This week, Congress passed a resolution ratifying a tentative labor agreement with rail worker unions to avert a looming railroad strike that could cripple the economy. But even if we dodge that threat, railroads are at the center of another crisis. This next potential emergency starts with the ongoing drought on the Mississippi River but it doesn't end there.

Little to no rainfall in the Midwest has led to historically low water levels on the country's most commercially active water passage for domestic transport and global exports. Around $100 billion in cargo, which includes fuel, coal, grain, industrial chemicals, building materials, and over 90 percent of agriculture exports, is shipped by river every year.

But now shallow water restricts the number of barges that can pass through narrow strips of the river. Several barges have gotten stuck on the floor of the riverbed and caused long traffic jams. For the few shippers who can still find barges to take their product, rates have skyrocketed nearly 300 percent compared with the same time last year. 

Naturally, many shippers are looking to railroads to save the day. But it turns out that railroad deregulation and consolidation make that option a non-starter for most.  Under relentless pressure from Wall Street to maximize short-term profits, railroads have stripped out so much capacity and laid off so many workers that they cannot begin to pick up the slack even as they impose monopoly prices on what little extra traffic they can handle.

"We have farmers needing to export goods and they have no one to turn to because the rail lines say they're at capacity," said Todd Tranausky, the Vice President of Freight Transportation Research, which monitors the rail industry. 

According to FTR's analysis, part of the problem is that the rail lines laid off workers right before the pandemic and have struggled to rehire new staff since the supply chain crunch hit.

The other problem is Wall Street’s mania for ripping out track. For example, one of America’s most storied railroads, the Illinois Central, used to operate a high-capacity, high-speed, two-track mainline paralleling the Mississippi River between Chicago and New Orleans. But in the 1990s, investors installed a new CEO, E. Hunter Harrison, who ripped out the second track and closed key yards. With that, the Illinois Central lost much of its capacity to serve as a viable alternative to barge or truck traffic. But Harrison boosted profits by cutting expenses faster than revenues, making him a Wall Street darling.  

Cheered on by powerful hedge funds, Harrison subsequently brought the same kind of radical downsizing to three other major railroads, introducing an industry trend that became known by the perversely Orwellian term “precision scheduled railroading.” As OMI policy director Phillip Longman details in his feature in the Washington Monthly, the result is a highly profitable industry with ever diminishing capacity to meet America’s transportation needs even as energy shortages and climate disruptions make railroads more critical than ever. 

Now as the drought crisis unfurls, two other large rail carriers — the Canadian Pacific, which operates tracks paralleling the Mississippi south of Minneapolis/St Paul, and the Kansas City Southern, which controls key routes to the Gulf of Mexico and beyond — are filing to merge. This will bring still more concentration and monopoly pricing to the industry, and quite possibly, the shedding of more rail infrastructure.  Regulators should block the deal as the first step towards restructuring our national rail system to better serve the public interest. 

The Open Markets Institute on November 17 sent a letter to the heads of the Department of Justice (DOJ), Federal Communications Commission (FCC), and Federal Trade Commission (FTC) urging the agencies to review Elon Musk’s purchase and management of Twitter and his ongoing management of Starlink — including his abuse of these powerful communications platforms for his own personal, political, and business interests. 

Open Markets believes that Twitter is an essential communications platform that serves a critical role in civic discourse and disaster response around the world, and Musk’s deal to buy Twitter poses a number of immediate and direct threats to American democracy, free speech, and national security. Bloomberg devoted an article to OMI’s letter on Musk’s ownership of Twitter and Starlink. The letter was also covered by Politico in its morning newsletter.

Open Markets Institute, the Irish Council for Civil Liberties, and the Trans Atlantic Consumer Dialogue, filed an official complaint with the Federal Trade Commission on the privacy, market, and security hazards of surveillance advertising. The groups urged the agency to act against commercial surveillance and to define real-time bidding as an unfair and deceptive practice. The comment read, “Surveillance-based advertising hurts the internet and exposes us all to discrimination, manipulation, and to private and government surveillance. The Irish Times wrote about the complaint filed with the FTC. 

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