Crying Over Cancelled Trains

There is much weeping and wailing and gnashing of teeth over the so-called high-speed train in Wisconsin. A Madison newspaper that calls itself “the Progressive Voice” claims that Governor-elect Walker’s promise to cancel the Milwaukee-to-Madison train is economic treason. That makes sense if you agree with Paul Krugman that the federal government should spend a few more trillion dollars on “stimulus” projects that few people will ever use. For those who think that the national debt plus social security obligations plus medicare obligations are likely to bankrupt the nation if not immediately fixed, the real economic treason would be to build the rail line.

Labor unions and other rail activists held a candlelight vigil last night to “save the train” and the thousands of jobs it would supposedly produce. If they really want to create jobs, they should bring back stagecoaches and riverboats.

The fact that, after spending nearly a billion dollars, the average speed of this supposedly high-speed train will be only 59 mph doesn’t seem to bother people. Nor do they fret about the fact that the subsidies to each train rider will be more than $100.

When the Antiplanner pointed out to some rail advocates that Badger Bus offers seven departures a day for less than $20 a ride that are both faster and more convenient than the train will be, one of them asked, “But can you shower, eat a meal in a sit-down restaurant facility and walk around and visit while the bus is in motion and have more then one restroom and not need to stop like you can on a train?” The answer is that you can’t shower or eat in a sit-down restaurant facility on a short-haul train, while you can walk around and visit on a bus. So the only advantage of the train is that it has more than one restroom. Is that worth $100 per rider?
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Someone else responded that the main patrons of the Badger Bus are students, while the high-speed train will attract “will be business types and government types who won’t use the bus anyway.” So apparently, “business types and government types” somehow deserve a $100 per trip subsidy that students don’t get. (Of course, when those students grow up to become business types and government types, they will have the pleasure of paying that subsidy which will be financed today out of borrowing.)

When they return the federal high-speed rail monies, the governor-elects of both Wisconsin and Ohio (whose high-speed train is expected to average a speedy 38.5 mph) have asked the federal government to dedicate those funds to deficit reduction. In response, Secretary of Immobility Ray LaHood has threatened to simply give Wisconsin’s and Ohio’s money to North Carolina or some other state to blow on their moderate-speed rail projects.

Of course, no one seriously thought that the feds would give the money back to taxpayers. But America’s deficit problem will never be solved until governors and other elected officials get out of the mindset that they have to spend those “free” federal dollars or they will just be wasted somewhere else.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

28 Responses to Crying Over Cancelled Trains

  1. Andrew says:

    Antiplanner writes:

    “But America’s deficit problem will never be solved until governors and other elected officials get out of the mindset that they have to spend those “free” federal dollars or they will just be wasted somewhere else.”

    Once the money has been appropriated, IT WILL be spent somewhere. If State X decides they no longer want the money obligated to their project, at least some of the 49 other States will be lining up hat in hand and most happy to receive the money.

    The key to cutting down on Federal spending is not refusing Federal Funds being doled out through competitive grant programs, but not appropriating those funds in the first place, or else rescinding unobligated funds appropriated by previous sessions of Congress.

    As long as the funds are being appropriated and obligated, the government of any state is almost criminally insane not to take any money that might be directed their way. The citizens of the state will be paying for that appropriation through taxes and future debt interest and principal payments. Those payouts will be completely wasted for those citizens if their state refuses to compete for the funds. They might as well take a portion of their hard earned money out of the bank as cash and set fire to it in the street.

    Run the numbers on Wisconsin, for example. Gov. Elect Walker is complaining about a potential annual subsidy obligation of $5-10 million over an indefinite period of time ($6 million per year is spent on the existing Milwaukee-Chicago service by Wisconsin and Illinois). I do not have the time obligation of this spending at hand right now, but assume it is 15 years of operation required before it can be abandoned without being required to be paid back.

