The prevailing economic consensus over most of the past fifty years has been that the ‘marketplace’ is the place for regulating most of society’s problems.
Understanding the falsehoods baked into this sad reality is the key to understanding the underlying causes leading up to an environmental disaster caused by a train derailment in East Palestine, Ohio earlier in the month. It’s shocking to me that this event isn’t getting the kind of coverage it should be receiving.
People impacted by toxic chemicals in the air, soil and water are already reporting health issues, and it will be years before we know about the cancer rate connected with this environmental disaster.
On to the background…
President Jimmy Carter signed the Staggers Rail Act in 1980, ending regulation of railroad freight prices by the Interstate Commerce Commission.
Railroad freight movers were allowed to offer preferential freight prices to bigger companies. Smaller competitors were soon out of the market, and the seeds were sown for the rise of big box stores.
Gone was the duty to provide service on unprofitable or less profitable routes. By 2008, 40% of freight routes were abandoned, allowing for the creation of what amounts to a cartel, with five companies carving up the US.
The five Class I US-based freight railroads operating in the country are:
BNSF Railway
CSX Transportation (CSX)
Norfolk Southern Railway (NSC)
Kansas City Southern Railway (KSU)
Union Pacific Railroad (UNP)
Nowadays, the railroad industry exists as an oligopoly. and for many shippers it’s actually a monopoly since many areas are serviced by only one railroad.
The remaining Big Railroad companies have divided up the country into noncompeting territories. Two companies — CSX and Norfolk Southern — dominate the east-of-Chicago trade. West of Chicago, there’s another duopoly run by Union Pacific and BNSF. North-south rail is controlled by three companies.
In practice this has meant higher pricing, skyrocketing hidden fees, and bottlenecks in deliveries created by “Precision Scheduled Railroading” (PSR), a just-in-time system that closed freight facilities. It also eliminated many union shops, replacing well-paid workers with low-paid workers who have fewer on-the-job rights. Since deregulation 370,000 jobs have simply gone away.
A potential national rail strike last fall led to doom and gloom predictions for the entire US economy. Newspaper accounts included predictions that a shutdown would cost the economy $2 billion per day, potentially shutting down the Christmas shopping season and eventually leading to layoffs for 700,000 workers working for manufacturers who rely on railroads.
Congress intervened, invoking a nearly hundred year old law making it harder for railroads to strike. The issue leading to the call for a strike was the refusal of companies to give up 24/7 on call schedules, and time off for doctors appointments.
It’s been good times for railroad companies with decades of big dividends and stock buybacks totaling $196 billion since 2010 — more than companies have spent maintaining infrastructure.
An attempt during the Obama administration to require upgrading brake systems on freight trains was shot down when Trump came into power.
Expert Grady Cothen, formerly a safety specialist with the Federal Railroad Administration told Congress that without action on braking systems, "[there] will be more derailments, more releases of hazardous materials, more communities impacted"
There are claims that modern electronically controlled pneumatic brakes (ECPs) would have prevented or lessened the impact of the Norfolk Southern train that derailed in East Palestine, Ohio.
Flames from tankers of hazardous chemicals shot 100 feet in the air and prompted the evacuation of thousands of residents. The train traveled more than 20 miles with a malfunctioning axle glowing brightly as it moved into Ohio. Although businesses along the way reported on the danger, by the time an alert reached the train crew, it was too late.
Cory Doctorow has been beating the drum about corporate concentrations, which are at the root of many of contemporary inequities:
Like all monopolists, the rail industry has been able to capture its regulators, trampling evidence-based policy and replacing it with rules that benefit shareholders at the expense of the public, labor, and customers.
This regulatory capture is an inevitable consequence of market concentration. When an industry is composed of dozens of small- and medium-sized firms, they are unable to converge on a single story about which rules regulators should favor them with: some of those companies will want things the others don't, and each will vie to produce evidence disconfirming the others' claims.
But when an industry dwindles to a handful of cozy giants whose C-suites are stuffed with company-hopping executives who've done time at every major company in the sector, they converge on a single fairy tale about the best way to regulate their industry, and convert their regulators' truth-seeking exercises into rigged auctions that they handily win:
Clouds of poisonous vinyl chloride smoke and gas triggered evacuation orders for the immediate area around the Ohio derailment. Residents who were allowed to re-enter later in the week came home to find dead chickens, pets, and fish floating face up in local springs.
More than one expert cast doubts on the duration and size of the area evacuated. A fifty mile radius, which would have included the city of Pittsburg, was seriously proposed.
Epidemiologist and health economist Eric Feigl-Ding revealed three additional chemicals involved in the train derailment:
Ethylene glycol monobutyl ether (bad for central nervous system)
https://ilo.org/dyn/icsc/showcard.display?p_lang=en&p_card_id=0059&p_version=2…
Ethylhexyl acrylate (bad for GI/ulcers)
Isobutylene (headache, dizziness, and higher levels: coma and death)
Transportation Secretary Pete Buttigieg has been missing in action when it comes to this event. Critics have pointed to his earlier failure to respond to warnings about Southwest Airlines as evidence that he’s cowed by big businesses, something that should be talked about during his next appearance as the Biden administration official who’s not afraid to go on Fox News.
The Environmental Protection Agency (EPA) sent a "General Notice of Potential Liability" letter to Norfolk Southern on Friday detailing areas where the company may be liable for damages and cleanup related to the East Palestine train derailment site.
Norfolk Southern offered up a $25,000 “donation’ for the city of East Palestine which works out to $5 per person in the city. Nobody seems very enthusiastic about this offer or the difficult-to-collect $1000 inconvenience fee proffered to residents within the evacuation area.
From New Republic:
Amanda Greathouse, who resides near the crash site, evacuated about one hour after the incident. She only returned home on February 10, a full week later, to retrieve personal effects like bank and ID cards. Even then, as she and her family walked through the home donning N-95 masks and gloves, an ominous odor pervaded. After leaving, her eyes burned and itched, her throat was sore, and she had a rash; her husband and both her sisters had migraines.
The next day, the family went to Norfolk Southern’s community family assistance center to obtain the $1,000 inconvenience check. After a four-hour wait, Greathouse was informed they needed more documents. The family was forced to return to their home again to retrieve additional documents, and left with renewed symptoms.
Here’s a very good video with more details:
The political consensus on monopolies is shifting as people are realizing the connections with inequality, disregard for the safety of consumers, and the corrupting influence on the institutions of democracy.
If you really want to solve the big structural issues in our society, ending the abuse of power by these entities is a great place to start.
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P.S. — You’d think the righties could come up with something better than “false flag” to describe so many news events. Witness the executive director of Turning Point USA trolling for media attention:
"Charlie Kirk baselessly suggests balloons over US are false flag operation to fake alien invasion and enforce lockdowns." (Mediaite)
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