Hemphill's January column - Government dole

[joesap1]

I apologize guys and gals, I hit the wrong button and this post was posted before I typed anything.

Hemphill's latest poses the question as to whether the railroads should get/take any subsidy from the government? The answer is NO!!! Unless you are of the persuasion that you think the government does best.
Of which case I think you would like the V.A.T.(value added tax) that is added to everything in Great Britain and Canada. That 17.5% tax pays for their "free" health care program that stinks.
We don't want the railroads to get into any deeper clutches of the government, do we? Amtrak is already subsidized and they can not live without it. That is what usually happens. Once you start depending on outside sources for support, you lose your creativity at learning to live within your means and seeking to get money honestly.
What do you think?

[Anonymous]

I think what Mark said was valid. He said either give support (not necessarily subsidy) to all OR to none.

LC

[Anonymous]

MWC: I'm trying to get my mind wrapped around your macroeconomic statements in your recent post in this thread:

"We will road-subsidize, real-estate-developer-subsidize, and airport-subsidize our country into an economic hole-in-the-ground from which we will find it difficult to dig out."

What hole-in-the ground? Was the U.S. economic growth of the 20th century an illusion? Compared with which other country(ies)? The the real-estate-constrained, railroad-subsidizing, fly-by-government-fiat states of Europe?


"We have a wonderful transportation system in this country, but its operating costs, and the operating costs of the residential, industrial, and commercial patterns the transportation system enables, are person-for-person the most expensive in the world."

Are they not the most productive in the world? I'm sure the bicycle-driven economy of India has a lower per capita transportation cost, but the Indians sure don't want to stay mired in that mud.


"As long as we get sufficient value for the dollars we spend, we can get away with anything. The market says we are NOT getting sufficient value. That's why the dollar is plunging like a bus into a third-world ravine."

Currency value fluctuations are being driven by the relative transportation costs across borders? Alan Greenspan must have missed that! When the $US was strong against the Euro, say three years ago, was the U.S. economy structurally different?


"Unless we want to personally experience what the fall of Rome felt like, we might want to look around for cheaper transportation solutions."

Gosh, I didn't realize it was all those subsidized paved Roman ROADS that caused the fall! And the Mediterranean was right under their noses!


"I think railroads will give us some cheaper solutions, but the economic bias we're creating by our heavy subsidies to other transportation forms (as well as our closely linked real-estate tax policies that favor urban sprawl) are preventing us from finding out if railroads really are cheaper."

Let's see ... total U.S. logisitcs costs went from 16% of GDP in 1980 to 8.5% of GDP in 2003. So, if truck taxes triple and the number of team tracks quadruples ... who knows what the number may be in 2010 ... 16%?


Mark, I certainly believe that U.S. railroads have a significant role to play in the economy, and that role may be somewhat prejudiced by public policy. But the fundamental logistic strengths of individual and shipment mobility in the form of auto, truck and plane, coupled with the "commons" benefit of joint passenger and freight usage of transport facilities make the U.S transport system unequalled in its support of a high standard of living.

The contrast with the European experience is illuminating. There, railroads have long been subsidized and trucks taxed far beyond anything that could be considered rational in the U.S.. To what end? Trucks totally dominate the freight market. Personal mobility? Highly subsidized passenger trains, yet the auto proliferates in the face of highly-taxed fuel. And in the wake of some dergulation, Southwest Airlines is widely emulated, to the delight of European flyers.

Sure, let's continue to seek a level public policy playing field, but let's not close our eyes to economic, competitive and logistics realities.

[Anonymous]

Mark-

Point taken. I think your position has definite merit.

A rational transportation funding policy would certainly have benefits for both the present and the future. The capacity of our highways is not endless and the vastly increased costs security, particularly in passenger aviation would certainly seem to make investment in rail capacity a necessity.

