A Little Less Help, Please

For those of you not paying attention, fuel costs are up. This change in circumstances changes the calculation of which mode of operation is optimal. In the case of transportation, the cost of long-haul packet shipping over railroads has dropped below that of trucks.

Commenting on this drop, Matthew Yglesias remarks,

Clearly trucks have a massive inherent advantage as a method of doing the last-mile of shipping, but for long-haul stuff a more rational federal policy environment in terms of carbon pricing and road/rail funding balance would give further momentum to this boom.

I think anyone who has bought wheat recently might suggest that Federal subsidies perturb the market substantially, frequently with severe unintended consequences. I highly doubt that Congress expected the price of pizza to rise because they were throwing buckets of money at corn ethanol. In light of the all-too-frequent confirmation that government intervention is a crude implement, perhaps a rational Federal policy environment would stop poking the economy with that stick. Perhaps we might remove subsidies for both highways and railroads, instead of increasing funding for the latter.

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