Railroad Nationalization

[trainmaster611]

What do you all think of having the railroads being nationalized or at least partially nationalized (as in the case of the USRA during WWI)? I'm speaking in particular about American railroads. How do you think they should be controlling the railroads and how far they should go with it?

[JamieLei]

I believe that a timetable based operation in the US would be the best plan of action - currently frieght goes wherever it likes, and passenger trains fit around them.

What would be nice is for all movements to be timetabled, so that passenger trains can go from one end of the country to the other without incurring common 10 hour delays.

However there would need to be a central authority to arrange this, ie: one controlling and owning the track. Sadly that sortof means nationalisation, or at least nationalisation of the track, as here in the UK.

[Kevo00]

No need for it in the US surely, as US Railroads are already far more productive than European ones and do what they do very well. I doubt even the most left leaning Democrat would argue for this - would the Brotherhood of Locomotive Engineers?

[JamieLei]

They may be very efficient at frieght, but they are very Inefficient at conveying passengers. Most commuter rail has only about 5 journeys a day each way, compared to here where almost every station has a clock-face timetable, and those closer to cities have more than two trains per hour.

With the exception of the east-coast, the rail system in america is quite poor. Co-incidentally, the track is owned by Amtrak on the east coast, so they are able to provide scheduled services.

[Kevo00]

Sure, but I'd argue that there is no need for improvement in passengers in most of the US, where they just do not have the popualtion densities needed to make passenger service worthwhile. There probably are some areas where improvement could be possible of course, but then most cities large enough to have commuters have their own Metro kind of arrangement. I suspect the US taxpayer is not up for subsidising a nationwide network of clockface timetable trains which hardly anyone would use.

[teccuk]

I see your point, but my limited of experience of American Rail'roads' was woeful. An average speed of 30mph and an 8 hour journey took 10. Speaking to people on the train, railroads remain very useful even if they are slow. For a start they are cheap and at times when airlines are booked up they are often not. Plus they give people a choice.

American railroads shift massive quantities of freight, but shouldn't the central govt. at least be able to specify passenger timetables?

[trainmaster611]

One of the critical problems is that the railway service just isn't up to par with the European services. Sure American railroads transport many times the amount of freight as the European railways do, but remember how much more industry there is in America and how much more freight needs to be transported.

If you looked at the percentages of freight transported by train in America versus percentages of freight transported by train in Europe, Europe wins hands down.

And we of course all know how dreadful America's passenger system is. While France has indepedent passenger corridors with train speeds up to 200mph, America has short passenger trains with highly infrequent and undependable service with embarrasingly slow speeds.

If the railways were nationalised, you could create a unified system that would work in the best interest for the overall American economy versus just the best interest of the railroad investorss.

Like if there's a sawmill on a branchline making a considerable contribution to the local economy, but the railroad isn't making any profit by serving them so then the railroad is going to end the service. But if you look at the gross economical impact, it would have been better to keep the railroad. So in that case, the railroad is looking out for itself and not the overall good of the economy.

That would be one case where nationalisation would have been better.

You would also be able to make an overall more uniform effort to better serve the economy in this manner. This will essentially ruin any potential profit for the railroad industry but in the long run, it helps because of the economic output provided by all the industries that benefitted from nationalisation.

And because freight is best transported en masse, that verifies the concept that transportation by rail is more economical than by truck or any other means.

Another point is of course the passenger trains. Everyone understands why passenger service is so much more beneficial. Again, the railway is providing a service for the greater economy at the sacrifice of itself. But because freight railroads don’t follow this same policy, it makes it a bad environment for government run passenger trains to operate in. So you have two forces here working against each other.

So it is better to go one way or the other. We can pretty much see where we would be going if we followed the policy of freight railroads – very scant service except where there are obvious great financial benefits, which means very limited service and absolutely no passenger trains. On the other hand, you have complete nationalization. While it completely ruins the rail industry, it creates a better significant overall postitive economic impact.

Personally, I’m not for complete nationalization but maybe something similar to what Britain has.

[Kevo00]

One of the critical problems is that the railway service just isn't up to par with the European services. Sure American railroads transport many times the amount of freight as the European railways do, but remember how much more industry there is in America and how much more freight needs to be transported.

If you looked at the percentages of freight transported by train in America versus percentages of freight transported by train in Europe, Europe wins hands down.

These claims interested me, so I thought I would do a little looking for the figures.

Well it would be very difficult to quantify how much is a lot of industry - but Wikipedia says that industry accounts for 20% of US GDP, while in the UK the figure is 26%, in Poland it is 31.7% and in Germany 33.4%. So at least in terms of economic importance it would appear that Europe has more industry than the US.