LC

[Anonymous]

Mark: I'm puzzled by your pessimism over the prospects for the U.S. economy, but it is not uncommon for informed minds to differ over that. But let's keep a clear eye on the real world. REAL GDP has had the following increases so far this century (surely we don't differ that the U.S. economy did reasonably well over, say, the previous 50 years):

Each year compared to the previous year:

2000 +0.8%
2001 +1.9%
2002 +3.0%
2004 +4.0% (Est)

What is elusive about that growth?

I respect your bias in favor of the railroads in the public policy arena, yet you have a confidence in your implicit view that a "sensible policy" would have a dramatic and positive impact on railroads for which I see little empirical evidence. Again, I offer the Euopean experience as suggestive of the likely outcome.

[Anonymous]

MWC:

"I think railroads will give us some cheaper solutions, but the economic bias we're creating by our heavy subsidies to other transportation forms (as well as our closely linked real-estate tax policies that favor urban sprawl) are preventing us from finding out if railroads really are cheaper."

Mark, I want to keep this light! ( :~)! But the above quote(which contains the word "bias" (:~) ) seems to me to indicate an "implicit view" (my words)! (:~)

[gabe]

Cool. I have got to see this.

A light discussion about implicit views concerning the subsidation of the transportation industry.

Gabe

P.S. I am really there with you on the urban sprawl issue. That is one of my pet projects.

[Anonymous]

A subtle but important distinction! Well said!

[oltmannd]

One of the interesting points in Mark's article is that the Fed DOT is organized into "silos" by mode. This appears to prevent the department from pursuing the greatest good much like marketing and operations can sometimes work at cross purposes on a RR.

Anytime you apply some artificial constraints to a system, you'll suboptimize it. However, anytime you try to organize something, you wind up applying contraints that are, if not artificial, are at least arbitrary. The trick is to organize to make the "game" match reality as best you can.

An example of how this how the RRs are generally organized into freight and passenger companies (e.g. Amtrak, NJT, NS, CSXT, etc). Because of this, it is very difficult and sometimes overly costly to operate freight on passenger RR owned track. You also wind up with "Bozo" decisions like the South Jersey Light Rail line where operation is segregated by the clock. There is even some "conventional wisdom" that says mixing frt and passenger is "Bad". When the RRs operated both frt and passenger, we didn't have these problems (we had other ones!).

The current "intermodal" approach to DOT spending (ISTEA et. al.) is a patch applied on top of the "silos". There has to be a better way...... Any ideas?

[MP57313]

QUOTE: Originally posted by oltmannd
You also wind up with "Bozo" decisions like the South Jersey Light Rail line where operation is segregated by the clock.

What drove this decision...was it safety (inability of a light rail car to withstand a potential collision with a freight train) or scheduling (local freights would tie up the line, preventing passneger trains from running on schedule).

[joesap1]

QUOTE: Originally posted by Dick_Lewis

MWC: I'm trying to get my mind wrapped around your macroeconomic statements in your recent post in this thread:

"We will road-subsidize, real-estate-developer-subsidize, and airport-subsidize our country into an economic hole-in-the-ground from which we will find it difficult to dig out."

What hole-in-the ground? Was the U.S. economic growth of the 20th century an illusion? Compared with which other country(ies)? The the real-estate-constrained, railroad-subsidizing, fly-by-government-fiat states of Europe?


"We have a wonderful transportation system in this country, but its operating costs, and the operating costs of the residential, industrial, and commercial patterns the transportation system enables, are person-for-person the most expensive in the world."

Are they not the most productive in the world? I'm sure the bicycle-driven economy of India has a lower per capita transportation cost, but the Indians sure don't want to stay mired in that mud.


"As long as we get sufficient value for the dollars we spend, we can get away with anything. The market says we are NOT getting sufficient value. That's why the dollar is plunging like a bus into a third-world ravine."

Currency value fluctuations are being driven by the relative transportation costs across borders? Alan Greenspan must have missed that! When the $US was strong against the Euro, say three years ago, was the U.S. economy structurally different?


"Unless we want to personally experience what the fall of Rome felt like, we might want to look around for cheaper transportation solutions."

Gosh, I didn't realize it was all those subsidized paved Roman ROADS that caused the fall! And the Mediterranean was right under their noses!


