Did you read the Railway Post Office in the latest edition of TRAINS?
There is a letter there from a gentleman in Georgia who is commenting on Don Phillips’ column about the British railway system. Phillips expounds at great length that the British government has turned a once ineffective rail system into one to be admired.
The gentleman from Georgia concludes his letter with a statement to the effect that if we unite and push for nationization of the railroads, we, too, can reach the pinnacle that Britain achieved.
Has Great Britain really achieved success or is this just one man’s opinion?
Consider that Britain has a national health care system that is paid for by the 17% Value Added Tax that is applied to every purchase. Their healthcare system is also one of the worst in the world. Without any incentive, very little research is done in Britain and they have very few new medical machines.
In the seventies Jaguar was turning out poor quality automobiles as they were part of the conglomerate British Leyland. Jaguar bought itself out from under British Leyland and began building cars people wanted. They got too popular, I suppose, since Ford snatched them up.
Bigger is not always better. The last thing we need is our corrupt, incompetent government taking over our free enterprise railway system!
Good comments Joe. Only an economic illiterate would promote nationalization. We saw communism collapse because, among other things, it was economically inefficient. We saw Canadian National privitize in order to compete with private Canadian Pacific. We have Amtrack excel at nothing except losing money. We need more privitization such as the post office and social security, not more nationalization. Larry
The US tried nationalized railroads once. The result was some standardization of equipment which was good and a physical plant in such bad shape that it took years to rebuild.
No matter how bad they screw thing up the Socialists always claim they will do better next time. They just weren’t given enough time and allowed to spend enough money.
I haven’t read the article but if they are talking about recent times wasn’t a key change privatizing the operations of a system that was already nationalized system?
I believe your speaking of the time during WWI, when the Government “leased” the railroads, invested almost nothing, ran the equipment into the ground, and left them in a shambles. During WWII the Government, having learned its lessons in the previous conflict, effectively ran the railroads instead by fiat by decreeing loads, investment policies, etc. This time, however, most made nice profits.
Both Don Phillips and the Georgia Gentleman are about 50 years behind the times. Great Britian nationalized their rail system around WWII. They de-nationalized their rail system a few years ago into a privately held open access system, albeit by a not-for-profit entity. So basically they took a private closed access system, nationalized for 5 decades, then returned it to the private sector as a private open access system. The rail service providers are now a mix of priva
Except for passenger service, which all over the world is becoming a Government responsibility, I think the present system, with its flaws, is still best. What is needed is fairer treatment taxwise for rail freight in general, and more private-public local partnerships to solve specific problems. And more shipper owned railroads. Certain railroad properties are really public service properties and taxes should be waved. I certainly hope that CSX doesn’t have to pay real estate taxes on the Baltimore museum!
Hemphill had a good rebuttal to the nationalization argument in his column in the same issue. Most people think that railroads are a public service provider who should provide “necessary” services without regard to profit while the investors reasonably expect the railroad to operate in a way to maximize profit.
Nationalization would lead to politicization and stagnation of the railroads. Australians are very familiar with the former and the British Rail experience prior to Beeching demonstrates the latter.
What I was pointing out was the irony of those overseas systems having to devolve into a nationalized system before they finally evolved into the private open access system. We Americans are supposed to be the most advanced nation, so if that’s so then we should be able to evolved into a functional open access system without going through the strangulation of nationalization or continuing down the dead end path of proprietary closed access. I’m all for waving taxes on railroads if it can be proven they are competing head to head with no captive shippers. The fact is, the railroads have chosen to remain proprietary closed access systems, and by default choose to be taxed in that vein.
Depends on your POV. If you’re a captive shipper, it means higher transportation rates relative to non-captive shippers. If you’re a U.S. exporter, it means you’re paying higher costs to get your goods from point of origin to the nearest port, relative to what your foreign competitors are paying to move the same product the same distance.
