White paper urges public ownership of U.S. railroads
By Bill Stephens | July 1, 2024
Rail labor groups today released a report calling for public ownership of Class I freight railroads in the U.S., arguing that the current system is broken because it’s beholden to Wall Street.
The 98-page report contends that the Class I railroads’ relentless focus on cost-cutting has hurt safety, service, employees, infrastructure investment, and passenger service.
“Why has this happened? Simply put: instead of investing in their workers, in safe infrastructure, and in quality services, the Class Is prefer to cut costs to the bone in pursuit of short-term profits to lavish on their shareholders in the form of stock buybacks and dividend payments,” wrote the report’s author, Brown University undergraduate and Stone Fellow Maddock Thomas. “Railroad executives hold the operating ratio — derived from expenses as a percent of revenue — to be supreme. As a result, railroads will refuse even profitable traffic if it means their ratio of expenses to revenue might rise by 0.5%. This short-term profit-focused management system is no way to steward our nation’s critical rail infrastructure.”
A publicly owned system, Thomas argues, would fund infrastructure improvements and electrification, improve and expand service, involve workers in decision-making, create jobs and maintain adequate staffing levels, and shift freight to rail.
As precedent, the report leans on the nationalization of railroads during World War I, when the U.S. Railroad Administration oversaw the industry from 1917 through 1920 and helped relieve bottlenecks that constrained the movement of freight to East Coast ports. After the war ended, rail labor lobbied unsuccessfully to keep railroads in the USRA’s hands.
The paper also notes how Conrail was able to rescue freight railroading in the Northeast after the bankruptcy of seven railroads, including Penn Central.
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In my humble opinion, and this is admittedly bigger picture than what this paper is advocating, this is what should have been done 80 years ago, when many other societies did the same. There's no telling how different our country could have been had we made a decision as a nation to strategically coordinate, invest in and build the future around a modern rail system instead of a haphazard, chaotic and absurdly wasteful environment driven by the personal automobile.
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