Supply Chain Optimization

Re-Regulating Transportation – It Could Happen

As politicians talk more about regulation in industries and making sure “stakeholders” come in front of shareholders, we should keep in mind that what was considered “good regulation” often has bad impacts.  Wall Street Journal author Phil Gramm had this thesis that I will paraphrase as “Government does more harm than companies.”  

 
As evidence, they cite that after the “Robber Baron” trusts were busted by the Sherman Act of 1890, the consumer was worse off.  
  • Output declined
    • Steel grew by 242% from 1880-90, but after, only 135%
    • Copper – before 330% vs. after 133%
    • Petroleum – before 74% vs. after 39%
  • Prices adjusted more slowly.  Steel rails fell by 43% before 1890 but only 0.7% after.  A similar pattern played out for sugar, copper, pig iron, and anthracite coal.
Today, transportation is one of the biggest stakeholder industries…ripe for regulation.  We would all agree that the transportation deregulation and elimination of the Interstate Commerce Commission (Born 1887 – died in the Carter era) produced significant price reductions and improvements in service.