"I think railroads will give us some cheaper solutions, but the economic bias we're creating by our heavy subsidies to other transportation forms (as well as our closely linked real-estate tax policies that favor urban sprawl) are preventing us from finding out if railroads really are cheaper."

Let's see ... total U.S. logisitcs costs went from 16% of GDP in 1980 to 8.5% of GDP in 2003. So, if truck taxes triple and the number of team tracks quadruples ... who knows what the number may be in 2010 ... 16%?


Mark, I certainly believe that U.S. railroads have a significant role to play in the economy, and that role may be somewhat prejudiced by public policy. But the fundamental logistic strengths of individual and shipment mobility in the form of auto, truck and plane, coupled with the "commons" benefit of joint passenger and freight usage of transport facilities make the U.S transport system unequalled in its support of a high standard of living.

The contrast with the European experience is illuminating. There, railroads have long been subsidized and trucks taxed far beyond anything that could be considered rational in the U.S.. To what end? Trucks totally dominate the freight market. Personal mobility? Highly subsidized passenger trains, yet the auto proliferates in the face of highly-taxed fuel. And in the wake of some dergulation, Southwest Airlines is widely emulated, to the delight of European flyers.

Sure, let's continue to seek a level public policy playing field, but let's not close our eyes to economic, competitive and logistics realities.

Unless we want to personally experience what the fall of Rome was like, we might want to look around for cheaper transportation solutions.
"Gosh I didn't realize it was all those subsidized Rooman ROADS that caused the fall."

Dear ***,
According to Gibbons, " The Decline and Fall of the Roman Empire," it was subsidy in the form of higher taxes that is one of the five reasons for the fall of the Roman empire.

[Anonymous]

Joe, point taken! But I guess the U.S. will go over the edge well after Europe!

[Anonymous]

***,

In order to share Mark's pessimism on the U.S. economy/transportation system, you have to take his claim of other forms of transportation being subsidized as an absolute truth, which of course it is not. As many of us have pointed out, on the federal level the majority of highway funds for the movement of intercity freight is paid for by user fees, with a very small porportion paid out of the general fund, and those usually come from economic development grants. It is true on the state and local level that highway funds come from non-user fees such as construction bonds or sales and property taxes, but that is by the choice of those state and local officlals, and such is not really germaine to a conversation on federal transportation policy, i.e. state's rights, not something the feds could get the states to change to true user fees.

If what Mark desires is some form of equalization where each transport mode has the same percentage of user fees and subsidies at each government level, we would have to start with including railroads in the federal diesel fuel tax of 18 cents per gallon, charge railroads additional fees per axle loadings and gross train weight, add a little more in the form of funds out of the general fund, and then the government would turn around and reinvest this money into the rail infrastructure, and of course states and localities would have to chip in their share via their own fuel taxes/property taxes/bonds/etc. So on one hand, the railroads would be paying through the nose, cutting into their gross revenues, but would not have the liability of actually taking care of the tracks, which drastically cuts back on their expenses. Of course, Mark does correctly point out that allowing direct subsidy of what he describes as "franchise ownership" of the rails would be an issue, and you'd have the inherent red tape and beauracratic overhead of having the government in control of the maintenance of the rail infrastructure. But then again, that's how highways and waterways are managed, and if the railroads want to be equal.....

That's only if this open access scenario took the form of government confiscation of the rails. I agree with Mark that this approach probably would not pass constitutional muster.

What I and other open access supporters advocate is not a taking of the property, but instead using the auspices the Sherman anti-trust act and split the infrastructure companies from the operating companies, ala AT&T. As we all know from our recent history, the AT&T breakup DID pass constitutional muster, and a similar breakup of the de facto rail monopoly is also likely to pass legal challenges e.g. there is precedent in our favor with this approach.

This type of split opens the door for eliminating property taxes for railroad right of ways, opens the door for allowing infrastructure owners to share in highway trust funds, e.g. typical private-public consortiums.

