Waking Up from the Railroad Pipedream to the Nightmare of the Vampire State


Well, that was fun. How realistic do I believe the railroad pipedream outlined in the previous posts is? I had outlined and researched this series of posts in early July, but I didn’t find the motivation to write it until November. Now those who read all the posts might be in agreement, or disagreement, with the particulars of what I have suggested, and the economic, demographic and commercial real estate trends I have described. (Bear in mind that I write reports on those subjects every day, reports people pay to read). You may have other thoughts on the issue. You may be thinking about the possible effect of different decisions on the well being of large number of New Yorkers in the future, and how priorities might be set. You might even be thinking about construction methods, rail operations, and government contract law, commercial real estate trends, global economic trends, and demographic trends.

But I assure you, based on 20 years of observation, that none of those things mean much at all in the state legislature in Albany, New York. There the credo isn’t what is best for us, but what is in it for me and mine. And none of the parties involved could be expected to approach the issue of rail freight from any other perspective. In Albany it is never about “what,” and always about “who.”

Railroad Pipedream: Economic Development Goals Upstate


The primary purpose of the Upstate railroad investments imagined in this pipedream is to speed freight traffic between points west of the Mississippi River, and east of the Mississippi and north of the Ohio River, to New York State, New Jersey and New England. The Upstate investments would take the place of additional highway lanes, such as those being built in on the Turnpike in New Jersey, and make transportation through New York more competitive with transportation through other states. The Upstate investments would also make the New York/New Jersey seaport, located in New Jersey, more competitive with other East Coast ports, and could feed a rail freight tunnel from New Jersey to the Bronx. Finally, the pipedream would remove freight traffic from the Empire Corridor, making high-speed passenger rail more possible.

These are the transportation goals. But the entire pipedream, with the freight tunnel and the investments Upstate, would also have economic development goals for Upstate New York.

Railroad Pipedream: Investments Upstate


Across the country, investment in freight railroads has started to increase, reversing the reduction in trackage and disinvestment in equipment seen in the decades following the development of the Interstate Highway network. As noted by the Wall Street Journal, “once a dying industry, railroads have made a strong comeback and are poised to become busier places in the years ahead. Forecasts for freight growth are substantial, prompting railroads to plan capacity additions.” According to one analyst “rail activity could possibly even double by the midpoint of the century. North American rail-freight rates would continue to be the lowest or one of the lowest in the world, and the industry would finance most or all of its capital requirements without public support.” According to another, “the public-sector financial situation will actually be an advantage for freight rail: Highways are not being funded, and the prospects are dim in that arena unless taxes are increased [which in turn raises the cost of trucking, which also helps the rails].”

Somehow, however, all this activity has bypassed New York State. Take the National Gateway project, a public-private partnership. “The National Gateway project will improve the flow of rail traffic throughout the nation by increasing the use of double-stack trains, creating a more efficient rail route that links Mid-Atlantic ports with Midwestern markets.” The project is expected to create 50,000 jobs, is expected to cost $842 million in federal and state funds and $395 million in private funds, and “is supported by a broad and diverse group of 336 public and private sector organizations and individuals, including Big Lots!, UPS and The Limited.” And unlike subsidies for individual companies, the preferred form of “economic development” in New York, this infrastructure improvement will continue support job creation into the future. The project is described in this video. Projects are located in Ohio, West Virginia, and Virginia and North Carolina. Not in New York and New Jersey, whose port will thus NOT be linked by a more efficient rail network to Midwestern markets. Why not?

Railroad Pipedream: The Pipe


To the problems with freight movement in Downstate New York laid out in my prior post, New York’s politicians and planners have either had no solution or just one solution – a cross harbor rail freight tunnel from New Jersey to Brooklyn, linking into the Bay Ridge Branch of the Long Island Railroad between the Sunset Park and Bay Ridge neighborhoods. First proposed in the 1920s but repeatedly found to be impractical since, this proposal has been kept alive by a few die-hards and one politician – Congressman Jerry Nadler.

To Nadler and the die-hards, the reason manufacturing left New York City cannot be wages, benefits, work rules, taxes, and the desire for large horizontally arranged plants. And the reason the port moved over to New Jersey can’t be because it doesn’t make sense to unload freight from a ship onto an island (Long Island, on which Brooklyn sits), and then try to get it off the island to the rest of the country. Those ideas conflict with New York City as they would like it to be, which is what it was, unionized and blue collar, with thousands of dock workers and tens of thousands of workers in low-skill, low-wage manufacturing industries such as garments and electronics, all earning rising wages. If, however, the goal is to improve freight distribution, not to bring back the port to Brooklyn or manufacturing for national markets to New York City on a large scale, then alternatives other than the New Jersey to Brooklyn crossing could be thought of. This post contains two of them.

New York State Freight Distribution: A Railroad Pipedream


The following series of posts is an indulgence. For the past 18 years, and in some ways for the past 30, I’ve become increasingly upset about the way this country and state have sold out the future, and the way the accretion of privileges by entitled special interests has prevented much from being done to turn things around. As a result a resurgence by the City of New York over the past 30 years, previously laid low by similar future self-dealing and future-selling a generation or two ago, is now threatened from without. This frustration is reflected in my writing here on Room Eight.

