Bucyrus But when I say it is a tug of war, I mean that everything gained since Staggers could go away overnight. The freight railroads seem to be flush with success these days, and that attracts opportunists and predators of all types.
Bucycrus, I don't begin to have the understanding of railroads you have. And I don't pretend to be an expert about the politics of regulation but at least I have a little experience there. We had the ICC for a great many years and at a great expense over those years. In the end it destroyed the two most successful railroads in the country and was on the way to destroying more. Of course it did have some help -- in fact a lot of help -- from the road building programs and the decline in the coal business and other similar things. However, for all of that the ICC was a negative factor, and an expensive negative factor, for efficient transportation. I sure hope we don't go down that particular road to ruin again.
John
John,
Yes, let's hope the railroads have become better at defending against regulation after fighting it for so long. But when I say it is a tug of war, I mean that everything gained since Staggers could go away overnight. The freight railroads seem to be flush with success these days, and that attracts opportunists and predators of all types.
BucyrusSo I don’t think Franken is just fooling around here. He and others see this as the right time to move the railroads into more regulation. It is a constant tug of war. These things are never settled forever.
Bucyrus,
I completely agree with your conclusion. However, railroads have been dealing with regulation for a long time. Since the Staggers act many things have changed in their favor and in our, the consumers favor. Now perhaps railroads are better able to deal with this than we give them credit for. I hope so.
While the system may be complex, I don’t think the issue at hand with Franken’s proposal is complicated at all. He thinks the railroads are price gouging, and he intends to stop them.
The reason he thinks they are gouging is because he believes they are a monopoly.
And he believes that every monopoly will gouge their market just because they can.
So I don’t think Franken is just fooling around here. He and others see this as the right time to move the railroads into more regulation. It is a constant tug of war. These things are never settled forever.
I suspect Senator Franken has been hearing from his constituents about railroad monopolies. What I wonder about is how far he is willing to go with this issue.
Don't forget that McDonalds has a monopoly of Big Mac sales!
How about open access at those "stations"?
henry6 Is there really an answer?
There are many answers. Which means there is no answer.
But I predict we ill not build a canal from the Great Lakes to the west coast.
A monopoly how? Bucyrus is right. A rail monopoly: the only railroad in town but there maybe highways and water ways and airway. A land monopoly: no air way. A total monopoly: no other form of transportation available but the one dubbed a monopoly. Well, we didn't use the two or three (and maybe overbuilt) railroads we did have, so one went broke and folded its tent and disappeared; the other two merged leaving only one. Whose fault is that? The market place? Investors? Business models? What would Franken want done? Build a new railroad? undo the merger? rebuld the road ripped up? enlarge the highway (or build a brand new one)? Did a waterway? Quite a conundrum we've weaved in this country of government commissions, rate making agencies, free enterprise, government subsidies, stockholder-investor companies, the concept that big is beautiful and efficient, and so on. Is there really an answer?
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I know what the concept of monopoly is but I have no idea what terms define a monopoly in a legal sense. The freight rail monopoly activists call this present condition a monopoly, but is it really?
My reading of this suggests to me that it would be profoundly complex to prove that today’s railroads actually are a monopoly. I am not sure experts would agree, or that a conclusion could even be reached.
Here is something else to consider: Is it possible to have a monopoly without any unfair or abusive pricing that a monopoly will enable? In the recent example of a little town with only one store, and no other stores nearby, you only have one store to choose from. Does that mean that it is a monopoly?
Anyone is free to build a second store in town. If the one store charges prices that people think are unfair, anyone is free to build a second store to compete with the first one.
So even with just one store, the owner must compete with the threat of someone adding a second store. And even if that does not happen, the owner of the one store must keep his prices low enough to prevent people from moving out of town. So there is that competition even without a second store.
In the calls for ending the so called freight rail monopoly, I don’t hear any mention of specific price gouging. And without such unfair pricing, is the so called monopoly causing damage? The anti-rail activists say it is. They say that excessive rail pricing is hurting our economy. Yet they say nothing about how much it is hurting the economy, or what the rail transportation price should be.
Perhaps the concern is with grain shipped from west coast ports.
If rates are too high due to lack of competition then build another railroad or spur line to a competitor line. This is what happened here in Guelph. Initially the Grand Trunk was the only game in town. Local merchants and manufacturers felt they were being gouged and decided to join forces to build another line from Guelph to connect with the CP at Guelph Junction. End of problem. Today shippers who feel they aren't getting a fair shake can do the same, they can look at alternative modes, or in some cases they can relocate to a more favorable competitive climate.
schlimm And not sure if you are being facetious
You are right, Schlimm. I was speaking tongue in cheek. It seems to me Senator Franken's remarks are very much in the spirit of the old Granger vs. Railroad debates. More deja vu all over again.
