I was going to wait for LC to post this, but it may be he’s having a hard time removing his fist from the wall in reaction to this…
http://www.progressiverailroading.com/freightnews/article.asp?id=7225
Introduced by Congressman Mark Green of Wisconsin.
Two questions:
Can someone tell us why railroads should remain exempted from normal antitrust laws?
Hey, jeaton, did you vote for this guy?
I can not think of any reason the railroads should continue their anti-trust exemption. Of course, Burns legislation has nothing to do with anit-trust.
I’m glad you mentioned the other legislation, because I am curious as to which proposal would be seen as the lesser of two evils to the railroad industry. I can tell you from an economist’s perspective, I would definately prefer the Green antitrust legislation over the Burns reregulation legislation.
I guess this is a punishment against CN/WC. I think it would be safe to say that Montana would also support this (BNSF).
How are they going to enforce this Railroads don’t hold a monopoly (truck lines)? As long as railroads stick to their agreements nobody should mess with them. Why does the government always stick their nose into every thing, except my fist? If it didn’t cost so dang much I would have thrown the computer out the window. Give me a break don’t they have something better do to, even take a vacation is better than this.
James[C):-)]
Mark Green has to do something to ensure that money continues to flow into his campaign fund from the paper manufacturing industry. Otherwise he might be looking for a job in his old occupation-5 & 10pm news reader on a local Green Bay TV station. People in Wisconsin do not demand high standards of intelligence for their elected government officials. The winner is usually one having the money to run the “cut taxes, family values, guns for everyone” smoke machine for the longest.
I was not able to vote for or against Green. I live in a different district. Our guy wins by promising save Social Security without cutting benefits or raising taxes paid to the Social Security fund. (You’re trained in economics, tell me how that works). He is an expert on that subject because he recieved survivor benefits when he was growing up.
Any way my comment on making the railroads subject to Anti-Trust is “Whatever”. If I was a shipper in Green’s distrtict, I wouldn’t be expecting three or more “railroad” companies to show up at my door anytime soon.
Jay
becouse thats what government dose best… they have to “justify” there jobs by making sure they always have work by writing more and more laws
csx engineer
The Burns bill looks like re-regulation to me and is obviously an attempt to gain the votes of Montana grain farmers. The Green bill is smoke and mirrors and has a similar ulterior motive. As pointed out above, railroads already have major competition, known to most shippers as trucking companies.
What about all those DHL Trucks loaded on flat cars whipping by the UPS and FedEx trucks stopped at the grade crossing? With gasoline headed for $5.00 a gallon, why not finish killing of all the more economical means of transportation, and pour more $s into those conservation, non poluting modes of transportation like airlines and truckers. I am glad to see the electorate has wised up since the fifties, when the politicians slogans were “Vote for me and I’ll raise your Social Security checks” before every retirement comunity that they could eat chicken with!
Very appropriate comments. The only real problem with this legislation is a stupid but powerful court (Like the court that forced power companies to sell their street railways under antitrust) could interpret this that single billing for interline shipments is out, shich would definitely cut into rail traffic. Particularly short lines. Some short line originated or teminated shipments see passage over as many as four different railroads. This should be an objection to the legislation by both shippers and railroads. At least an amendment should tackle the problem.
Just when I thought I was going to walk away from the forum . . . You have got to be kidding me, right? I don’t know where to begin . . .
First, the contention that railroads are not subject to competition is about as fascicle as the media coverage of the newly selected Supreme Court Justice. It is very interesting to see that a transportation industry that transports far less than half the tonnage in the United States (and even less in terms of profit) can be classified as not subject to competition.
Second, why is it that we are going to target an industry that isn’t even earning the cost of capital? What happened to the industry when it was subject to this regulation? Regulating this industry will end up producing one of two eventualities: (1) no railroads—as would have been the case were it not for Staggers—or (2) massive taxes so our country can either bail the rail industry out or run it publicly—which I assert would cost the voting public even more.
Railroads are getting close to earning the cost of capital; it would be such a waste to all parties—including the shippers–if we reversed course and went back to the days when lines were falling like flies. Did shippers really feel secure in their service in the late 70s and early 80s? Is that really preferable to right now?
Third, how would we implement this? Are we going to build new lines or have a public taking by forcing open access over tracks that will eventually fall into disrepair because everyone knows it is cheaper to run your trains over someone else’s tracks rather than maintain your own.
Of all the nonsense and drivel . . .
Gabe
P.S. For what it is worth, I radically oppose a further round of mergers and am radically in favor of short line and regional spinoffs. But, what is suggested above is overkill.
P.P.S. “Kill” in “overkill” modifies the rail industry and those shippers who depend upon it for service.
