Monday, March 08, 2010

Economics + Environment + Transportation = Railroad

In recent months and years, newspapers and politicians have discussed expanding America's railroad system. From streetcars and trolleys inside cities, to commuter rail lines linking nearby towns, to long-distance service across the nation, trains seem to offer a cornucopia of benefits: short-term job booms as lines and stations are built, long-term job growth in railroad employees and ancillary businesses (selling newspapers and coffee at the train station), lower transportation costs for all sorts of businesses shipping everything from raw materials to finished products, the most efficient use of fuel possible, less environmental impact, de-congestion of freeway and major roads, less wear-and-tear on those roads, and the ability to do business while traveling instead of having both hands and the wheel and eyes on the road.

There is no doubt that improving and expanding our rail system would be an advantage for our country.

An improperly conceived rail system, however, can turn into a economic failure - and consume endless infrastructure dollars without creating the promised conveniences to the business community.

To reap the harvest promised by railroad expansion, we must observe the following principle:

Any economically feasible or sustainable passenger rail system relies upon the physical infrastructure and economic momentum provided by moving large amounts of freight via train.

We must make sure that we focus first on increasing tonnage, which is where the real money is. Every diesel truck rolling on our interstate highways contains freight which could be on a train. Moving some of that cargo to railroads will create the volume business which will pay for further increase in physical infrastructure. Moving that cargo to rail will also save fuel, reduce environmental impact, and keep the roads in better condition. Businesses will want to move more cargo by rail because it will cost them less.

What about jobs? For each hundred tons of freight moved from diesel truck to railroad, the number of trucking jobs lost will be slightly larger than the number of rail jobs created. Won't that create unemployment? No. And here's why:

As we move cargo from truck to train, we can also reduce the amount of money which the federal government uses to subsidize the trucking industry. (Yes, trucking is federally subsidized: the road taxes paid by trucks do not offset the disproportionate wear-and-tear they put on the roads; as less freight moves down the freeways, those interstates will need to be re-surfaced less often.)

Fewer federal subsidies to the trucking industry will lead to fewer tax increases; fewer tax increases leads to more business, creating employment for any former trucking workers who might not get rail jobs.

It is not feasible to maintain and build medium-range or long-range rail lines mainly for passenger travel. Tickets sales won't even begin to cover the costs. Even with strong freight tonnage on the rails, passenger rail is often not profitable, and needs to supported by the cargo revenues or by tax breaks for rail companies.

The bottom line: we need to encourage (via gradual reductions in federal subsidies for the trucking industry) more freight to move by rail; only then can we build the physical infrastructure and maintain the economic momentum to provide good passenger service, and only then can we reap those many benefits which a good rail system offers.