All good Libertarians are pro-transit

Once upon a time, there were trains. They were private. And it was good. A Krugman– or Yglesias-style argument in favor of stimulus will point out that the transcontinental railroads were made possible by ginormous land grants from the federal government, a clear-cut “in kind” capital cost subsidy. And of course, they’re right. But there was no operating subsidy. The Rainhill Trials, that was all private financing. And more important, all the streetcar and urban rail was private too. The BMT was private (and tasty), the Key System was private, and the Galveston-Houston Electric Railway, that was definitely private.

Sometimes the trains were tied up with land development interests (private) or freight railroads (private) or utility companies (TRUSTS!), and once in a blue moon they were even public from the start. But for the most part it was all capitalism – “free enterprise” if you prefer.

Meanwhile, governments large and small set about using your tax dollars to build free competitors to the trains. In 1926 we came up with numbers and then in 1935 we dumped scads of money into roads. We also made it illegal for an electric company to own a streetcar company, which is ludicrous, since the primary infrastructure of an electric company is a bunch of wires, and the primary infrastructure of a streetcar network is rails and a bunch of wires, and the primary nonlabor input to streetcars is electricity, which electric companies sort of by definition have in spades… but hey, it was the 30’s, Americans had been screwed by Wall Street, they were tired of monopolies.

Now you’d think that this would kill the trains. Certainly, more than a few small-town trolleys folded once the electric company umbilical cord was cut. But at the national level the trains came back stronger than ever. The “free enterprise” railroads decided to take their subsidized government competition head-on. And the result was this:

But, the government just kept on building highways. Not only that, they made a rule that trains could only do 80mph unless the railroads installed a ridiculously expensive signaling system. So what did the railroads do? They all bought these:

In fact, the 50’s turned into the greatest decade for passenger rail. Smoothsides and E-Units were cranked out by the hundreds. Even commuter trains got streamlined. So what did the feds do? They went and built this:

And what did the cities and states do? Well, they spent a whole lot of money building these:

And against that two-front assault, the trains folded. Most of the interurbans and streetcars were torn out the 50’s. Railroad petitions to abandon passenger service really took off in the 60’s. In 1971, Amtrak took over most of the passenger trains and immediately cut over half the routes. In fact, far from being the national savior of passenger rail which some now ascribe to it, Amtrak was originally intended to facilitate an orderly wind-down of passenger service in the US. That’s why it doesn’t have a guaranteed funding source, why it’s constantly subject to the whims of who’s appropriating this year, and why it maintains a staunch institutional commitment to incrementalism. It simply wasn’t intended to be a permanent entity.

Nowadays, any proposal for a train system is met with cries of “socialism.” Which is absurd. Railroads were PRIVATE ENTITIES THAT SUCCESSFULLY FOUGHT FREE PUBLIC COMPETITION FOR NEARLY FORTY YEARS.

So let’s posit an alternate history.

In 1926, the federal government nationalizes the core, trunk national rail system. (They leave the little branch lines and whatnot to private operators). They don’t make huge improvements at first, but they do create standardized train names, lots of reliable clockwork long-distance routes, and publish it all in a big national timetable.

Soon after, the depression hits. In 1935 the WPA and the PWA began sinking money into railroads in earnest. The biggest programs are electrification – where the US is still using steam in the 30’s, by the time the program wraps in 1943 you can travel under wire nonstop from NYC to LA, from Miami to Seattle.

In 1946 the federal government passes the “60mph rule,” which requires a maximum speed limit of 60mph on all public and private highways unless continuous rubberized guardrails are installed on both sides of the road. The Pennsylvania Turnpike installs these, and later the New Jersey Turnpike follows, but highway authorities elsewhere find the cost to be prohibitive.

Nevertheless, the nation’s automobility won’t be tied down. Throughout the 1950’s, more people are driving cars then ever. So in 1956, the federal government passes the “national system of interstate and defense railways.” From whole cloth, an entirely new system of high-speed railroads is constructed. These are fully grade separated, allowing speeds of 130mph throughout the system. Meanwhile, states and cities embark on subway programs throughout the 60’s and 70’s, replacing slow surface streetcars with fast municipal trains.

What do you think such a system would look like?

It’s not even a hypothetical question, because I’ve just described Japan.

OK, so there was never any 60mph turnpike speed limit. But the basic outline – government nationalizes railway, government spends lots of money on electrification, government then constructs brand-new parallel high-speed system out of whole cloth – is exactly the history of the JR Group.

JR is private. Or rather, it’s private in the sense that GM is private. The Japanese National Railways had a whole chunk of debt from building the Shinkansen system, so the Japanese government spun it off into two companies – one that just held the primary rail assets, one that held the debt and other assorted frivolities. All the union contracts were renogiated. Pretty much like “old GM” and “new GM.”

But if that doesn’t quite meet your definition of “free enterprise”, you can’t really argue with the 100% privately owned suburban railways, which have survived by successfully competing with the government railway for 80 years.

That’s the Moonlight Echigo, doing about 55 by my estimate.

Other trains are faster. The Hokuhoku line runs at 100 (160km/h):

Should we try to emulate Japan? Not exactly. For one thing, that rail network is supported by a density that doesn’t exist here. Which is fine. If we had to pick a country to emulate, my first choice would be Germany, since you get ICE-T‘s and unrestricted Autobahns. But the truth is I don’t want to emulate any country. We build excellent roads here in the US of A. We used to build excellent trains, too. In fact, back in the 60’s, Japanese train companies licensed American train technology. Think about that for a minute. The Japanese… paid for our train knowhow.

