Not content to just threaten any airlines that might oppose heavy subsidies to high-speed rail aimed at putting their unsubsidized operations out of business, Secretary of Immobility Ray LaHood is now threatening railroads that are supposedly dragging their wheels in response to federal plans to run moderate-speed (up to 110 mph) trains on their freight lines. As previously noted here, three of the nation’s four largest railroads have stated that they do not believe that passenger trains can be safely run faster than 90 mph (79 mph in the case of one of the railroads) on the same tracks as freight trains.
Apparently, LaHood has been making “thinly veiled threats” to apply “punitive measures” to railroads that aren’t getting on board the 110 mph trains. Obama’s expectation was that the railroads would eagerly accept money to improve their tracks because the improvements would benefit the freight trains as well as passenger service. But the reality is that the typical freight car spends far more time standing still than in motion, so speeding a freight train from, say, 50 mph to 60 mph has almost no effect on the amount of time required to deliver payloads.
“There are five cost levers in operating a railroad: locomotives, fuel, crews, rail cars and right of way,” says a BNSF executive. “Virtually none of the passenger projects change our cost structure so much as to say there’s a significant railroad benefit to these projects.”
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But the other major railroads view the impediments caused by passenger trains to be greater than the benefits of federal subsidies. “The majority of proposed improvements for faster/more reliable passenger services are not necessary for, nor will they positively affect, the railroad’s own freight operations,” says a rail consultant who is pro-high-speed rail, but skeptical of the president’s plans.
The real problem comes from an administration that regards all private property as something that it can take on a whim. This essentially feudal idea was revealed when Obama burned Chrysler investors by essentially giving the company to the unions that had, in large part, created Chrysler’s problems in the first place. These kinds of actions will greatly reduce the willingness of investors to put their money in American companies, especially ones with heavy union involvement.
Auto companies, banks, railroads, oil companies — what industry will next be subject to appropriation of its assets by the administration? Some may say they deserve it, but while it may be hard to defend BP, one has to wonder just how the railroads, which move freight far more efficiently that other modes of travel, deserve to lose control of the rail lines that they build and have maintained at their own expense for over 100 years. (Only about 5 percent of American rail lines ever received any federal subsidies or land grants.) The actions of the Obama administration more closely resemble those of a Third World dictator than the leaders of the free world.
Not content to just threaten any airlines that might oppose heavy subsidies to high-speed rail aimed at putting their unsubsidized operations out of business, [emphasis added]
SNORK!
Good comedy Randal. Thank you for that joke.
DS
I missed the “joke”, DS.
Which of the cost layers that apply for the airlines (equipment, crews, fuel and ROW) is subsidized by non-customers?
I thoroughly agree with Randal’s concern with LaHood’s behavior as DOT Sec in this administration. At the risk of being brow-beaten in the Oval Office for holding less-than-complimentary views, I’m thinking *he’s* the joke.
The joke is the assertion that airlines aren’t subsidized. It’s a hoot.
We’ve already discussed that fossil fuel is subsidized, but that isn’t what made me chuckle.
Thanks!
DS
“Which of the cost layers that apply for the airlines (equipment, crews, fuel and ROW) is subsidized by non-customers?”
Well equipment is to some extent (Government funding for military aircraft subsidizes a portion of the production and operation of civilian aircraft). Training of pilots and mechanics is to some extent. Almost the entire air traffic control system, especially the infrastructure. The government pays airlines to reserve a portion of their fleet for government business whether the government uses the planes or not. Airlines based in the USA are protected by Federal law from all foreign competition: No airline based anywhere else in the world is allowed to carry passengers between points in the USA.
The “joke” you missed is the way in which people choose to discuss various subsidies in order to demonize modes and projects that are unfavorable to them. Total up all the free stuff and services the airlines get from the government and your quickly in the billions. Maybe the Antiplanner’s arguments would be more convincing if he didn’t lie about the subsidies that his preferred modes receive. But in his defense, I’m not sure I would participate in his blog without his hyperbolic posts.
Oh yeah, I almost forgot. Not that it’s a direct subsidy, but airlines are exempt from state consumer protection laws.
Did you know your property rights used to extend to the top of the atmosphere? That’s right!
Those rights got taken away, though. Those durn airplanes, flyin thru everyone’s prop’teh, takin yer rights.
One of the things we talk about when we say that property rights are not carved in a stone handed down from the clouds. Society decides property rights, not the individual. Property rights change over time, via discussion and negotiation in civil society.