Let's not give Franken's words any more credit than they deserve. This isn't "The Farmers" seeking/demanding rail economic regulation. Farmers are a diverse lot. While it's undoubtedbly true that there are some farmers who would support Franken, I can't find railroad regulation on a list of legislative issues for any state farm bureau. It's questionable as to how many farmers want more government involvement in their business.
What I do find on an Internet search is farmers' concern for non railroad related government regulations that adversely impact them.
Having said that, it is important to not ignore people such as Franken. As Bucyrus wrote, there are people in the government who see this as an opportunity to advance their own power and economic well being. They join with others who just cannot imagine anything working well unless it is thoroughly guided by a Federal bureaucrat. But they have no real skin in the game.
When they make bad decisions (and they will make bad decisions) the government types won't be the ones that suffer. The railroads and the farmers will pay the cost. I may be optimistic, but I'm confident that the majority farmers realize that. But we all know the government does strange things. So I'm optimistic but also concerned.
petitnjHopefully Congress realizes that they are getting the best rail transportation system in the world at no cost to them.
I think that Congress does realize that, but it might work against the freight railroads rather than for them. I think part of Congress perceives the prosperity of freight railroads opportunistically as being somewhat of a golden goose. Regulation is not just a matter adjusting the price between railroad and farmer. It is also the government actually taking a piece of the action for their own interest in growth.
The regulations impose cost, and some of that cost pays for the governmental regulatory apparatus. So, it is not just farmers who are motivated to regulate. The cost of regulation will also pay for new government employees, their careers, and their retirement. To Congress, expanding regulation is like growing a business. So they are part of the motivation to regulate, and not just a neutral arbiter. Indeed, Franken, Congress, and the Administration may very well be a larger part of the motivation for re-regulating the railroads than the farmers are.
Farmers can demand regulation on a continuous basis, but the likelihood of their success depends on the mood of Congress from moment to moment. At this particular moment, I believe that the mood of government is to favor higher taxes and regulation much more so than it has been for a long time. So, I could see the regulation pendulum swinging the other way, undoing the rail industry gains of the last thirty years. I would not underestimate Franken’s ability to get action on this.
Deggesty Mentioning accuracy, I had never heard of William Jennings Bryant until you named him. I did know about William Jennings Bryan, though.
Mentioning accuracy, I had never heard of William Jennings Bryant until you named him. I did know about William Jennings Bryan, though.
C&NW, CA&E, MILW, CGW and IC fan
Franken’s words are the inane prattle of a very ignorant man.
“Recent analysis indicates that 78% of the 28,000 “stations” in the continental United States where a major freight railroad picks up or delivers freight are served by a single railroad. Of the remaining 22% of rail stations that are nominally served by a second railroad, a significant number are served by a short line or regional rail carrier that is dominated by the major railroad serving the location. This lack of competition in our national freight rail transportation system and the resulting railroad monopoly power over a significant portion of annual railroad freight movement create significant problems for our state and national economies. “
So?
By the senator’s (Lord please help us.) “Reasoning”, the BNSF intermodal facility (station?) at Willow Springs, IL constitutes a “monopoly” because only the BNSF can receive or deliver freight at that particular facility. No, it doesn’t. The UP is just a few miles up I-294. But that apparently is well beyond his understanding.
It’s the same with farmers’ grain. Nothing ties a farmer to a particular loading point. The farmer will seek the best financial outcome with the sale of his/her crops. Midwest farmers have many outlets for their crops. These crops may be shipped by truck from the fields to grain processing facilities. Or they may be trucked to a river terminal for barge movement. Or they may be trucked to a Great Lakes port. Or they may be trucked to a rail loading terminal on one of the several competing railroads serving the Midwest. (Franken’s Minnesota has four class 1 railroads, plus short lines/regionals, plus the Mississippi River, plus the Port of Duluth.)
In any event, the grain can come out of the field in a tractor-trailer and that gives it some range. The farmer is not “monopolized” by a loading facility served by only one railroad, as the ignorant senator falsely charges. (It also can come out of the field in a farm wagon pulled by a farm tractor if that’s the choice of the farmer.)
The US has the best rail freight system in the world and this ignorant man with power wants to mess with it. He has no knowledge or background in the subject. But that never stopped a *** fool politician such as Franken.
http://www.telegraph.co.uk/news/worldnews/europe/italy/9904979/Italy-paralysed-as-Grillo-plots-exit-route-from-euro.html
Hopefully, comedian Al Franken does not hold enough power to do as he wishes.
