The Free Enterprise Alternative harnesses private sector economic forces to create a dynamic, flexible, innovative, and efficient rail industry. Basic to this structure is the separation of carrier and roadway functions, which allows each to be structured in the most appropriate manner: carriers participate in a free market governed by competition, and the roadway network exists as a regulated natural monopoly available for use by all carriers. Joint use of roadways provides both competition and efficiency. The new rail industry structure offers many advantages over the existing traditional industry structure. Despite its benefits, the new structure would doubtless encounter opposition.
Many previous proposals for restructuring have called for government ownership of rail roadways. Some proposals have viewed government ownership as a means for addressing inequalities between the railroads and the other modes. Other proposals have envisioned government ownership as simply a means for subsidizing railroad companies.
Government ownership of rail fixed ways would not resolve inequalities among the different modes. The disparity is in the structure, not merely who owns what components. Fixed ways in the other modes are available to any and all carriers, but rail fixed ways are not. Government ownership of rail roadways cannot correct the inequalities, particularly if the government grants individual railroad companies exclusive-use leases.
Government ownership, as a conduit for subsidy to existing railroad companies, would not address the structurally rooted inequities. No method exists to determine a fair or equal amount of subsidy for each mode. Subsidy subverts market economics; equality cannot be obtained through subsidization. Equality can only be achieved through an economic environment which requires each mode to shoulder its own full costs, including user fees based on the most accurate allocation of costs from multipurpose facilities.
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Publication information: Book title: Railroads, the Free Enterprise Alternative. Contributors: Daniel L. Overbey - Author. Publisher: Quorum Books. Place of publication: Westport, CT. Publication year: 1982. Page number: 199.