RXR Anti Trust Exemptions. Is it a problem?

[Anonymous]

Yes, I have a great admiration for Theodore Roosevelt. Anti-trust laws are essential for maintaining the integrity of the free market system, and TR had tremendous foresight.

Paul, the reason I believe issues such as open access for railroads is apolitical is that open access for energy transmission was a bipartisan effort, neither a left wing or a right wing ideal, e.g. centrist in nature. The same should apply in extending anti-trust laws to railroads.

[PNWRMNM]

In his post of September 19 Futuremodal claims the highway system was and is financed with user fees so motor carriers are not subsidized.

In footmote 230 or "Perkins/Budd' by Richard C. Overton 1982 the author states " . . . The truth apears to be that for the period 1921 through 1974, approximately two-thirds of the combined federal, state, and local expenditures for highways were met by user charges of one sort or another, while the remaining one-third was paid from gerneral tax sources. In other words, vehicular traffic by no means paid its way (the one third paid by general taxes amounted to $128 billion), nor was it accurate to imply that all ulta-modern highways were fully paid for by public expense. As is so often the case, the answer lay somewhere in between. (us DOT, Bureau of Public Roads, Highway Finance, Summary to 1965, Table HF-1 for years 1965-1967 and Table HF-11 for years 1968-74{Washington DC 1965-1974}.)"

Mac

[Anonymous]

QUOTE: Originally posted by PNWRMNM

In his post of September 19 Futuremodal claims the highway system was and is financed with user fees so motor carriers are not subsidized.

In footmote 230 or "Perkins/Budd' by Richard C. Overton 1982 the author states " . . . The truth apears to be that for the period 1921 through 1974, approximately two-thirds of the combined federal, state, and local expenditures for highways were met by user charges of one sort or another, while the remaining one-third was paid from gerneral tax sources. In other words, vehicular traffic by no means paid its way (the one third paid by general taxes amounted to $128 billion), nor was it accurate to imply that all ulta-modern highways were fully paid for by public expense. As is so often the case, the answer lay somewhere in between. (us DOT, Bureau of Public Roads, Highway Finance, Summary to 1965, Table HF-1 for years 1965-1967 and Table HF-11 for years 1968-74{Washington DC 1965-1974}.)"

Mac

Mac,

You might want to contact the author and ask him why he combines federal, state, and local expenditures to facilitate his conclusion, rather than doing the professional thing and comparing federal funding to state and local funding. The two are very different, as most federal highway funding comes from user fees, while state and local highway funding uses a combination of funding methods. It is at the state and local level where the 128 billion figure arises.

I was very careful to differentiate between the federal and state methods of highway funding in my previous posts, and I was the one that made the point regarding the use of non-user fees at the state level for a typical state's share of highway funding. Nothing is served by clouding those differences and packaging them all into a one size fits all critique, unless one is motivated by a desire to propagandize for the sake of the railroad industry.

The fact remains: The federal share of highway funding comes from user fees, not subsidies from the general fund. Therefore, it is a non-sensical statement to say "highways are subsidized", and implying that such is characteristic of federal highway expeditures.

[jeaton]

If I do not use the federal highway system and I pay the Federal Gasoline Excise Tax am I not subsidizing the federal highway system? If I paid a certain amount per mile to drive down a federal highway, then it would be a user fee. With the exception of toll roads, local, state and FEDERAL highways are built and maintained with money collected from the public through taxes. It does not follow that because an expenditure is made from taxes dedicated to a specific purpose that the tax becomes a "user fee".

[PNWRMNM]

FM

The highway system is subsidized as described. Whether it is the Feds, the state or the locals does not make any difference and you know it.

Mac

[Anonymous]

QUOTE: Originally posted by jeaton

If I do not use the federal highway system and I pay the Federal Gasoline Excise Tax am I not subsidizing the federal highway system?

So what you're saying is that you buy lots of gasoline, but you don't use the federal highway system? How much gas does your lawnmower use, anyway?

If what you're saying is that you mostly drive on local roads (and thus you are paying a federal fuel tax but not using the federal highway system), keep in mind that much of the money from the Highway Trust Fund does go the construction and maintenace of local roads. In addition, some is siphoned off for spending on mass transit, bike paths, etc.

If anything, it seems you non-federal highway users should be giving us regular highway users a rebate.

[Anonymous]

QUOTE: Originally posted by PNWRMNM

FM

The highway system is subsidized as described. Whether it is the Feds, the state or the locals does not make any difference and you know it.

Mac

Sorry Mac, but you are in denial. You want so much to believe that highway users are subsidized, because it buttresses your case that the "competition" to railroads is subsidized, and without that point of contention you whole case is eroded.

The truth is, just the opposite is the reality. By allowing railroads anti-trust exemption, the federal government is actually subsidizing the railroads. What other transportation mode is allowed monopoly power and anti-trust exemption? None but the steel rails.

I know it makes your head hurt to have to contemplate that reality, but you gotta face the truth sooner or later.

