An Open Letter to Railroad Executives

 Dear railroad executives, 

    Kudos to you, you're craftier than I expected. Although I knew that firms' expenditures included vying for potential government favors – like keeping shipping rates artificially high to ensure "consumer protection" – I didn't realize they also included paying to suppress competitive substitutes! Both types of expenditures, of course, are instances of rent-seeking. The specific competitive substitute I'm referencing here, in case you haven't guessed, is the American maritime industry. 

    Not only do your various Political Action Committees (PACs) contribute generously to representatives on the House Committee on Transportation and Infrastructure, but also to at least five of the fourteen representatives on the Subcommittee on Coast Guard and Maritime Transportation. And on both sides of the aisle, no less! I congratulate you on bipartisanship! 

    Now, why would railroad PACs be interested in maritime transportation? Oh, right! As I mentioned before, in seeking favoritism, you're also paying to suppress substitutes, which includes any other form of transportation – including maritime transportation! 

    At first, dearest executives, I doubted that you engaged in such dubious behavior. But upon researching those Congresspeople whom you selflessly support, I found that each of them openly supports legislation such as the Jones Act, a protectionist 1920 law that requires that all intra-U.S. maritime commerce be carried on "U.S.-owned, U.S.-crewed, U.S.-registered, and U.S.-built" ships. This act notably restricts the entire industry, to the point where "2% of American freight travels by sea. In the European Union... the corresponding statistic is 40%."

    I shouldn't have been surprised by your support for the Jones Act and similar legislation, which artificially raise shippers' costs of using an obvious substitute for your services. Such support is exactly what Chicago economist George Stigler predicted, even if his colleague Sam Peltzman added nuance to the representative's rational cost-benefit analysis. 

    I will say, though, that you are not as good at rent-seeking as the airlines. That's why you're only my second favorite group of cronies. Sorry, not sorry. 

Juliette Sellgren