DS
“Maybe the Antiplanner’s arguments would be more convincing if he didn’t lie about the subsidies that his preferred modes receive.”
Well, let’s see here. Since DS (aka Dan) and Bennett wish to set up a comparison between two passenger-transport modes, namely airlines and railroads, let’s keep this an apples-to-apples examination.
What would be the full economic costs of one vs. the other in transporting some standard unit of passengers, say 150, between two major cities, say Miami and Detroit? We can start with one city-pair and then generalize about a national network at some future date (but imagine the necessary ROW for passenger rail to replicate the air network. That’s truly daunting to contemplate!)
And let bygones be bygones — ignore whether military jet transport development may have accelerated adoption of turbine technology or whether land grants may have assisted the laying of rail track across the continent. Let’s just sketch out the *current* economic resources required to transport those 150 people between those cities.
Let’s also not forget the considerably different level of productivity the two modes would display. While an airliner can transport these folks in 3 hours between Miami and Detroit (unless they’re routed through a hub that is), a 150-mph high-speed train can only do that in about 10 hours. (This estimate assumes these high-speed trains can barrel through multiple major cities along the route, just like those airplanes that fly overhead and violate everybody’s property rights. On this dimension, should we attach the same cost to HSR as we would to air travel?)
That modal time-differential must somehow be explicitly accounted for in the tally of economic resources required by each of the two competing modes, since three hours of ATC is required to serve 150 travelers while ten hours of control is needed to serve 150 rail travelers. (I’m assuming the ROW is already in place for this one train route.)
When balancing one mode against the other, let’s not overlook some practical considerations. The time-differential poses significant consequences with regard to each mode’s ability to self-sustain, i.e. attract *capital* in order to serve a (presumably) growing market of passenger travel between Miami and Detroit — beyond simply replacing its fleet and network infrastructure as it wears out.
Hmmmmm…this presupposes that a vastly inferior (i.e. slower) means of transport could actually attract a sufficiently large market by which it could economically recover its rather large fixed cost investments in ROW, equipment, etc. That may be a faulty assumption, but let’s trudge ahead anyways…
Now I’m beginning to grasp the likely essence of your complaint about subsidization of the air travel industry, especially traffic control. You’re saying that without such subsidy, railroad passenger transport would prove to be economically competitive -if not wholly superior- to air transport, right? That it could not only deliver people traveling between points A and B at competitive total economic cost but also in a competitive time framework?
And you’re holding the position that the ONLY thing preventing this from happening today is some embedded government subsidy to air travel, particularly via a national air traffic control system?
Well, you’ve got a steep climb ahead of you if you’re gonna prove that, Einstein. I’m not calling you a liar, I’d just like some *proof* of what you seem to be saying.
“Well, let’s see here. Since DS (aka Dan) and Bennett wish to set up a comparison between two passenger-transport modes, namely airlines and railroads… You’re saying that without such subsidy, railroad passenger transport would prove to be economically competitive -if not wholly superior- to air transport, right?”
Not at all. In fact many of Mr. O’Toole’s criticisms of rail transport I agree with. But, I often find it perplexing that many of the things he touts as results of the “free market” are: 1. in fact subsidized and 2: a result of government planning (see: the US interstate system, air transport, suburbia, etc.). What I’m saying (and I think I can speak for Dan here) is that Mr. O’Toole deliberately states falsehoods (i.e. air transport is unsubsidized) to make a point about things in the world he finds unfavorable. But using many of the same tactics and data sets he uses, the things he likes, don’t hold up to the same scrutiny. The interstate system and suburbia are a direct result of elitist, top down, government planning. Air transportation is subsidized. Claiming otherwise hurts his credibility.
Look, almost always the “solution” in the eyes of the antiplanners is to remove government intervention from the process, but government intervention is directly responsible for so many of the things antiplanners love. I think the debate here would be much more productive if we could get over this pseudeo-libertarian bs.
Since DS (aka Dan)… wish[es] to set up a comparison between two passenger-transport modes, namely airlines and railroads…
No.
My wish, as stated, was to enjoy the chuckle at the ridiculous assertion that airlines don’t get subsidies. Not hard to grasp at all.
Thanks!
DS
Those are some good points, benett, though I think it is a too strong to say the Antiplanner deliberately states falsehoods. It seems like there are lots of definitions of a subsidy, especially when a government is relatively heavily involved in an industry.