[jeaton]

Mac

You have to understand-if he says it, it's the truth.

Jay

[PNWRMNM]

Jay,

Thank you for reminding me. I know the FM's acquaintance wtih reality is fleeting at best. Clearly you understand it, I hope the rest of the participants do too.

Mac

[Anonymous]

Geez you two, get a room.





Preferably a padded one with rose colored windows.

[greyhounds]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by PNWRMNM

FM

The highway system is subsidized as described. Whether it is the Feds, the state or the locals does not make any difference and you know it.

Mac

Sorry Mac, but you are in denial. You want so much to believe that highway users are subsidized, because it buttresses your case that the "competition" to railroads is subsidized, and without that point of contention you whole case is eroded.

The truth is, just the opposite is the reality. By allowing railroads anti-trust exemption, the federal government is actually subsidizing the railroads. What other transportation mode is allowed monopoly power and anti-trust exemption? None but the steel rails.

I know it makes your head hurt to have to contemplate that reality, but you gotta face the truth sooner or later.

The truth is that the railroads are unique in that they must: 1) compete with each other and, 2) cooperate with each other at the same time. Even under your cherished open access, which you have yet to make a case for, no one rail company could get trainloads together to go everywhere from everywhere. They'd still have to: 1) compete with each other while, 2) cooperating with each other.

You can't have this cooperation without some form of exemption from anti-trust. They've got to talk to each other about through charges, divisions of revenue, etc.

When I was setting freight rates for the old ICG, as Jay also did, the rule was explained to me as folllows: "You and I can talk and agree, but we can't talk and agree with someone else." I could leaglly talk to the SP about establishing a through rate from Chicago to Dallas over Memphis (it was a breakthough - they had always insissted on St. Louis). But if we brought the Santa Fe into the conversation or agreement we were illegal. Makes sense to me.

Now if two trucklines talked it would be collusion, since they both went to Dallas and Chicago. But since (at that time) the ICG didn't run to Dallas and the SP didn't touch Chicago, we could talk.

The relavent discussion about highway subsidies is the advantage it gives to trucking. An 80,000 pound truck does far more damage, and requires far more design and construction, than the largest SUV. The taxes are scewed so as to make the SUV's/passenger cars cross subsidize the large trucks.

When I worked for International Harvester/Navistar, then the largest manufacturer of larger trucks, I came to realize that such trucks were basically designed by state legislatures - whatever they said was legal is what got designed. Their laws mandated a vehicle that was cross subsidized by the driving public. And that's what got built.

[MichaelSol]

QUOTE: Originally posted by greyhounds
You can't have this cooperation without some form of exemption from anti-trust. They've got to talk to each other about through charges, divisions of revenue, etc.

"Anit-trust" is a specialty area of both law and economics, and particularly in a regulatory context.

"Price fixing" is a completely different legal consideration, economic phenomenon, and invokes a different regulatory mechanism.

Nearly all national-scale industries compete, yet cooperate through their trade and lobbying associations. That this occurs has nothing to do with anti-trust economic theory, does not invoke anti-trust regulation, and while it presents temptations to price fixing, sophisticated industries invoke sets of rules to avoid any appearance of such efforts, including third party discussions with other competitors.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by greyhounds
The relavent discussion about highway subsidies is the advantage it gives to trucking. An 80,000 pound truck does far more damage, and requires far more design and construction, than the largest SUV. The taxes are scewed so as to make the SUV's/passenger cars cross subsidize the large trucks.

How so?

Best regards, Michael Sol

[Anonymous]

QUOTE: Originally posted by greyhounds

The truth is that the railroads are unique in that they must: 1) compete with each other and, 2) cooperate with each other at the same time.

Outside the Midwest, railroads operate under a duopoly environment. Some areas suffer under a monopolist environment. That ain't competition. Your statement 1) is a gross overgeneralization. As for 2), are you kidding me? Cooperation?! How are paper barriers and bottleneck rates "cooperation"?

QUOTE:
Even under your cherished open access, which you have yet to make a case for, no one rail company could get trainloads together to go everywhere from everywhere. They'd still have to: 1) compete with each other while, 2) cooperating with each other.

Since 1) and 2) have been discredited, the only thing to discuss is the case for open access, which is simple: OA forces rail transporters to compete with each other for all rail customers. It puts railroading on the same footing as trucking, barging, et al. Whether they cooperate with each other or not is dependent on market forces and federal oversight.

QUOTE:
The taxes are scewed so as to make the SUV's/passenger cars cross subsidize the large trucks.

Under your "user fees are subsidies" definition (a skewed definition if there ever was one), if SUV's/passenger cars cross subsidize trucks, then by association they are also cross subsidizing the railroads, since outside the coal transportation market railroads are now completely dependent on trucks to get the cargo between the railhead and the customer's dock.

Of course, that whole line of thought is ridiculous, because user fees are not subsidies. Although we could argue that highway user fees are being used as a cross subsidy for railroads via the RR's dependence on trucks, since without them most rail lines would be rusting right now.