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The history of the US's Western freight lines is fascinating (and frustrating): we've allowed these massive companies (UP, BNSF) to extract rent for well over a

The history of the US's Western freight lines is fascinating (and frustrating): we've allowed these massive companies (UP, BNSF) to extract rent for well over a century, in exchange for having laid down the original lines (which, mind you, were also paid for in land and bonds[1]). [1]: https://en.wikipedia.org/wiki/Pacific_Railroad_Acts https://en.wikipedia.org/wiki/Pacific_Railroad_Acts

IIAOPSW 4y ago
Its long and complicated. Amtrak exists in the first place because once upon a time these freight operators were also the passenger operators. While today they look like "extracting rent", once upon a time they were forced by regulation to carry the burden of passenger service. The situation with Amtrak was basically the government agreeing to take over that before it killed the companies, but Amtrak would retain certain rights to demand the use of rail lines which an otherwise private operator might not be able to successfully negotiate over. But its more complicated than that even. Because passenger rail was dying in the first place due to the massive subsidy the government gave to competing modes of transit in the form of the interstate highway act and later the subsidized construction of airports. So yeah, Railroads were supported by the government to begin with, but live by the subsidy die by the subsidy. So really the history of railroads isn't at all a clear cut line between private and public interest. The current "massive companies" are a shadow of what they once were. Pennsylvania RR used to have a higher annual revenue than the Federal Government itself. New York Central wasn't far behind. By the 50s, these titans were in such decline they were forced to merge into "Penn Central". By the 60s, Penn Central was dead. Could you imagine Amazon having to merge with Walmart to survive by the 2030s, and going bankrupt anyway by the 2040s? This was more extreme than that.
- woodruffw 4y ago
  This is all important context, and I thank you for including it. I agree it's not as clear cut as "public versus private." But there's a recurring theme here: public money enabling private growth, followed by public money softening private decline. Railroads are just one instantiation of this pattern: it shows up in agriculture, industrial manufacturing, medical and materials research, &c. At some point, it should make us stop and think about why we're transferring public money to private institutions and also paying for their mistakes, rather than just having the public institutions do the work themselves. One wonders what the US's rail infrastructure would look like had the US Government bought (and continued to operate) it outright, rather than merely socializing the losses in passenger sales.
  - xyzzyz 4y ago
    The railroads were sure funded by public money, but it most certainly has not been taxpayer money. Instead, it was money invested by private individuals. Government did help the railroads with vast grants of lands, but most of the value of the granted land stemmed from the railroads that were built nearby. It was in fact a great deal for taxpayers, a win-win situation. > One wonders what the US's rail infrastructure would look like had the US Government bought (and continued to operate) it outright, US federal government certainly is not known for providing high quality service at low cost, quite the opposite in fact.
    - crooked-v 4y ago
      > US federal government certainly is not known for providing high quality service at low cost, quite the opposite in fact. The Post Office stands as a prime example of an extremely high quality service provided at a comparatively tiny price, and one that's successful and self-sustaining even while dealing with the immense costs of reliable delivery to extremely rural areas.
      - WillPostForFood 4y ago
        extremely high quality service Really? When's the last time you had to go do something at the post office? It is a nightmare. Dirty building with disinterested workers, and long slow lines. The bulk of the mail I receive is junk mail, and multiple times a week I get my neighbor's mail.
        Mistletoe 4y ago
        Ok send a letter by UPS and FedEx for 60 cents to anywhere in the USA.
        kortilla 4y ago
        The thread you are replying to is complaining about the quality, not the cost.
- LargoLasskhyfv 4y ago
  Which begat Donald Trumps entry into speculative projects. Ladies and Gentleman! May I present to you TELEVISION CITY! https://en.wikipedia.org/wiki/Riverside_South,_Manhattan https://en.wikipedia.org/wiki/Riverside_South,_Manhattan (Now playing "Living in America" by James Brown https://www.youtube.com/watch?v=c5BL4RNFr58 https://www.youtube.com/watch?v=c5BL4RNFr58 )
- dwighttk 4y ago
  > used to have a higher annual revenue than the Federal Government I’d be interested to know how much of the switch was the company shrinking and how much was government revenue going up.
AnimalMuppet 4y ago