From a practical standpoint, it is likely that the "purchase" price of the right of way would be a paper transaction, and the former owner operator would simply deduct their "toll" charge from that price. Only the new entrants would actually pay cash for access. This ensures that current operations are not severely inhibited, and prevents overt cherry picking of prime routes by the new entrants.

[Anonymous]

In Logistics, time is waste. A product in transit or in a warehouse is a product not in use. Surplus products are needed to cover delays and potential delays of products that are on their way. A freight train’s cargo is very expensive and it isn’t adding value until it is put to use. This expense and delay produces expenses and delays throughout the supply chain. Inventory must be on hand, warehouses must store the inventory, extra delays must be added to ensure enough products will be available, and when demand for a product falls all those surplus products become garbage.

Competitive advantage in the global economy is adapting to change faster. Company profits for most businesses depend on this more than shipping costs or fuel costs.

Railroads must find ways to compete with trucks on delivery time. If they can that may be worth taxpayers money. If they can’t lower shipping and fuel costs won’t save them from decline.

[daveklepper]

I am in favor of Mark's solution: Subsidies for railroads where there is a definite government expenditure reducing and/or tax revenue increasing benefit. This includes help to shortlines to handle heavier cars so important tax-paying industries can stay in business. It includes capacity increases so that very expensive highway expansion can be avoided. It includes subsidies to passenger rail where:

1. The image of the USA suffers internationally and tourism suffers becuase of a nonexistant or decrepit truly national passenger rail system.

2. Expensive airport expansion and/or very expensive expansion of air traffic control locally can be avoided.

3. Expensive efforts to keep highways open with large snow accumulation a can have better priorities because the help passenger trains provide.

4. Expansion of Interstate and other key highways can be avoided.

5. Reduction of traffic congestion, particularly at choke points, without any possible immediate remedy, is needed NOW.

6. Preperations for a "just-in-case" National Defense effort so the long-term solution to Global Terror (modification of the Saudi educational system so kids don't grow up thinking the the Eternal intended all but Wahabee Muslims to be treated like animals) canb have some teeth.

[oltmannd]

QUOTE: Originally posted by MP57313

QUOTE: Originally posted by oltmannd
You also wind up with "Bozo" decisions like the South Jersey Light Rail line where operation is segregated by the clock.

What drove this decision...was it safety (inability of a light rail car to withstand a potential collision with a freight train) or scheduling (local freights would tie up the line, preventing passneger trains from running on schedule).

Exactly! You choose std commuter equipment for the route and you don't have the problem. You have to rearrange things in Camden and Trenton a bit, though.

The issue of providing late night service from Rivershark games and Sony Center would also be solved.

You also would gain the ability to run direct to 30th St Sta and Atlantic City by restoring connection at Delair Bridge.

Of course, this would involve having NJT negotiate with SEPTA, Amtrak and Conrail.

I stand by my "Bozo" characterization!

[oltmannd]

Dave-

I think you are falling victim to the thinking that is causing the problem. That is, that each mode of transport is it's own end. That is the transportation provider's point of view, not the transportation consumer's point of view.

If the point is to move people or goods and the government's proper roll is to facilitate such movement, then investment or other government support would be decoupled from revenue source and directed to provide greatest good.

Fuel taxes and airport ticket taxes are certainly not fair and equally applied "user fees". For example, trucks cause 95x the wear and tear on the interstate highways but don't pay 95x more toll and fuel tax. My property tax pays for local police that patrol the interstate highway in my county that is at least 1/2 thru traffic. My property taxes pay for my local schools but my house doesn't go to school.

If a 5% increase in fuel tax would be required to build additional highway capacity to relieve congestion by building new highways, but a 2% increase would produce the same reduction in congestion if invested in rail capacity (to remove trucks and commuters) which would be the wise choice?

