“I’ll save the details for a future column.” – Don Phillips, in Sept. Trains.
Don has been promising periodically for at least five years to tell us why railroads have nothing to fear from relentless Democratic efforts in the Congress to re-regulate.
It’s past time for him to deliver, so guys like Jim Young, Matt Rose and all us stockholders can relax.
Run a google on the topic of “privatized profit and socialized losses” and you will better understand
Well, several things came up on the google. Is this what you mean?
http://www.prophetwithoutprofit.com/tag/tarp/
To me, Phillips can not possibly honestly write on how increased regulation will not harm the railroads because the specific purpose of such regulation will be to divert money from the railroads. That would be “harming the railroads.”
The US railroads are a true industrial success story. The “Union Guy” who is the current head of the Federal Railroad Administration has called the US rail freight system “The Envy of the World.” The FRA has called the US freight rail system the most efficient and safest in the world.
The railroads are a largely a self supporting and self financing industry that pays its own way, generates wealth for the nation’s people, requires no significant subsidies (despite what Zardoz says), pays a union work force well, and pays taxes instead of using taxes. So, naturally, Phillips wants the government to mess with that and he will make excuses for such government aciton.
Here it is as I see it. Anything that is produced, mined or manufactured must move through a channel of distribution to the end users. This channel can consist of the manufacturer, miner, grower, whatever; the “middlemen” who handle the product along the way, and the final retailer who delivers the finished thingy to the ultimate consumer. Each of these guys gets a cut of what the ultimate consumer pays. The railroads are often a part of this channel and they get paid for what they do.
Channel members are always, always, always fighting over who gets how much. When they can’t get their way they r
Question:
Has Phillips been telling us that the railroads have nothing to fear from the relentless Democrat effort to re-regulate the railroads because the relentless effort will not succeed, or because new regulation will not hurt the railroads? I am guessing it is the latter, but if it is, I then need to know why Phillips believes that.
When one understands that the name of the game in politics is power and NOT governance per se, then one will understand the situation we find ourselves in. OTOH, if we did not have at least some kind of regulatory body, we would likely have total confusion in the economy with equally discordant side effects in other sectors. The trick is having that government that governs and doesn’t spend its time worrying about re-election. Term limits, anyone?
They might spend their time preparing a cushy landing zone after their term is up. Perhaps some industry board positions in return for favorable legislation? They would be lame ducks at the beginning of their last term - constituents be “darned”. …devil and the deep blue sea…
I get the sense he thinks it will be “not that bad” and that the RRs are just inflaming the issue to draw a line in the sand a this point, lest it get worse later. What I worry about is that the government talks out of both sides of it’s mouth. On one hand, they want the industry to do more so that important national goals of reduced energy consumption and environmental protection are fulfilled, yet on the other hand, they are nicking away at the means for the RRs to do exactly this. They are already causing capital to be diverted from efficiency and expansion projects to cover PTC and hazardous routing regulation at the same time they are trying to enact regulations that will decrease i
That is what I would expect Phillips to believe. I think the railroads’ current success story renders them to be a very juicy plum, just ripe for picking in a way that invites government regulation and “partnering” in many new ways. When you read what the FRA wants to do with railroading through the public sector, it seems to total more than what the railroads are doing now in their private role.
I agree with Greyhound’s point that everybody in the supply chain wants a bigger piece of the action and would like the government to step in and redistribute the revenue. But the government itself has a powerful self-interest that constantly seeks fulfillment as well. So they are motivated to step in even if nobody wanted them to.
How did I get dragged into this? I have no knowledge about subsidies, railroad or otherwise.
But if I had to choose, my uninformed opinion would be that the railroads deserve MORE in subsidies, at least equal in percentage to the level that the airlines and highways get subsidized.
Yes, it is the latter – in so many words a couple of years back. Yet the explanation has always awaited “a future column.”
I’ll admit the purpose of my post was to tweak Don. If I had to explain the logic for re-regulation to the railroads and to TRAINS readers, it would take me five years, too.
