Save The Nation - Feb 2021

The railroad industry has undergone a large number of mergers since 1981, which has raised fears of monopolization. Some economists and most politicians equate the number of competitors or degree of industry concentration with the robustness of competition. They reason that, as mergers leave more shippers served by only one railroad, surely higher rail rates must follow.

By most measures, railroad deregulation under the Staggers Act of 1980 has been a resounding success. The Staggers Act lowered real rail rates on most commodities by 15 percent to 25 percent, saved shippers $11 billion to 18 billion annually due to lower rates and more timely service, and staved off a massive taxpayer bailout of an industry that was a financial basket case.1

Who can forget the image of President Ronald Reagan hoisting a foot-high, pork-laden spending bill during his 1988 State of the Union Address and warning the then-Democratically-controlled Congress not to send him another such bill upon the threat of his veto.

How should a civilized society respond when A crashes his car into a car driven by B, causing injury to B and damaging his property? The common law of tort is predicated on the notion that people who are harmed by the actions of others are owed restitution by those responsible for their losses. But what if the responsible party lacks the financial wherewithal to provide full compensation? Unless he has purchased liability insurance, the accident victim will have to absorb the losses himself. The law can assign responsibility, but it cannot redistribute wealth that does not exist.

I make mistakes. For example, last weekend the one tie that I brought to an out-of-town wedding did not match my suit. I took responsibility for poor wardrobe selection and wore the tie anyway. However, there were other choices. It would have been possible to purchase a new tie, borrow a tie, or go to the wedding with no tie at all. In the end, I chose to wear the tie and accept the ridicule associated with that decision.

Imagine the following headline: "Policymakers Panic in Fear of Merger Mania!" Although it could be true, in reality, there is little to fear. With the economy growing rapidly for the past eight years, we have witnessed a record increase in the number of corporations merging with one another. Common reaction to mergers is a suspicion that corporate America is gobbling up its competitors, which will mean higher prices for consumers.