Thursday, February 05, 2009

An erroneous train of thought

Whilst discussing the question of whether or not the BNP are left or right wing, Shuggy says this:
But anyone with even the most superficial knowledge of history understands that this was never - and it not now - the only reason a national government ever took anything into state ownership. Apart from anything else, the huge range of polities that have done this should be enough for the idea that nationalisation equals left-wing to be laughed out of court. Didn't just about every country in the world have a larger role for the government in the development of their railway networks? Nothing to do with them being more or less 'socialist' and everything to do with them following the lead from the world's first industrial nation.

Building rail networks was obviously essential for servicing the needs of developing capitalist economies.

Can we stop this revisionism? The vast, vast majority of the British railway network was built by private companies—not the state.
The first public railways were built as local rail links operated by small private railway companies. With increasing rapidity, more and more lines were built, often with scant regard for their potential for traffic. The 1840s were by far the biggest decade for railway growth. In 1840, when the decade began, railway lines in Britain were few and scattered, but within ten years a virtually complete network had been laid down, and the vast majority of towns and villages had a rail connection, and sometimes two or three.

What the state did do was to completely and comprehensively fuck up the railway companies, almost from the get-go. The state enforced a maximum price for freight carriage, then it ran the railways in WWI, then forced the railways companies to effectively run services for free during WWII. And then, even after nationalisation, the government continued to screw the network. [Emphasis mine.]
Traffic on the railways remained fairly steady during the 1950s[5], however the economics of the railway network steadily deteriorated. This was largely due to costs such as labour rising faster than income. Fares and freight charges were repeatedly frozen by the government in an attempt to control inflation and please the electorate.

The Beeching Axe was then instituted and was, by any standards, a massive failure. Beeching assumed that, if unprofitable branch lines were closed, people would simply drive to the next nearest station and use the mainline. They didn't.
The closures failed in their main purpose of trying to restore the railways to profitability, with the promised savings failing to materialise. By closing almost a third of the rail network, Beeching managed to achieve a saving of just £30 million, whilst overall losses were running in excess of £100 million.[3] These losses were mainly because the branch lines acted as feeders to the main lines and this feeder traffic was lost when the branches closed. This in turn meant less traffic and less income for the increasingly vulnerable main lines. The assumption at the time was that car owners would drive to the nearest railhead (which was usually the junction where the closed branch line would otherwise have taken them) and continue their journey onwards by train, but in practice, having once left home in their cars, they used them for the whole journey. The same problem occurred with the movement of goods and freight—without branch lines, the railways lost a great deal of their ability to transport goods 'door to door.' Like the passenger model, it was assumed that lorries would pick up goods, transport them to the nearest railhead, where they would be taken across the country by train, unloaded onto another lorry and taken to their destination. However, the development of the motorway network, the advent of containerisation and the sheer economic costs of having two break-of-bulk points made long-distance road transport a more viable alternative.

At its peak in 1950, British Railway's system was around 21,000 miles (33 800 km) and 6,000 stations. By 1975, the system had shrunk to 12,000 miles (19 300 km) of track and 2,000 stations; it has remained roughly this size thereafter.

To try to pretend that the state was responsbible for building the British rail network is absolutely laughable. In fact, the state was responsible for screwing the rail companies and hindering the growth of rail—when they weren't actively closing vast swathes of it down, that is.


John B said...

...except that the government invested gbp1bn *in 1950s money* in the railways during the 1950s, which the (railway company veteran, obviously) managers pissed up the wall on completely useless crap.

That Wiki entry on Beeching is resonding bollocks as well; if I could be bothered I'd edit it. There is absolutely no evidence that the disappearance of branch lines hit rail freight - rather, the train had been made into a useless way of transporting freight smaller than wagonloads by the, err, army of ex-army truckers that emerged in the late 1940s. Since rural passenger rail has always been hopelessly uneconomic, branch closures were only a matter of time.

The *only* bad thing about Beeching was the refusal to safeguard routes in case things improved later (e.g. Oxford-Cambridge, Sheffield-Manchester via Woodhead, Lewes-Uckfield). Now that road congestion and long-distance commuting have made some of these lines viable again, it's unfortunate that there are supermarkets, boating lakes and houses built on their routes...

Anonymous said...

Hey John, can you think of a policy that would help the government safeguard and even fund rail routes? I'm sure I heard about one, once...

Old BE said...

