The financial outlook for the railroad industry is the brightest it has been in many years, due largely to recent deregulation efforts and changes in the federal tax laws. It is not the best time to offer a treatise on the fundamental problems of the railroad industry. Still, those problems remain even if events in the past few years have made them somewhat more tolerable.
Prior to deregulation, only two policy options were available: the status quo of regulated private enterprise or nationalization. It was a question of choosing the lesser evil. Deregulation--actually a reduction of regulation, not its elimination--is an extension of the status quo in that much regulation is retained. Deregulation shows the potential for keeping railroad problems within acceptable limits. A number of knowledgeable people have doubts, however. The Interstate Commerce Commission has yet to develop a method for setting maximum rates acceptable to shippers, railroads, and the courts. Actions by some railroads have prompted calls for a reversal of recent trends and an increase in regulation. If the deregulation efforts should prove less than successful, the original options of old-style regulation or nationalization remain. The Free Enterprise Alternative offers a new option.
The Free Enterprise Alternative also offers an alternative approach to rail transportation. Simply put, it shows that a railroad need not always act like a railroad to be successful. By starting with what is routine in the other modes and not with what the railroads have always done, a new spectrum of markets and service possibilities emerges. This different perspective is useful in and of itself.
The Free Enterprise Alternative identifies those structural elements which have led to the success of the highway, water, and air transport modes--the same elements which have led to the relative decline of the railroad industry. It applies the desirable elements of those structures to the rail mode.
The ideas basic to the Free Enterprise Alternative, such as joint use of the fixed way and competition among carriers, are not new. They have been the