The Deal Professor has a post about voting errors made by Burkle supporters and why Riggio won the election.

Only 1 of 7 pro-Riggio votes came from outsiders. I’ll show what would’ve happened if Burkle supporters hadn’t made voting errors. And I’ll look at independent voters. Those are my next 2 posts.

Talk to Geoff about Barnes & Noble (BKS)