Off the Rails II: GOP Misreading Ayn Rand in Blocking Railroads

  • Published on November 9th, 2010

The teapartiers who swept into power last week may have missed a major point in their reading of Ayn Rand.

In her seminal work, “Atlas Shrugged”, Rand (yeah, newly-minted Senator Rand Paul is named for her) has railroad magnates as her heroes, and it is a symptom of America’s decadence that the railroad network is allowed to fall into disrepair.

Now, while China and Japan green and grow their economies with high speed rail lines, Rand’s latter-day disciples seem obsessed with doing the job of her “socialist looters”.

The latest round: fallout continues from Wiscosin Governor-elect Scott Walker’s vow to shut down the high speed rail line planned for his state. The Republican ran on an anti-tax and anti-government platform, with the rail line as his poster child. He vowed to block the line through any means necessary and use the money for roads and bridges instead.

But the Federal Department of Transportation says rail money is for rails, and Wisconsin can’t just use it for other stuff. Meanwhile, New York and Illinois both say they’d be happy to have the money for actual rail projects

“To me, it doesn’t make sense to not move ahead, but we have had an election,” said outgoing Democratic Governor Jim Doyle. There has been a lot of politics played with this issue, but I have to deal in the real world and think about how this affects real jobs and the real lives of people.”

Jobs, jobs, jobs

Here are the numbers:

  • $810 million of Federal money was appropriated for the high speed rail line to connect Milwaukee and Madison.
  • The construction would create almost 5,000 jobs.
  • There would be 55 permanent operations jobs.
  • The operating rail line would cut transit time between the cities, creating more economic activity and jobs.
  • There is also a railcar factory in Wisconsin. Jobs would be created there, but if this line is cut they’ll probably move to a more transit-friendly state, like Illinois.
  • Once the rail line is completed, the cost to run it every year will be $7.5 million. Since it’s part of a regional transportation hub (the link between Minneapolis/St. Paul and Chicago), the Federal government will probably pick up 90% of that as well, as it does on other rail lines.
  • But cancelling the rail line will cost $100 million and 400 jobs just in the near term.

Enter ideology

US infrastructure is crumbling, mostly because years of budget-cutting and anti-tax posturing have left some states near collapse – and some bridges actually collapsing.

But Walker didn’t seem concerned about that until he was able to use it as an issue against the train line.

“The whole reason we made a point of raising our concerns about this is I don’t want the taxpayers of this state to be stuck with a bill of $7½ (million) to $10 million a year when we have roads and bridges that need to be fixed,” Walker said.

But that ain’t happening, as Walker ally Congressman Tom Petri acknowledged.

“Now this money, if Wisconsin decides not to use it, is still in that grant program and in the normal course of events would be rebid and (would go to) New York or California or one of the (other) states,” Petri said. “For us to keep that money would require us to change the law and that would mean getting the votes of (states like) New York and California and Florida. It’s conceivable but very unlikely.”

Also, under current rules, if the state backs out it will have to repay any money already spent. It’s unclear what that total is, but outgoing Governor Doyle figures it at nearly $100 million. There would be $14.25 million just in cancellation costs on the contracts – enough to run the line for 20 years (with the expected Federal subsidies).

So it’s clearly a lot more about anti-railroad ideology than any actual concern for the bottom line.

Ideology? Or just weasel-words?

Here’s Walker on jobs:

[My opponent] tells us that spending $810 million on high-speed rail will create thousands of new Wisconsin jobs, but according to the federal government’s own estimate, the total number of permanent jobs created will be 55.  That’s $14.5 million per job, not including any hidden costs!

Having seen the numbers above, you’ll note that he is ONLY referring to the 55 permanent operations jobs – not jobs from all the other economic development that will be sparked by the rail line. Weasel words.

Meanwhile, Walker appears to be talking out of both sides of his mouth when it comes to keeping jobs in Wisconsin.

The Wisconsin-based Talgo railcar company has been trying to convince him to allow the line to go ahead. Company spokeswoman Nora Friend said, “He was very kind to explain that the decision is not final. He’s just trying to understand the implications of the big project. He needs time, and we think that’s fair.”

But Walker’s spokeswoman Jill Bader said “not true”.

“Scott remains opposed to the train. He reached out this afternoon to encourage Talgo to remain in Wisconsin,” Bader said. “He needs time to have discussions next week with the Doyle administration on their intentions when it comes to this project, and will continue to examine all legal options to stop the train.”

