When Democrats Were Deregulators
The term “deregulation” has become polarized in Washington. But there was a time when both parties could agree on the benefit of targeted regulatory reform.
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.”
Targeted deregulation recognized that railroads operate in competitive markets and should price their services according to market demand and operate over their most efficient routes.
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.
Partial deregulation was chosen over nationalization, which would have cost taxpayers billions of dollars. 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.
U.S. freight railroads play an integral role in the economy today because Democrats and Republicans collaborated to balance market forces and rate regulation. Polling by Real Clear Politics found that most Americans support markets and targeted regulation. The Staggers Act is an example of deregulation done right.
美国货运铁路在今天的经济中发挥着不可或缺的作用，因为民主党人和共和党人合作平衡了市场力量和费率监管。Real Clear Politics的民意调查发现，大多数美国人支持市场和有针对性的监管。“交错法”是放松管制做得对的一个例子。
Mr. Jefferies is president and CEO of the Association of American Railroads.