[Anonymous]

futuremodal: Which U.S. railroad is earning monopoly profit? ATT existed in its former state because of the great 1913 compromise: regulated monopoly returns in exchange for universal telephone service. Technological advances and "private carriage" (railroad telegrph/telephone systems morphing into de facto "contract carriers," etc.) rendered the old model obsolete, and the long-haul market was deregulated in 1984. Ironically, the railroad industry experience was almost a circus mirror image of that of the telephone industry: heavily rate- and service-regulated without monopoly returns, and with the explicit regulatory objective of fostering enhanced competition from pipelines, barges and trucks. Gradually, "umbrella" rate regulation was ended (1958 legislation), then service and route regulation substantially ended (1970's and 80's legislation). These belated actions were taken to save the railroad industry from the effects of misguided regulation, not to protect the public and enhance competition, as was the case in the AT&T breakup.

Ironically, for "open access" proponents, the FCC has finally bowed to the will of Congress as expressed in 1996 legislation and has ended "open access" in local telephone markets. Investment and innovation had atrophied under a regime more aptly named "forced access."

The practicalities of fragmented railroad network ownership (separating so-called infrastructure from the operating entities) are so daunting that only those posessing a blind faith in the wisdom of regulators would seriously propose it. The most recent real-world test of such a scheme with which I am acquainted is the debacle in England. And there, the split was of a nationalized system, not of private properties.

Your idea of "prepaid" tolls compensating shareholders for the taking of right-of-way, track, structures, signals, dispatching centers, computer centers, and most importantly, franchise value, is simply not feasible. Who can possibly have the wisdom and knowledge to equitably (in the economic sense) divide these tangible and intangible values between two sets of owners? We are talking about a less than zero-sum game here, so who takes the loss?

[Anonymous]

***,

I'm not sure where you are getting your information. If you are denying the tremendous explosion in telecommunications innovation, employment, market entry and exit, et al, since the AT&T breakup, then there's no point in explaining the similar benefits of maximizing access to the rail grid.

BTW, England may be the only example of open access referenced by U.S. opponents of open acess, but it is not the only place in the world where open access is in place. To compare the British rail system to the U.S. rail system, then, now, and in the future, is to compare trolleys to SUV's.

And of course, if you want examples of railroads earning monopoly profits, just ask any captive rail customer charged differential pricing. Differentlal pricing is monopoly pricing. They are one and the same.

[Anonymous]

QUOTE: Originally posted by oltmannd

Dave-

I think you are falling victim to the thinking that is causing the problem. That is, that each mode of transport is it's own end. That is the transportation provider's point of view, not the transportation consumer's point of view.

If the point is to move people or goods and the government's proper roll is to facilitate such movement, then investment or other government support would be decoupled from revenue source and directed to provide greatest good.

Fuel taxes and airport ticket taxes are certainly not fair and equally applied "user fees". For example, trucks cause 95x the wear and tear on the interstate highways but don't pay 95x more toll and fuel tax. My property tax pays for local police that patrol the interstate highway in my county that is at least 1/2 thru traffic. My property taxes pay for my local schools but my house doesn't go to school.

If a 5% increase in fuel tax would be required to build additional highway capacity to relieve congestion by building new highways, but a 2% increase would produce the same reduction in congestion if invested in rail capacity (to remove trucks and commuters) which would be the wise choice?

I am all in favor of local jurisdictions having a local option tax, including additional fuel taxes, if there is a direct benefit to freighters and commuters, e.g. a reduction in the costs of maintaining local roads and highways. Of course, this is something that is out of the hands of the federal government.

What I would strongly oppose is additional fuel taxes on gasoline and diesel nationwide to be parlayed to railroads in their current monopolistic form. We cannot use tax money to feed corporations. The only way you can justify giving tax dollars to railroads is if infrastructure is separated from operating companies, and that assumes some form or degree of the infrastructure entity being comprised of a public private consortium.

Also, don't forget that if you increase the amount of cargo moving by rail, that cargo is still going to need to access highways to get it to and from the points of origin/destination, therefore you will still need to improve urban highways. Most highway congestion is taking place in urban areas, while most railroad capacity needs are out on the mainlines, so taking part of the fuel tax revenues to aid in railroad capacity improvements will not do anything for the urban congestion problems.

