Sunday, December 14, 2014

Fair Rail for Farmers Act is Unfair

“Anyone who says that economic security is a human right, has been to much babied. While he babbles, other men are risking and losing their lives to protect him. They are fighting the sea, fighting the land, fighting disease and insects and weather and space and time, for him, while he chatters that all men have a right to security and that some pagan god—Society, The State, The Government, The Commune—must give it to them. Let the fighting men stop fighting this inhuman earth for one hour, and he will learn how much security there is.”

Rose Wilder Lane

The arguments for voluntarism, claimed Milton Friedman, are complex whereas the arguments for state action are fairly simple. During 2013-2014 a record wheat crop coupled with a brutal winter caused some challenges for the transport of wheat via rail. These problems were exacerbated by the grain revenue cap which sets a maximum price on some grain transport by rail west of Thunder Bay. In a classic case of intervention begetting intervention the Harper government decided to compound the problem by setting a quota of grain to be shipped every week, some 345,000 metric tonnes (to increase to 465,000 tones in March 22, 2015).  It also requires the railroads to report grain car movements to the "Grain Monitor"; an additional entirely unnecessary cost.  To an etatist the problem and solution must be elegantly simple; there is too much wheat not being moved to port, by golly let's move it to port (or rather, let's use the threat of fines to compel those damn lazy railroadmen to do their jobs)!  But it is incumbent upon us to look a little deeper into this problem and consider both ce qu'on voit et ce qu'on ne voit pas.

Railroads, like any other industry, require the infusion of capital to function competitively. Regulations which limit the profits of an industry can deter capital investment therein.  Instead of imposing further onerous regulations on companies which are already struggling under the weight of unnecessary red tape why not look to how we can deregulate markets? Do we really think that the politicians and bureaucrats in Ottawa know more about how to operate a railroad then the people who have been involved in the railroad business their entire lives and have a financial stake in the success of their company?  Hasn't anyone learned the lesson of the 20th century that command economics is both morally and functionally bankrupt?

While imposing draconian conditions upon CN & CP may be popular with Western farmers they too will suffer in the long run if the government continues it's assault on the free enterprise system.  Who will deliver their crop to Asia when the railroads have atrophied because no one wants to invest in an industry rendered moribund by heavy handed government regulation?  A freely floating price system is critical to the success of a capitalist economy.  When prices go up, this is a signal to entrepreneurs to redirect resources into this segment of the economy.  Price fixing prevents this essential flexibility and can lead to catastrophe.

Instead of agitating for government intervention at the first sign of trouble we should empathize with the plight of railroads beset with bumper crops and harsh conditions on one hand and crippling regulation on the other.  The solution is not for more government involvement here but less, not further regulation but instead we need to deregulate and allow the free and unhampered market to work it's wonder.  Either we progress, towards laissez-faire, or we devolve, towards state control. The choice is up to us.

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