Rail Price Controls? Ridicule the Thought

摘要

That is what happens in competitive markets: Competition drives down prices, while service usually increases. However, things that happened 40 years ago are hard to remember today. When it comes to public policy, that is a problem. Almost nobody who currently works in rail policy has the institutional knowledge of what the rail industry was like before it was freed from government constraints. Now that things are good and shipping is cheap, bureaucrats are considering what should be unthinkable: restoring price controls. In 1887, Congress passed the Interstate Commerce Act. The intent was to break the railroads' monopoly power. This never works, but Congress loves trying. Fast forward 100 years, and regulations and price controls almost bankrupted the rail industry. So, in 1980, Congress passed the Staggers Rail Act, which allowed for deregulation and for shippers to compete. Freight rates fell by 45%.