Slightly off topic, with regards to the British experience with open access, you have to go back to the tried but true axiom of "freight makes money, passengers lose money". The British rail system is predicated on the movement of passengers, while the U.S. rail system is predicated on the movement of freight. If we designed an open access system in which the infrastructure is entirely privately owned, you would have to design a fee system that first covers the costs of the infrastructure including overhead, then secondly entitles the infrastructure company to a percentage of the profits of the operationg companies. The RailTrack entity that ran the British open access network was seriously constrained by a mass of passenger services using the rails. Passenger trains were mandated to have priority over these lines, while freights took a back seat. It was nearly impossible for RailTrak to make more than marginal revenue, and consequently they had to cut costs somewhere to stay in the black. Since British law basically forbade them from laying off employees or cutting back their hours (the Achilles Heal of the European Union which will eventually spell doom for the EU), the only other way they could cut costs was to defer maintenance, with predictably disasterous results.

If we have a private open access system in the U.S. it would probably run on a cost covering fee basis (which would include a minimum profit margin) and then additional revenue from garnering a percentage of the operators revenues from using the system. This will work with a primarily freight based rail system, but absolutely will not work on a passenger based rail system. I would further advocate certain federal incentives to ensure the economic health of the infrastructure companies, including property tax exemption, accelerated depreciation, and transferable tax credits similar to the shortline bill recently passed. It might also make sense to base the fee system on a railroad fuel tax, but I think a ton/mile-weight per axle charge system is more feasible.

[Anonymous]

futuremodal:
I specifically referred to telecommunication technology improvements as a factor in the break-up of AT&T and certainly didn't mean to imply there hadn't been much since then. Rather, my reference to atrophy was in connection to the so-called "last mile" problem so widely documented in the general business and trade press over the past eight years. There is now a veritable explosion of investment announcements by the "Baby Bells" concerning fibre optic investments, etc., all turned loose by an end to "open access." With regard to differential railroad pricing, that's called sound management practice, and the Staggers Act has relief mechanisms should inappropriate pricing occur.

[Anonymous]

QUOTE: Originally posted by Dick_Lewis

futuremodal:
I specifically referred to telecommunication technology improvements as a factor in the break-up of AT&T and certainly didn't mean to imply there hadn't been much since then. Rather, my reference to atrophy was in connection to the so-called "last mile" problem so widely documented in the general business and trade press over the past eight years. There is now a veritable explosion of investment announcements by the "Baby Bells" concerning fibre optic investments, etc., all turned loose by an end to "open access." With regard to differential railroad pricing, that's called sound management practice, and the Staggers Act has relief mechanisms should inappropriate pricing occur.

We haven't seen a "vertitable explosion" of investment by the Baby Bells now that there has been a parial re-regulation of the telcoms into regional monopolies. What incentives do monopolies have for any such investment? None. What's going to happen is that internet users will become frustrated with the lack of broadband access and switch to wireless for last mile connectivity, or wait for the technology that allows broadband via the power company's wires. All the left wing courts' did in barring ISP's access to last mile phone line connections was cause millions of internet users to either lose their prefered service or pay much higher (read: monopoly) rates for fast internet connections. The customer gets screwed again.

Did the Staggers Act really result in an increase in railroading's share of intercity freight? If the Staggers Act was really deregulation, shouldn't rail's share of intercity freight be around 40% or 50% by now? But it ain't, is it? All we see are more and more trucks on the highways as former rail shippers lose their branchline connections or get fed up with bad service. Meanwhile, long stretches of the nation's rail grid go underutilized while other sections are bogged down in congestion. That's what happens in a monopolistic economy. Every economics theory predicts such macro-inefficient responses.

[Anonymous]

futuremodal:

EXHIBIT 1.

Internetnews.com
May 19, 2004
Texas is Locus of Verizon's Fiber Focus
By Colin C. Haley

Verizon began rolling out fiber-to-the-premises technology in a fast-growing Dallas suburb Wednesday, the first step in an aggressive pu***o take market share from rival ISPs and cable operators.

