Ornery.org
  Front Page   |   About Ornery.org   |   World Watch   |   Guest Essays   |   Contact Us

The Ornery American Forum Post New Topic  Post A Reply
my profile login | register | search | faq | forum home

  next oldest topic   next newest topic
» The Ornery American Forum » General Comments » Central planning vs free market : road vs rail

 - UBBFriend: Email this page to someone!    
Author Topic: Central planning vs free market : road vs rail
vulture
Member
Member # 84

 - posted      Profile for vulture   Email vulture   Send New Private Message       Edit/Delete Post   Reply With Quote 
I'm about to reveal (once again) my woeful lack of knowledge of the details of US history, so you have been warned.

The US interstate highway was (quite famously) born partly in Eisenhower's experience in the 1919 army convoy in which a convoy of 80 vehicles (fewer at the end...) crossed from one coast of the US to the other to test who easy it was to move military units around to cope with invasion or emergency. It took about 2 months, at the impressive average speed of 6 miles per hour. The poor performance was contrasted strongly with what he saw later in the battle of the bulge (WWII) when the Germans used the autobahn system to shift entire armies from one front to the other in a fraction of that time. Hence the US interstate system was born, centrally planned primarily to facilitate movement of military units.

It provided plenty of fringe benefits for the economy too, not least the lower transport costs for goods and raw materials between markets. It also brought a lot of 'unusable' land into use because that land was now very close to the primary transport network. I.e. it not only improved the efficiency of the market by improving transport, but expanded the economy by allowing growth into and development of areas that were previously too remote to be viable.

Now one of the main tenets of free market economics (at least in the US) seems to be that anything done by the government is intrinsically less efficient that anything done by companies in pursuit of financial gain.

My (limited) understanding is that the rail network is precisely something that was developed by the actions of private companies and individuals funding the expansion of the rail network. And since the road and rail system do essentially similar jobs, it might be interesting to compare the efficiency and utility of them (with 1001 footnotes and caveats).

So what would the interstate network have looked like if it had been left to companies to develop it (and fun it with toll roads, presumably)? Would the US economy have developed as rapidly? My guess is not, since roads would only be built along routes that there was already significant traffic along; there would be no real incentive to build routes that no-one at the time had any interest in using. The existence of the road eventually stimulates traffic, but profitability may be decades down the road. Particularly when you are almost universally competing with the train system, which has the added benefit of no overhead cost for people using it (vs buying a car or a truck, which is a significant capital outlay).

So my suspicion is this: in 2009 the US is in better shape economy because of a centrally planned, government project (the interstate system) than it would be without said project. Never mind the benefit it was originally designed for, of being able to move large quantities of troops around the country in days, rather than months.

Does anyone think that this view is reasonable, or is someone going to make the case that the rail system does it better (or that the interstate system would be better now without government interference)?

Posts: 1768 | Registered: Oct 2000  |  IP: Logged | Report this post to a Moderator
PSRT
Member
Member # 6454

 - posted      Profile for PSRT   Email PSRT   Send New Private Message       Edit/Delete Post   Reply With Quote 
Sidebar: At some point, GM bought up whole swathes of rail in the US, and basically let it rot. This killed rail travel in the US, while making auto transportation essential to get around the country. When this went to trial, the CEO of GM was fined...

1 dollar.

Posts: 2152 | Registered: Apr 2009  |  IP: Logged | Report this post to a Moderator
TommySama
Member
Member # 2780

 - posted      Profile for TommySama   Email TommySama       Edit/Delete Post   Reply With Quote 
Don't scoff, sonny. Wasn't it Benjamin Franklin who started his career off with only one dollar?
Posts: 6396 | Registered: Feb 2006  |  IP: Logged | Report this post to a Moderator
Greg Davidson
Member
Member # 3377

 - posted      Profile for Greg Davidson   Email Greg Davidson   Send New Private Message       Edit/Delete Post   Reply With Quote 
Look at Virginia vs. New York from 1789-1865 and you will also see a significant differential in the level of economic progress achieved by the state that had a higher level of government involvement in the economy.

There are examples that cut both ways; sometimes government involvement makes things worse, sometimes it makes things better. This is among the things that indicates that the tenets of free market economics are flawed

Posts: 4178 | Registered: Dec 2006  |  IP: Logged | Report this post to a Moderator
TommySama
Member
Member # 2780

 - posted      Profile for TommySama   Email TommySama       Edit/Delete Post   Reply With Quote 
"Does anyone think that this view is reasonable, or is someone going to make the case that the rail system does it better (or that the interstate system would be better now without government interference)? "

This is a cool argument.

I think the US government supplied a lot of cheap land and privileges to the railroad companies when they started off, so they weren't exactly 'free market.'

