Conrail Sale Saves Taxpayers From Taking Another Bath
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Reading Harry Bernstein’s April 1 column, “Conrail Sale Points Up Privatization’s Bad Track Record,” it comes as no wonder that he writes a labor column. He certainly would fail as a businessman (or as a gambler, for that matter).
Bernstein argues that since the government has spent $7.6 billion on Conrail, Conrail should not be sold until the government gets its money back. Apparently, he has never heard of “sunk costs” or “Don’t throw good money after bad.” The obvious point is that that $7.6 billion is history. It is lost forever. We taxpayers have been taken for a bath. Whether we sell or don’t sell Conrail, we are still out that money.
The wisdom of selling Conrail is to be based on its future, not its past. Sold, Conrail brought in $1.65 billion and thus an annual “profit” (in reduced interest on borrowing) of about $100 million, plus taxes on whatever profit Conrail may make. The railroad business is not well, and Conrail could easily never see another profitable year. Thus, there is a good chance the government would be ahead even if it gave Conrail away.
The real lesson of the $7.6 billion wasted on Conrail is that we never should have gotten involved in the first place. We lost that money trying to bail out some special interests and now have rectified part of the mistake by getting the government out of a business it had no business being in.
DAVID CARL ARGALL
La Puente
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