jump to example.com

The problem doesn’t stop with Amtrak

2000px-Amtrak_logo_2 | @RoderickTLong | Support this author on Patreon

Amtrak is in legal trouble. The rail service provider has long enjoyed an anomalous legal status as a for-profit corporation created by the U.S. government. But in 2008, the Passenger Rail Investment and Improvement Act, or PRIIA, heightened that anomaly by giving Amtrak a say in crafting and imposing the regulations that the entire U.S. rail industry has to follow. And that, the D.C. Circuit Court of Appeals ruled late last month, is unconstitutional.

In the court’s ruling, Judge Janice Rogers Brown expresses concern about the ability of any business entity – public, private, or in-between – to “co-opt the state’s coercive power to impose a disadvantageous regulatory regime on its market competitors.” Inasmuch as PRIAA has “endowed [Amtrak] with agency powers, authorizing it to regulate its resource competitors,” Brown argues, the act “violates the Fifth Amendment’s Due Process Clause by authorizing an economically self-interested actor to regulate its competitors.” (Association of American Railroads v. U.S. Department of Transportation, 29 April 2016)

It remains to be seen whether the Supreme Court will agree; in the past it hasn’t always seen eye to eye with the D.C. court on issues involving Amtrak. George Will is not optimistic; writing in the Washington Post, Will sees PRIIA as a symptom of an increasingly bipartisan conviction that “the separation of powers is an anachronistic inconvenience,” and looks forward gloomily to a future characterized by the “steady permeation of ostensibly, but not really, private entities with government’s presence,” which he takes to have been “progressives’ consistent goal … for a century.” (“Amtrak’s for-profit regulation,” Washington Post, 11 May 2016)

The ruling, whether it ultimately gets upheld or overturned, raises broader questions about the relation between business and government in general.

While describing Amtrak as a “wholly unique statutory creature,” Brown recognizes that the problem extends beyond Amtrak’s specific legal status, charging that “government’s increasing reliance on public-private partnerships portends an even more ill-fitting accommodation between the exercise of regulatory power and concerns about fairness and accountability.”

In fact, though, the problem is still broader than that – and broader, too, than lack of respect for the constitutional separation of powers, which is the chief moral that George Will draws from the case. Even in the case of businesses that are not officially public-private partnerships, it is all too common for favored firms to lobby successfully for regulations that help them and hinder their competitors, and even to get their representatives onto the regulatory boards.

This phenomenon of regulatory capture is by no means anomalous, nor is it something that can be fixed by a few simple reforms. On the contrary, it’s the virtually inevitable result of the state’s power to regulate. The interests that benefit from regulatory favoritism tend to be concentrated; the interests that are harmed by it tend to be dispersed. Hence the proponents of regulatory favoritism have more incentive, and opportunity, to lobby for it than its opponents have to lobby against it. So long as the state retains its regulatory powers, then, the weight of economic incentives will continue to push toward policies of cronyism.

Indeed, the root of the problem lies within the institution of the state itself. If it’s a bad idea, in Judge Brown’s words, to allow “an economically self-interested actor to regulate its competitors,” then what are we to make of the state, which by definition claims a territorial monopoly on the provision of legal services – legislation, adjudication, and enforcement? What this territorial monopoly means is that no one can offer those services without the state’s approval and oversight. Should we expect government to exercise this monopoly fairly and wisely?

Without the discipline of vigorous market competition, firms lack the economic incentive to provide good value to their customers; moreover, even apart from the issue of incentives, without the feedback of price signals, firms lack the information needed to determine how best to satisfy customer preferences. Thus when a firm holds the legal right to put its competitors out of business, the foreseeable results – as any economist will tell you – are high prices, low quality, inefficiency, and abuse of power. Why should we expect this economic truism to apply any differently to the state than to anything else?

The problem isn’t just Amtrak. Nor is it just public-private partnerships, or even regulatory favoritism toward crony capitalists. The problem is the state itself. And thus the problem won’t be solved until the monopolistic entity known as the state is replaced by the more level playing field of a polycentric legal order.

   
Discussion
 
Highlights

Street Knowledge with Chris Graham: Libertarian gubernatorial nominee Cliff Hyra

Chris Graham interviews Libertarian gubernatorial nominee Cliff Hyra.

Another new poll gives Northam big lead in Virginia governor race

One Virginia governor race poll released yesterday had Democrat Ralph Northam and Republican Ed Gillespie tied.

Poll: Trump unpopular in Virginia

President Donald Trump is well under water among Virginia voters, according to new poll results released by the University of Mary Washington.

The Petty Hearts bring Tom Petty tribute to Wayne Theatre on Sept. 22

Tom Petty tribute band The Petty Hearts are coming to the Wayne Theatre on Friday, Sept. 22.

Virginia Chili, Blues n' Brews Festival set for Saturday

The Virginia Chili, Blues n' Brews Festival will celebrate its 10th anniversary on Saturday in Downtown Waynesboro.

Events Calendar

Upcoming events in the Shenandoah Valley, Central Virginia and statewide from the Augusta Free Press Events Calendar. Don't see your event listed? Email augustafreepress2@gmail.com.

UVA alum Chris Long to donate first six NFL game checks to fund scholarships

The Chris Long Foundation announced today that Philadelphia Eagles defensive end Chris Long will donate his first six game checks of the 2017 NFL season to fund two scholarships in his hometown of Charlottesville.

Game Preview: VMI, Chattanooga look to get back on track on Saturday

VMI knew the 2017 football season was going to be a rebuilding year. Chattanooga, coming off a playoff appearance in 2016, had its usual high expectations.

Game Preview: UVA has a chance at Boise State

Vegas and the ESPN Power Index don’t give UVA much of a chance to win at Boise State on Friday night.

Street Knowledge with Chris Graham: First look at UVA-Boise State

Chris Graham and Scott German take a first look at the UVA-Boise State game set for Friday night.

Web Design, Marketing

Augusta Free Press LLC provides clients in the Shenandoah Valley and Central Virginia and beyond with marketing and PR solutions including web design, TV/radio, social media and overall marketing campaign design and implementation.

   
Recent Posts
   
Your One-Stop Media Shop
Augusta Free Press LLC provides clients in the Shenandoah Valley and Central Virginia and beyond with marketing and PR solutions including web design, magazine/brochure, TV/radio, social media and overall marketing campaign design and implementation.
  • Web Design

    You want a new website, but don’t have the first clue as to how to build one. That’s our job. We take care of all facets of web design – visual design, layout design and content development. Get your business online for as little as $1,299.
    Learn more about AFP Web Design services.
  • Graphic Design

    The staff at Augusta Free Press Publishing has been recognized by the Virginia Press Association for excellence in layout and design. Whether you need a fresh business card design, rack card, ad, flyer or full magazine design, we can help with all your graphic-design needs.
    Learn more about AFP Graphic Design services.
  • Marketing

    Augusta Free Press manages advertising campaigns for small- and medium-sized businesses across Virginia. You don’t need to hire a full-time marketing coordinator. Bring the experience of the Augusta Free Press team to work for you – for a fraction of the cost.
    Learn more about AFP Marketing services.