    So the Feds are going to give Wisconsin $800 million which will be spent on purchases and labor producing income and sales tax revenue from its recipients in the state of at least 10% of the total grant value, or $80 million. If we assume Wisconsin is going to pay for about 1% of the grant cost through taxes regardless of it being spent in Wisconsin or redirected to somewhere like Washington, Illinois, or North Carolina, then Wisconsin is paying around $8 million for this money no matter where it is spent, but is going to get close to $80 million back from the money spent in the form of additional tax revenues, while an annual obligation of an additional $6 million in perpetuity at current interest rates is around $72 million, and is less if only for 15 years.

    Wisconsin will also later benefit from a slight reduction in highway deaths because additional people are on safer public transportation rather than driving themselves, Wisconsin will save some amount of money on road maintenance and policing and court costs from some number of drivers shifting their trips to rail.

    Since the money has already been appropriated and will be spent somewhere, Wisconsin can only come out ahead by taking the money and spending it. The decision is either spend the money elsewhere, in which case the state’s citizens paid out $8 million and got nothing in return, or spend the money on the rail line and reap the tax benefits of the labor by Wisconsin residents, the purchase of Wisconsin made cross ties and Wisconsin mined railroad ballast and Wisconsin made railroad equipment, in which case the tax money returning to the Wisconsin treasury from the project is probably enough to fund the rail line’s operations forever assuming it runs at a loss.

    Even that last point is not clearly obvious. The line will double the length of each train run, thus halving the amount of time spent sitting at the end of the line between runs per day. With the present Amtrak schedule two trains each make 7 one-way trips of 90 minutes each every day – 630 minutes of revenue service per train per day. When extended to Madison on the same schedule, two of what is now three trains each make 5 one-way trips of 180 minutes each every day, and the third train makes 4 one-way trips of 180 minutes – an average of 840 minutes of revenue service per train per day. The variable operating costs will increase by 50-100% (crews and equipment costs by 50%, fuel by 100%), but the fixed terminal costs which make up a large proportion of rail costs will see almost no increase at all. So it is likely that revenue on the extended trains will go up more than costs, because the trains will now serve three major markets instead of one – Madison to Milwaukee, Madison to Chicago, and Milwaukee to Chicago, and one of the markets is a longer market able to command a higher ticket price.

  2. msetty says:

    Andrew, you’re being logical.

    What makes you think being logical will make any difference in arguing with the likes of The Autoplanner’s peanut gallery?

  3. prk166 says:

    “Wisconsin will also later benefit from a slight reduction in highway deaths because additional people are on safer public transportation rather than driving themselves, Wisconsin will save some amount of money on road maintenance and policing and court costs from some number of drivers shifting their trips to rail.” -Andrew

    Really? I didn’t realize that I90 between Milwaukee and Madison had a problem with deaths. Less people die in auto accidents today than 50 years ago. The rate of death from accidents is 1/5th of what it was 50 years ago ( http://www-nrd.nhtsa.dot.gov/pubs/811172.pdf ). How many deaths in a year, if any, would this actually reduce? A

    As for the reduced maintenance costs, do you have a source? I94 between those cities carries 40,00 to 45,000 cars per day. How much difference in maintenance will taking 600 cars per day, what the state claims will no longer be driving the route, each day make? Keep in mind that these freeways are built to handle the weight of 80,000 pound semi trucks. Will a 1.5% reduction of 4,000 pound vehicles actually make a measurable difference in maintenance?

  4. C. P. Zilliacus says:

    Something relevant from the NewGeography.com site is this article by Matthew Stevenson, Amtrak Fails To Weather The Storms.

  5. C. P. Zilliacus says:

    prk166 wrote:

    As for the reduced maintenance costs, do you have a source? I94 between those cities carries 40,00 to 45,000 cars per day. How much difference in maintenance will taking 600 cars per day, what the state claims will no longer be driving the route, each day make? Keep in mind that these freeways are built to handle the weight of 80,000 pound semi trucks. Will a 1.5% reduction of 4,000 pound vehicles actually make a measurable difference in maintenance?

    Hint: The answer to your question is:

    pretty close to zero

    if those 600 motor vehicles are reasonably modern and in a state of good repair.

  6. C. P. Zilliacus says:

    The Antiplanner wrote:

    When the Antiplanner pointed out to some rail advocates that Badger Bus offers seven departures a day for less than $20 a ride that are both faster and more convenient than the train will be, one of them asked, “But can you shower, eat a meal in a sit-down restaurant facility and walk around and visit while the bus is in motion and have more then one restroom and not need to stop like you can on a train?” The answer is that you can’t shower or eat in a sit-down restaurant facility on a short-haul train, while you can walk around and visit on a bus. So the only advantage of the train is that it has more than one restroom. Is that worth $100 per rider?

    Even parallel to Amtrak’s Northeast Corridor, which offers the closest thing to high-speed rail in the United States (courtesy of U.S. taxpayers), private-sector bus operators like MegaBus are expanding their operations and making a profit, something Amtrak has never been capable of doing, not in the Northeast and not anywhere else either.

  7. Andrew says:

    C.P. Zilliacus:

    Megabus makes a “profit” in the sense that it takes advantage of “free” infrastructure provided by train stations (where it locates its stops), city streets (where it boards people), the internet (which it uses for its reservation system), and the interstate system (which it uses to move from A to B), all provided by private capital and the taxpayers.

    Megabus would never have even begun to operate if it were not for these gifts provided by the sweat and capital of others, primarily taxpayers.

    Most of the sunk investment value of the Northeast Corridor (land, grading, brdges, tunnels, drainage, retaining walls, stations, roadbed, catenary, power systems) was provided by the shareholders and bondholders of the Pennsylvania Railroad and the New Haven Railroad, not the US Taxpayers. The US Taxpayers paid for rebuilding the tracks and signal system on the Northeast Corridor.

    There is simply no comparison here.

  8. Andrew says:

    C.P. Zilliacus:

    Megabus makes a “profit” in the sense that it takes advantage of “free” infrastructure provided by train stations (where it locates its stops), city streets (where it boards people), the internet (which it uses for its reservation system), and the interstate system (which it uses to move from A to B), all provided by private capital and the taxpayers.

    Megabus would never have even begun to operate if it were not for these gifts provided by the sweat and capital of others, primarily taxpayers.

    Most of the sunk investment value of the Northeast Corridor (land, grading, brdges, tunnels, drainage, retaining walls, stations, roadbed, catenary, power systems) was provided by the shareholders and bondholders of the Pennsylvania Railroad and the New Haven Railroad, not the US Taxpayers. The US Taxpayers paid for rebuilding the tracks and signal system on the Northeast Corridor.

    There is simply no comparison here.

  9. C. P. Zilliacus says:

    Andrew wrote:

    Megabus makes a “profit” in the sense that it takes advantage of “free” infrastructure provided by train stations (where it locates its stops), city streets (where it boards people), the internet (which it uses for its reservation system), and the interstate system (which it uses to move from A to B), all provided by private capital and the taxpayers.

    Umm, Megabus has a set of IFTA stickers on each of its vehicles. That means that Megabus pays federal motor fuel taxes, and state motor fuel taxes in each state that on which it runs its buses. Those fuel taxes fund maintenance of at least some of those streets and most of the Interstate highways on which Megabus operates, and some of the revenues are diverted to subsidize the operation of urban mass transit systems. On some roads and bridges, Megabus pays tolls just like other highway users (and some of those tolls are also diverted to transit subsidies). Above and beyond that, the buses also display IRP (“apportioned”) vehicle registrations, which means that they pay registration fees in each state and Canadian province in which they operate. Not sure about other cities, but in Washington, D.C. its terminal is not close to the city’s Union Station train terminal.

    As for private capital, well, I presume that the UK’s Stagecoach, the owner of Megabus, thought it was a rational business decision to invest in such services.

    Compare and contrast with Amtrak, which consumes large amounts of federal tax money and pays no taxes to any state government.

    Megabus would never have even begun to operate if it were not for these gifts provided by the sweat and capital of others, primarily taxpayers.

    I don’t think that private investment is a gift. Nor are the highway use taxes and registration fees that Megabus and other highway users pay a “gift.”

    Most of the sunk investment value of the Northeast Corridor (land, grading, brdges, tunnels, drainage, retaining walls, stations, roadbed, catenary, power systems) was provided by the shareholders and bondholders of the Pennsylvania Railroad and the New Haven Railroad, not the US Taxpayers.

    Unfortunately, the shareholders were wiped-out by the bankruptcy of the New Haven and the Penn Central Railroads decades ago. Presumably, the bondholders were forced to accept less than face value for the debts they were owed, but I do not know the details of those bankruptcy cases.

    The US Taxpayers paid for rebuilding the tracks and signal system on the Northeast Corridor.

    I believe taxpayers (and not the owners of the defunct Penn Central and New Haven railroads) also paid for each and every piece of Amtrak rolling stock now running on the Northeast Corridor. Taxpayers also paid to repair and upgrade the catenary and supporting structures along much of it. Federal and state and probably some local taxes (and motor fuel taxes and tolls paid by Megabus and Greyhound and other highway users) were used to fund the purchase of the rolling stock used by SEPTA, NJ Transit, MARC and NY MTA.

    There is simply no comparison here.

    I agree. Megabus is 100% private investment and pays taxes. Amtrak receives massive capital and operating subsidies from those taxpayers and pays no taxes to any agency of the government.

  10. Andrew says:

    C.P. Zilliacus:

    “Unfortunately, the shareholders were wiped-out by the bankruptcy of the New Haven and the Penn Central Railroads decades ago.”

    Yes, imagine that. When you tax one entity, and use the proceeds along with additional general revenue to subsidize the construction and operation of a competing government owned entity, the first entity tends to go bankrupt.

    What a shocking observation.

    “Taxpayers also paid to repair and upgrade the catenary and supporting structures along much of it.”

    You don’t know what you are talking about.

    “Megabus is 100% private investment and pays taxes.”

    Sure, if its buses never leave the owner’s parking lot. Otherwise, it is simply another freeloading entity using the publicly funded highways. Since it would not even exist without those highways, you’d have to say that about 99.9% of the cost of providing Megabus service is a result of socialism, not the operations of the free market.

    Its rather like having the government clear land, plow it, plant it, water it, fertilize it, and then claim to be a farmer because you harvested the crop in the fall.

    “Those fuel taxes fund maintenance of at least some of those streets and most of the Interstate highways on which Megabus operates,”

    The point stands that Megabus would never have come into existence without your beloved socialist roadways, because the pittance of fuel taxes it pays in a year could not even pay for the construction of one lane mile of the interstates it operates on. On the other hand, the very existence of the railroads as private non-government entities is proof of the work and selection of the free enterprise system when it comes to the creation of transportation infrastructure.

    Improved roadways have been around since the time of the Roman Empire, but they have rarely or never been able to be provided by private capital investment, whereas railroads were almost uniformly built by private investment decisions made by free people. Its not like improved roadways were unknown in the period prior to the 1920’s, its just that it took a dose of communism to get them built in this country and elsewhere.

    It must be painful to be a faux-libertarian who is a partisan of government controlled transportation infrastructure that was obtained at gunpoint through condemnation of privately owned houses and land.

    “and some of the revenues are diverted to subsidize the operation of urban mass transit systems.”

    Again, you don’t know what you are talking about. Federal Transit Administration money is only available for capital projects, not operations. Additionally, most state constitutions forbid the allocation of fuel taxes for non-highway purposes, or the diversion of turnpike revenues for non-highway purposes. Transit operating subsidies are generally derived from other sources like sales taxes and general revenue.

    “I presume that the UK’s Stagecoach, the owner of Megabus, thought it was a rational business decision to invest in such services.”

    Of course it is. The same way it is rational for trucking outfits to use freeways that could never have paid for, or long distance auto commuters. When someone else is paying for 90%+ of your actual costs of operation, it is eminently rational to take advantage of their forced generosity to make money. GOD BLESS AMERICA!

  11. Borealis says:

    There is no doubt that there were some very entrepreneurial rail pioneer companies that made a huge difference in US history. The development of the West is greatly influenced by these rail entrepreneurs.

    But do you think these rail pioneers are akin to high speed rail companies that their entire purpose is to get large capital and operating subsidies? On one hand the cross-country railroads received huge land grants, but those were only profitable many decades out and only if the railroad was still around. On the other hand, many railroads in the West had no subsidy and were huge risks — some profitable, some not.

    I would think that a modern equivalence of the old railroads would be a transit railroad that were built with huge profit/lost risks, not guaranteed profits regardless of whether the transit rail was profitable.

  12. prk166 says:

    The internet is not provided by the government. To make such a claim betrays a vast amount of ignorance as to how the internet functions.

    “Sure, if its buses never leave the owner’s parking lot. Otherwise, it is simply another freeloading entity using the publicly funded highways. Since it would not even exist without those highways, you’d have to say that about 99.9% of the cost of providing Megabus service is a result of socialism, not the operations of the free market.” – Andrew

    That is false. They pay taxes for those roads they’re using. That we’ve forced upon them a system where they may or may not be paying the full value is not of their doing nor excuses your rationalization of your unfounded claim. You can say that 99.9% of the cost of providing Megabus service is a result of socialism all you want, it will not make it true. They do directly 0pay for the vast majority of those costs. Plus there are indirect ways of paying via tax money that goes into the general fund and gets used for projects such as local streets, et al. More so, government running a road does not equate to socialism. Please see wikipedia for what constitutes socialism.

  13. Borealis says:

    Regarding the argument that Megabus does not pay the full costs of the roads it uses, I don’t see a problem there. Everyone who uses the road pays a very small part of the cost of the road and receives a much larger benefit than what they pay. That is what makes roads such a great bargain.

    When government builds and maintains roads it is acting as an efficient collective agent. User fees like gas taxes, tire taxes, vehicle registration fees and drivers licenses approximate the costs of the roads. If someone can find a profitable use of the roads, especially if they don’t add to peak congestion, then it is a gain to our society.

  14. Frank says:

    prk166 said:

    “…government running a road does not equate to socialism. Please see wikipedia for what constitutes socialism.”

    Burn!

  15. Frank says:

    Borealis said:

    “On one hand the cross-country railroads received huge land grants, but those were only profitable many decades out and only if the railroad was still around.”

    Huge, indeed. (“From 1850-1871, the railroads received more than 175 million acres of public land – an area more than one tenth of the whole United States and larger than Texas.”)

    Some also received loan subsidies, which were “twice as large relative to investment costs as the land grant aid.”

    This “one hand” is huge and points to massive government subsidies building the railroad giants that dominate today.

  16. Andrew says:

    prk166:

    “The internet is not provided by the government.”

    The internet is an invention of decades of research funded by DARPA, an arm of the defense department promoting cutting edge scientific research.

    The concept of the internet was around long before then in the writings of men like Tesla, but private capital was unable or unwilling to create the vision as reality.

    “More so, government running a road does not equate to socialism.”

    Socialism is government ownership and control of the means of production. Improved roads are a necessary part of the production of motorized transportation by car, bus, and truck. The use of the roads is tightly controlled by the government through ownership, policing, licensing of users, and registration and regulation of vehicles. Some vehicles are forbidden on some roads (bicycles, horse carts, mopeds, and pedestrians are forbidden on many unless a path has been povided). The roads are funded by taxes imposed on the populace at large and are 100% owned by various levels of government. The construction of private roads competing with the government roads is generally forbidden. That sure as hell smells like socialism to me. Dirt paths through the wilds might be public rights of way open to all on foot or beast, but an improved road most certainly is not.

    Borealis:

    “User fees like gas taxes”

    Gas taxes are excise taxes on gasoline, not fees for the use of a road. You pay gas taxes when you drive down a turnpike that does not receive tax money, and you pay gas taxes when you fill up your lawnmower. On the other hand, you can steal gas and drive down a road for free, so they clearly are not user fees. Gas taxes as dedicated to a non-existant accounting fiction called a “trust fund” are simply a way to swindle the general populace into believing they are actually paying ALL of the costs of their habit of motorized transportation when they clearly are not.

    “Everyone who uses the road pays a very small part of the cost of the road and receives a much larger benefit than what they pay. That is what makes roads such a great bargain.”

    Exactly. The needs of many are socialized and provided by government force and compunction. They are a great bargain of government socialism provided they were not rammed through your homestead or business during their construction.

    Frank:

    “Huge, indeed. (“From 1850-1871, the railroads received more than 175 million acres of public land – an area more than one tenth of the whole United States and larger than Texas.”)”

    At the same time, land was available freely to all via the Homestead Act and the Mining Act. The railroads weren’t getting any more of a sort of a bargain in terms of free land inhabitated by untamed Indian tribes than was anyone else at the time. The purpose of the land grants was to promote the settlement of the country – the same purpose as the Homestead and Mining Acts. There were free roads available in the form of the Oregon Trail and the like, but they hadn’t managed to entice any white people to settle between the Missouri River and the Sierra Nevadas and Cascades. The land had no value without the railroads.

    “Some also received loan subsidies, which were “twice as large relative to investment costs as the land grant aid.””

    The loan subsidies and land grants for the railroads that received them came with repayment terms of subsidized transportation of government material and agents for around 100 years. The main purpose of these interferences was to advance railroad construction and thus settlement of the plains and mountain states by a couple of decades over what would have been accomplished by leaving the railroad companies to themselves, as well as to improve military transportation between the east and west vs. an overland march or ships around Cape Horn.

  17. Borealis says:

    Andrew – You make a great point, in the technical accounting or legal world. But in the political world, you are figuratively pissing into the wind.

  18. Matt Young says:

    When folks talk about the government invention of the internet I have to ask which of the 40 pages of text defining the TCP/IP protocol was funded by government and at what cost?
    Or are we talking about the government effort in defining the 60 some odd dashes and dots of the Morse code?
    The government cost of having a few undergraduates kids extract IP messages and route them with a few hundred lines of code?
    I would say two thing made the internet. 1) The ability to squeeze copper into long tubes, and 2) the integrated circuit, really the solid state device.

    OK, so whatever government funded Schrodinger and squeezed copper did in fact invent the internet.

  19. prk166 says:

    “The internet is an invention of decades of research funded by DARPA, an arm of the defense department promoting cutting edge scientific research.
    The concept of the internet was around long before then in the writings of men like Tesla, but private capital was unable or unwilling to create the vision as reality.” – Andrew

    No, it was not. DARPA did not create Alta Vista, Six Degrees or Napster. It didn’t create Twitter, Google, Facebook, VOIP, YouTube, Netflix, MySpace, Hulu, REST, SOAP, XML, blogs, Javascript nor RSS. Government programs lead to the invention of things like FTP and HTTP. HTML was from an individual working on their own that just happened to be employed at CERN. Government didn’t invent the internet. A couple protocols that were developed to facilitate communications came out of government funded research.

    More so government did not lay the cable across the country nor to your house that carries all those data packets.

