Government Intervention a No-Brainer

It's confusing to watch Congress do nothing but saber rattling in the face of the current U.S. rail crisis, writes Mike Bryan. Government intervention in this issue seems like a no brainer.
By Mike Bryan | November 24, 2014

During the global financial crisis, the federal government provided hundreds of billions of dollars to bail out Wall Street bankers. While I, like most people, may have my own thoughts on the efficacy of those actions, I personally am not qualified to pass judgement. It is, however, confusing to observe the reluctance of the government to intervene in the current rail crisis in America.

My natural cynicism would lead me to believe that the reason Congress is doing nothing more than saber rattling on this issue is because this crisis is largely affecting main street instead of Wall Street. I’m not an expert in transportation or the complexities of the rail industry. In my view, this is a national security issue, it’s an energy independence issue and it affects America’s economic well-being and very fabric of agriculture. If you want to talk about trickledown, anything that affects agriculture affects main street and when you negatively impact main street, it will eventually trickle-up to Wall Street.

BNSF, for example, spending $5 billion on infrastructure enhancement may, in fact, be a drop in the bucket of what is actually needed. The Bakken oil reserve looks like it will be around for many years to come. As agriculture continues to produce more and more, it will continue to put pressure on the rail industry. More and more freight is being shipped via rail. The ethanol industry depends on rail to move billions of gallons of product every year. In other words, the health of America’s rail system is part and parcel to the health of America.

It’s not just agriculture that is being penalized for this rail crisis. The automobile industry, the oil industry, tens of thousands of other smaller industries and businesses that rely on rail service to move millions of tons of product every day are all being hit hard by this unnecessary delay in meaningful action by the rail industry and the federal government.

Intervention by the federal government is certainly nothing new. They are actually quite good at it. History is replete with examples of government intervening to help industry, especially when matters of national security are at stake. Even I could make the argument that an over-burdened rail system is a threat to energy security, economic security, environmental security and, in fact, our national security.

What happens if the rail industry over-builds and a couple of decades down the road (or rail in this case) we have more rail cars than we need? While I really don’t think that this is going to happen, even if it did, I would rather see the steel from thousands of unused rail cars being recycled than doing too-little too-late and needlessly creating devastating impacts on our economy.

Clearly the government has spent billions of dollars on things that have far less of an impact on America then a few billion pumped into one of our country’s major transportation resources. This seems like a no-brainer to me, but then, like I said, I’m not transportation expert.

That’s the way I see it.


Author: Mike Bryan
Chairman, BBI International
[email protected]