EXHIBIT 2

1980 Rail RTM Market Share: 37.5%
2002 Rail RTM Market Share: 41.7%

[Anonymous]

QUOTE: Originally posted by Dick_Lewis

futuremodal:

EXHIBIT 1.

Internetnews.com
May 19, 2004
Texas is Locus of Verizon's Fiber Focus
By Colin C. Haley

Verizon began rolling out fiber-to-the-premises technology in a fast-growing Dallas suburb Wednesday, the first step in an aggressive pu***o take market share from rival ISPs and cable operators.

EXHIBIT 2

1980 Rail RTM Market Share: 37.5%
2002 Rail RTM Market Share: 41.7%

Nice try. According to page 34 of ourJanuary 2005 issue of TRAINS, the rail share of the U.S. freight market is 23% with PRB, 16% without PRB, presumably for the year 2001. What's your source for the 41.7% figure?

As for the telecom thing, a PR news item is not an accurate indicator of whether re-monopolizing the Baby Bells is a benefit or cost to the consumer. I am more persuaded by the reports of customers' loss of internet choice and price competition due to this court decision.

[joesap1]

Remember, anytime the government gets involved with anything: it screws it up!
Therefore, since the money the government has comes from our pockets, and they continue to waste it and want for more, let's not subsidize railroads and hold the government accountable for the money they are wasting now.
The government doesn't need any more money. They must learn how to manage what they got.

[oltmannd]

QUOTE: Originally posted by joesap1

Remember, anytime the government gets involved with anything: it screws it up!
Therefore, since the money the government has comes from our pockets, and they continue to waste it and want for more, let's not subsidize railroads and hold the government accountable for the money they are wasting now.
The government doesn't need any more money. They must learn how to manage what they got.

I agree with your point that gov't must learn to live within it's means, but we vote for these guys, so the blame rests with us!

But, I can't agree that the gov't screws everything up. I think they've done a good job with national defense, national parks and making gov't accessible via the internet, for example. And, they've done reasonably well, on the whole, regulating auto safety and the environment also.

These are all things that the public sector would never do because the benefits don't accrue directly to those spending the money. Walmart may import mega-tons from China, but they would never own and operate their own navy to protect the container ships, would they?

[SALfan]

QUOTE: Originally posted by futuremodal



Did the Staggers Act really result in an increase in railroading's share of intercity freight? If the Staggers Act was really deregulation, shouldn't rail's share of intercity freight be around 40% or 50% by now? But it ain't, is it? All we see are more and more trucks on the highways as former rail shippers lose their branchline connections or get fed up with bad service. Meanwhile, long stretches of the nation's rail grid go underutilized while other sections are bogged down in congestion. That's what happens in a monopolistic economy. Every economics theory predicts such macro-inefficient responses.

At least from the limited amount I know, the Staggers Act enabled the railroads to SURVIVE. After the forum discussion about the Penn Central, I read "The Wreck of the Penn Central", and from that it appeared to me that regulatory idiocies alone were enough to doom the company, given its territory and physical plant. If the regulatory climate of the 1960's had remained in place, I don't believe the railroads could come close to carrying today's traffic because they would have consumed their plant and equipment and gone out of business or would be in very bad shape indeed. Now that 25 years have elapsed and the excess railroads and trackage have been wrung out of the picture, the railroads (or at least some of them) are on the brink of having enough pricing power to make a decent profit.

Branchlines: How many shippers would be willing to pay the true costs of maintaining and operating those lines? None, because trucks are cheaper. Rail is a very bad way to distribute a few carloads over a wide area.

Busy lines versus underused lines: I imagine the underused lines are the circuitous, slow, heavily-graded lines without much online traffic, while the heavily used lines are the short, fast, flat (or flatter) lines or have significant online carloadings. When the railroads have the choice, traffic will find the best route like water finding its own level. Even I can figure out it's better to send all the traffic you can over the best route.

