Kennedy’s deregulation legacy

Edward M. Kennedy died Tuesday, and discussion will center on his liberal legacy. But what of those elements of his conservative legacy? Kennedy was an interesting politician, and when remembering him, commentators should also remember his push to deregulate America’s transportation.

Vanderbilt University professor James W. Ely’s book on Railroads & American Law renders this judgment about railroad regulation: “Railroad regulatory policy has left a cautionary legacy. Rather than a triumph of the Progressive Era, the waves of regulation put the industry in a straitjacket, and ultimately proved disastrous.” (p. 282). Railroad regulation was disastrous from any perspective. Regulation encouraged the growth of highways, and so liberals could complain the decline of the railroad increased global warming and other bad things. Conservatives could rightly complain that Congressional intrusion into transportation disrupted the market and created artificial winners in the automakers and trucking. In any case, big economies need railroads because railroads are economical means to move products to market—you pay less at Wal-Mart thanks to railroads.

By the 1970s, American railroads were in chaos. Almost a century of regulation left railroad companies unable to compete due in part to regulation and domination by unions. Bankruptcy was a common story of the era for railroads. Democrats and Republicans saw a need to fix this and the Staggers Rail Act of 1980 (followed during the Clinton years by the 1995 elimination of the Interstate Commerce Commission) allowed railroads greater freedom to set their own rates, and perhaps most importantly, merge.

But the Staggers’ Act arose out of Jimmy Carter’s promise to deregulate, and Ted Kennedy’s primary campaign against Carter for the Democratic nomination. According to Stephen Goddard’s Getting There, Kennedy’s primary campaign for deregulation encouraged Carter to push Congress for rail deregulation. Goddard called it, Carter “looking over his shoulder”. This led Carter to urge Congress to “remove the shackles” (as Goddard put it) from trucking and railroads. It finally happened, and Democratic president Jimmy Carter signed the Staggers Rail Act of 1980 in October—just before an even bigger deregulator was elected president.

Even after the campaigns, Kennedy praised deregulation. He was proud of his legacy to deregulate airlines in 1978, and the 1980 act to deregulate trucking. This combined with railroad deregulation saved consumers millions, and helped spark substantial economic growth. When Bill Clinton signed legislation to end the ICC, it capped a legacy where Democratic leaders helped end regulation begun by Republicans like Teddy Roosevelt.

When Congress considers healthcare “reforms” it should remember the serious problems caused by government intrusion into transportation. While Democrats, many that supported deregulation, have pushed for greater government control of healthcare, everyone should remember the disastrous legacy of transportation, and how Democrats like Kennedy led the way out from the burden of regulation.