I don’t see air traffic control as a subsidy because it is the government undertaking a basic government function. The government claims control of the airspace, so it should pay to do that. The military and general aviation are a lot of air traffic control too. But I can see how others could view it as a subsidy, especially as a rebuttal to some accusations of other subsidies.
I think it is close to a toss up as to whether airline security should be paid by airline passengers. Sure the passengers want to be safe and it benefits airlines, but terrorism is a national defense issue which implies it should be paid by general taxes. The US has decided to pay for it by taxes on airline passengers.
I don’t see the railroad land grants as a relevant subsidy today, even though they have huge value now. There were enormous public interest in creating contact between the East and West, else the US could lose California and other land to other countries. The payment of land was what the US had a huge amount of that it was already giving away (homesteads). The US also made out well as the railroads made lots of US land much more valuable. It seems like a good investment, especially in retrospect. But I can see how others could view it as a subsidy, especially as a rebuttal to some accusations of other subsidies.
I cannot see how the development of military aircraft is a subsidy to civilian aircraft development. Sure, it helps the civilian aircraft industry, but there is overwhelming government need to have the military at the cutting edge of aircraft engineering. I don’t think viewing it as a subsidy is anything but a weak and desperate argument, akin to calling democratic elections a subsidy to newspapers and TV.
The relentless “pseudo-libertarian!” refrain here is worthy of consideration.
Just don’t think we’re fooled: this is less about “pointing out hypocrisy” than it is about justifying the perpetuation of planners’ expensive boutique notions on the basis of a qualitative fallacy. In other words, we are supposed to believe that a mode with 75% farebox recovery, for example, is the same as one with 15% recovery because “they’re both subsidized,” directly or indirectly. Having conflated quantitative data with qualitative, planners are then free to suggest they are owed $1 of light rail because of a penny in Port subsidies. After all, they’re both subsidized!
Not that this will do much to dissuade the contingent of planners here, many of whose livelihoods depend on collecting such rents, notwithstanding their ceaseless accusations of the same toward Randal. You know who you are.
“My wish, as stated, was to enjoy the chuckle at the ridiculous assertion that airlines don’t get subsidies.”
Then produce a copy of the check they cashed – or the appropriation(s) directed toward them. Indirect subsidies like the purported subsidized cost of fuel, etc are not admissible, since those are not exclusively available to one industry.
Chuckle all you wish.
P.S. Thanks to chipdouglas for his astute comments.
Come now Mr Heller. We cannot play dumb about airline subsidies on a blog that purports to do economic analysis. Aside from my tax money going to a bailout, or the observation by Buffett that the airline industry has not made a single red cent for investors in a century of manned flight, we note help runs the gamut from the myriad tax breaks to lure airlines and build airports, we find that there are among more than 100 locales around the country that receive federally subsidized airline service (this being a fact Cato has noted), Fed takeover of UAL and USAir pensions (remember those news stories?) or allowing carriers to delay full funding (bankruptcy protection), and so on.
Next we’ll have someone state that US roads pay their own way.
DS
(Only about 5 percent of American rail lines ever received any federal subsidies or land grants.)
Source, please.
“Next we’ll have someone state that US roads pay their own way.”
Of course US roads don’t pay their way, silly!! The *users* -and beneficiaries- do. (I’m sure you knew that, but you just wish to ignore that reality.)
You seem to want to advance a most inflexible definition of subsidy, wherein a subsidy results whenever a city or state receives a distribution of gas tax money and spends it on the road network from which it was generated. I guess you’ve never heard gas taxes referred to as ‘user fees’ right? (You’d rather set up toll booths at all intersections? That’d be real efficient.)
User fees aren’t general taxes like the sales tax, income tax or property tax — where there’s no obligation to spend those monies on things related in any way to the activity that produced them.
I’m sorry -but not surprised in the least- that you haven’t offered any evidence for your view or substantive argument in this thread thus far. You simply babble adolescent nonsense. (I don’t need to call it lies because nonsense is sufficiently descriptive.)
Besides, the airline industry *could* make a red cent of profit for their investors if the government could step in and allow them to exercise oligopolistic market power, sort of like what exists in the rail industry. (P.S. Is this why the ‘oracle’ of Omaha likes them?) But that’s not politically feasible, given what would happen to airfares and service levels.
You clearly don’t grasp reality.
@ Frank, who asks about Randal stating ‘only about 5 percent of American rail lines received any federal subsidies or land grants’.
I did some searching around, pulling up the Wikipedia entries for all the eastern railroads I could think of:
New Haven RR,
NY Central RR,
Pennsylvania RR,
Erie RR,
Chesapeake & Ohio RR,
Baltimore & Ohio RR,
Illinois Central RR,
Rock Island RR,
Norfolk & Western RR,
Southern RR,
Florida East Coast RR.
I’ve scanned through all. Here’s what I found in the Illinois Central entry: “In 1850 U.S. President Millard Fillmore signed a land grant for the construction of the railroad, making the Illinois Central the *first* land-grant railroad in the United States.”
ALL the listed railroads were started before that date (only exceptions, all post-1870: New Haven, Chesapeake & Ohio and the Florida East Coast), so it’s safe to assume that *none* of these lines received any land grants. Yet history tells us these many railroads developed a rather dense rail network east of the Mississippi River. So, the ‘only 5%’ figure Randal cited appears entirely plausible.
Hope this helps.
Regardless of any supposed subsidy for certain forms of transport, that does not justify for its continuance or expansion.
BTW (Dan), gov does not subsidize the cost of gas.
For some reason, Dan thinks that just because he briefly types some assertion, that it is so. Dan offers no data or support for his many wild general statements or accusations.
I have previously debunked the notion that gas prices are lower than cost because of gov. (Dan often has no response when he is proven wrong, repeatedly, or else he switches topics.)
I’ll repeat a main question: Show any gov budget that has expenses in lowering the price of gas.
Apply the same accounting to other claims of subsidy, without certain user taxes. Sure, it’s unfairly true for many airports. And it’s obviously true for public transit, with about 2/3 gov [from general taxes] support.
The bottom line, in addition to the wrongness of general taxes for just a few, is the need/want/demand to travel between UAs that are about 100-700 miles apart.
Compare the cost & convenience to car & air.
Stop moaning about whether Randal is being inconsistent by labeling airlines unsubsidised. To the extent you’re right I am certain he would also like to see those subsidies disappear. If airlines receive $0.05 in subsidy for every dollar sent to rail then as an approximation to zero it isn’t bad.
Is there dispute here that the federal and state gas taxes are a proxy for a user tax of automobile/truck users and are theoretically intended for roads and highways? Separately (and I don’t know the answer), are local sales taxes tacked on to gasoline sales (and thus are a general sales tax).
(I’m sure you knew that, but you just wish to ignore that reality.)
We’ve discussed this misperception/fallacy/point of ignorance here many times.
No.
————–
Stop moaning about whether Randal is being inconsistent by labeling airlines unsubsidised.
No one is moaning. We are pointing out yet again yet another false assertion on this blog.
DS
“We’ve discussed this misperception/fallacy/point of ignorance here many times”
If so, then apparently those discussions have never been to your satisfaction. Otherwise, why do you persist in raising your misperception/fallacy/point of ignorance?
If so, then apparently those discussions have never been to your satisfaction. Otherwise, why do you persist in raising your misperception/fallacy/point of ignorance?
No.
Several here have, many times, showed that user fees are not enough to cover road costs. These discussions conclude to my satisfaction. As this one does, showing that aviation industry enjoys subsidies, contra Randal’s assertion.
DS
And your conclusion is…..what, exactly?
Define your terms (road costs, user fees, subsidy, etc.).
What is your policy prescription? What makes it superior (as you must believe it would) to the present system? What practical consequence would result?
You’ve succeeded only in being both belligerent and slippery on a very narrow point. Sort of like a water-rat. Which -absent any substantive commentary, enlightening information, citations or elaboration- is all I can consider you to be.
Alternatively, you could provide an answer to this short query: Would your prescription reverse the dominant market share of airlines vs. rail passenger service, even if all the HSR ROW, equipment, etc were in place? That is, would HSR rail win more than 50% of the market between, say, Miami and Detroit?
You have two possible answers:
1) No.
2) Of course not, silly.
“That is, would HSR rail win more than 50% of the market between, say, Miami and Detroit?”
No, HSR is not appropriate at such a distance. It might be appropriate and successful between Detroit and Chicago or Miami and Orlando.
Amtrak’s Acela Express has a hefty chunk of the air/rail market share between Boston and New York and New York and Washington, and it’s not even a real high speed train. Acela even covers its operating costs, making a profit of $41 per rider according to Subsidy Scope.
Oh, but you were suggesting all along that airlines needed subsidy to successfully compete with passenger rail, which you apparently hold as being the universally superior mode. Why do you now limit your position to shorter distances?
