The Bottom-Up Revolution in Trucking

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There’s a strong argument to be made that the Jimmy Carter administration was the most libertarian-friendly of the last half-century. One of the administration’s signal accomplishments was the deregulation of the trucking industry. Jesse Walker tells the story:

Consider the farm policies established during the New Deal. Franklin Roosevelt’s agricultural advisers fell, roughly speaking, into two competing categories. One group, representing the old agrarian anti-monopolist tradition, wanted to level the playing field for smaller operators. The others saw big business as an ally, not an enemy; they believed, as Hamilton puts it, that the feds should “cooperate with monopolistic meatpackers and milk distributors to achieve efficiencies in the mass production and mass distribution of food.” The second group quickly became dominant, and the policies that followed encouraged consolidation and privilege: Price supports fed the biggest agricultural interests, dairy regulations locked a milk cartel into place, and acreage reduction requirements led to evictions of tenant farmers.

A similar fate befell the young trucking industry. After the Motor Carrier Act of 1935, drivers who wanted to start a new trucking firm “suddenly needed much more than just a truck and trailer to start in business,” Hamilton explains. “They needed to gain operating authority as well, which the ICC granted only after lengthy and expensive proceedings meant to discourage competition.” There was one bright spot in the law, though—a rare victory for the populist elements of the administration. Agriculture Secretary Henry Wallace “recognized that independent truckers might undermine the monopoly power of railroad-based food processors,” so he endorsed an exemption to the ICC’s restrictions on the trucking trade. Drivers hauling farm products would be relatively unregulated, a decision that allowed a fleet of tiny trucking firms to flourish. Meanwhile, in the rest of the industry, the government’s rules favored large, established companies—and, later, the Teamsters, who negotiated sweetheart contracts with the cartel while disdaining independent drivers.

The Interstate Commerce Commission maintained a tightly-regulated trucking cartel for a half-century until the late 1970s:

Mike Parkhurst was a trucker turned reporter whose magazine, Overdrive, aspired to speak for the independent owner-operator; it was filled with exposés and editorials attacking the Teamsters union, the Interstate Commerce Commission (ICC), and the maze of state and federal rules that befuddled and burdened the ordinary driver. In his magazine and in testimony before Congress, Parkhurst called for a sweeping deregulation of his industry, a push that culminated with the Motor Carrier Act of 1980. The new law, sponsored by Sen. Ted Kennedy (D-Mass.) and signed by President Jimmy Carter, radically reduced the ICC’s authority, eliminating entry barriers, price controls, and other policies that had protected a cartel of carriers from competition. Before 1980, independent truckers had been limited to transporting farm commodities. Under the new rules, thousands of new firms flooded into the remainder of the industry, driving down prices for manufacturers and consumers alike.

The debate over deregulation during the 1970s is interesting because it didn’t break down along traditional partisan or ideological lines. The leading advocates were liberals—Stephen Breyer, Ted Kennedy, Jimmy Carter—but the movement also had significant support from the free-market right and from small entrepreneurs. Large, incumbent firms in these industries joined forces with their associated unions to oppose reform.

The battle, in other words, was between advocates of competition and advocates of corporatism. The corporatists dominated Washington policymaking in many industries from the New Deal until the Nixon years. For reasons that aren’t clear to me, their power collapsed in the mid-1970s. And the result was a sweeping transformation of the American transportation and communications industries whose benefits we continue to enjoy today.

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9 Responses to The Bottom-Up Revolution in Trucking

  1. Rhayader says:

    Yeah I think Carter got a bit of a raw deal. To read the right wing blogs, he’s high in the running for Worst President Ever.

  2. Erstwhile says:

    There’s a strong argument to be made that the Jimmy Carter administration was the most libertarian-friendly of the last half-century

    .

    No. The top marginal tax rate when Ronald Reagan entered office was 70%. After the 1981 and then 1986 reforms, it was 28%. Think about that. Put on your Randian hat for just a moment and think about the moral difference between the federal government claiming that they own 70% of every dollar you earned (over a certain threshold) vs. 28%.

    Jimmy Carter signed The Chrysler Corporation Loan Guarantee Act of 1979 bailing out Chrysler Corporation.

    He also presided over gas rationing. Whether or not you were allowed to buy gasoline depended on what day of the week it was. There were also long lines for gas.

    In negotiating the Camp David Accords, Carter thought it would be a good idea to channel billions of dollars annually into foreign aid to both the Israelis and the Egyptians indefinitely. Well, this is a small price to pay for the lasting peace in the Middle East that we have achieved.

    Carter’s mishandling of the Iranian hostage crisis–and Iranian-American relations in general–is legendary. Goodbye Shah (and modernity)! Hello, Ayatollah Khomeini!