    “Socialism is government ownership and control of the means of production. Improved roads are a necessary part of the production of motorized transportation by car, bus, and truck. The use of the roads is tightly controlled by the government through ownership, policing, licensing of users, and registration and regulation of vehicles. ” – Andrew

    It’s amazing that you can look at the definition and still insist on perversing it to meet how you want it to be. Why do you insist on doing so?

  20. C. P. Zilliacus says:

    Frank posted:

    Huge, indeed. (“From 1850-1871, the railroads received more than 175 million acres of public land – an area more than one tenth of the whole United States and larger than Texas.”)

    Heck, subsidies to railroad companies by states started well before 1850. The Baltimore and Ohio Railroad received generous subsidies from the municipal government of Baltimore and from the State of Maryland from the time of its founding in the 1820’s. Read more in a fascinating paper about the B&O’s financial records here (.pdf, 944 kb).

    Some also received loan subsidies, which were “twice as large relative to investment costs as the land grant aid.”

    Money was pumped into the B&O by both public and private sources – and yes, it had construction cost overruns, too – in large part because the route from Baltimore west to Ohio ran over some very rough terrain.

    This “one hand” is huge and points to massive government subsidies building the railroad giants that dominate today.

    Long after the B&O disappeared by merger (it is now part of CSX Transportation), federal taxpayers were called on to clean-up the financial mess left by the 1970 bankruptcy of the Penn Central and other railroads in the Northeast. In 1976, most of the bankrupt railroads became Conrail, which lasted until about 2000, when Conrail was then split in two between CSX and its main rival in the East, Norfolk Southern.

  21. Andrew says:

    C.P. Zilliacus:

    “Money was pumped into the B&O by both public and private sources”

    This speaks to the schizophrenia of what a railroad is. Railroads were chartered as public utilties required to convey all goods and people delivered to them at the rates established for movement. At the same time, Railroads are private for profit corporations required to deliver a return to their stock and bondholders. From about 1958 onwards, these two ideals stood in marked contrast because the government still wanted the railroads to be open to all for movement of people and goods as they then existed, but they also did not want to subsidize unprofitable passenger and branchline freight operations made marginal by government road construction and promotion of suburbanization and motorization. They also wanted to control rates at levels that would not allow for reinvestment in the system, but at the same time not pay any capital investment from government funds that would provide a private profit to the corporations shareholders.

    These attitudes of the government are in marked contrast to that of roads, where due to government ownership of the infrastructure, they were more than happy to pay any amount necessary to create an open access public utility system to duplicate the conveyance functions of the railroad and provide significant benefits to the private investors of various trucking, bus, real estate development, and auto companies.

    The rail system we have today is one where the interests of stock and bondholders have been given precedence over the railroads being a public utility, so that railroads are no longer required to accept freight requested to them for movement, and have exited the passenger business completely, leaving it to the government to provide where politics dictates instead of where “the public convenience and necessity” (the alleged basis of railroad’s operating certificates) might demand. From a free market perspective, there isn’t necessarily anything wrong with that, but from a policy perspective, it is a disaster that leaves our economy beholden to the whims of OPEC and our treasury in hock for military and foreign aid operations to secure the oil supply necessary for our current transport system.

    “Long after the B&O disappeared by merger (it is now part of CSX Transportation), federal taxpayers were called on to clean-up the financial mess left by the 1970 bankruptcy of the Penn Central and other railroads in the Northeast. In 1976, most of the bankrupt railroads became Conrail, which lasted until about 2000, when Conrail was then split in two between CSX and its main rival in the East, Norfolk Southern.”

    I’m not sure what the B&O has to do with the Federal Government’s interference in the normal bankruptcy process for the Penn Central, Erie Lackawanna, Reading, Jersey Central, and Lehigh Valley. The B&O never went bankrupt in that time period, and had nothing to do with Conrail.

