In a new RealClearMarkets article, Market Institute President Charles Sauer warns that Washington’s instinct to “do something” after a tragedy often leads to bad policy that expands government power without addressing the real causes of a problem.
Using the 2023 train derailment in East Palestine, Ohio as an example, Sauer argues that lawmakers are once again using a crisis as justification for new regulations—even though existing market incentives already encourage railroads to invest heavily in safety.
“One of modern politicians’ worst habits is ‘doing something’ following a natural or man-made disaster like a hurricane, mass shooting, or financial crisis. The ‘something’ is usually an expansion of government power.”
In the case of East Palestine, the railroad responsible faced enormous financial consequences. Norfolk Southern ultimately paid more than $2.2 billion in costs related to the derailment, including environmental remediation and legal settlements. Those penalties illustrate how liability and insurance markets already create strong incentives for companies to prioritize safety.
“Railroads are responsible for accidents involving their trains. Insurance companies also have an incentive to make sure their policy holders are taking all reasonable precautions to avoid accidents.”
Sauer also explains that rail remains one of the safest and most efficient ways to move goods in the United States. Trains move freight more cheaply and with greater fuel efficiency than trucks, and they help reduce congestion and accidents on American highways.
“Trains are a cheaper way to transport goods than trucking; it costs $0.30 cents to move a ton of goods one mile by train, while it costs $0.50 to move the same ton of goods one mile by truck.”
Despite these realities, Congress is once again considering the Railroad Safety Act, a bill that would impose new regulations and increase fines on railroads. The legislation has bipartisan backing and support from transportation unions, but Sauer warns that the bill could unintentionally push freight off rail and onto trucks—raising costs across the economy while making highways less safe.
“Imposing new federal safety regulations on railroads is not only unnecessary—it could create new problems.”
The lesson, Sauer concludes, is that policymakers should resist the temptation to legislate in response to every crisis. Sometimes the most responsible response is recognizing that markets, liability, and private incentives are already working.
Read the full RealClearMarkets article here.
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