Who Protects the Consumer?
201
fender of the consumer. It so happens that one of Nader's sub-
sidiaries had published an excellent analysis of the ICC, stressing,
among other things, how the long-haul/short-haul discrimination
was resolved. Nader could hardly have been under any illusions
about how the airline case would be resolved.
As any student of
regulation would have predicted, the CAB ruling, later upheld by
the Supreme Court, required intrastate companies to raise their
fares to match those permitted by CAB. Fortunately, the ruling
was in abeyance because of legal technicalities and may be ren-
dered irrelevant by the deregulation of air fares.
The ICC illustrates what might be called the natural history of
government intervention. A real or fancied
evil leads to demands
to do something about it. A political coalition forms consisting of
sincere, high-minded reformers and equally sincere interested
parties. The incompatible objectives of the members of the coali-
tion (e.g., low prices to consumers and high prices to producers)
are glossed over by fine rhetoric about "the public interest," "fair
competition," and the like. The coalition succeeds in getting Con-
gress (or a state legislature) to pass a law. The preamble to the
law pays lip service to the rhetoric and the body of the law grants
power to government officials to "do something." The high-minded
reformers experience a glow of triumph and turn their attention
to new causes. The interested parties
go to work to make sure
that the power is used for their benefit. They generally succeed.
Success breeds its problems, which are met by broadening the
scope of intervention. Bureaucracy takes its toll so that even the
initial special interests no longer benefit. In the end the effects are
precisely the opposite of the objectives of the reformers and gen-
erally do not even achieve the objectives of the special interests.
Yet the activity is so firmly established and so many vested inter-
ests are connected with it that repeal of the initial legislation is
nearly inconceivable. Instead, new government legislation is called
for to cope with the problems produced by the earlier legislation
and a new cycle begins.
The ICC reveals clearly each of these steps—from
the curious
coalition responsible for its establishment to the beginning of a
second cycle by the establishment of Amtrak, whose only excuse
for existence is that it is largely free from ICC regulation and can
202
FREE TO CHOOSE: A Personal Statement
therefore do what ICC will not permit the individual railroads to
do. The rhetoric, of course, was that the purpose of Amtrak was
i mproved rail passenger transportation.
It was supported by rail-
roads because it would permit much then-existing passenger ser-
vice to be eliminated. The excellent and profitable passenger
service of the 1930s had deteriorated and become unprofitable as
a result of the competition of the airplane and the private car. Yet
ICC would not permit the railroads to curtail the service. Amtrak
is now both curtailing it and subsidizing what remains.
If the ICC had never been established and market forces had
been permitted to operate, the United States would today have a
far more satisfactory transportation system. The railroad industry
would be leaner but more efficient as a result of greater tech-
nological innovation under the spur
of competition and the more
rapid adjustment of routes to the changing demands of traffic.
Passenger trains might serve fewer communities but the facilities
and equipment would be far better than they are now, and the
service more convenient and rapid.
Similarly, there would be more trucking firms though there
might be fewer trucks because of greater efficiency and less waste
in such forms as the empty return trips and roundabout routes
that ICC regulations now mandate. Costs would be lower and
service better. The reader who has had occasion to use an ICC-
licensed company to move his personal belongings will have no
difficulty in accepting that judgment.
Though we do not speak
from personal experience, we suspect that this is also true for
commercial shippers.
The whole shape of the transportation industry might be radi-
cally different, involving perhaps much greater use of combined
modes of transport. One of the few profitable private railroad
operations in recent years has been a service transporting people
plus their automobiles in the same train. Piggyback operation
would doubtless have been introduced much sooner than it was,
and many other combinations might have emerged.
A major argument for letting market
forces work is the very
difficulty of imagining what the outcome would be. The one thing
that is certain is that no service would survive that users did not
value highly enough to pay for—and to pay for at prices that
yielded the persons providing the service a more adequate
