Yet another massive train derailment has happened, this time just outside Philadelphia, the same city where an interstate highway was shuttered for weeks after a bridge collapsed.
Why is America’s transportation system so fragile? One word: government.
Much of the nation’s transportation infrastructure is publicly owned, either directly by municipal, state, or federal governments, or indirectly by “public corporations” or “authorities,” like the New York Port Authority. Lo and behold, insulated from market forces, they all make decisions based on politics rather than economics.
Sometimes, governments skimp on durability to keep short-term costs down. But that’s to make them look good in the next election or budget cycle. And this frequently means higher medium- and long-term costs and delays down the road.
Other times, governments try to keep costs down by allowing projects that should take weeks or months to complete to roll on for years. For example, a fairly straightforward highway widening project in Sioux City, Iowa began early in Barack Obama’s first term. It finally wound down at the end of Donald Trump’s term, costing travelers untold headaches and delays throughout the 2010s.
Most railroad tracks, by contrast, are owned and operated by private railroad freight lines, which have invested about $700 billion since the Staggers Act of 1970 partially deregulated the industry. That is a far better outcome than the nationalization of private passenger rail with the formation of Amtrak in the early 1970s. Still, it’s a far cry from what railroads without any fear of federal regulations would have done to improve their own property.
As for railroad executives, they tend to slap bandages on damaged arteries rather than make larger investments because the future of transportation policy remains remarkably uncertain.
For a century, policymakers and regulators whipped railroads because they were America’s quintessential Big Business, profitable and hence exploitable. That’s why financial journalist Wilma Soss (on her NBC radio show Pocketbook News), novelist Ayn Rand (in Atlas Shrugged), and financial journalist and novelist Garet Garrett (in The Driver) all focused on railroads in their epic indictments of government run amok.
As predicted, overregulation threatened to derail the entire railroad industry in the 1970s. Today, industry leaders wonder whether it’s possible to stop regulators from blocking the tracks again, especially when the federal government has fallen into the hands of scofflaws of the Constitution.
Moreover, it remains unclear where railroads fall in the “green” scheme of things. They emit less carbon dioxide than trucks on a ton-mile basis and they also ship bulk commodities, like coal, that would otherwise float down rivers or not be shippable at all. Woke math can compute almost any answer, so there is a chance that railroads could end up like natural gas-powered stoves in New York or fur clothing in California, once again regulated to the brink of extinction.
Companies in other heavily regulated industries also fail, often with catastrophic results. Remember Silicon Valley Bank and the other banks that imploded earlier this year? The big banks and insurers, like AIG, that went under in 2008? Depositors were saved, but taxpayers got smacked—again.
Regulations don’t necessarily stop bad things from happening. They even, it seems increasingly so, cause them by keeping executives focused on maximizing short-term profits instead of realizing long-term gains.
For all their supposed sins, America’s 19th-century “robber barons” built scalable commercial empires that adapted to every change, except the increasingly grasping hand of Uncle Sam. It is time for the old boy to release his iron grip and let American entrepreneurs again do what they do best, innovate without fear of reprisal from “that man in the White House” and his many—indeed, countless—minions throughout the federal government.
So the next time a train runs off the rails or a bank ruins your home, don’t blame private business. Blame the government for creating so much opacity over the horizon. Executives will remain timid to invest until the courts and the American people place clear constraints on the administrative state and the politicians funding it.