But it isn’t the case that I am no longer capable of thinking big thoughts about what could be done to improve the common future. These thoughts could be useful in a different place, as in parts of Europe or Asia, or in another time, like the United States at any point in its history until the recent past – back when building a better future for those coming after is something most Americans aspired to. Today all the money is going to debts and pensions and health insurance paid to those 55 or over, at the expense of those 54 and younger, not to investment in a future very few care about. Because those 55 and over wanted benefits for themselves, but didn’t want to pay for them – and now that the country is broke and would prefer to deny to those coming after so they can keep borrowing. But I might as well indulge myself. The following posts describe a pipedream, not a proposal, not because what is laid out is impractical, not useful, or is inherently (as opposed to politically) expensive. It is a pipedream because we are in the Vampire State not Empire State, and this is the era of Generation Greed.

Corrupt Cops: We Don’t Get What We Pay For If It All Goes to Early Retirement


According to the New York Times, police corruption is rising. "One former Internal Affairs Bureau investigator who was involved in scores of cases in recent years said the number of corruption complaints — ‘logs in police parlance — had been on the rise, climbing to about 65,000 a year from about 45,000 a year in a little under a decade." Why is that?

A little rumor I heard third hand. The soaring number of criminal cops dates from the era when police starting pay was slashed to $25,000 per year. To pay for all the retroactive pension enrichments around the year 2000, which have caused pension spending to soar toward equality with payroll for cops actually on the job. Now we are paying hugely for each police officer, but most of the money is going to the retired. And the police on the job increasingly resent their pay — no matter how much they cost. Take the two together and it isn’t the police who are getting ripped off, at least collectively. Those who pay for them are.

Bloomberg: Move to New Jersey For The Good Life, or Pay for Those Who Do


Mayor Bloomberg helped to destroy the future of the New York City schools by agreeing to allow teachers to retire seven years earlier, a decision that will suck money out of the classroom year after year for decades. But now he wants to make it up to us, by having New York City taxpayers foot the bill for a project to make it easier for middle and upper middle class New Yorkers to leave the city and its local income tax behind and move to New Jersey, where the kids could get an education. According to the New York Post “Mayor Bloomberg is pushing forward with a proposal to extend the No. 7 train to New Jersey and get the project locked in before he leaves City Hall in two years.” Even as the rest of the NYC subway collapses due to soaring debts, and other retroaction pension enhancements passes some years earlier.

Cuomo is Right on the Millionaire’s Tax


A year or two ago, the State of Illinois increased its state income tax rate by 60%. It was the right thing to do. Today, Governor Cuomo is refusing to keep a New York State income tax surcharge. That is also the right thing to do. Why the difference? The overall state and local tax burden in Illinois had long been below the national average, unsustainably low given that state’s services and other obligations. New York’s state and local tax burden is the highest in the country, except (in some years) for Alaska and Wyoming where most of the taxes are on mineral extraction and not residents or other businesses. Illinois’ top state income tax rate was increased from 3 percent to 5 percent. The New York State rate is nearly 7 percent without the surcharge – 10 percent in New York City where a local income tax is added, and is 9 percent with the surcharge – or more than 12 percent in New York City.

Throughout the country, public services are being devastated by soaring pension costs caused by two factors – inadequate past funding by taxpayers, and retroactive pension enhancements for public employees. In Illinois, taxpayers deserve the majority of the blame: in many years taxpayers put in zero, and there isn’t nearly enough money even to pay the pensions public employees were promised when hired, even without pension spiking and any of the retroactive deals. In contrast, the public employee unions and their retroactive pension deals may be more to blame in New York City than anyplace else in the country, with the United Federation of Teachers the most guilty of all (based on the difference between what was promised when workers where hired and what they took later).

State Government Employment: 2002 and 2010


This post is the final discussion of the spreadsheet of the U.S. Census Bureau’s state and local government employment and payroll data, which is linked from this post. The data can be downloaded by following the link. In March 2010, U.S state governments employed just under 1,400 full time equivalent workers per 100,000 U.S. residents, a small number compared with the nearly 4,000 local government workers, and more than 5,500 workers in the private health care, social services, and heavy construction sectors, which are substantially government-funded.

The three levels of government may be described this way: the federal government takes in the most money, but sends it right back out again in payments to individuals (Social Security, interest on the debt), the private sector (Medicare), and aid to the states. It actually does very little other than national defense and the Post Office. Local governments do most of the work actually done by government workers. State governments, however, make most of the decisions on the margin, control how local governments do their work, and supply much of their funding. The primary work of state governments, as opposed to work done by local governments and the private sector in part with state money, are state colleges and universities, state correctional institutions, and state hospitals (mostly mental hospitals). These three functions accounted for nearly 60.0% of all U.S. state government employment in March 2010. A discussion of how the State of New York compares follows.

Local Government Payroll: 2002 and 2010


This post is another discussion of the spreadsheet of the U.S. Census Bureau’s state and local government employment and payroll data, which is linked from this post. The data can be downloaded by following the link. It shows that the average New York City local government employee earned 40.4% more than the average U.S. local government employee in March 2010. That is down from 44.6% above average in March 2002, when New York City’s police, fire and sanitation payroll was inflated by post-9/11 overtime.

For comparison, local government employees in New Jersey earned 27.1% more than the national average in March 2010 up from 23.9% above average in March 2002. And private sector workers in Downstate New York, including New York City, Long Island and the Lower Hudson Valley (which really functions as one big labor market), earned 56.0% more than private sector workers in the U.S. in 2010, according to Employment and Wages data from the U.S. Bureau of Labor Statistics. Excluding the massively paid Finance and Insurance sector, Downstate New York’s private sector workers earned 30.0% more than the U.S. average, the same as in 2002 and a figure that has varied only slightly – from 29.0% above average to 32.0% above average – over the past decade. A discussion follows.