Boston, NYC, Philadelphia, Baltimore and (less so as time goes by) Washington DC are qualitatively quite different from Miami, Orlando, Tampa. Or Chicago, Detroit, St. Louis, Minneapolis. Or Seattle, Portland, LA, SF, etc. Or any other regional group of cities advanced for “high speed” rail.
Those differences are primarily in scale (population), density, and extent of commercial connection. All make the economics demonstrated by Acela a singular example, one that is likely well beyond reach in those other potential HSR corridors.
I see you didn’t use Orlando-Tampa as your shorter distance counterexample. That was revealing, in that it suggests rail may only offer sufficient attraction in a rather narrow “slot” of from ~300 to 500 miles. Air will dominate for distances longer than that; auto will dominate distances less than that since rail simply cannot offer sufficient frequency to be attractive. (Unlike air frames, train sets can’t be productively deployed to serve other cities/markets throughout the day or night.)
This pretty well limits rail to, at best, a handful of city pairs with strong commercial connections east of the Mississippi River, within Texas and maybe a couple along (and to) the West Coast.
I’m not against any of that, but let’s not kid ourselves that simply removing any subsidy to air carriers will ensure every such endeavor’s success. (And good luck charging the airlines for their violation of property rights to a level that would even approach the cost of the ROW or infrastructure needed to connect HSR between those city pairs.)
What puzzles me most, however, is how expensive will it be to build HSR lines into and through these already-developed cities like Chicago? And whether the forecasted ridership would justify undertaking such an investment. I am unaware that Acela required such undertaking.
“Oh, but you were suggesting all along that airlines needed subsidy to successfully compete with passenger rail, which you apparently hold as being the universally superior mode.”
No I wasn’t. Apparently, the other person you were arguing with was.
I don’t think rail is the universally superior mode. Airlines, trains, buses, cars, bikes and your own two feet have a time and a place.
“All make the economics demonstrated by Acela a singular example, one that is likely well beyond reach in those other potential HSR corridors.”
The risk is certainly there that high speed rail will not be successful in the proposed corridors. I think the best chance of success is in California. Los Angeles and San Francisco are certainly dense enough to give HSR a shot, and in ten or 15 years Los Angeles will have a decent enough transit system that will connect to the proposed high speed rail stations.
To mitigate that risk, I believe that any high speed rail project should translate into real benefits for existing transportation corridors, such as giving existing train operators the opportunity to use the new infrastructure where feasible.
“I see you didn’t use Orlando-Tampa as your shorter distance counterexample.”
I wasn’t planning on writing a book.
“That was revealing, in that it suggests rail may only offer sufficient attraction in a rather narrow “slot†of from ~300 to 500 miles.”
High speed rail is only one type of rail transit. There’s commuter rail, light rail and subway, which are appropriate for a range of distances. With careful planning, I think there’s potential for high speed rail corridors to result in gains for commuter rail corridors. One example is Caltrain, which may see electrification, increased speeds and better service as a result of the California High Speed Rail project. If they play their cards right, that is.
However, for high speed rail I’d say the sweet spot is ~100-500 miles.
“What puzzles me most, however, is how expensive will it be to build HSR lines into and through these already-developed cities like Chicago?”
The plan is to use existing rail rights of way to get into city centers.
One example is Los Angeles-Anaheim. The high speed train planners are proposing to use BNSF and Metrolink (commuter rail) owned right of way in urban and suburban areas at 100-125 MPH. With positive train control they believe it is feasible. Essentially, two new tracks would be built in addition to the existing three. All passenger traffic would move to the two new tracks and the freights would stay on the three existing tracks. The existing service would benefit from grade separations, better reliability and the opportunity to operate at increased speeds.
Between Los Angeles and Sylmar, to give another example, you might see a new bridge or trench here and there, but the tracks will ultimately use existing rights of way.
In any case, as a commuter rail rider, the prospect of seeing upgraded service is hopeful, even if I never step foot on a high speed train.
“And whether the forecasted ridership would justify undertaking such an investment. I am unaware that Acela required such undertaking.”
Acela is operated on existing tracks that have been upgraded, some segments more than others.
THeller, there is no need to wave your hands and arms, and burn a smoke screen with all your extra wurdz, yo. I merely pointed out an erroneous assertion, and now you demand I solve the situation! I do love the comedy to be found here!
DS
You *asserted* an erroneous assertion. You neglected to evidence it. Such appears to be your M.O.
No.
Thanks for trying to play, though.
DS
My apologies for being so inferior to he who answers not.