Gabe,
“Compeition” in the Green bill refers to head to head competition between railroads. As you know (or should know), each transport mode has it’s own advantages and disadvantages in comparison to the others. As has been explained, the railroads niche is to move bulk commodities at speed. Barges move bulk commodities at a relative snail’s pace, trucks move product at speed but not in bulk, pipelines only move one or two specific commodities, airlines move light select products at max speed, etc. Therefore, certain product groups will tend to gravitate toward one of the modes as it’s main tranporter. When these product groups are subject to only one transporter within each mode, you get captive shippers and monopolistic characteristics. Since all other modes have intramodal competition, the only mode left within intramodal monopolistic power are the railroads. Thus, when you have a representative government that is charged with maintaining a competitive free market, you are bound to get this type of legislation when certain monopolistic actions take place.
An easily understandable comparison is the antitrust action against Standard Oil. Using your logic, you can argue that Standard Oil wasn’t a monopoly, because there were other forms of energy available for oil consumers. Coal was widely available at the time, I guess you can argue that coal was the competition against oil. But of course, that argument is flawed because the usage for oil is unique in transportation fuel consumption compared to coal. Oil had a niche, and Standard Oil had a monopoly on this niche. The antitrust action against Standard Oil was appropriate by the analysis of most historians and economists.
Trucks can only be seen as an alternative of last resort to railroads, just as coal is only an alternative to oil if we start building steam cars again, e.g. an alternative of last resort. Maybe if oil runs out we’ll see coal fired steam powered autos again, but until then if oil is available w
So, If a grain producing area is being "taken advantage of " by a barge company,will we expect taxpayers to dig another river to provide equal competition?[:D] No,wait, that would only be a duopoly-still not competion, according to some theories. We would need to dig two more rivers to get true competition.[:o)]
In your grand plan, trains from the Murphy Southern would have to be allowed to run over the Futrure Model Pacific lines, for a certain price-probably determained by some government agency. What’s to stop the governing agency from determining that MS could run FMP trains over FMP lines for a certain price. As soon as The Murphy Southern purchases the right politicians,the owners could make someone else do all the work, and sit back to collect all the riches.[;)] I’m on my way to world domination! When I’m king of the world, there will be a smilie for tounge-in cheek!
Friends, Rail fans, Country lend me your ears. This is important; this could kill the railroads if this goes through. We need to raise hell about this, now before it is too late.
E-mail Congressman Green at mark.green@mail.house.gov
I have already done so. Please (I’m pleading) send your congressman a letter tell him that will kill the railroad industry, that truck lines and others offer competition to railroads that are fighting to survive. Ask what happened to the Uncle Sam that supported the railroads. Use your power granted to you in the 1’st amendment of the US constitution. Let them hear you.[soapbox]
The Honorable Mr. Green has an incredibly narrow definition of competition. Rail and trucks definitely compete with each other even if the Representative from Wisconsin says that they don’t. He’s obviously pandering to the voters and the contributors with this bill. In the current political climate, the bill will be lucky to get out of committee.
It is my belief the only area where the anit-trust laws do not apply is with mergers. Anti-trust is certainly an issue when developing marketing strategies.
Do we have any lawyers out there who no of areas besides mergers where anti-trust does not apply?
Baseball, the national defense industry, legalized prostitution, and gambling.
We do have the best Congress money can buy!
I recently heard from some very knowledgeable industiy watchers that three or four of the Class I’s may have earnings for 2005 that will meet the cost of capital ROI. This is a key factor in advancing projects to deal with capacity problems.
Although I consider it to be extremely unlikely, let’s assume that this all leads to a full open access environment. Unless the managers of the “new” railroads are as dumb as a box of rocks, they will go after the business with the highest margins. Now, there will surely be issues of quality of service, but the key element of competition will be price. One cannot say it is bad for the shippers, but rates will certainly drop and so will margins. It can be assumed that lower rate will attract more business, but the question becomes, “Will the increase in new business be sufficient to bring total margins back to existing levels?” Answer: Doubtful.
It is typically assumed that competition will encourage the development of greater efficiency and a reduction in unit costs. In the case of railroading, I find that iffy. What elements of cost would be reduced? I can’t see any special oppurtunities for significant reductions in the cost of rolling stock, track materials, signal systems or fuel. Maybe labor, but if the Class I’s get the flexibility they are seeking for crew size, that cost will not be that easy to reduce.
The bottom line is a lower totals on the bottom line. So how does that do anything to relieve capacity problems?
Jay
I do not think open access is a anti-trust issue. Since Staggers an application to build into a facility on another railroad has never been turned down.