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Summarizing The Success Of 40 Years Of Deregulation In Air And Freight Transportation

Summarizing The Success Of 40 Years Of Deregulation In Air And Freight Transportation

In 1980 Democrats held the presidency and both houses of Congress. The 96th Congress marked a generation in which both the Senate and House had stayed blue. However, the economy overall had suffered the drawbacks of some 90 years of misguided industrial regulation and central planning from both parties. Moreover, Americans suffered from stagflation (prolonged stagnation and inflation), gasoline shortages brought on by a fickle foreign oil supply, limited options for transportation, and limited consumer goods, which were expensive to ship.  A growing bipartisan, academic and policy consensus documented that regulatory control entrenched the power of incumbent firms, incentivized collusive relationships between regulators and companies, created barriers to entry in the market, and precluded the competition that would incentivize innovation and choice. Congress and the Carter Administration rightly focused on democratizing the benefits of freight rail and air transport networks to help address some of these challenges. The signing of the Staggers Rail Act in 1980 laid important groundwork for the greening of the transportation industry today.

Making Freight Rail Work for Americans, not Bureaucrats

American folklore alludes to the 19th century railroads as justification for regulatory agencies, but the creation of Interstate Commerce Commission (ICC) in 1887 was partially a product of rent seeking, reflecting the political prioritization of powerful agricultural interests over transport providers, not consumers. Shippers of the time desired political power to ensure preferred rates rather than a competitive bidding process. The subsequent decades saw the decay of America’s railroads, so much so that they were unfit to deliver some supplies to ports during World War II. Many went out of business as the government subsidized highway travel and trucking. It reached

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Staggers Rail Act deregulation has enabled rail industry to thrive even during times of national crisis: Analysis

Staggers Rail Act deregulation has enabled rail industry to thrive even during times of national crisis: Analysis

October 14, 2020, marks the 40th anniversary of the enactment of the Staggers Rail Act signed by former President Jimmy Carter. The bipartisan legislation primarily deregulated the freight rail sector, which was on the brink of collapse in the 1970s.



a group of people sitting at a train station


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The rail industry’s success after 40 years of rail deregulation provides “an important case study on matters related to competition, markets, rate regulation and capitalism writ large,” the Association of American Railroads argues.

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The Staggers Rail Act eliminated many of the regulations still in place since 1887, when Congress passed the Interstate Commerce Act. The act established the Interstate Commerce Commission (ICC) to regulate monopolies controlling the railroads.

By the 1970s, the regulations had not changed. Combined with competition from other transportation sectors, major railroads were facing bankruptcy, the industry was facing ruin and rail infrastructure was so deficient that cars were falling off the tracks.

Deregulation enabled the rail industry to take a customer-focused and market-based approach. Since then, freight railroads have invested more than $710 billion of their own dollars back into the national rail network.

Since 1980, rail traffic has doubled but, because of deregulation, rail rates are down by more than 40 percent when adjusted for inflation. Customers can ship double the amount of goods for roughly the same price they could 40 years ago. And because of technological advancement, increased volume of heavy freight has been carried on rail lines instead of on congested or failing public roads making transportation safer.

“The freight rail industry is one of the most cost-effective and efficient transportation networks in the world,” the Association of American Railroads (AAR) argues. “Fueled by billions of dollars in annual private investment – $25 billion on average – railroads maintain and modernize the nation’s nearly

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