As the Senate readied to pass its version of the transportation and infrastructure bill in early August, the liberal magazine Washington Monthly published an article titled, “Amtrak Joe vs. the Modern Robber Barons.”
The Senate was about to authorize $66 billion in funds for rail projects, with much of that money going to Amtrak. However, author Phillip Longman, a fellow at the Open Markets Institute, argued that unless President Joe Biden “takes on the financiers” of rail, “merely maintaining Amtrak service — let alone expanding it — will become ridiculously expensive.”
Similar to many solutions from OMI scholars, Longman proposed to regulate the railroads by “once again treating railroads as public utilities,” or even opting for more robust measures involving the “nationalization” of rail and railroads.
Longman said that the law used to treat railroads “as quasi-public utilities, subject to strict price regulation and the principle known as ‘common carriage,’ which prohibited them from turning away some customers or classes of business while favoring others,” and that this setup persisted “until the end of the 1970s.”
He painted a picture of private freight rail today of constantly being hollowed out by Wall Street financiers and chasing profits at the expense of capacity and customer service.
Longman also told several stories of the intense wrangling that often takes place between the private freight rail companies that own the majority of the tracks that Amtrak runs on and Amtrak, which rents those tracks. Freight rail is known for driving a tough bargain for the use of its privately maintained infrastructure.
Marc Scribner, a transportation policy analyst with the Reason Foundation, told the Washington Examiner that Longman’s whole way of sizing up the problem is off-base.
“It’s quite impressive for someone to get the history and practice of railroading, rail economics, and rail regulation so wrong. It’s also quite ironic that someone from a supposedly anti-monopoly organization is calling for restoring the pre-1980 rail cartel that harmed shippers and consumers for generations and ultimately nearly wiped out the entire industry in the U.S. by the 1970s because it couldn’t adapt to new economic conditions,” Scribner said.
Scribner characterized Longman’s analysis as “fringe revisionism” and said the “expert consensus in academia and railroad policymakers in peer countries” is that “America’s private freight rail system went from near-death to the envy of the world in the decades that followed partial deregulation.”
“Attempting to turn that into a negative story would require readers to ignore the massive declines in rates charged to rail customers, improvements in service quality, and ongoing private investment observed in real data from the real world,” Scribner added.
Ted Greener is vice president of public affairs for the Association of American Railroads, which has both private freight companies and Amtrak as members.
“Railroads fight for business in a competitive freight market. They work to serve customers reliably and safely and are often growing business in key areas, including ‘intermodal’ movements most closely tied to consumer goods. Any notion that railroads today are ‘robber barons’ of yesteryear is pure fantasy — a rhetorical tactic to try and implement a vision whereby they are regulated as utilities versus private businesses. Of course, history shows that is an awful idea,” he told the Washington Examiner.
He also pushed back at the idea that rail is being hollowed out for short-term gain and trumpeted the fact that private freight rail did not ask for or receive a bailout during the pandemic.
“Freight railroads have consistently invested some $25 billion in recent years despite fluctuations in rail traffic. Research from Northwestern University just this year shows that the industry, which didn’t seek nor receive federal bailout money amid the COVID pandemic, performed admirably in that period, attracting and growing many new lines of business. All the while, they’ve improved efficiency in the interest customers and the overall economy,” Greener said.
