Do we really need government to improve public infrastructure? Part 1

There’s an intriguing article posted May 8, 2018, on the Forbes website where authors Jerome Jean Haegeli and Vangelis Papakonstantinou suggest that we are approaching infrastructure improvement in the wrong way. I’d like to expand a little on this as it applies to both passenger and freight rail infrastructure in the U.S.

Freight rail in the U.S. has had it right for a century and a half. Infrastructure—that is, track, bridges and grades, stations, and handling facilities—was not constructed without an economically viable business plan. Investors, be they government or private, expected to get a return on the investment. New construction or expansion had to show those investors two things. First, that the project could be brought in at or under budget without burdening the investors with demands for extra funds. Second, that the expected business generated would produce enough revenue to cover not only costs, but operating expenses and future maintenance.

In the early days, freight rail was also passenger rail, in fact it was passenger rail more than anything . The economic argument for new construction was often to get passengers from one place to another, with the more speculative argument that the tracks would lure industrial development close enough to the tracks to become freight customers. It’s important that there was an economic argument, however. Even the famous—and infamous—transcontinentals, Union/Central Pacific, Great Northern, Northern Pacific, and Canadian Pacific to our north, received more than just government funds to support their construction.

Sticking with freight rail for just a little bit more of this article, let me point out that freight rail is getting away from this by falling for the tired argument that only government has enough money to improve our aging infrastructure. The media has us convinced that most railroad bridges are crumbling or dangerous, that trains themselves need expensive digital systems to keep from killing people, and that, left to economic arguments, the railroads will never make the needed improvements. More often than not, major line and grade improvements are made only with substantial government grants or outright financing that wouldn’t have been thought of in the era of expansion.

Which brings me to passenger rail. When did passenger rail become a public utility instead of a transportation business? Some would argue it happened when the railroads decided to focus on more profitable freight business and throw the burden of moving thousands of commuters into big cities every day onto local and state governments. When those thousands of commuters could wind up clogging roads and streets for years before costly improvements could be made and expensive new roads built, it looked easier for government to start subsidizing the commuter trains and rapid transit systems.

It happened before anyone thought the local governments would have to own, repair, maintain, extend, and add railroad lines. Everyone thought running the trains would be enough to get over the hump; and what a hump it was!

I would argue that it happened when the federal and state governments could not see beyond the regulatory nightmares they had established. Originally, those regulations were needed to prevent the kind of economic shenanigans that had caused threats to the general economy of the entire nation, but they soon became so entrenched and so burdensome that they sucked the life blood and incentive for innovation right out of the railroad business. They almost killed both freight and passenger rail.

In any case, though many would have it reversed, the lifting of those regulations on freight rail has let freight rail prosper. Passenger rail, by then a public utility that could only be innovated by sucking up tax dollars, never had the opportunity to take advantage of the lifting of those regulations... until recently—see BrightLine.

Europe and the UK has had limited success in turning passenger rail back into a private, for-profit enterprise, in part because they haven’t allowed the franchise holders to do anything but run the trains. Which brings me to the end of the preamble and up to my argument.

Next time: The right and the wrong way to go about infrastructure improvements.

©2018 – C. A. Turek – mistertrains@gmail.com

(Charles A. Turek is a writer and novelist based in Albuquerque, NM. After four decades working in areas of the insurance industry related to transportation, he now writes on all aspects of American railroading. Charles is a political conservative but believes in public funding of passenger rail as a part of the federal government’s constitutionally conservative obligation to provide for defense and public infrastructure so that private enterprise may flourish.)