Rail monopolies destroyed the American supply chain

Heads they win, tails we lose.

The rail barons were the original monopolists, whose ability to make or break whole industries based on their parochial needs spurred the first American antitrust laws. For generations, railroads were tightly regulated to ensure resiliency, competition and fairness. Today, the monopolists are back, and their greed has shattered American supply-chains.

The pandemic has seen massive failures in rail service — late deliveries, waves of derailments, huge backlogs. But rail profits have soared, as have the prices of carrying freight. No wonder: in 1980, there were 40 US “Class I” railroads. Today, there are seven.

How did this happen? Blame Carter. And Reagan. And every president since. The Carter administration lit the kindling for the bonfire of regulations and Reagan poured gas on it. In 1980, the dismantling of rail regulation picked up a good head of steam and it hasn’t slowed since.

Writing in The American Prospect, Matthew Buck provides an excellent, highly accessible overview of how railroad deregulation made a small number of people — especially the notorious hedge-fund looter Bill Ackman — spectacularly rich, and how those riches were turned into political power to further the removal of the rail industry’s brakes.