The Politics of Industrial Change: Railway Policy in North America

By R. Kent Weaver | Go to book overview

CHAPTER TWO
Adjustment Policy in the North American Rail Industry

SECTORAL policies reflect the difficulties governments have in imposing overt, concentrated losses on domestic groups. Only political structures that allow governments to compel acceptance of those losses are likely to succeed in imposing accelerationist policies. These constraints on industrial adjustment policy described in the previous chapter are clearly present in the North American railroad industry.

The rail sector offers an excellent arena for a comparative examination of industrial adjustment policy and public enterprise in the United States and Canada. Governments in both countries have intervened in their rail industries almost from the beginning of railway development, and the policies have paralled each other in timing and general direction. Nevertheless, there have been important differences, both in specifics of policy and in instrument choice.

Of course, narrowing the scope of discussion to a single industry has disadvantages as well as advantages. Most notably, the reader must be convinced that the case is not idiosyncratic but generally applicable. Choice of the rail industry case magnifies this problem, for most of the writing on industrial policy focuses on internationally competitive industries such as steel, automobiles, and semiconductors. The U.S. and Canadian rail industries are involved in international competition only to a limited degree, although they face substantial competition from other modes of transportation in most markets. But there is little reason to believe that the difficulties in promoting adaptation are intrinsically different in industries facing international competition from those that do not. Moreover, the same domestic conflicts--those involving competing firms in the industry, suppliers, customers, labor, and communities affected by locational decisions--will arise regardless of international competition. The adjustment crises of the U.S. and Canadian rail

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