    They managed to stay out, for the most part, of the bankruptcy and liquidation of the Rock Island and Milwaukee in the Midwest, and the economically necessary portions of those systems are still operational today. The same could have been done in the northeast. That it wasn’t speaks to political priorities at the time, not the fundemental economics of railroading.

  22. Andrew says:

    Borealis:

    “You make a great point, in the technical accounting or legal world. But in the political world, you are figuratively pissing into the wind.”

    I didn’t think this was a political forum, but was instead a technical and legal one.

    If we want to discuss politics of rail and roads and taxes, I’d be happy to discuss policy ideas.

  23. aynrandgirl says:

    “The point stands that Megabus would never have come into existence without your beloved socialist roadways, because the pittance of fuel taxes it pays in a year could not even pay for the construction of one lane mile of the interstates it operates on”

    That would be great, if fuel taxes were the only taxes it pays. What happened to all the franchise, license, registration, sales, income, and property taxes paid by Megabus and its employees?

    “Additionally, most state constitutions forbid the allocation of fuel taxes for non-highway purposes, or the diversion of turnpike revenues for non-highway purposes.”

    Even if that’s true, it’s irrelevant and meaningless, and you know it. Money is a fungible thing, as taxpayers in states with lotteries well know. If fuel taxes bring in $100 million in revenue, but amounts formerly allocated to highway purposes from the general fund are reduced by $50 million, then in fact fuel taxes are being diverted to non-road purposes regardless of the formal accounting. And you forget things like recent measures in MN, where new fuel taxes contain explicit requirements for diversion to non-road purposes.

  24. Andrew says:

    aynrandgirl:

    “That would be great, if fuel taxes were the only taxes it pays. What happened to all the franchise, license, registration, sales, income, and property taxes paid by Megabus and its employees?”

    I don’t see the relevance of any of that. Are you arguing that Stagecoach Group has a natural right to have all of the taxes and fees it pays dedicated to greasing the skids of operation of its own business via government subsidy? And also those paid by its employees?

    So should the Norfolk Southern Railroad Corporation, for example, by right have all its corporate taxes, property taxes, fees, etc. and also all of the taxes and fees paid by its employees solely dedicated to government programs which subsidize its operation and success? Are you arguing that the government is obliged to subsidze every company in some manner to the exact amount of every tax it or its employees pay in any respect?

  25. metrosucks says:

    Of course, Andrew and his loser buddy Jardinero1 don’t really care about the morality of subsidies per se. They are simply upset that their favorite pet project, “high” speed rail, doesn’t get more subsidies.

  26. the highwayman says:

    metrosucks said:
    Of course, Andrew and his loser buddy Jardinero1 don’t really care about the morality of subsidies per se. They are simply upset that their favorite pet project, “high” speed rail, doesn’t get more subsidies.

    THWM: Regarding WI & OH, these are not high speed rail projects with 200 mph track speeds, these are just repair jobs of existing lines so trains can go at 75 mph.

  27. the highwayman says:

    C. P. Zilliacus said:
    Frank posted:

    Huge, indeed. (“From 1850-1871, the railroads received more than 175 million acres of public land – an area more than one tenth of the whole United States and larger than Texas.”)

    Heck, subsidies to railroad companies by states started well before 1850. The Baltimore and Ohio Railroad received generous subsidies from the municipal government of Baltimore and from the State of Maryland from the time of its founding in the 1820?s. Read more in a fascinating paper about the B&O’s financial records here (.pdf, 944 kb).

    Some also received loan subsidies, which were “twice as large relative to investment costs as the land grant aid.”

    Money was pumped into the B&O by both public and private sources – and yes, it had construction cost overruns, too – in large part because the route from Baltimore west to Ohio ran over some very rough terrain.

    THWM: Though private toll road companies got government grants as well.

  28. the highwayman says:

    prk166 said:
    The internet is not provided by the government. To make such a claim betrays a vast amount of ignorance as to how the internet functions.

    THWM: No, but there was a lot of involvement behind it by the military.

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