Wednesday, November 15, 2017

GUEST BLOG: Are we doomed to repeat our mistakes?

Written by  G. R. (Dick) Green, for Railway Age
GUEST BLOG: Are we doomed to repeat our mistakes?

2018 will likely see a federal infrastructure bill introduced in Congress, nearly all of which will be related to transportation. If the mid-1950s process that led to the Interstate Highway System, which has been described as the largest public works project in history, is any guide to the future, what will the new bill look like?

The Interstate Highway System was the third major infrastructure project undertaken by the U.S., the first being the transcontinental railroad from the Midwest to the West Coast in the 1860s, the second being the Panama Canal at the end of the 19th century. Most historians would agree that both were operationally successful, with a positive return on public investment.

The Interstate Highway System is quite another story. In summary, there was unbelievable, breathtaking failure to even consider the impact of the project on the private railroad system and existing public transit. Not that there wasn’t a need to do something about highways. Proposals for a new system had been discussed for decades, but World War II and the Korean War had put them on hold. Part of the problem was that, while a new highway system was badly needed, the private railroads of the country had been a backbone of the war efforts and were worn out and inadequate to the task of a growing economy. But Congress was concerned only with building and funding a highway system. Of course, this involved spending a great deal of money for an extended period of time, a politician’s heaven.

It is important to note that while autos and light trucks also use it, it is common knowledge that the Interstate Highway System was and is designed for heavy trucks, from the depth and width of the pavement, bridges, grades, curves, interchanges, everything (as well as heavy military weapons transported on trucks. The formal name of the legislation authorizing the Interstate Highway program was the Interstate and Defense Highways Act.—Editor). Not surprisingly, the development and design of the system enabled the heavy truck industry to dramatically expand in size. This was needed, but much of this traffic would otherwise have gone by railroads, which are privately financed. In response, the heavy truck industry argues that they have paid billions in highway user taxes but in numerous independent studies it is shown that heavy trucks have not nearly paid for their maintenance and capital costs.

Others argue that the benefit to the economy from having an efficient highway system justifies the investment. But how is that working out? Heavy trucks use roughly four times as much fuel as rail to move the same amount of tonnage and many more times the labor requirement, which means the government is sponsoring and subsidized the least-efficient transportation mode. But in spite of this, with the growth of intermodal traffic it is an everyday occurrence to have hundreds of intermodal trains carrying hundreds of truck trailers or containers paralleling the very interstate highway system that Congress designed and funded for the trucking industry. This is happening because trucking companies, in spite of the federal subsidy, reduce their operating expenses by using rail for the long-haul portion of the move. Ironically, the Interstates are now in poor condition, mostly from the pounding of heavy trucks, and some states are actively working with railroad companies to divert traffic off the highways.

Notwithstanding this freight traffic distortion, has the U.S. benefitted from the Interstate Highway System in other ways? Unfortunately, just the opposite. With the development of the automobile, some cities began to build freeways, but these were modest affairs and frequently toll roads, as they were expensive. But with the advent of the Interstates, now cities had extensive freeways, none of them toll roads. It is a certainty that most of these freeways would never have been built were it not for the federal program. These freeways revolutionized the way people could get to work in cities large and small, and frequently public transit was abandoned or underfunded. But all too soon freeways had expanded as far as they could go, grid lock prevailed, and in city after city right up to today, public transit has or is being revived at considerable expense. This helps, but the fact is that freeways can’t be undone and we have to live with what we’ve got. The exception to this is that our largest cities’ planners, particularly New York and Chicago, knew freeways wouldn’t work for them, and they never abandoned their public transit systems.

The ordinary motorist has benefitted from the Interstates and it is possible that autos and light trucks have returned a profit from their payment of fuel taxes on their share of the investment and operating costs. But, a design of the Interstate Highway System that utilized the economic advantages of each mode would have been more efficient, far less costly, and saved huge amounts of fuel and manpower resources. It would have allowed market forces to allocate mode of transport, not subsidies. It is important to note that in an extensive report entitled, “Federal-Aid Highway Act of 1956: Creating the Interstate System,” in page after page, the only mention that regulators and committee members were aware that the railroad industry even existed, was the insistence that there be no railroad crossings on the Interstates. It is also interesting to note that Dave Beck, head of the Teamsters, was a committee representative, but the record shows that no railroad representative was even consulted. Meanwhile, unions and other special interests benefitting from the Interstates, worked unceasingly to keep user fees to an absolute minimum.

Finally, in what should have been expected, while Congress was quasi-nationalizing the heavy truck industry, the country’s railroad system was headed for bankruptcy. Without having much choice in the matter, Congress was forced to pass the Staggers Act of 1980, which partially deregulated and saved the railroads. Ironically, this was one of the most important pieces of legislation ever enacted in Congress yet not one person in ten, or one hundred, thousand has ever heard of it. Small wonder; no accolades are given the farmer who is forced to stop beating his half-dead horse. Most importantly, since then, railroads have become competitive in the market place for long-haul truck traffic that otherwise would have gone by the Interstate Highway System.

It is often said that if we do not learn from history we are doomed to repeat our mistakes. Consider that an infrastructure bill is pending in Congress at this writing, but you will look in vain for a single member of Congress that includes rail on their wish lists, so it is a reasonable prediction that it is very likely that the trucking, airline and waterway industries will be the beneficiaries.

In summary, ponder this question. Would the country have been any worse off today if the railroads had remained nationalized after World War I, but then later the country developed a rational and even-handed Interstate Transportation System? While this question is academic, recognizing the mistakes we have made and changing the way Congress does business would be a step in the right direction.

Dick Green, a fourth-generation railroader, was the first chairman of the Association of American Railroads Heavy Wheel Load Committee. As Director of Economics for the Western Pacific, he developed the company’s Cost Analysis System, and in October 1969, as a member of the AAR Cost Analysis Organization, introduced and demonstrated a Unit Train Cost Formula, the first computerized application of its type in the industry.

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