If you’re a Class I, it means you have to average 180% of revenues above variable costs to achieve revenue adequacy, and if your non-captive shippers only pay 108% above costs (similar to profit margins of transport modes who use public ROW’s), then you have to charge your captive shippers 237% above costs to “break even”, but of course no one in their right mind would want to remain a captive shipper, so as their plant comes to a replacement age they either move overseas or find a spot in the U.S. with some semblence of head to head rail competition, so eventually your pool of captive shippers shrinks and you’re stuck with this expensive ROW that you can’t sustain due to the loss of your “cream” customers who’ve left the country or your captured territory, and as this triggers the next big recession the federales are going to scapegoat you and either re-regulate or nationalize you with only minimal compensation.
Eventually, shippers will start to question why they are paying premiums for transportation while their overseas competitors are not. Since industries that ship by rail make up a larger portion of the tax base (and have more lobbying influence) than does the rail industry, it won’t be long until something draconian is forced upon the Class I’s, unless they pre-empt such actions by taking the nece
It would appear that a smart railroad management would not adopt the stratergy mentioned because they would want to retain the business of the “captive shipper” long term.
Geography is also a factor. Few foreign competitors are as far from tidewater as American manufacturers.
I wonder how much of a contribution UPS (one of railroading’s largest customers) makes to the tax base. Since most UPS traffic is high-rated, the railroads are more willing to provide the service that UPS is willing to PAY for. If you prefer a less than premium rate, you will get appropriate service.
A small “captive” shipper does have an alternative if he doesn’t like railroad rates or service. It’s called the truck.
Your comment on geography is a sweeping generalization. Last time I looked at an atlas, Australia is rather large, the Asian continent is rather large, and there is no reason to believe their shippers are closer to tidewater than U.S.shippers.
Regarding UPS, remember that UP kicked them off their lines because they couldn’t handle their business. UPS is willing to pay a rate for rail service if it is less expensive than going over the road. When a Class I muffs it, it doesn’t matter how much the customer is willing to pay.
So the captive shipper can just switch to trucks?!? To deliver chemicals? Autos? Or maybe they should start up a truck based TOFC service when the railroads can’t handle it! Imagine it, a trailer riding piggyback on another trailer! If in this global economy a U.S. based manufacturer or producer can’t get expedient rail service, it is more likely they will switch countries or shut down and reinvest elsewhere rather than switch to trucks, because otherwise they cannot compete with overseas firms. “Let switch to trucks” is the railroad version of “Let them eat cake” and is just as based on arrogant ignorance. I say “Off with their heads”!
All of your comments have merit, but I think the suggestion that we should move toward open access amongst the railroads is worthy of consideration. Is it possible to work out the details, as to MOW etc, and still keep the railroads separate and competitive?
Open access sure sounds good, but it probably only a pipe dream at best. Human greed always creeps in and wrecks a share and share alike plan.
What do you think?
I keep telling people that the more often you look to government to solve all of your problems, the more power you give them to regulate your life!!!
“No, can’t marry Jill S. WE have determined that your genetics are a better match with Sally F. Don’t like her? Pray, how is this relevant? Go register for the marriage by next Monday or face sanction.”
Does that sort of regulation make you feel all warm and fuzzy? Start with nationalization and see what follows.
As far as I can tell, no one on either side of the open access argument wants de facto wholesale railroad nationalization to take place. But if you think nationalization is impossible in a representative republic, don’t forget that most of the WWII Allies were democracies. The economic devastation of WWII was the driving force that resulted in the nationalization of those countries’ rail systems. If a similar economic hit takes place in the U.S., there will be plenty of voices on the left who will suggest nationalization as a way to revive the economy.
What I have pointed out is that nationalization of the rail infrastructure wouldn’t be all that bad, because ROW ownership tends to be a nominal function of government anyway (highways, waterways, etc.) It wouldn’t be nearly as beneficial as having infrastructure operated as private regulated utilities, because then you still have a profit motive to improve services. HOWEVER, if the entire railroad industry was nationalized (including rail services), that would be a complete economic disaster, if Amtrak is any indication of how the federal government would run things.