Where The Birds Never Sing


On February 3, a freight train operated by Norfolk Southern derailed in East Palestine, Ohio. The major accident was later declared “100 percent preventable.” 

Falling safety standards in the industry can be traced back to the Staggers Act of 1980, which spurred deregulation. Examining the aftermath of this shift, a 2022 article by JOHN S. STRONG finds that “activist investors”—including one who was briefly involved with Norfolk Southern—initiated board takeovers that transformed the operations of several freight rail companies. 

From the article:

“Many of the activist campaigns during the 2000–2022 period were spurred by the development of a new approach to rail operations, known as Precision Scheduled Railroading (PSR). PSR focuses not on train movements, but car movements. Rather than waiting for a train to be built, cars are picked up from shippers and added to trains regardless of train length. Two major effects of PSR are to reduce the number of required hump yards, and to shift from unit trains to manifest mixed services on regularly scheduled trains. The nature of PSR operations results in potential problems. The closing of hump yards and reduction in trackage means the industry has less capacity to respond quickly to surges in demand. Labor reductions have resulted in shortages of train and network crews. Shippers previously served with larger unit trains have experienced occasional service disruptions. Longer, heavier manifest trains have raised concerns about safety.”

+  “Deregulation meant discrimination…in the sense that transport ceased to be a product sold to all customers at a standard price.” Marc Levinson on big and small shippers. Link

+  “If the safety of railroad freight transportation is measured solely by train accidents, and if the maximum amount of freight traffic is assumed to have been shifted by deregulation, as many as 236 extra freight transportation deaths per year can be blamed on deregulation.” A 1989 chapter by Kennith D. Boyer. Link

+  James M. Macdonald and Linda Cavalluzzo on deregulation and organized labor. Link. And Steffen Habermalz and Kirsten Monaco track how wages fell after the Staggers Act. Link


Local fiscal capacity

SASCHA DRAY is an economist at the World Bank in the Macroeconomics, Trade, and Investment Global Practice. In a recent paper, he explores the importance of tax revenue for the growth of local governments.

From the abstract

“Using newly collected financial data of more than 300 U.S. cities over 1899-2000, I leverage source-specific variation in revenue through a shift-share research design. I report three main results. First, additional tax revenue causes greater spending on services than same-sized non-tax revenue, despite partial earmarking of non-tax revenue for this purpose. Second, tax revenue generates persistence in revenue. An initial increase in tax revenue has a 81% persistence on total revenue 10 years later, while similar non-tax revenue increase has dissipated after 3 years. This persistence can be explained by fiscal capacity improvements through higher effective tax rates, better enforcement and increased spending on revenue collection. Third, reliance on taxes has long-run effects on municipal finances and growth.”

+  “Kindleberger sat close enough to the center of power to want to, and occasionally be able to, influence US foreign economic policy. He nonetheless remained an outsider methodologically and at a distance from the actual policy reins.” New on PW, Herman Mark Schwartz on Perry Mehrling’s Money and EmpireLink.

+  “A divide emerges between how the ECB hindered or facilitated fiscal responses to these two international crises, despite the Federal Reserve’s willingness in both periods to prevent liquidity crises from worsening.” Also new on PW, Nina Eichacker compares ECB policy in 2008 and 2020. Link

+  “Pakistan’s nest of international lenders looks as intransigent as its brazenly elite-captured domestic economy.” New on the Polycrisis, Tim Sahay and Kate Mackenzie analyze debt and power in Pakistan. Link.

+  “In this paper, we lay out a theory of supply chains where financial conditions play a pivotal role in the determination of the length of supply chains.” By Se-Jik Kim and Hyun Song Shin. Link

+  “While climate change poses a risk to Nigeria’s development prospects, it also provides opportunities for Nigeria to rethink the design and implementation of its national development programs.” By Belinda Archibong and Philip Osafo-Kwaako. Link

+  Amanina Abdur Rahman and Achim Schmillen on Malaysian growth and within-sector labor productivity. Link.

+  “The ‘softening’ of the German power bloc towards fiscal capacity building and redistributive mechanisms in the EMU is likely to prove durable.” Etienne Schneider on recent shifts Germany’s European policy approach. Link

+  A new report from the Center on Global Energy Policy, authored by Ian Hamilton, on decarbonizing the global building sector. Link. And see Jeremy Wallace’s recent Polycrisis essay on China’s construction sector and the global climate agenda. Link

+  “The bargaining position of mercenaries depended upon whether their numbers were greater or less than the demand for them. When they were in short supply, or particularly needed, they could, and did, insist on more attractive terms from their employers, even, as with the Ten Thousand, in the middle of a campaign. Suspecting that Cyrus’ expedition ‘would involve more difficulty and danger’ than he had disclosed to them, ‘they asked for more pay, and Cyrus promised to give to all half as much again as they had before’. Later, angry at learning that Cyrus planned to march against the Great King himself, they successfully negotiated a settlement whereby each soldier would receive a bonus of five minae of silver (about four months’ pay) and full pay until his return to Ionia.” By Harvey F. Miller. Link

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

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