The problem was that the railways never made much money. The railway boom was a classic speculative bubble - similar to the dotcom boom. Lots of people piled in in the hope that they would make money eventually. The same thing for the London tube network - investors thought that if only they were ambitious enough the routes could start turning a profit.

It looks as if, although transport infrastructure provides wider benefits, the profit generated by it never reaches the people who build and run it. That is why so many countries see it as a public good and therefore worthy of public investment.

Anonymous said...

Never commented here before, but I think it is worth highlighting the role of the Transport secretary of the time - Ernest Marples. As the railways closed down, Motorway building really took off. It is of course pure coincidence that one of the beneficiaries of this was Marples Construction - proprietor one E. Marples. Surely he wasn't sitting in the old MOT writing out huge cheques to himself?

Roger Thornhill said...


Wasted 1bln of other people's money eh? - Standard procedure for State funded entities. If it was the rail company as a company, would they have wasted the money in a premature move to unreliable light diesel on the scale they did, for example? Probably not. Would they have collected figures to suit the road lobby? No.

See John, you dug State control another grave by showing that a State owned entity pissed £1bln up the wall.

Letters From A Tory said...

I've never found using 'logic' or 'facts' works particularly well against the BNP.

Hacked Off said...

The governments since time immemorial have always been in the pockets of the munitions and the oil companies (and other big business groups - now retail have a considerable sway) and of course, our friends the banks.

Then add in the far from benign influence of America. We used to lead the world in making aeroplanes, for example. Tony Benn and the TSR2 anyone care to Google?

What about the fiddled figures which did for the "duck" wave energy project? Honest mistake my hairy arse.

The railways are symptomatic, victims of the rise of the road network, the people's rush for the car, government "incompetence" and fucking useless management.

The Penguin

John B said...

"although transport infrastructure provides wider benefits, the profit generated by it never reaches the people who build and run it"

This is absolutely true. Generally countries move to state funding of infrastructure at roughly the point when investors *finally* start to notice that it's a terrible investment for them. In the UK, this was the case by the late Victorian era - the Tube only got built because a charismatic shyster mugged a load of investors in the US who didn't understand this golden rule.

"If it was the rail company as a company, would they have wasted the money in a premature move to unreliable light diesel on the scale they did, for example? "

If not, it would have been due to capital constraints rather than sanity. The people making the purchasing decisions under the modernisation plan genuinely believed they were guaranteeing the profitable future of the railway, which is the same framework that would've been used in a private business at the time.

"It is of course pure coincidence that one of the beneficiaries of this was Marples Construction"

Marples was a crook, yes - however, the Labour government that took control shortly after the report was published and before most of the closures had been made (and who had been against Beeching when in opposition) agreed when they saw the figures that the closures were the right thing to do. So oddly, yes, it is mostly coincidence.

Anonymous said...

One story i heard, and cannot prove, about the Beeching Axe was someone high up in Guv'mint was convinced railways would be not needed as by the year 2000 everyone would have their own private helicopters. As far as I can recall this idea of the "personal autogyro" was one of the things often splashed in seemingly more intelligent 'Popular Mechanics' type magazines and of course by scientists in the 1950s

You know, the sort now who say in 10 years global warming will wipe out all known life, etc.

Anonymous said...

The Penguin said..."Then add in the far from benign influence of America. We used to lead the world in making aeroplanes, for example."

Not really - the US aviation industry has always been more than capable. It is the far from benign influence of the EU that has damaged us more.

In 1971 we had the largest and best aviation industry (military and civil) in the EU. Now civil aircraft manufacture (able to compete head on with Boeing) is based in France and we only share in military plane design. We still have R-R (until it's taken over by the Germans).

Anonymous said...

John B said: "Generally countries move to state funding of infrastructure at roughly the point when investors *finally* start to notice that it's a terrible investment for them."

It only became a terrible investment because of government misuse and interference.

Dr Evil said...

That fucker Beeching was paid £24000 a year in 1960. My father bought a 4 bed detached house for £3000 in 1960. Just shows ya. Fucking governments simply don't care about the people.

Neal Asher said...

Hey, just a side note here: isn't it funny how NuLabour twats claim all this objecting to foreign workers is playing into the hands of the far right. Yet, as is plainly evident, it's playing into the hands of the far left trade unionists.

John B said...

"It only became a terrible investment because of government misuse and interference."

Utter balls. The

"That fucker Beeching was paid £24000 a year in 1960. My father bought a 4 bed detached house for £3000 in 1960. Just shows ya"

No, that shows you how much house price rises have outpaced wage rises. £24,000 in 1960 is £400,000 based on inflation, or £1.1m based on GDP growth - ie roughly what you'd expect the ex-head of ICI to earn if moving on to become a consultant.