Blows your mind.

So what I want, is for us to take our proven national abilities in highway construction and apply them to fast trains. And I want the (L)’s and the (R)’s to stop acting like roads that are half-funded by gas taxes are some sort of capitalist paradise while trains are an evil government plot to brainwash you into collectivism.

Trains were the original private enterprise. Roads were pretty much always socialism. That’s why the stuff on your train layout is all painted different eye-catching colors, whereas the highways all look pretty much the same.

Now, let’s go build some more trains.

8 thoughts on “All good Libertarians are pro-transit”

  1. Thank you, I’ve been trying to convey this message for a while now to liburty-lovin’ conservatives who see spending on transit as “socialism” while government road building as “freedom”. No, it was government road building that killed an entire private industry and now we’re just trying to trying to put the pieces back together. They complain trains don’t make a profit — well they did at one point before the government came along with publicly funded roads. I’ll be linking to this post from now on.

  2. One nitpick: a large majority of JNR’s debt was not Shinkansen construction, but rather operating losses from the 1970s; it received much less money in national subsidies than it was burning in operating losses, so it kept borrowing money. It’s this operating debt that was wiped; the Shinkansen construction debt the JRs had to take.

  3. Great post. I understand the desire to break up the railroad and street railway monopolies, but the “solutions” were so over-the-top that they have left an enormous trail of destruction in their wake. While the overall policy of roads, roads, and more roads continues, it wasn’t until the railroad industry was pretty much on its deathbed in 1980 when the Staggers Act lifted a lot of the regulation that was continuing to drag the railroads down. That certainly helped to prompt a resurgence in freight rail, though many railroads, especially the class I’s, are starting to act in ways suggesting they need to either play nice or face new regulations.

    Anyway, another point is that railroads still have to pay taxes on all their infrastructure, equipment, and operations, another thing that tilts the playing field significantly. That’s specifically why electrification has failed to catch on even on pretty heavy haul routes, or was even scrapped altogether. The presence of that electrical infrastructure increased the value of the line and thus the taxes levied on it. That’s a very backwards policy that unfortunately remains in place throughout 99+% of the US.

    This is all very much a parallel to the overall suburbanization of the country. There was a real and legitimate desire in the first half of the 20th century to lessen overcrowding (not to be confused with density, mind you) in cities, and to help people move to greener pastures where they could have a little more space, better sanitation, and whatnot. Unfortunately, just like with the railroads, the policies that were put in place, and which have scarcely received any reevaluation or adjustment to current times, went way too far and have left yet more destruction in their wake. Even the tax issue is the same, where property taxes punish people for constructing quality buildings and increasing density. Instead they encourage demolition, depreciation, and cheapness.

  4. This perspective from the L’s is loooong overdue. Thank you! One point of clarification: Those land grants you mentioned…first of all, they weren’t free. In exchange for the federal land grants, the railroads had to provide discounted shipping to the federal government. They ended up paying more back than they received in land grants. Second, they weren’t as extensive as you think. I wish I could recall the actual percentage of track miles that benefited from land grants, but it’s a lot smaller than people think.

    One other important point: Circa 1966-1968 (can’t recall the exact year) a newly (and politically) appointed head of the US Postal service, who happened to be a former airline executive, began canceling first class mail contracts with the railroads and gave them to, you guessed it, the airlines. The result was a vital income stream for passenger trains disappeared. It was right after this happened that passenger train balances went deeply into the red and the railroads began trying everything they could to justify to the Interstate Commerce Commission to stop running passenger trains.

  5. The land grants for the transcontinental RRs were huge – 10 square miles per track mile. The bonds, of course, were repaid, but the point there was that raising private money for the transcons was very difficult. As far as the eastern RRs, streetcars, and interurbans are concerned, they couldn’t have been built without using public street ROWs and the government’s eminent domain power.

    I do agree with the larger point that the collapse of the RRs between 1930 and 1980 was due to huge subsidies for other modes, combined with the ICC/STB and FRA almost legislating the railroads out of existence (a trend that continues with things like PTC, crash standards, quiet zones, etc). The subsequent public takeover of commuter operations has led to some really perverse outcomes, e.g. the fact that LIRR, MNR, and NJT don’t interline or through-route – efficiencies that a private operator would have had to adopt a long time ago.

    As far as private rail in the US goes… well, the Class 1’s sure are kicking ass. I think you might be able to make a go of it with a private commuter rail or transit line in some US cities… if you had a loose land development regime on the line and a way to capture the value added.

    1. Matt: the total track miles that benefited from land grants were a lot smaller than people realize. Again, I wish I could recall the statistic. I’ll see if I can dig it up.

  6. Also, Matt, the private railroads are “kicking ass” as far as freight goes. Passenger transportation was never a big money-maker for the railroads (That’s just the nature of the common-carrier passenger business in any mode). The only reason it was profitable at all was for the following reasons:

    — cross-subsidization of infrastructure from the far more profitable freight side of the business

    –mail contracts

    –the shipping of express freight via the Railway Express Agency (REA)

    Actually, the REA, which was owned by the railroads, was never profitable, but it improved the bottom line of the passenger trains.

    There is one exception that has cropped up: The Florida East Cost Railway is going to implement a conventional passenger corridor between Jacksonville and Miami starting around 2015. This is an extremely densely traveled corridor with real estate development opportunities. I’m hoping it works.

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