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