opinion
Free enterprise and an open, competitive marketplace can be powerful forces for reform and progress.
They can bypass politicians and bureaucrats, enabling consumers to decide what goods and services they want, and what value to place on those goods and services.
Through the pressures of keen competition, market forces can also bring gains in the efficiency with which an economy operates. Wasteful businesses will tend to fail as they lose customers to their lean, mean competitors.
Those are some of the reasons why “deregulation” has become a popular word. Without the oppressive rigidity of government regulations, free-market forces can flourish, to the benefit of the whole economy. Or so the theory goes.
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In reality, government regulation is often essential. Sometimes regulation is needed to achieve social goals, like protecting children from tobacco or liquor advertising.
And sometimes, regulations are needed to simulate the benefits of competition. An example is grain transportation.
As a recent Alberta Wheat Pool research report noted, the only way to get classic free-market competition in railway transportation of grain would be to have the railbeds under public ownership, open for any company’s private trains to use.
In effect, that would be the equivalent of the public highway system, where hundreds of trucking firms, small and large, compete in offering transportation services.
Public ownership of railbeds could be a good idea, if only because it might be a way of giving farmers the equivalent of the Crow Benefit transportation subsidy without violating world trade rules. But governments don’t have the money to buy and maintain rail lines.
So deregulation would result in two monopolies that are largely geographically separate – the CNR in the northern prairies, and the CPR in the south. In theory, they could get into price wars at the points where they overlap, but that kind of profit-
damaging activity would be unlikely.
Long-distance trucking cannot economically compete with railways in grain movement, so farmers and their grain shippers would be at the mercy of the railways.
Currently, the Western Grain Transportation Act prevents this unpleasant scenario through a system that monitors railway performance and ensures that the benefits of efficiency gains are passed on to customers in the form of lower rates.
As future columns will argue in more detail, proposals to “reform” the WGTA would help railway shareholders at the expense of farmers.
