Wall Street is killing the railroads

You thought this was a labor story. Actually it's a story about saving the planet by saving the railroads before financiers pick them clean.

Your good friends at the Environmental Protection Agency assembled this helpful pie chart tracking sources of greenhouse gas emissions (“GHG”). As you can see, transportation produces one-third of all GHG emissions, more than any other category, and most of that is from trucks. There are two ways to move stuff across the United States, by rail or by truck. (In theory you can also move stuff by ship, but the highly restrictive Jones Act has choked off most freight shipments from one U.S. port to another. You can also move oil by pipeline, but I don’t consider anything liquid to be “stuff.”)

Trucks belch out roughly ten times as many GHG emissions per ton-mile as rail. Rail, according to this chart, is absolutely the best way to move freight. So we’re moving more freight now by rail, right?

Wrong.

Let’s look at another chart, this one from your good friends at the Transportation Department.

The green line is trucks and the purple line is trains. Trucks are going up and trains are going down. Trains still move an awful lot of freight in the U.S.—about one third of the total—but if we’re going to save this planet they’ll need to move a lot more. This is one of the few climate-change problems that’s easy to fix. Just move more freight by rail, for Christ’s sake. But the railroads don’t want to. They make more profit by laying off workers, selling off rights of way, reducing service, and squeezing their customers, hard. Moving freight is the last thing on their mind.

The near-shutdown this week of rail freight drew everyone’s attention to the railroads’ pathologically cruel labor policies, which keep workers on call 24/7 and penalize them for going to the doctor. But behind those policies are a commitment to squeezing profit out of a dwindling asset that’s even more pathological. Railroads are, believe it or not, the most profitable industry sector in America, with a return of 51 percent. It’s hard to make profits like that without cooking meth, but the railroads manage it. They manage it because Wall Street, which has made the railroads its plaything since rail began its sad decline in the 1970s, is committed to their plunder. That’s the subject of my latest New Republic piece. Following the lead of Phillip Longman of Open Markets Institute and The Washington Monthly, I’d actually like to nationalize the railroads while there are still railroads to save. Read my story and weep.

(If that whets your appetite, read Phil’s great Washington Monthly piece from last year. But read my piece first, because this is my Substack, damn it. Let Phil get his own goddamned Substack.)