(also interesting to note that the PM was paid £10,000 in those days, which is £450,000 adjusted for GDP. No wonder we currently get monkeys for the role, given the peanuts we currently pay...)

John B said...

Garr. first should be "utter balls, the problems occurred /long/ before any significant government interference. Rather, the government allowed people to build lines from nowhere to nowhere with earnings projections based on nothing, and then they promptly went bust. Railway mania is the generally known term...

Anonymous said...

You can swat the argument aside thusly: We don't have a capitalist economy. If we ever did it was a long time ago.

Railroads may have been privately financed but their springing up here there and everywhere was backed by the power of the authorities. IIRC sometimes with specific acts of Parliament.

Most political parties are simply different degrees of left and the same is true of the Governments they form. Sadly. Few offer genuine alternatives such as shrinking the state, limiting the scope of it's interferences and letting the people decide what is best for themselves.

Shuggy said...

Is this working yet? I think you've misunderstood me. I responded here because the form wouldn't take.

Anonymous said...

John B said..."Garr. first should be "utter balls, the problems occurred /long/ before any significant government interference."

Well, "utter balls" does not seem to me to be an adequate argument.

The UK government has directly interfered with the railways for nearly a century, and indirectly for as long as they have existed.

The concept that politicians interfere, don't know what they're talking about and work on back stabbing, greed and troughing is hardly new. Even Wellington complained about it.

In the UK I do not know of one industry run even moderately well by the government, except perhaps the letter delivery arm of the Post Office (GPO phone service was a disgrace).

Henry North London 2.0 said...

It now takes 3 million pounds to build a steam engine

Folded at Dawn said...

John B - the railways were profitable, and functioned well, until WW1. At that point, the government nationalised them in all but name, taking them over for the duration of the war. They failed to maintain them during that time.

After WW1, they returned the railways to their original owners - with a 4-year backlog of maintenance. Then they fixed ticket prices. Then they raised the wages of the workers.

This meant that, suddenly, the smallest lines were unprofitable and there was no way out for the rail companies. They couldn't raise prices to invest to repair their exhausted network and rolling stock.

The result? Mergers to produce economies of scale that would stave off collapse. It worked - sort of - for around 2 decades, then another war came along, and the government did the same thing.

I live down the road from where Beeching lived, in East Grinstead. Did you know that he kept open the line from East Grinstead to London to ensure that he could reach Parliament, but closed the other 3 lines that ran south, west and east from East Grinstead? He was a first-class season ticket holder (paid for by the taxpayer, naturally).

What a noble man.

You can find out more by reading Christian Wolmar's "Fire & Steam". He's a horrible trot, but read between the lines in his book and he grudginly admits the success of laissez faire in delivering a high-quality rail service.

Anonymous said...

Labour or the BNP - it's a close call for many in the UK.

Labour or the UK Libertarian Party - not so close.

Anonymous said...

I think rail freight declined because our economy changed.

We no longer produce massive quantities of heavy goods that all need to be sent to the same destination (e.g. finishing plant, or seaport for export).

Our economy now depends on moving enormous numbers of tiny things very quickly from multitudinous sources to multitudinous destinations (see under Amazon, eBay, all online business, etc). And that is the one thing rail is completely hopeless at. It doesn't reach everywhere, it's slow, it's inflexible.

If you have to use road for any part of the job, then it makes no sense to do anything except use road for the whole job, so that's what we do.

Interestingly, for the things rail is good for - moving huge loads to one place - it is still used. Dozens of coal trains run every day from the Ayrshire coalfield (now all opencast) to the power stations in northern England. And thank goodness they do, I can't begin to think how many thousands more heavy trucks would be cluttering up our minor roads, were it otherwise.

Anonymous said...

Railways in Britain were largely built with private money; even so, the state had to facilitate the process with a plethora of private Acts of Parliament to allow land to be compulsorily purchased. Once mainland Europe got the railway fever, the state became far more heavily involved, no doubt partly for idiological reasons (although it's hard to see the Hohenzollerns and the Habsburgs as socialists), but more to the point because private investors were loathe to back the railways without an assured return. By this time of course, they had had the British example to scare them off (IIRC, those who invested in the 1840s didn't see their original investment paid back until the 20th century - let alone those railways which operated Ponzi schemes avant la lettre).

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