[Anonymous]

futuremodal:

Revenue Ton-Mile Data Sources: The Market share data are from the long-recognized and credible Eno Foundation for Transportation, Inc, as published in "Railroad Facts" 2004 Edition, published by the AAR (The Association of American Railroads for those of you in Rio Lindo).

"As for the telecom thing ...": Let's see ... Verizon says they are competing with cable and other ISP's; you say that soon wireless and internet access via powerlines will be available; access via satellite is available. Yet you say Verizon, et al, are re-monopolizing! I waited 6 years for second-rate DSL service from SBC (the local Baby Bell) ... never got it ... finally went to cable earlier this year. I can hardly wait til SBC starts competing with Charter Cable. But I sure don't expect SBC shareholders to subsidize my access.

(A side note on the RTM figures in the January "Trains": INTERCITY TON-MILES is the standard measure for intercity freight transportation. U.S. railroads, with only the most trivial exceptions, engage only in intercity freight transportation. They do not deliver freight to anyone's front porch. Neither do they provide service from a farmer's field to storage bins. Nothing wrong at all with measuring (estimating) the ton-miles generated by the trucks that do. One can even do the math and say railroad intercity ton-miles are xx.x% of all ton-miles, including intracity and agricultural freight, but it's a bit like comparing anvils with apples.

(And certainly, if one wishes, one might compare rail market share, thus determined, over the years. The "market share" data on page 34 of Jan. "Trains" have no date, so are of little help in any analysis, but let's imagine they are for 2001(the TRANSEARCH copyright date). Presumably, with enough analysis and estimating, one could compare that year with 1980 and begin to speculate about causes of any change revealed by the "analysis."

(But one can have almost no confidence in an analysis which arbitrarily includes and excludes data, as does the purported analysis on page 34: "In the United States, ton-mile losses have been masked by the increase of coal shipments from the Powder River Basin, so market share appears to remain constant." Hmmmmm. "I voted for the $87 billion before I voted against it."

(So why not here in the Forum and in "Trains" let's stick with relevant (intercity), consistently measured (as are U.S Class One RTM's), and reliable data from credible sources (Eno foundation). Then we won't be talking Anvils and apples.)

[Anonymous]

***,

You should know as well as anyone that the AAR is nothing but a propaganda vehicle for the current rail oligarchy, therefore they are heavy on the skewing of statistics to fit their narrow point of view. The clue you missed is the inclusion of "revenue" in the ton miles calculations of the so-called "credible" Eno Foundation vs a strict ton-mile analysis. All other modes of transportation have to compete for each and every customer, and thus the profit margins are thin, e.g. there are no captive shippers, thus no monopolistic (mislabeled as "differential") pricing margins. I could carry one ton of cargo 100 miles, say by dirigible for the sake of argument, and that wouldn't register on a pie chart for my modal market share. But if I charged a trillion dollars for this one ton, then on a revenue ton mile basis my mode would be rather significant. But any statistician would discount my dirigible's so-called "market share".

The only legitimate comparison between modes is in plain ton-miles, because those other modes don't have the monopoly margins of rail. And you must include all aspects of a commodities transport from origin to final destination, otherwise you are skewing the data to fit a premeditated bias. The facts remain that railroads have not increased basic market share with the implementation of the Staggers Act (but as one other reader pointed out, it did help railroads survive.) The reason for this can be traced to monopolistic empowerment, which tends to denigrate competitive pressures, thus no incentive to aggressively pursue a larger piece of the pie. They are fat and happy with what they've got, and they know that the possibility of new entrants into railroading are nil, so why run the risk of loss with an aggressive marketing strategy?

BTW, it's "Rio Linda" not "Rio Lindo". If you're going to steal a quote from Rush, at least get it right.

[edblysard]

David,

I've been following this thread, and had a few questions.

Looked at you'r bio, and noted you state that you are a "transportation researcher" and the inventor of the "stack and a half"

Question one: What company or university are you doing the research for?
and
Question two: Which railcar maker makes your stack and a half?.
Last,
Question three: Which railroads use it?

Thanks,
Ed