Regulators Are Trying to Derail the Success of our Private Railroads | Ian Adams   Leave a comment

Found on FEE

By virtually any measure, America’s freight rail system is one of the best in the world. In fact, rail transports a full 40 percent of freight moved in the United States. But rogue federal regulators may change that.

Image result for image of a freight train

Since 1981, when a bipartisan congressional effort largely deregulated the nation’s freight rail providers, Americans have enjoyed a 45 percent decrease in rates for transport by freight train.

That means nearly twice as much freight can be moved on the rails today, compared to 35 years ago, for roughly the same cost. New rules under review by the U.S. Surface Transportation Board, however, largely would undo those striking gains.

The Rail Industry Doesn’t Need Micro Conductors

The Surface Transportation Board is considering implementing a “reciprocal switching arrangement” rule, better known as “forced access,” which would require railroads to grant competitors a right to use their rails.For decades, railroads have negotiated terms among themselves for interchanging traffic.

Supporters of the rule maintain the measure would improve competition. However, they seek to do so by reinstating the kind of pre-1981 regulatory regime that brought the railroads to the brink of financial ruin.

Before passage of the Staggers Rail Act of 1980, railroads were unable to account for the true costs of their services because of regulations that restricted their rates and practices. Similarly, forced access would prescribe how railroads interact, independent of the public’s interest in competition.

The case for forced access is built on two seemingly reasonable, but ultimately incorrect assumptions.

The first incorrect assumption is that rail lines are public property and should be treated the same as roads; they aren’t, and they shouldn’t be. In fact, for the most part rail lines are owned by private firms.

The second misconception is that railroads can’t already coordinate the use of each other’s rail lines on their own, even though they do it all the time.

In fact, for decades, railroads have negotiated terms among themselves for interchanging traffic. The Surface Transportation Board is asked to intervene only when one railroad complains that another is charging rates that are excessive.

Why Fix What Ain’t Broken?

This system has worked well. The public benefits from rails being held in private hands, as that arrangement has provided incentives for private capital to be invested in maintaining those lines.Forced Access would lead to less private railroad investment, and consumers would feel the pain.

Compared to other major industries, railroads invest one of the highest percentages of their own revenues to maintain and add capacity to their systems, according to the Federal Railroad Administration. This has saved taxpayers billions.

Compelling railroads to open their routes to other operators under terms dictated by the government would render railroads’ billions in private investment less valuable. Over time, they would have less and less reason to invest, and consumers would feel the pain.

Of course, proposals for forced-access regulations would be unthinkable were the railroads in the state they found themselves in before the Staggers Rail Act’s reforms, in the wake of eight large railroads filing for bankruptcy.

As is often the case, memories of past foibles fade quickly. The cost of forgetting the past, and the great benefits that liberalization has brought, would be a return to worse service, expensive taxpayer subsidies, and, perhaps, outright nationalization of our railroads.

That would be a move in the wrong direction.

Source: Regulators Are Trying to Derail the Success of our Private Railroads | Ian Adams

Advertisements

Posted October 7, 2016 by aurorawatcherak in economics

Tagged with , , , ,

What's Your Opinion?

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Leo X. Robertson

News of my latest publications, events, and episodes of the Losing the Plot podcast!

Sherry Parnell

Author of "Let the Willows Weep"

Emerald Book Reviews

Book Reviews and Promotion Services

YA Chit Chat

The Ponderings of YA author J. Keller Ford

madchen863's Blog

Planet Earth: home of life

MIND MIX RADIO

Radio for the Awake and Aware

SHAKERS & MOVERS

Soweto isiPantsula Crew + Management

RedheadedBooklover

Just a redheaded woman who is obsessed with books

Mercedes Prunty Author

The Walking Mumbie

InsureZero Blog

All you need to know about Insurance

Creative Ideas for Starving Artists

Brain juice that revives and refreshes

Real Science

"Science is the belief in the ignorance of the experts" - Richard Feynman

Marsha Ingrao

Traveling & Blogging Near and Far

Victoria (V.E.) Schwab

"You can't get a cup of tea big enough or a book long enough to suit me." ~C.S. Lewis

Darlene Foster's Blog

dreamer of dreams, teller of tales

All About Writing and more

Advice, challenges, poetry and prose

Tapestry ~ Treasures

My life is but a weaving between the Lord and me!

Sue Vincent's Daily Echo

Echoes of Life, Love and Laughter

S.R. Mallery's AND HISTORY FOR ALL

Everything Historical And Much More...

%d bloggers like this: