Wednesday, June 03, 2009

A highly negative comparison

Losing out in a comparison of (political) courage* to former Pres. Jimmy Carter is a mark of Cain. And to Holman Jenkins, Pres. Obama is so marked.

In his column, Jenkins notes the perilous political path Carter navigated to push Congress to pass the Staggers Act, which deregulated the freight railroad industry and effectively saved it from mass bankruptcies. Compare that to Obama's sop to the UAW that constitutes his GM rescue plan:

Rail executives and economists had been arguing since the 1920s, when competition from trucks and planes began to emerge, that comprehensive federal regulation had only distorted the industry's pricing, driven away investment, and made competitive adaptation impossible. But the argument had a new ring now that Washington would have to bear the political risk of operating and subsidizing the nation's rail services.

It still took some doing on Mr. Carter's part. When the bill stalled, a hundred phone calls went from the White House to congressmen, including 10 by Mr. Carter in a single evening. The bill essentially no longer required railroads to provide services at a loss to please certain constituencies. It meant going up against farmers, labor, utilities, mining interests, and even some railroads -- whereas Mr. Obama's auto bailout tries to appease key lobbies like labor and greens, which is why it can't work.

In his message to Congress, Mr. Carter warned of a "catastrophic series of bankruptcies" and "massive federal expenditure" unless deregulation was allowed to "overhaul our nation's rail system, leading to higher labor productivity and more efficient use of plant and equipment."

* * *

In 1980, Congress passed the Staggers Act, ending a century of federal regulation and leading to the railroad industry's renaissance. Leo Mullin, then a young Conrail veep, would later look back and praise all involved for having the fortitude to recognize that salvaging the taxpayer's investment in Conrail meant more than fixing a single broken company -- it meant fixing a defective regulatory environment.

Carter also deregulated the airline industry. This is a far cry from Obama's plans to regulate the pharmaceutical (through health care reform) and automotive industries nearly to death.

* -- Despite innumerable political disagreements with the man, The Monk will not question Carter's personal courage. Carter served on submarine duty in the US Navy during World War II, and served under Adm. Hyman Rickover in the Navy's pilot nuclear submarine program.

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