(Sorry, machine sent from will not link.)
schlimm John WR I know you're always accurate Schlimm, but are you sure the Cross of Gold speech wasn't delivered by Al Franken? John No, not always accurate. No one is. And not sure if you are being facetious, but yes, it was by Bryant. Link to a recording he made in 1921: http://www.historicalvoices.org/earliest_voices/bryan.html
John WR I know you're always accurate Schlimm, but are you sure the Cross of Gold speech wasn't delivered by Al Franken? John
I know you're always accurate Schlimm, but are you sure the Cross of Gold speech wasn't delivered by Al Franken?
No, not always accurate. No one is. And not sure if you are being facetious, but yes, it was by Bryant.
Link to a recording he made in 1921:
http://www.historicalvoices.org/earliest_voices/bryan.html
Johnny
Dear Sen Franken,
I would like some more information before I consider your request for action.
1. A station is any named point along a rail line for the purpose of identifying a location. It does not necessarily correspond to a location with economic activity. So, of course, there will be a majority of locations on a single line because the railroad created the "station" in the first place. Who did the "analysis" an 8th grader?
2. What farmer MUST use rail? Is there a gun to their head? Is it legislated? Oh, that's right, it's cheaper than trucks. Why aren't the evil trucking cartels being targeted for forcing those poor farmers into the arms of the railroads?
3. Shipping grain by barge is cheaper than via rail. Why aren't you demanding the barges serve these remote locations where there is only a rail monopoly? They benefit from government maintenence of waterways, so isn't not about time they give back? Just because there isn't a river there is no excuse.
3. Would the farmers even be there if it weren't for the railroad in the first place? Without a way to get his product to market, he would be at a competetive disadvantage and suffer even greater economic harm. They would have located elsewhere.
4. How many farmers deal directly with the railroads? I don't know of many. Most sell their grain to a consolodater/marketer who then may or may not make use of rail transport. Why does this middleman get a free pass from you Mr Franken? Maybe because they wrote the letter for you to sign?
5. How is a railroad is a monopoly? Please clarify.
Signed,
A concerned taxpayer
p.s. This tripe is way funnier than anything from your previous career.
There are many supporters of capitalism who think the free market means free to collude, price-fix and form monopolies, all of which are inefficient, as henry6 points out, regardless of the economic sector. The whole advantage of the free market is that competition leads to correct prices and wages. Take away that efficiency and you might as well have the inefficiencies and distortions of centrally-planned economies.
Railroad share of traffic and profits have gone down hand in hand with mergers and removal of competition; thusly followed by service level. Other industries which have merged their way to smaller business activity and smaller revenue and profits when in monopolistic and semi monopolistic situations include banks, broadcasters, newspapers, manufacturers of various products, insurance companies, telephone communications, and a few others.
schlimm In metro areas there are often choices of cable providers + the two satellite providers. So there is competition. Perhaps fewer choices in smaller towns?
In metro areas there are often choices of cable providers + the two satellite providers. So there is competition.
Perhaps fewer choices in smaller towns?
And farmers can use railways, trucks, horse-drawn carriages, cargo helicopter, and probably a blimp company or two.
It's not like they have to use railways.
It's been fun. But it isn't much fun anymore. Signing off for now.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.t fun any
jeffhergert Most stations, and the customers located at those stations, have always only had single line service.
Most stations, and the customers located at those stations, have always only had single line service.
On a related note closer to Franken's employment history, how many people have more than one cable TV provider?
In the good old days the farmers complained about railroad rates for moving grain so formed the Grange which led to the Interstate Commerce Commission being formed. Discontents in public and business sectors have always gone to the government for help. How many laws and procedures do we have today which are the result of law suits and legislation? All created and pursued by individuals and businesses and their self created and self serving organizations. Not new at all. Business loves a monopoly while telling us how great the American system of competition is so good when in reality each wants to be the last dog standing with you on the chained end of the leash.
In the good old days, if you didn't like the product or the price, you went out and found or created an alternative. Today, you cry to the government. Hopefully Congress realizes that they are getting the best rail transportation system in the world at no cost to them.
When I hear about ending the freight rail monopoly, I wonder how that could be done in practical terms. I picture Al Franken setting the fair price of affordable transportation. It would permit the railroads to make a reasonable profit without gouging the shippers. But then Franken would have to be paid for his role, and we would all have to pay for that just like we pay for the monopoly.
The more direct approach would be to introduce more competition by open access, but that just seems unfathomably complex. In the end, it might add more cost than the monopoly did.
Here is a link to a piece that explains how the freight rail monopoly could be eliminated. As you can see, it is much more nebulous than what would first come to mind as a practical way to end the monopoly. And again, I wonder if complying with all the new regulation would add more cost than it removes by ending the monopoly:
http://www.nreca.coop/press/fastfacts/Documents/FastFactsRailCompetition.pdf
schlimmThe famous "Cross of Gold" speech was actually delivered by William Jennings Bryant
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