Posts: 6396 | Registered: Feb 2006  |  IP: Logged | Report this post to a Moderator
vulture
Member
Member # 84

 - posted      Profile for vulture   Email vulture   Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
Originally posted by TommySama:
"Does anyone think that this view is reasonable, or is someone going to make the case that the rail system does it better (or that the interstate system would be better now without government interference)? "

This is a cool argument.

I think the US government supplied a lot of cheap land and privileges to the railroad companies when they started off, so they weren't exactly 'free market.'

Certainly the government and the various state governments provided a lot of incentives and help to the railroad companies - they weren't pure free market. But my understanding is that they were much more free market-esque than the roads which were planned and whose motivation was provided entirely by the government.
Posts: 1768 | Registered: Oct 2000  |  IP: Logged | Report this post to a Moderator
Stevarooni
Member
Member # 6053

 - posted      Profile for Stevarooni   Email Stevarooni   Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
Originally posted by TommySama:
I think the US government supplied a lot of cheap land and privileges to the railroad companies when they started off, so they weren't exactly 'free market.'

The U.S. government also subsidized a lot of the rail lines on a per-mile basis, which is said to have led to some lines being much more curvy and meandering than they would otherwise have been.
Posts: 536 | Registered: Mar 2008  |  IP: Logged | Report this post to a Moderator
Viking_Longship
Member
Member # 3358

 - posted      Profile for Viking_Longship   Email Viking_Longship       Edit/Delete Post   Reply With Quote 
The government also heavily subsidized the raw material for building the rail roads, steel in particular.
Posts: 5765 | Registered: Dec 2006  |  IP: Logged | Report this post to a Moderator
Viking_Longship
Member
Member # 3358

 - posted      Profile for Viking_Longship   Email Viking_Longship       Edit/Delete Post   Reply With Quote 
The highway system tradtionally has been within a government's sphere of influence anyway. It's not simply "private, good, public...BAD!"
Posts: 5765 | Registered: Dec 2006  |  IP: Logged | Report this post to a Moderator
Greg Davidson
Member
Member # 3377

 - posted      Profile for Greg Davidson   Email Greg Davidson   Send New Private Message       Edit/Delete Post   Reply With Quote 
I am not so sure about government subsidies for steel in the 1820's to 1850's...
Posts: 4178 | Registered: Dec 2006  |  IP: Logged | Report this post to a Moderator
JWatts
Member
Member # 6523

 - posted      Profile for JWatts   Email JWatts   Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
Originally posted by vulture:
Now one of the main tenets of free market economics (at least in the US) seems to be that anything done by the government is intrinsically less efficient that anything done by companies in pursuit of financial gain.

That's hardly an absolute. Common exceptions to that are defense, standards, mail delivery, utilities and roads. We don't live in a pure economic system, but a hybrid.

Certain items are done better by a monopoly. Many times monopolies are more efficient due to economies of scale. Characteristics of monopolies include quashing rivals and jacking up costs.

The ultimate monopoly is in the form of a government.

I'd say your right that the interstate system was a classic case of the government doing a big project well.

Other cases, include, the Panama Canal, Hoover Dam, the Manhattan project, NASA Apollo project (the moon), eradication of small pox, TVA (and rural electrification), etc.

[ December 31, 2009, 03:23 PM: Message edited by: JWatts ]

Posts: 4700 | Registered: Oct 2009  |  IP: Logged | Report this post to a Moderator
msquared
Member
Member # 113

 - posted      Profile for msquared   Email msquared   Send New Private Message       Edit/Delete Post   Reply With Quote 
Did the government use Eminent Domain (sp?) to get the land used for the Highway system? Does business have the right to claim any property it wants for it's projects?

msquared

Posts: 4002 | Registered: Nov 2000  |  IP: Logged | Report this post to a Moderator
DonaldD
Member
Member # 1052

 - posted      Profile for DonaldD   Email DonaldD   Send New Private Message       Edit/Delete Post   Reply With Quote 
Sheeple (just wanted to use the word - sheeple sheeple sheeple. It's fun)

What's the question again? Is it simply whether anybody disagrees that, in some cases at least, the result of government rather than purely corporate activity can be better for the economy/country as a whole?

Posts: 10751 | Registered: May 2003  |  IP: Logged | Report this post to a Moderator
kenmeer livermaile
Member
Member # 2243

 - posted      Profile for kenmeer livermaile   Email kenmeer livermaile       Edit/Delete Post   Reply With Quote 
"So my suspicion is this: in 2009 the US is in better shape economy because of a centrally planned, government project (the interstate system) than it would be without said project. Never mind the benefit it was originally designed for, of being able to move large quantities of troops around the country in days, rather than months.

