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As we gear up for the release of Episodes 5 and 6 of Reconnect America, we wanted to share some of the conversations that have been guiding us toward a deeper understanding of the last 46 years of U.S. rail transport and the evolving relationship between this critical national infrastructure and the businesses and communities that depend upon it.

My guest for today’s conversation is John Strong, professor of finance at the College of William and Mary. Professor Strong is the author of a handful of articles that have proven uniquely valuable in illuminating some of the interconnected issues that we are grappling with—in particular, the development of the operating model known as Precision Scheduled Railroading (PSR) and the rise of a class of activist investors who have aggressively forced this model upon railroad managers in North America.

In addition to these themes, our conversation also explores how the ground for PSR and shareholder activism was laid by an earlier wave of adaptation to railroad and financial deregulation. Driven by the newfound ability to spin off and abandon less profitable lines, merge systems, and enter long-term contracts with discounts that privileged the largest multinational corporations, this initial pivot was aimed at moving fewer, longer, so-called “unit trains” carrying a single commodity from a single origin to a single destination. Financially, it was fueled by an emergent class of index fund managers, whose passive oversight left a power vacuum that would ultimately be filled by activist investors.

In a moment when Wall Street’s stranglehold on U.S. railroads threatens to trigger yet another wave of anti-competitive consolidation, this conversation sheds valuable light on the evolving incentive structures that brought us to where we are today.

With Gratitude & Solidarity,

Bill Moyer

Reconnect America is hosted by Bill Moyer, co-author of the book Solutionary Rail: A People-powered Campaign to Electrify America’s Railroads and Open Corridors to a Clean Energy Future. Check out the essays and supplemental posts that complement this podcast HERE.

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