Lessons from Conrail (Congress, Reagan, highway, companies)

[Frankie117]

Those of you who were old enough to remember should be able to compare the auto industry bailout to the massive Conrail bailouts of the 70's and 80's. It was a frequent subject of the news back in the day.

Conrail is short for Consolidated Northeastern Railroads. In the 70's, most Northeastern railroads were on the verge of bankruptcy, primarily due to the fact that abandoning unprofitable routes was almost impossible, not to mention heavy tax burdens and the advent of superhighways.

Conrail was nationalized, and Congress poured billions into trying to save it. The primary responsibility of these railroads was to keep routes open for the Department of Defense, loss of that capability was simply not an option.

When our savior Ronald Reagan took office, he "demanded" that Conrail survive without federal assistance. New laws were passed, and layoffs, route abandonment, and re-distribution of resources within the railroad itself caused it be regain profitability by the mid/late 80's. Fueled by the intermodal boom resulting from the new China trade, Conrail posted its first ever profit. By the 90's, the government was no longer needed to control it, and by 1999, it was split among two Class I railroads in the East: Norfolk Southern and CSXT where it remains as some of the most valuable trackage in the Northeast and possibly the nation as a whole.

Based on that, perhaps the lessons of Conrail can be put into play with the automakers. They need to re-organize, and the only way to do that is to let the government take the reigns for a while. Of course, you probably won't believe that I'm a hardcore Libertarian at this point .

Still, I do not care for these companies, but for the companies that supply them and all the employees that will suffer. Sure, layoffs will be necessary, but unfortunately it is a "necessary evil". When the industry gets itself back into good financial standing, the jobs will gradually return.

Just my $.02