CSX–An Unsafe Culture

The book on this style of business plan is Free Lunch:  How the Wealthiest Americans Enrich Themselves At Government Expense (And Stick You With The Bill), and its author was recently interviewed by Bill Moyers.  Here’s how David Cay Johnston put it:

DAVID CAY JOHNSTON: John Snow was a brilliant young economics professor and lawyer who wrote about how the government system of regulating transportation was inefficient and causing difficult costs. And in the Ford administration– had a prominent role in promoting deregulation of trucking. Then he got a job with the CF– what’s now the CSX Railroad.

BILL MOYERS: And what is CSX?

DAVID CAY JOHNSTON: It’s one of the largest railroad companies in America. And that railroad, the– his mentor, Hays Watkins, won an award from INDUSTRY WEEK magazine. And the whole reason for the reward was their success at milking the government for favors. And Snow, throughout his career, spent an enormous amount of time going and meeting not with presidents of the United States but with the congressmen and senators and the staff members and the bureaucrats you’re never going to hear about in the Transportation Department and the Appropriation Department to get all the rules and favors that he wanted.

And one of the worst rules is this. If you’re on an Amtrak train and there is an accident and something happens to you, the damages that occur are always paid by the taxpayer, even if, as in the case I tell about in the book, there was a known unsafe condition that CSX caused in its zeal to cut costs and to increase Mr. Snow’s salary.

Even though Snow was warned and warned this is dangerous, we’re not doing enough for safety. There were official investigations. They stuck to their policy. They saved $2.4 billion dollars. Well, people died because of it. One widow pressed her case, got all the way to the Supreme Court with it. Got $50 million in damages awarded by a jury. Couldn’t today ’cause Governor Jeb Bush in Florida signed a law to prevent this from happening again. But got $50 million in damages. Didn’t cost CSX a penny. They just handed the bill to the taxpayers and said, “You get to pay.”

BILL MOYERS: Because this is a law.

DAVID CAY JOHNSTON: That’s the law.

BILL MOYERS: Passed by Congress.

DAVID CAY JOHNSTON: That’s right. And this is a moral hazard. It’s another thing that Adam Smith warned us about. You shouldn’t be able to say, “I get the rewards and you the taxpayer are going to take up all the risks.”

I wouldn’t be surprised if the Massachusetts people injured in this collision with CSX don’t get a penny in compensation from CSX.  

Watch the whole interview with Moyers and Johnston.

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