Free The Fine Print: How Big Companies Use "Plain English" to Rob You Blind by David Cay Johnston Page B

to Congress and in disclosures to shareholders, rail industry leaders describe a tremendously competitive market, one in which the railroads are under siege by truckers, barge operators and pipelines trying to take away their business. As you would expect, each railroad has reliable expert witnesses who testify in trials and present politicians with studies that show how tough it is to make a profit running a railroad. Even more powerful than expert witnesses are the government insiders with whom the railroads have established relationships that serve their interests—often at the expense of the consumer. Two quick examples: When Linda Morgan left the Surface Transportation Board in 2002 she was its chair; she joined Union Pacific as one of its top lawyers. Less than four years later, her successor, Roger Nober, left the government board only to resurface, exactly one year and one day later, as executive vice president and chief lawyer at Buffett’s BNSF. They are just two of the many who reaped the rewards of having been reliable industry allies while in government.
    The rail industry is quick to challenge anyone who questions its power, its misleading use of statistics or its stranglehold on the economy, asserting that critics really want to destroy a crucial mode of transportation. This is poppycock, of course, but given how little most journalists know about business—and especially business law—outraged railroad voices with one simple message often succeed in drowning out those that describe the complexities of a modern octopus that has businesses and communities in a stranglehold.
    Lafayette’s Huval offers a fair-minded view from the middle of the fray. He reports that his nonprofit electric utility “supports a strong national coal delivery network by rail,” before adding a crucial qualification: “It is in the national interest to have a railroad system built on reasonable, not predatory, pricing and service.”
    That brings us back to another common complaint concerning monopoly railroads: quality of service. In a competitive environment, there’s pressure not only to match or better a competitor’s prices but to provide reliable service so the customer will not shift allegiances. But just as the wheat farmers in Montana and Idaho sat powerless, their harvests sitting trackside while prices fell, so electric utilities suffer from sporadic coaldeliveries. In 2005 and 2006 the Union Pacific provided such atrocious service that the Lafayette Utilities System had to import coal from Venezuela (which, by the way, was shipped by barge). At times the system had to truck low-quality lignite coal from northern Louisiana to keep the lights on. Competitive businesses would pay dearly for providing such unreliable service, but government-protected monopolies can disregard customer need yet keep on making huge profits.
    The so-called unit train is a transport practice that has worsened customer service in recent years. The most efficient way to run a railroad is nonstop between two points, with two or three locomotives pulling a hundred or more fully loaded railcars at slow speeds. Such unit trains are extremely efficient because once a train is moving, fuel consumption drops dramatically (as we’re reminded often by the CSX Transportation commercials boasting of moving a ton of freight more than two hundred miles on one gallon of diesel). The same principle applies to airplanes, which gulp fuel on takeoff but sip at cruising altitudes; thus, a direct flight from New York to San Francisco consumes much less fuel than connecting flights that carry the LaGuardia passenger to the same final destination but connect at St. Louis and Salt Lake City.
    That said, neither passengers nor every piece of freight shares the same cost-effective destination and point of departure. When in-between and tangential destinations are factored in, a network develops. Though that’s part of the fabric of modern economic life, it runs