Does anyone think that this view is reasonable, or is someone going to make the case that the rail system does it better (or that the interstate system would be better now without government interference)?"

yes and no. The no is that big biz (detroit, mostly) was already banging the autos rule/railroads drool drum, and the interstate hiway system greatly contributed to railroad's demise. I do not think that this is at all what Eisenhower wanted, and is probably one of the things he alluded to when he warned against "the military-industrial complex".

Posts: 23297 | Registered: Jan 2005  |  IP: Logged | Report this post to a Moderator
G2
unregistered


 - posted            Edit/Delete Post   Reply With Quote 
quote:
Originally posted by JWatts:
quote:
Originally posted by vulture:
Now one of the main tenets of free market economics (at least in the US) seems to be that anything done by the government is intrinsically less efficient that anything done by companies in pursuit of financial gain.

That's hardly an absolute. Common exceptions to that are defense, standards, mail delivery, utilities and roads. We don't live in a pure economic system, but a hybrid.
I disagree. Private defense is considerably more efficient - there are numerous historical examples from the ancient to modern. However we all are willing to accept the trade off in efficiency because in general we all think it's a bad idea to have a number of private militaries running around.

There are industry standards created in the absence of government force. They work at least as well as any government standard.

Mail delivery ... the Post Office is losing millions but FedEx, UPS, DHL, etc are able to do it as cheaply or cheaper and turn a profit.

As for roads, more and more are being sold off to private ownership and this is a growing trend.

[ January 04, 2010, 03:20 PM: Message edited by: G2 ]

IP: Logged | Report this post to a Moderator
Wayward Son
Member
Member # 210

 - posted      Profile for Wayward Son   Email Wayward Son   Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
Mail delivery ... the Post Office is losing millions but FedEx, UPS, DHL, etc are able to do it as cheaply or cheaper and turn a profit.
Which, of course, is why everyone mails their letters and advertisements via FedEx rather than the US Post Office, since it is so much cheaper. [Wink]
Posts: 8681 | Registered: Dec 2000  |  IP: Logged | Report this post to a Moderator
MattP
Member
Member # 2763

 - posted      Profile for MattP   Email MattP   Send New Private Message       Edit/Delete Post   Reply With Quote 
And the USPS acts as the "last mile" carrier for FedEx/UPS/DHL in many cases. I'm pretty sure ALL residential DHL deliveries that aren't large freight end up going through USPS.
Posts: 3481 | Registered: Jan 2006  |  IP: Logged | Report this post to a Moderator
G2
unregistered


 - posted            Edit/Delete Post   Reply With Quote 
quote:
Originally posted by Wayward Son:
quote:
Mail delivery ... the Post Office is losing millions but FedEx, UPS, DHL, etc are able to do it as cheaply or cheaper and turn a profit.
Which, of course, is why everyone mails their letters and advertisements via FedEx rather than the US Post Office, since it is so much cheaper. [Wink]
USPS lost almost $3 billion dollars in 2008 and ended 2009 with $3.8 billion loss. Maybe people do get a cheaper bulk rate or on those postcards to Grandma but for how long can such an inefficient system be maintained? The point you're trying to defend is that the USPS is so much more efficient but if you think 3+ billion dollar losses are efficient then efficient does not mean what you think it means. [Wink]

[ January 04, 2010, 05:19 PM: Message edited by: G2 ]

IP: Logged | Report this post to a Moderator
MattP
Member
Member # 2763

 - posted      Profile for MattP   Email MattP   Send New Private Message       Edit/Delete Post   Reply With Quote 
Inefficient? That $3.8 billion loss is on something like $200 billion in income. It's nothing to scoff at, but the service is largely paying for itself. A 2% loss seems pretty manageable to me and hardly represents a failed system.
Posts: 3481 | Registered: Jan 2006  |  IP: Logged | Report this post to a Moderator
JWatts
Member
Member # 6523

 - posted      Profile for JWatts   Email JWatts   Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
Originally posted by Wayward Son:
Which, of course, is why everyone mails their letters and advertisements via FedEx rather than the US Post Office, since it is so much cheaper. [Wink]

The USPO has a legal monopoly on 1st class letters. Fed Ex legally can Not send 1st class letters.

quote:
Originally posted by G2:
I disagree. Private defense is considerably more efficient ...
There are industry standards ..

Mail delivery ...

As for roads, ..

I said Common examples. I didn't say that there weren't exceptions, but in all those cases the government has the largest marketshare.

Of course, email is killing the USPO. Their monopoly on 1st class letters will soon have a negative value when combined with the obligation to deliver to the entire US at a common rate.

[ January 04, 2010, 06:03 PM: Message edited by: JWatts ]

Posts: 4700 | Registered: Oct 2009  |  IP: Logged | Report this post to a Moderator
Wayward Son
Member
Member # 210

 - posted      Profile for Wayward Son   Email Wayward Son   Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
The point you're trying to defend is that the USPS is so much more efficient but if you think 3+ billion dollar losses are efficient then efficient does not mean what you think it means.
No, that's not my point. My point is that FedEx, UPS, et al. are not necessarily that much more efficient and profitable.

