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[quote]QUOTE: Originally posted by M.W. Hemphill Greyhounds: Your analysis of the effects of regulation on the Rio Grande and Union Pacific is unlikely to inspire disagreement from any reasonable person I have met. However, depending on who I am, I can think of broad benefits of economic regulation of transportation. While arguments can be waged that it cost the U.S. economy this or that, that's not relevant to the person who Does Not Care what happens to the U.S. economy. Specifically, regulation was hugely beneficial for small shippers and anyone interested in transportation to or from a small town or to a location off the main routes of commerce. It gave the one-car-a week coal mine the same rate as a thousand-car-a-day coal mine. If I am the small coal mine I like that a great deal, because it keeps me in business. If I want to live in a country that allows small businessmen to get into business, and hinders the large businessman's power, I want regulation of the market. If I want to live in a country that gives the consumer the lowest possible price, I want deregulation of the market. An assertion today that regulation would be good, or bad, as a summary judgement, based on today's value system, can be made. If it's a consistent and defensible argument, it will probably stick. Projected backward, it's an ahistorical assertion unless it considers the value system of the past. Slavery, for instance, was a good deal for the slaveowner. Bad for the slaves and for later generations, but apparently that didn't concern the slaveowners very much. Ahistorical assertions also diverts attention from the larger question: why it is that a majority of Americans in the past found economic regulation desirable, and why it is that a majority of Americans find it undesirable now. After all, we did it: railroad regulation was not imposed by aliens or evil overlords, but by Americans. So why did America change? What it was that led Americans to believe railroad regulation was a good idea in the late 1800s, and about a century later to conclude it was a bad idea? I submit that regulation and deregulation both were logical outcomes of substantial reassessments of what it was people wanted out of their lives. Of the first change, most historians consider it a revolt against modernity and an emphasis that America should remain a nation of individuals of roughly equal economic power, along with a strong fear of classism, monarchies, immigrants, certain religions, and ironically, a fear of distant control. Of the second change, most historians consider it a revolt against limits on individual expression and self-realization, namely, limits on the personal expression called "I want to get really rich and accumulate cool toys." Ironically, it also includes a strong fear of distant control. The irony of the past is that to achieve regulation, control of the market had to be vested in distant Washington, with a dubious oversight called the popular vote, and the irony of the present is that to achieve individual wealth, control has to be vested in distant boards of directors, with a dubious oversight called the annual election of the board of directors. I find deeply incisive what BNSF VP Stevan Bobb said to me two years ago to explain grain rates: "We believe in equal opportunities, not equal outcomes." That is, everyone has the freedom to invest in any piece of land they want and reap all the reward the market will allow, but the railroad (and by extension the government) has no obligation to assure everyone gets the same reward regardless of their decisions. Those who invest in badly located farms get high rates, and those who invest in well located farms get low rates. The economic rent of the land will reflect location. [/quote] Mark, Your understanding of economics is purely textbook, not rooted in the reality of considering all variables. Your comment (and BNSF's rationale to charge discriminatory rates to Montana farmers compared to the rates charged Kansas farmers) lacks a complete analysis of "good" investment vs "bad" investment in farm locations. The ONLY reason BNSF is able to do this is that the STB did not follow the protocols of ensuring no undo economic damage to regions and enabling the maintenance of access to competitive rates when the original BN merger was authorized, along with the subsequent Milwaukee abandonment and the eventual BN + SF merger. When the STB allowed the BN merger, they all knew that the Milwaukee was not long for this earth, yet they made no attempt to rectify the eventuality of Montana (and most of the Northern Tier states) becoming captive to a regional monopoly, where once there had been several viable competitors (albeit in the days before the PARTIAL DEREGULATION of the Staggars Act). The STB should have allowed UP access to BN's Northern Tier lines, the same as was done for Nevada and Utah when SP and UP merged. To say that Montana farmers were fooli***o "invest" in Montana farmland is to ignore both the STB's creation of a monster and the fact that most of this farmland was settled long before any such mergers took place. I guess next time the STB allows a merger that creates monoplolistic pricing for adjacent landowners, the landowners should just throw in the towell and donate their land to the Nature Conservancy. The fact that Kansas farmers have access to rate competition while Montana farmers do not is not the result of any economic models or bad business decisions of landowners, rather it is the result of unequal application of federal policy. "We believe in equal opportunities, not equal outcomes." What a crock! Mr. Babb knows full well that his Northern Tier customers do not have access to equal opportunities. He'd have more credibility if he simply gave Montana farmers the finger.
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