Percentages of frieght transported by train in the US - well a google search for this found this very interesting congressional report from 2004 which uses admittedly old figures but suggests that in 2001 US railroads transported 47% of freight in terms of ton miles, and 30% measured in tons. I assume however that these figures haven't changed markedly - it certainly doesn't suggest that there is any form of market failure there, or an disincentive to Railroads to carry frieght. If they had it would be pretty catastrophic Compare this to a figure of just 8% in Europe given by this article from the fall of 2007. So er US railways have a dramatically higher share of the frieght market than European railways.

As to the issue about the US economy, well you are basically arguing that the railroad should be used to support industries that are located in the wrong place to begin with or are inefficient. If the hypothetical sawmill is not producing enough to make a rail connection efficient then it should simply switch to road - why should the entire community pay for the sawmill to keep a railway open that only it is using when there is already a much cheaper to maintain road infrastructure that it and everyone else can use? Further it may be more advantageous for the sawmill to use road if it is not shipping in quantities large enough for rail - it can then ship when it likes, not when the railroad tells it it can. Further there is no guaratee that the sawmill will continue to use rail with a nationalised or subsidized structre - British Rail was certainly very good at losing frieght customers because it had no incentive to keep them, and ended up overcharging them and serving them with very inefficent and irregular services. It really would be better to simply close the railroad and re-allocate the resources somewhere more productive in the economy.

And because freight is best transported en masse, that verifies the concept that transportation by rail is more economical than by truck or any other means.

Yes indeed. This is rail's greatest advantage, when there is frieght to be transported en masse. This is why the railroad industry is rightly most interested in mass flows of traffic like coal, oil or steel. A company like Wal-Mart, who rely on smaller deliveries on a regular basis to maintain stock levels in their stores at minimum inventory could not use rail unless it had its own rail system going to its stores which would clearly be inefficient because of the large sunk costs required to maintain specific infrastructure, and because it would need to control the railway timetable. No shipper wants their materials to sit around in switching yards going nowhere. Further it is obviously inefficient to have branch trains going everywhere with just one or two wagons on them - the UK had this until the 1960s then got rid of it - because the government was no longer prepared to subsidise the losses this system was making. In essence, if you want the state to control or subsidise frieght transport to articifically help the economy, then trucks should be nationalised as well as the railroads.

As for having a system like Britain has, well the UK taxpayer does not get good value out of its system and infact a lot of money is wasted subsiding passenger routes that are used by very few people - right to the extent that there are some routes in Scotland where it would be cheaper to fly everyone their destinations by helicopter than take the train! This is because the railways are not in areas where there is a large enough bulk of people going by train. Meanwhile in the south-east overcrowding gets worse and worse because funding cannot be reallocated to help while government taxes operators out of their earnings in premium payments. I'm pretty sure that in the longer run we will see a lot of rail closures in Britian for this reason. Also I don't really need to state the benefits of the US railroads keeping their vertically integrated structure while the UK has a high transaction cost structure with a state owned landlord which isn't very interested in the needs of train operators.

So in general then your rationale for nationalisation is dodgy - US rail performance looks better than Europe's, and there is no evidence of market failure. Further nationalisation would mean moral hazard - the government spending money on infrastructure that would promote economic inefficiency in the long run. I'm really sure the US taxpayer is not up for this.

[stupidestfool]

Now that, my friends, is a PhD Student's argument!

[trainmaster611]

What if that industry is producing more economical output than what the railroad is losing? That's what I'm talking about here. Not an obscure retail store. In cases like that, it would be best to have the line sponsored by the government so that the industry isn't forced to switch to trucks, which as I said earlier are inefficient for these tasks. So the government is investing in this line but the payback to the economy is greater so in the long run its beneficial.

[Kevo00]

Why are trucks inefficient for industries that don't produce enough to make a railroad line profitable? If an industry isn't producing enough to justify a rail link but the industry remains a profitable concern then I don't see any other option for it but to use trucks. I don't see how the economy suffers from this, infact it probably benefits from resources being allocated more productively.

Are there real life cases of heavy industries that can't get a railroad to transport their raw materials or products?

[The Irish]

In this this discussion, there are not only economical arguments. It's not only about what the taxpayer get's "out" of it.

Railroads have something to do with serving the public, making sure that people which cannot or do not want to drive a car or take a plane also get from A to B. And of course, there is the environmental side of things. In times of climate change discussions and the ever increasing worries about it, the Railroads and ships are the only real options in moving passengers and freight around.

[ostlandr]

This is a subject near and dear to my heart. One of the things that nearly killed the railroads in the US was the construction of the publicly-funded interstate highway system, allowing trucks to haul freight door-to-door at 60 mph. Now, fifty years later, heavy trucks are pounding this fifty-year-old infrastructure to pieces. I work in transportation in the public sector, and we're predicting that the whole highway system will sink into the same condition as the rail system due to lack of capacity and deferred maintenance in the next 10-20 years, and the railroads can't absorb any more traffic. In some cases, they are turning away busines, "cherry picking" the most profitable cargoes.

In my experience, government is good at building things, but bad at running things. I submitted a proposal to our Congresscritter (who is a member of the transportation committee) detailing the need for a system of Interstate and Defense Railways. Build publicly funded high speed, high capacity rail lines connecting major cities and ports, military bases, etc. These lines will be usable by any rail operator, just as the highways are open to any trucking company. (Keeping grades and curves to a minimum will make this safer.) Charge the railroads to use them based on some combination of ton/mile fees or taxes on diesel fuel. This would, in a politically acceptable way, relieve railroads of the huge drain on their finances that prevents expansion- hideous property taxes on their infrastructure. This was why so many lines were ripped up in the '70s- the railroads would have loved to keep the tracks in place, even if there was scant traffic, in the hopes of a brighter future- but property taxes made this a losing proposition.

Have the tracks separated by speed (a trick learned from the folks here) so that passenger trains, hot intermodals and produce specials don't get stuck behind drag freights. Of course the national passenger railroad gets priority track clearance.

Actually Nationalizing the railroads is IMHO a very, very bad idea. The saying goes in this country that government "Can't pour water out of a bucket even if the instructions are printed on the bottom." Look at the way Amtrak withers on the vine due to chronic underfunding and mismanagement. If we change the tax structure to where any activity is profitable enough to recoup the cost of capital, there will be businesses falling all over each other to get at those profits.

Yeah, I'm a capitalist. And yes, capitalism doesn't provide a fair and equitable distribution of goods and resources. But it provides a more fair and equtable distribution of goods and resources, and generates more wealth to distribute, than any other system we've come up with.

[ikarus]

I have to agree with ostlandr. The system he proposes is similar to what we have in Romania (his is better )

CFR (Romania national railway):was for many years just about the only way to get around long (100km+) distances. For shorter hops you would have buses. After the revolution the national railway has undergone several (failed) attempts to make it profitable. In the end we now have this system: CFR (Romanian Railway) now owns the infrastructure, SNCFR Marfa (National Romanian Railway Society/Company Cargo) does the freight transport and SNCFR Calatori (National Romanian Railway Society/Company Passengers). CFR does well financially, CFR Marfa does very well, only SNCFR Calatori still receives massive state funding.

Competition: Buses compete (quite succesfully ) with CFR Calatori, offering better services and lower or equal prices . Trucks are taking over freight transport abandoned by CFR Marfa. Also, some private rail freight companies have emerged (having nice margins too).

My conclusion:any tranport system should be state-owned (road, rail, water and air). Maintenance costs should be covered by taxes (i.e. road & environmental taxes etc.). It works for roads, waterways, airtransport (although we could lose some off the massive airspace reserved by the military) and, in my country, for railways. The rest should be left to transport companies.
And yes, passenger transport needs a 'reserved lane'. Cars clott my entire city and buses really would need a special lane, since they are transporting about 50% (if not more) of passengers. The same should apply for railways.

Yeah, I'm a capitalist too. It's the most organic system I know. As long as nobody cheats the system (i.e. bullying, bribery, blackmail) it works.

[Born Acorn]

Nationalisation is expensive and often a sign that a government has failed in providing a decent enough market for the business in question to profit from.

That said, if done properly, a nationalised central railway system can define a nation. One only needs to look at Indian state railways. That thing is like a mini-economy all in it's own.

[noofnoof]

In Australia we have it moderately sensible.
the ARTC (Australian Rail Track Corporation) is an Australian Federal Government owned entity responsible for the leasing, maintaining, and organisation of pretty much all standard gauge mainline in Australia.
in states such as Queensland and Victoria, the non-standard gauge mainline is owned by the state government. (victoria has 4,017 km of broad gauge, and there is 15,160 km of 3 foot 6 narrow gauge.)
we have government run passenger trains, and private freight trains. in fact just today I had my hands on the ARTC timetable for the Brisbane to Sydney line. listed all the freights, and passengers.