Letters are mainly delivered by the USPS because it's more expensive with FedEx, UPS, et al. Otherwise, they would have taken the letter market, too.

What the carriers do a bit more cheaply is deliver the high-cost stuff, like packages and priority letters. There they can make a profit, but only by excluding the low-profit stuff like letters, by pricing it higher than the USPS.

So saying that the carriers can deliver mail as cheaply or cheaper than the USPS and make a profit ignores the fact that the carriers can pick-and-choose which mail to deliver. If they had to deliver all mail--letters, flyers, packages, etc., at prices set by Congress--they most likely wouldn't do much better, and might very well do worse.

You're missing that you are comparing apples and oranges.

Posts: 8681 | Registered: Dec 2000  |  IP: Logged | Report this post to a Moderator
Dave at Work
Member
Member # 1906

 - posted      Profile for Dave at Work   Email Dave at Work   Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
Letters are mainly delivered by the USPS because it's more expensive with FedEx, UPS, et al. Otherwise, they would have taken the letter market, too.
Since the USPS has a legal monopoly on first class mail, it is illegal for FedEx, UPS et al to compete in the letter market. There are arguments both for and against opening the first class mail monopoly to private competitors but I am not very familiar with them and cannot present them with any reasonable faithfulness.

I suspect that it would boil down to whether or not the inexpensive delivery of first class mail is a public good, and if so can the public good be met better with a centralized government controlled or sanctioned solution or a competing market of private solutions.

Edited to add:

Since there is an existing government solution, the USPS, and since it is only costing about 2% more than it takes in to do the job, it doesn't strike me as a candidate to muck about with in a major way when there are other areas of government that can be looked at to trim some fat.

Also, if a solution allowing private carriers to compete for first class mail delivery but requiring a rate set by congress was set up it would not be a fair test of a private market system. A fair test of a private market system would allow the competitors to set their own rates.

[ January 04, 2010, 06:55 PM: Message edited by: Dave at Work ]

Posts: 1928 | Registered: Jul 2004  |  IP: Logged | Report this post to a Moderator
DonaldD
Member
Member # 1052

 - posted      Profile for DonaldD   Email DonaldD   Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
As for roads, more and more are being sold off to private ownership and this is a growing trend.
Road maintenance, not the construction of the framework, which is what vulture was originally talking about. There may be profits to be had by a private entity in maintaining existing roads with already captured markets, but that has little to do with his original point.
Posts: 10751 | Registered: May 2003  |  IP: Logged | Report this post to a Moderator
whitefire
Member
Member # 6505

 - posted      Profile for whitefire   Email whitefire       Edit/Delete Post   Reply With Quote 
Interestingly enough Article 1, Section 8 of the US Constitution enumerates almost, if not all, of the items being discussed here including the post office, (post) roads, and the military. Honestly, I see that there could be a good argument that a railroad could be considered in that, especially if that "road" were to carry the mail.
I don't think central planning had anything to do with it - these are things just too big to do while establishing uniform, consistent, and reliable services.
I also found it interesting when someone once pointed out that one major problem with passenger rail service in the US is that it operates in exactly the opposite way as the highway system. Namely that the corporations own the railroads and the government operates the service. In this way, it seems like the government screwed the pooch on the rail system. Had they built it, and leased it to the railroads in the same way they do with the hwy system (fuel taxes, mileage taxes on freight, etc) it might well be a better system.

Posts: 97 | Registered: Sep 2009  |  IP: Logged | Report this post to a Moderator
G2
unregistered


 - posted            Edit/Delete Post   Reply With Quote 
AN update on the success of the US Postal Service:
quote:
Potter [Postmaster General John E. Potter] and his colleagues estimate the Postal Service will lose a record $7 billion in the fiscal year that ends in September and could lose at least $238 billion in the next decade if Congress fails to act.

An average loss of nearly $24 billion a year over the next decade. And that's the positive outlook:
quote:

Auditors appeared to push beyond the USPS proposal. "If no action is taken, risks of larger USPS losses, rate increases and taxpayer subsides will increase," GAO said.

Yep, that's a success story alright.
IP: Logged | Report this post to a Moderator
   

Quick Reply
Message:

HTML is not enabled.
UBB Code™ is enabled.
UBB Code™ Images not permitted.
Instant Graemlins
   


Post New Topic  Post A Reply Close Topic   Feature Topic   Move Topic   Delete Topic next oldest topic   next newest topic
 - Printer-friendly view of this topic
Hop To:


Contact Us | Ornery.org Front Page

Powered by Infopop Corporation
UBB.classic™ 6.7.1