My mistake…Sorry. I gues it was the right church, but the wrong pew!
[%-)][%-)][%-)]
You’re thinking of John G. Kneiling, aka “The Professional Iconoclast”. Those were good columns even if one didn’t agree with all of them. It would be interesting to go back over them and see how accurate he was.
Sam,
That was not Don Phillips, it was John Kneiling. I usually found John’s columns and articles interesting and refreshing, even though I was in my teens and early 20’s when I read him. Don’s columns seem to be affected by his time spent in Europe, a little to much exposure to a society where government is looked at as the end-all, be-all in the lives of its citizens.
Jay
Tarp is just the latest (albeit a good one) example of how big business owns our government, this problem goes back quite a ways.
As it applies to dakotafred’s curiousity, in a nutshell the government has allowed the railroads to combine to the point that they’ve become “too big to fail” …all in service to greed.
Anything the gov’t might try to do that would “harm” the viability of the railroads would just precipitate another bailout. Perhaps the gov’t should have seen this coming back when approving all those “mergers of efficiency”…the stockholders enjoy the savings of expense elimination, and then when it finally unravels… guess who gets to pay to put Humpty back together again?
How would the government, the railroads, or any business for that matter, be able to tell what is the right size for a business to be?
What’s the difference between “all in service to greed”, or increasing the return to stockholders, while remaining competitive in the market? Isn’t this just a case of 20/20 hindsight?
Exactly right, Murphy! I think “all in the service of survival” might be more accurate… Don’t forget the industry as a whole is still not revenue adequate per STB’s definition.
And, wasn’t PC “too big to fail”? That’s how we got Conrail! First, the government chokes the industry to the point of passing out and now once they’ve let go and the industry has managed to a take a breath or two, we should choke them again?
In reply to samfp1943 above, a much-younger Phillips did in fact run contemporaneously with Kneiling a million years ago. His column was called “The Potomac Pundit.” Then editor David P. Morgan dumped both columnists on the pretext of freeing up more space for “news.” I always suspected this was simply cover for getting rid of Kneiling, who was certainly angering many readers, maybe to the point of non-renewed subscriptions. Phillips was thrown out with the bathwater.
Would anybody besides me rather see another columnist or two at the expense of (often-old) “news” and all those departments? (If you’re not interested in the department itself, that page is a monthly waste.) I personally miss Ed King and Larry Kaufmann.
Don has been saying that for many years about several topics, usually related to Amtrak, passenger trains in general, USRA, Conrail, politics and other government involvement/ interference of various kinds with the railroad industry, etc. By my recollection, he has usually failed to deliver, at least in a recognizable link to my dull mind - other topics seem to come up that grab his attention instead for those future columns.
Note that buried in the middle of Don’s subject column this month is an recounting of the FRA’s current unilateral (= ex parte) attempt to establish new rules for higher speed passenger trains on freight railroad tracks, such as maximum delays, financial penalties for same, forcing the railroads to pay for corrective improvements, etc. All of that seems to have kicked open a hornet’s nest with the Class I managments, judging by even Don’s account. To me, there seems to be an inconsistency here - the same government that Don expects to be reasonable about re-regulation was caught of being manifestly unreasonable - both in ‘process’ and ‘result’ - on the issue of passenger rail rules. Sure, they’re different agencies - FRA vs. STB - but the political and legal masters of both is Congress . . . [:-^]
I wonder if a worthy counter as ‘damage control’ to the re-regulation movement is to concede and grant ‘open access’ for the ‘captive’ shippers’ I don’t have t
Yes, especially Ed King (I’m not that familiar with Kaufmann’s work). I used to really like listening to the scanner when King was dispatching on the CP C&M sub–he had a unique way of talking on the radio, and he really knew his stuff!!
Although I can imagine quite a ‘lively’ discussion regarding which features could be replaced.
I have been expecting this. I think the imposition of public HSR onto the private freight railroad corridtors will lead to major friction, and tend to blur the line between public and private.