Extract rent? Seriously? They sell transportation. They face competition from the highway system, which is provided at public expense. Nothing about this looks like rent (even in the economic sense).
- woodruffw 4y ago
  Selling transportation doesn't make it not rent extraction: these companies were given the land they operate on, plus government bonds to offset their capital expenses. Most operate as monopolies or duopolies in their regions, which is the efficient condition for rent-seeking behavior. (The fact that they experience brisk competition from other subsidized forms of transportation doesn't alter this.)
  - jeffbee 4y ago
    They were given not just the land under their tracks, but 10% of the rest of the nation as a sweetener.
- twoodfin 4y ago
  The interstate highway system for many years paid for itself via the gas tax and other user fees, and could easily do so again.
pstuart 4y ago
We should look at nationalizing the rail lines and then investing in them to accommodate freight and passenger traffic more effectively. Positive Train Control[1] and judicious expansion of switches/bypass lanes should allow us to better saturate the rails so that throughput is maximized. This could even enable new passenger services other than Amtrak to operate in competition. [1]: https://en.wikipedia.org/wiki/Positive_train_control https://en.wikipedia.org/wiki/Positive_train_control
- mlindner 4y ago
  Nationalizing them would be a disaster. They were deeply unprofitable until the federal government de-nationalized them after it had nationalized them and practically ruined them in the process of that nationalization. Let's not ruin what good things there are.
  - stetrain 4y ago
    You can nationalize the infrastructure without nationalizing the operations upon it. Many other countries use a system where one government-related entity manages in the infrastructure, and many private companies can pay to operate rail services on that infrastructure. This would actually allow market competition instead of geographic monopolies.
    - Jochim 4y ago
      We have something like this in the UK. It's a dogshit system that leads to service that is both awful and overpriced. The whole thing should be nationalised.
      - Symbiote 4y ago
        It's a good idea to nationalise passenger trains in Britain, but I'm not aware of anyone calling for freight trains to be nationalised.
        4y ago
mlindner 4y ago
I'm confused why you think that private rail owned, operated, and built by private companies is somehow "rent seeking". Amtrak is even only allowed to use their rails by forced act of Congress. If things followed normal commercial rules Amtrak would have no right to use them at all. More so, they operate below the cost of any freight rail of anywhere in the developed world. They're incredibly efficient in operation. US Freight rail is a massive success story.
- stetrain 4y ago
  > From 1850 to 1871, the railroads received more than 175 million acres (71 million ha) of public land – an area more than one tenth of the whole United States and larger in area than Texas. https://en.wikipedia.org/wiki/Pacific_Railroad_Acts https://en.wikipedia.org/wiki/Pacific_Railroad_Acts
  - s1artibartfast 4y ago
    That establishes that they were given land, and a hell of a lot of it. So we're settlers, Ranchers, and individuals. A bass portion of land in the US was handed over to private parties who wanted to put it to use. I don't see how that undermines the idea that they are the rightful owners of it today. They were giving it in the expectation that they would put in rails to make money for themselves, and as a byproduct, there would be rail service for customers. Sellers remorse after 150 years is not grounds to claim that they don't actually own it
- crote 4y ago
  It depends on how you look at it. Purely from a $/tonne/mile perspective, it is a massive success. There is no doubt about that. However, the technology is literally decades behind compared to the rest of the world. Electrification basically does not exist, and basic safety systems are in their infancy. Precision Scheduled Railroading has resulted in a system with very little flexibility which makes extremely poor use of the infrastructure available. Working conditions are appalling, and the resulting stress has major safety implications. Meanwhile, passenger transport - which was the reason they were developed in the first place - has been reduced to a rounding error, and is the laughing stock of the Western world. Europe transports 35% of its freight by boat, 12% by rail, and 55% by road. The US transports 5% by boat, 11.6% by rail, and 75% by road. The observed success of American freight is primarily due to geographic restrictions: there are virtually zero waterways in the western half, and cross-continent barge transport is impossible. Combine that with a country which is incredibly big and mostly empty, and rail ends up being the only viable method for bulk cargo transport. The way I see it, US freight is deeply troubled by operating issues, and is only economically successful due to geography making it the only viable option.

