US President Joe Biden (Photo: AFP)
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Joe Biden wants to undo a rail success


Have you heard about the bill steaming through a divided Congress with bipartisan support to reverse a 40-year bipartisan experiment in railroad deregulation? No, you haven’t because it doesn’t exist.

From the 1920s to the 1970s, the US pulled a Venezuela, driving into near-collapse an industry vital to its economy. An unlikely reform promoted by President Jimmy Carter and bipartisan allies in Congress set the Interstate Commerce Commission on a path to extinction and saved the nation’s freight railroad system by mostly deregulating it. Not only Washington but the world-wide rail community looks back on the 1980 Staggers Rail Act as that rarest of things, a palpable success authored by the U.S. Congress.

It also left behind a vestigial agency, the little-known Surface Transportation Board, which in the Joe Biden era is trying to revive regulation by fiat. The board just scotched one proposed merger, between Canadian National and America’s Kansas City Southern, without even formally considering it (the rival Canadian Pacific has since inked a deal). The board waved vaguely in the direction of “competition” concerns, but many noticed a filing by Amtrak complaining that the would-be acquirer, Canadian National, had earned a D+ grade (yes, Amtrak issues grades) for its reluctance to let its profitable freight service be disrupted to benefit Amtrak’s unprofitable passenger trains.

Whatever the motive, the board’s action sent a thrill through white-haired advocates who never reconciled themselves to a rail industry free of Washington control. Their new hero is Mr. Biden. His sweeping July 9 White House “competition” manifesto singled out rail for a heavy hand. It may not be strictly related, but the statement also demanded more favors for Amtrak, thereby burnishing Mr. Biden’s brand as the “Amtrak president,” which touches some strange erogenous zone for liberals.

Railroading is a complicated business. A load can zip halfway across the country in hours, then be hung up for days or weeks in a transit yard before the next part of its journey. Railroads have lately increased their value to shareholders and customers through something called Precision Scheduled Railroading. Operating efficiencies and profit margins are up. Fewer workers are needed. Also off-loaded have been some low-margin customers—i.e., those who can ship efficiently by truck or whose service requires maintaining little-used spur lines.

On the flip side, certain shipments that went by truck now go by rail because rail better matches trucks in timeliness and reliability. And so the economy evolves under the workings of the profit motive.

One thing remains unchanged: Railroads and their biggest customers (such as coal shippers, agriculture processors and chemical plants) are condemned to live in angry tension because neither can exist without the other. Their ancient fights were recently reprised at length in the Washington Monthly by think tanker Phillip Longman, who portrays today’s freight railroads as abusive monopolists. These companies, he says, are operated by modern-day “robber barons” who perversely want to shrink the industry “to the point of non-viability” for “short-term economic gain” (this will be news to one of those robber barons, Warren Buffett, who praises his Burlington Northern Santa Fe as a source of long-term profits).

When this argument doesn’t get him far, Mr. Longman rolls out an alternate clincher: climate change. Because railroads use less fuel per ton-mile than trucks, railroads should be forced to change their practices and pricing to subsidize more freight to switch from trucks to rail. The blessed result will be a “cooler planet” via “huge reductions in carbon emissions.”

Echoing this argument has been Mr. Biden’s newly installed head of the Surface Transportation Board, Martin Oberman. In a speech he claimed that “123 million tons of global warming CO2 has been pumped into our atmosphere just because the railroads chose not to maintain their market share as compared to trucks (emphasis added).”

The wording is slippery. Railroads and their customers both choose to maximize their efficiency and profitability. Messrs. Oberman and Longman also fail to mention that any emissions reductions would be infinitesimal in relation to the atmosphere. Theirs is one more climate “solution” designed to fool a media and public that have no realistic notion of the quantities involved or about the implausibility of U.S. actions to influence the weather.

Climate change is indeed an intractable puzzle. Many religions produce charlatans who resort to a simpler message of “give me your money.” Just as the near-destruction of America’s railroads was a legacy of an earlier Progressivism, the corruption of the climate cause into an all-purpose instrument of Washington rent-seeking may be a legacy of today’s.

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