Let’s talk about efficiency. It’s a good thing, right? But what does that mean in the real world? Just ask the residents of East Palestine, Ohio.

We’re all looking for new ways to be more efficient–maybe a quicker, more organized, and easier way to prepare a complicated meal (that still tastes great!) or a GPS-guided route to school or work that saves time and gas. Or, for a business, a more streamlined method of production that helps workers work smarter and safer, while still maintaining high quality.

Those are good things. But as I travel across the country talking about my book, or helping an organization fight a privatization scheme, I am constantly hearing that businesses are always more efficient than governments (note: It’s not true). In fact, as a glance at the business section of any bookstore will show, there’s a cottage industry of consultants and business leaders who sell new efficiency ideas and methods while continuing to advance the inherent efficiency and superiority of private business.

Let’s dig into the basic “mathematics of efficiency.” It’s about spending or doing less to get the same or better (cost/time + efficiency = same or better.) In that formula, “efficiency” could either be “smarter” or “cheaper.”

The problem is that far too often it equals cheaper. Efficiency could mean fewer workers than are needed to ensure high quality or safe production on the shop floor. Efficiency could mean lower wage workers. Efficiency could be using lower-quality supplies and equipment. And sometimes, efficiency means fewer inspectors and less monitoring of safety protocols.

Sometimes “same or better” means outsized profits, expensive stock buybacks, high-dividend payments, and high executive compensation packages–in other words, the fruits of high productivity built upon a package of “efficiencies.”

So, I’ve come up with a new term. When efficiency means cutting corners for increased profits, we should call it: “Extractive Efficiency.”

That’s what happened in East Palestine and could happen again if the underlying extractive efficiency isn’t dealt with. In fact, over the last few years, all the railroad companies have focused on efficiency to increase profits, cheering Wall Street, but not the residents of East Palestine. Less than two weeks before the derailment, it was reported that Norfolk Southern, the train operator, had improved the average speed of its trains from 17.5 miles per hour to 20.7 between the second and fourth quarter of 2022, and by January was at 22.2 miles per hour.

Here are a few of Norfolk Southern’s “efficiencies.”

Fewer workers: Norfolk Southern removed a senior type of inspector from the track division that runs through East Palestine, making more work for signal maintainers. Over the past five years, employment among the nation’s largest freight rail carriers has fallen about 18 percent. With fewer workers doing more work, they may miss telltale signs of safety failures.

Harder work and more hours per worker: The industry, including Norfolk Southern, implemented “Precision Scheduled Railroading” that, according to The American Prospect “means no excess engines, no track not under constant use, no downtime in the yards, no employees not busy driving the trains or maintaining the tracks, and never have three one-mile-long trains when one three-mile-long train can be assembled.” Shockingly, railroad workers get no paid sick days.

Less monitoring and oversight: Norfolk Southern skimped on heat detectors along the track designed to pick up overheated wheel bearings, a leading cause of derailments. Overheated wheel bearings may have been the cause of two derailments just last year from the same company. The current law allows the railroad industry to set its own standards for the use of sensors. While the rail industry lobby, the Association of American Railroads, says the sensors should be within 40 miles apart, its own research arm concluded 15 miles was the ideal for sensor spacing.

And, oh yeah, the companies are doing well.

Norfolk Southern’s 2022 profit was up 9 percent, to $3.27 billion.

The top five executives at Norfolk Southern are doing well also. Their total compensation in 2021 totaled $14,828,772.

And the company spent $1.8 million lobbying the federal government in 2022 and $1.3 million in political contributions to federal candidates and committees. What’s all the money spent on?  According to Sherrod Brown, “Rail lobbyists have fought stronger safety standards for years, and Ohio communities like East Palestine and Springfield have paid the price.”

So, I guess businesses can be pretty “efficient.” The only question is at what cost and to whom.

Donald Cohen
Executive Director