Login
or
Register
Home
»
Trains Magazine
»
Forums
»
General Discussion
»
More on the negative consequences of monopolistic pricing
Edit post
Edit your reply below.
Post Body
Enter your post below.
[quote]QUOTE: <i>Originally posted by PNWRMNM</i> <br /><br />Dave, <br /> <br />You are the greatest source of economic claptrap I have seen on this forum, but the above post rises you to new heights of inconsistent generalizations unsupported by any fact. <br /> <br />By the way, I love my BNSF Kool Aid. It keeps me strong against the confused. <br /> <br />Mac <br />[/quote] <br /> <br />Mac, <br /> <br />The problem is that you and a few others who participate on this forum do not have an understanding of how economics and politics intermingle as it relates to railroads. I'll try and explain it in the simplest terms. <br /> <br />Regulation is good for consumers to the point of price protection, but it inhibits business expansion and innovation. <br /> <br />Monopoly is good for the company to the point of increasing profit margins over the short haul, but it inhibits the customer's range of economic choices, and it also inhibits the desire for innovation due to the risk aversion. <br /> <br />The response to regulation by government depends on the political philosophy of the party in power. If it is a populist oriented body, then regulation will be seen as a necessary evil to counteract the evil of "excess" profit making entities. If it is a pro-business body, then regulation is seen as an inhibitor to economic expansion. It is assumed that as the general population becomes more educated, they will aspire to the latter rather than bury their heads in the former. <br /> <br />Deregulation comes in two disparate forms: Monopoly-inducing deregulation (popularily known as partial deregulation), wherein the supply side of the business is unshackled but the demand side remains locked for the sake of the larger businesses. The more beneficial form of deregulation is anti-trust inspired deregulation, wherein both the supply side and and demand side are unshackled, allowing both unlimited business expansion and unlimited consumer choice, with each acting as the other's deterent. <br /> <br />The response to monopoly-inducing deregulation by populists is to institute reregulation to "protect" the general population. The response by pro-business depends on what part of the business spectrum has the greatest say. If it is the few but most powerful big businesses, then all they can offer is excuses for the monopolists. If it is the many but least powerful small businesses, then they will push for anti-trust actions but not re-regulation, since business regulations can hurt the small as well as the large businesses. <br /> <br />What the Stagger's Act did was to erect the monopoly-inducing partially deregulated rail market, where the railroads were allowed relatively limitless power to control their own market, but the rail consumers were not afforded the necessary deterent of having relatively unlimited market choice among rail service providers. The consequence is short term profiteering among the railroaders, and the eventual long term response by representative governments is to either reinstitute regulations to control pricing, or force full anti-trust deregulation to make the rail market truly competitive on both ends. What is happening in Montana is just the tip of the iceberg, and if the collective leaders in the business and political spectrums do not take the necessary action, what will result is a return to rate regulation, a prospect that is good for neither business or consumers. <br /> <br />But if your reponse is to say that BNSF or some other Class I can do no wrong, then it is pointless to try and explain basic economics. Blind loyalty is not a virtue.
Tags (Optional)
Tags are keywords that get attached to your post. They are used to categorize your submission and make it easier to search for. To add tags to your post type a tag into the box below and click the "Add Tag" button.
Add Tag
Update Reply
Join our Community!
Our community is
FREE
to join. To participate you must either login or register for an account.
Login »
Register »
Search the Community
Newsletter Sign-Up
By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our
privacy policy
More great sites from Kalmbach Media
Terms Of Use
|
Privacy Policy
|
Copyright Policy