IIAOPSW 4y ago

Its long and complicated. Amtrak exists in the first place because once upon a time these freight operators were also the passenger operators. While today they look like "extracting rent", once upon a time they were forced by regulation to carry the burden of passenger service. The situation with Amtrak was basically the government agreeing to take over that before it killed the companies, but Amtrak would retain certain rights to demand the use of rail lines which an otherwise private operator might not be able to successfully negotiate over. But its more complicated than that even. Because passenger rail was dying in the first place due to the massive subsidy the government gave to competing modes of transit in the form of the interstate highway act and later the subsidized construction of airports. So yeah, Railroads were supported by the government to begin with, but live by the subsidy die by the subsidy. So really the history of railroads isn't at all a clear cut line between private and public interest. The current "massive companies" are a shadow of what they once were. Pennsylvania RR used to have a higher annual revenue than the Federal Government itself. New York Central wasn't far behind. By the 50s, these titans were in such decline they were forced to merge into "Penn Central". By the 60s, Penn Central was dead. Could you imagine Amazon having to merge with Walmart to survive by the 2030s, and going bankrupt anyway by the 2040s? This was more extreme than that.

woodruffw 4y ago
This is all important context, and I thank you for including it. I agree it's not as clear cut as "public versus private." But there's a recurring theme here: public money enabling private growth, followed by public money softening private decline. Railroads are just one instantiation of this pattern: it shows up in agriculture, industrial manufacturing, medical and materials research, &c. At some point, it should make us stop and think about why we're transferring public money to private institutions and also paying for their mistakes, rather than just having the public institutions do the work themselves. One wonders what the US's rail infrastructure would look like had the US Government bought (and continued to operate) it outright, rather than merely socializing the losses in passenger sales.
- xyzzyz 4y ago
  The railroads were sure funded by public money, but it most certainly has not been taxpayer money. Instead, it was money invested by private individuals. Government did help the railroads with vast grants of lands, but most of the value of the granted land stemmed from the railroads that were built nearby. It was in fact a great deal for taxpayers, a win-win situation. > One wonders what the US's rail infrastructure would look like had the US Government bought (and continued to operate) it outright, US federal government certainly is not known for providing high quality service at low cost, quite the opposite in fact.
  - crooked-v 4y ago
    > US federal government certainly is not known for providing high quality service at low cost, quite the opposite in fact. The Post Office stands as a prime example of an extremely high quality service provided at a comparatively tiny price, and one that's successful and self-sustaining even while dealing with the immense costs of reliable delivery to extremely rural areas.
    - WillPostForFood 4y ago
      extremely high quality service Really? When's the last time you had to go do something at the post office? It is a nightmare. Dirty building with disinterested workers, and long slow lines. The bulk of the mail I receive is junk mail, and multiple times a week I get my neighbor's mail.
      - Mistletoe 4y ago
        Ok send a letter by UPS and FedEx for 60 cents to anywhere in the USA.
        kortilla 4y ago
        The thread you are replying to is complaining about the quality, not the cost.
LargoLasskhyfv 4y ago
Which begat Donald Trumps entry into speculative projects. Ladies and Gentleman! May I present to you TELEVISION CITY! https://en.wikipedia.org/wiki/Riverside_South,_Manhattan https://en.wikipedia.org/wiki/Riverside_South,_Manhattan (Now playing "Living in America" by James Brown https://www.youtube.com/watch?v=c5BL4RNFr58 https://www.youtube.com/watch?v=c5BL4RNFr58 )
dwighttk 4y ago
> used to have a higher annual revenue than the Federal Government I’d be interested to know how much of the switch was the company shrinking and how much was government revenue going up.

AnimalMuppet 4y ago

Extract rent? Seriously? They sell transportation. They face competition from the highway system, which is provided at public expense. Nothing about this looks like rent (even in the economic sense).

woodruffw 4y ago
Selling transportation doesn't make it not rent extraction: these companies were given the land they operate on, plus government bonds to offset their capital expenses. Most operate as monopolies or duopolies in their regions, which is the efficient condition for rent-seeking behavior. (The fact that they experience brisk competition from other subsidized forms of transportation doesn't alter this.)
- jeffbee 4y ago
  They were given not just the land under their tracks, but 10% of the rest of the nation as a sweetener.
twoodfin 4y ago
The interstate highway system for many years paid for itself via the gas tax and other user fees, and could easily do so again.

pstuart 4y ago

We should look at nationalizing the rail lines and then investing in them to accommodate freight and passenger traffic more effectively. Positive Train Control[1] and judicious expansion of switches/bypass lanes should allow us to better saturate the rails so that throughput is maximized. This could even enable new passenger services other than Amtrak to operate in competition. [1]: https://en.wikipedia.org/wiki/Positive_train_control https://en.wikipedia.org/wiki/Positive_train_control

mlindner 4y ago
Nationalizing them would be a disaster. They were deeply unprofitable until the federal government de-nationalized them after it had nationalized them and practically ruined them in the process of that nationalization. Let's not ruin what good things there are.
- stetrain 4y ago
  You can nationalize the infrastructure without nationalizing the operations upon it. Many other countries use a system where one government-related entity manages in the infrastructure, and many private companies can pay to operate rail services on that infrastructure. This would actually allow market competition instead of geographic monopolies.
  - Jochim 4y ago
    We have something like this in the UK. It's a dogshit system that leads to service that is both awful and overpriced. The whole thing should be nationalised.
    - Symbiote 4y ago
      It's a good idea to nationalise passenger trains in Britain, but I'm not aware of anyone calling for freight trains to be nationalised.
      - 4y ago

mlindner 4y ago

I'm confused why you think that private rail owned, operated, and built by private companies is somehow "rent seeking". Amtrak is even only allowed to use their rails by forced act of Congress. If things followed normal commercial rules Amtrak would have no right to use them at all. More so, they operate below the cost of any freight rail of anywhere in the developed world. They're incredibly efficient in operation. US Freight rail is a massive success story.

stetrain 4y ago
> From 1850 to 1871, the railroads received more than 175 million acres (71 million ha) of public land – an area more than one tenth of the whole United States and larger in area than Texas. https://en.wikipedia.org/wiki/Pacific_Railroad_Acts https://en.wikipedia.org/wiki/Pacific_Railroad_Acts
- s1artibartfast 4y ago
  That establishes that they were given land, and a hell of a lot of it. So we're settlers, Ranchers, and individuals. A bass portion of land in the US was handed over to private parties who wanted to put it to use. I don't see how that undermines the idea that they are the rightful owners of it today. They were giving it in the expectation that they would put in rails to make money for themselves, and as a byproduct, there would be rail service for customers. Sellers remorse after 150 years is not grounds to claim that they don't actually own it
crote 4y ago
It depends on how you look at it. Purely from a $/tonne/mile perspective, it is a massive success. There is no doubt about that. However, the technology is literally decades behind compared to the rest of the world. Electrification basically does not exist, and basic safety systems are in their infancy. Precision Scheduled Railroading has resulted in a system with very little flexibility which makes extremely poor use of the infrastructure available. Working conditions are appalling, and the resulting stress has major safety implications. Meanwhile, passenger transport - which was the reason they were developed in the first place - has been reduced to a rounding error, and is the laughing stock of the Western world. Europe transports 35% of its freight by boat, 12% by rail, and 55% by road. The US transports 5% by boat, 11.6% by rail, and 75% by road. The observed success of American freight is primarily due to geographic restrictions: there are virtually zero waterways in the western half, and cross-continent barge transport is impossible. Combine that with a country which is incredibly big and mostly empty, and rail ends up being the only viable method for bulk cargo transport. The way I see it, US freight is deeply troubled by operating issues, and is only economically successful due to geography making it the only viable option.