Friday, January 01, 2021

The Staggers Rail Act of 1980 got American freight transportation back on track

See When Democrats Were Deregulators by Ian Jefferies. Mr. Jefferies is president and CEO of the Association of American Railroads. 

This is something I usually talk about when I cover regulation. Excerpts:

"The bipartisan Staggers Rail Act of 1980, passed by a Democratic Congress and signed by President Jimmy Carter, deregulated the freight railroad industry. When Mr. Carter signed the law on Oct. 14, he said that “by stripping away needless and costly regulation in favor of marketplace forces wherever possible, this act will . . . benefit shippers throughout the country by encouraging railroads to improve their equipment and better tailor their service to shipper needs.”"

"Previously, railroad rates and service were set by government, and carriers were often forced to provide service on lines lacking commercial viability. Railroads publicly posted rates for specific commodities independent of market conditions. The impact on railroads was predictable and disastrous. At one point, 1 in 5 rail miles was serviced by bankrupt railroads."

By allowing large railroads to shed inefficient, low-density or unprofitable lines to focus on core businesses, the Staggers Act not only improved service along the mainline network; it helped give birth to a short-line rail industry that today operates 50,000 miles of the 140,000-mile network that spans across the United States.

The Staggers Act maintained ample protections for customers that lack effective competition. The market is allowed to work where competition exists, while the government can intervene where it doesn’t.

The Staggers Act continues to provide economic dividends. “As we appreciate the achievements of rail deregulation, it is useful to realize that the policy succeeded in large part because it brought buyers and sellers closer together to achieve mutual benefits,” Brookings Institution researcher Clifford Winston wrote in 2005.

Since 1980, freight railroads have poured more than $710 billion of their own funds back into their operations. Average rail rates are 43% lower today than in 1981 when adjusted for inflation. This translates into at least $10 billion in annual savings for U.S. consumers. Safety and service are at historically high levels."

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