More background:

Off the Rails: GOP Opens Reign By Killing Jobs

(via)

About the Author

Jeremy Bloom is the Editor of RedGreenAndBlue. He lives in New York, where he combines his passion for the environment with his passion for film, and is working on making the world a better place.

16 comments

  • In real life, the railroads were driven out of existence by government regulations (in principle, similar to those in Atlas Shrugged). The new proposed rail system is to be government-run. The govt has no business running railroads (nor should it be in the anti-business of ruining them). If you want rail service again, get the government out of business’ way, and keep it out of the way. Opposition to govt-run trains is fully consistent with the philosophy in Atlas Shrugged.

    • Again, it wasn’t government regulation – the railroads have been deregulated for decades. It was the fact that the government heavily subsidized the rails’ competition – highways/trucking and airports/air traffic control for air freight. If you want the government out of rails, they’ve gotta get out of highway construction too.

      Until that happens, saying “One form of transit should be pure capitalism (until they’re driven out of business, ha ha ha)” is disingenuous at best. At worst, it makes well-meaning libertarians look like tools of industries that are perfectly happy to gorge at the public trough.

      See also: Billions of dollars a year in government subsidies for the oil industry and big agriculture.

  • There’s a huge problem is saying that today’s rail system isn’t the system Rand had in mind when writing “Atlas”. True, Rand would have openly opposed the nationalization of the railroads (and did!), but she was notorious for not EXACTLY having all of her facts straight and it would be inconceivable for a “modern industrialist force” to build a rail line of any significant scale without government endorsement and several acts of eminent domain sponsored by senators and congressmen and at least several city governments … and that was just as true 100 years ago, which takes more than a little “shine” off of Rand’s Taggart family.

  • The reason why nobody uses railroads is because of airplanes. Airplanes are much more cost efficient than railroads for a variety of reasons (mostly because you don’t have to build new tracks for a plane to be re-routed). Ms. Rand would not approve of any government subidization of business – not to mention the insane government boondoggles that are the modern “high speed rail” projects. If you read Atlas Shrugged and took away the message “railroads are good,” then you completely missed the point of the novel. Also, you repeatedly make what economists call the “broken window” fallacy in economic thinking. You claim that this or that government project will “create” this or that number of jobs – but the money the government spends to “create” those jobs had to come from somewhere – it was looted from the private sector. So your wasteful government project might have “created” 50 new jobs but it did so only by stealing money from the private sector which would have used it to create at least 50 new jobs (but probably more).

    • The private sector is currently sitting on $1 trilliion dollars. NOT using it to create jobs. Why? Because they can use it to leverage arcane financial gambles that reap them huge profits without actually, you know, bothering to invest in anything productive. And as long as that continues, we’ll continue to have jobless recoveries and even more jobless recessions, like we’ve had for the past 10 years.
      I totally agree with Rand that the people who make society work are those who actually CREATE something. Unfortunately, the guys who are looting society now aren’t the socialists (I think there are 17 ACTUAL Socialists in the US today). Instead, it’s the Wall Street Banksters who are doing the looting, and doing it on a scale that Rand could never even have conceived of.
      Until we get America back on the job of making things, we’re not going to turn this country around.

      • Mr. Bloom, the “guys who are looting society” the most are politicians and bureaucrats. Ayn Rand was right. Between employment taxes, unemployment insurance taxes, city real estate taxes, county real estate taxes, use taxes, city sales taxes, county sales taxes, state sales taxes, city business personal property taxes, county business personal property taxes, city personal property taxes, county personal property taxes, city franchise fees, city operating licenses, state corporate registration fees, utility franchise fees, utility taxes, 911 taxes, community assistance taxes, (and more), I and my business pay over 50% of pre-tax income to various governments – and then what is left over is taxed again as “income” by local, state, and federal governments – and then what is left over is taxed again when it is spent personally, (sales tax), or taxed again when it is invested (“unearned” income tax and/or capital gains tax), then, if there is anything left over it is taxed at a 55% rate when I die (unless I do that before the end of this year). I’m pretty sure that if all corporate and personal taxes and fees are counted – instead of just the ones progressives talk about – I pay over 80% of my total pre-tax income to various looters, which in my case are all politicians and bureaucrats. If that’s not ACTUAL SOCIALISM, what is?

  • Keep your facts straight my friend. Rand Paul was not named after Ayn Rand. Rand is simply short for Randall. Also, the railroads in Ayn Rand’s novel weren’t government run or government funded.

    • You are partially correct. I had bad information on Rand Paul. But not on Rand’s Railroads.

      While it’s true that that Ayn Rand’s railroad’s weren’t government run, the reality is that America’s railroads were funded with enormous government subsidies, including bonds and land grants.

      Transportation is necessary for commerce. Whether it’s rails or highways, canals or bridges or airports, all of society benefits from having a solid transportation infrastructure. Is that socialism?

      And there will always be freeloaders who are happy to whine about paying the cost… while happily pocketing the benefits.

      • 1. The fact that any current high-speed rail line would be OPERATED by a government run agency makes your comparison to the railroads of 1957(when Atlas Shrugged was published) basically irrelevant.

        The passenger railroads of that time covered their own operating costs with ticket prices, something Amtrak will never hope to do as long as it’s forced to make decisions with political incentives rather than economic incentives. It makes really no difference whether or not they had initial government subsidies.

        (Incidentally, James J. Hill’s Great Northern Railroad, on which Ayn Rand’s Taggart Transcontinental was based, was built ENTIRELY without government subsidies and had none of the shoddy construction that plagued the more famous Union Pacific/Central Pacific.)

        2. You’ve cited “the federal government picking up the cost” of operating this high speed rail line as though that makes it more viable. The only “advantage” federal funding brings is that the costs to the taxpayer are less transparent, thus allowing you to convince the more gullible people that they don’t exist. But you’re not that stupid yourself, so where are the federal $$ going to come from?

        3. You’ve not found anyone who’s opposed to transportation generally, or for that matter even government funding of transportation. What they’re opposed to is a particular high speed passenger rail line. And with good reason – passenger rail is a horribly inefficient, 19th century means of transportation. Improved highways and air traffic control would make a far greater difference at far less cost.

        • You guys just don’t get it.
          You don’t get to live in a society where the government pays for roads, for sewers, for airports, for fire, and a host of other services that are essential to the functioning of society… and then say “Oh, but this thing over here (that I happen to not use, so I don’t care about) is an excessive socialistic government intrusion into the marketplace.”

          Let’s see… what might have changed in 1957 that affected the potential of railroads for profitability? Could it be… the megabillion in Federal spending to create the interstate highway system? Massive subsidies of taxpayer dollars that allowed long-haul trucks to compete directly with the railroads? Followed swiftly by the (Federally subsidize) airline industry taking away long-haul passenger fares?

          Again, in a system – transportation – where the government heavily subsidizes road and air, it’s disingenuous to raise holy hell about the evils of socialism as they apply to rail.

          Why did the Great Northern receive no subsidies? Semantics. The Great Northern was an agglomeration of earlier Hill purchases, all of which DID get land grants and subsidies.

          1879 St. Paul & Pacific’s Dutch bonds are bought by JJ Hill, Hudson Bay, et al. The bankrupt railroad is renamed the St. Paul, Minneapolis, & Manitoba. Purchased for $6,780,000, Hill sold the grant land alone for $13 million (Holbrook, 1953, p.192). The “Manitoba” came in when Hill built a connection with the Canadian Pacific to get 2.6 million acres further grant lands (Minn. Gov. signed Jan 9, 1879).

          1889 Minneapolis & St. Cloud was renamed the Great Northern Railway. In 1890, Great Northern took over the St. Paul, Minneapolis & Manitoba (Yenne, 1991, p.62ff). The prevalent claim that GN was the only transcontinental built without federal aid is not true. Most of the lines that went into the GN system got State and/or federal grants: the Minneapolis & St. Cloud; the St. Paul & Pacific (1862 grant of 3.3 million acres); and the St. Paul, Minnesota & Manitoba (1879 grant of 2.6 million acres). See John B. Rae’s “The Great Northern’s Land Grant” in the Journal of Economic History, 12 (Spring 1952), p. 140-145; Paul Gates (1968, p.362); Mercer (1982, p.56), and the Great Northern entry in our Profiles section.

          The “subsidy-free” Great Northern has been the poster child for the “government is bad” crowd, but it’s simply a myth.

          • You don’t get to live in a society where the government pays for roads, for sewers, for airports, for fire, and a host of other services that are essential to the functioning of society… and then say “Oh, but this thing over here (that I happen to not use, so I don’t care about) is an excessive socialistic government intrusion into the marketplace.”

            Then I guess it’s a good thing that Rand believed in a completely capitalist society where all things: rails, roads, bridges, sewers, utilities, EVERYTHING was privately owned.

      • To the extent that the railroads were subsidized they failed! Look at the most successful railroad endeavor J.J. Hill’s Great Northern Railway which was built without government handouts.

        Its socialism if the highways, canals, bridges, and airports are government owned.

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