    Carter’s policy of funding the war in Afghanistan–and the policy of World-Historical moron Zbigniew Brzezinski in funding Afghans against the Soviets–was later continued by Reagan.

    Carter created the Department of Health and Human Services, the Department of Energy, the Department of Education. Is libertarianism now favorable to the creation of new, ever-expanding cabinet departments?

    Carter explicitly believed in an economy that was led from the top. For instance, delivered a speech where he famously declared that the energy crisis was the moral equivalent of war while clenching his fist.

    ‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡

    In short, your assertion that Jimmy Carter is the most libertarian-friendly administration of the last half-century is wildly off-base.

    I know this won’t win you any cool-points with the Obama-worshiping drones, but Ronald Reagan was more libertarian although he was far from being a libertarian.

  3. Yeah, gasoline deregulation and tax cuts were two of Ronald Reagan’s most libertarian policy reforms. On the other hand, you’re leaving out some of Carter’s key achievements. In addition to deregulating the trucking industry, he also deregulated railroads, airlines, and telecommunications. He cut the capital gains tax rate. The tight-money policies that ended double-digit inflation were begun under Carter’s watch. The Carter administration’s drug policies were much more libertarian than Reagan’s were. I don’t think Carter was personally a libertarian; his administration was a product of the times as much as the man.

  4. Erstwhile says:

    Do you think Reagan should get any credit for his individualist rhetoric even if he didn’t always live up to it?

    Words and ideas count have to count for something, right?

  5. Sure. There’s also a strong argument to be made that the Ronald Reagan administration was the most libertarian-friendly of the last half-century

  6. Mike Parkhurst says:

    The trucking industry was NOT deregulated in 1980. This is a big, fat lie. The legislation
    that was passed in 1980, to boil it down and simpify it was this: Suppose a truck line
    had the ICC “rights” to haul Kodak film from Rochester, New York to Chicago, but, prior to this 1980 regulation, they did not have the “rights” to haul film back. Well, this legislation, forced down Carter’s throat (now the second worst president in the last 100 years!) only allowed that truck line to haul Kodak film back to Rochester. That was what
    Kennedy called “deregulation.” It wasn’t. True deregulation didn’t hit until 1983 and, thank goodness, the ICC was sunsetted out of existence in December, 1995, the oldest and most inept of all the then commissions of the government. I think I know something about “deregulation” since my magazine, Overdrive, and my two associations, RoadMasters and the Independent Truckers Association, were primarily responsible for it, partly due to pressure put on Congress in the 1979 shutdown I organized as well as the 1983 shutdown both of which put tremendous media pressure
    on Congress. I am so sick of hearing that trucking was deregulated in1980, but I felt
    I had to comment and bring out the facts. Mike Parkhurst. This comment was posted on Tuesday, August 17, 2010.

  7. Whoever said Jimmy Carter was Libertarian and got trucking deregulated must own a lot of oceanfront property in South Dakota. Trucking was NOT deregulated in 1980
    as incorrectly claimed. Mike Parkhurst was 100% correct when, in his comments he noted that the so-called deregulation of 1980 was only partial deregulation. Parkhurst
    got legislation introduced in the Senate and House that gave the owner-operator the right to haul free of ICC regulation but Parkhurst went further than that by continuing his push for complete deregulation which didn’t happen, as he said, until 1983 a few months after another trucker shutdown he organized earlier that year over a huge new tax on trucking. I was a member of both Roadmasters and the Independent Truckers Association (ITA) his two associations he started and ran. Parkhurst did more for truckers in one day than the ATA did in 50 years but the other trucking
    publications were so jealous of Parkhurst’s notoriety (and accomplishments) that they never even mentioned his name as the true champion of so many things in trucking and for truckers. I know he also was responsible for weight and length limits being raised because I met with Senator Ted Kennedy in his office for a half hour in 1978
    and he told me that Parkhurst spelled out the reasons for raising the limits which got Kennedy to push for and finally get, the weight and length limits we have today.
    Unlike most truckers who sit on their butt and whine, I was one of the many who went to Washington whenever Parkhurst asked us to in order to push for changes that the ATA couldn’t get with all their money but Parkhurst did with bulletins, his magazine and his dedication. I would give $500 to anyone who could supply his phone as I have wanted to personally thank him. I actually met him once at a truck stop, TTT in Tucson. I am so sick of all the bull that when I read this krap about Jimmy Cartwr being Libertarian I almost choked. If anyone knows Parkhurst’s phone just email it and the first one to supply it will get $500 . Marlonlongworth@aol.com

  8. Tommy Teissere says:

    Someone who started in the industry at a very young age in the mid 60′s. Have been through it all. The good and the bad. I can tell you whether union or non-union in the early days. Grandfathers,Sons or their sons typically worked at the same place. Never saw a sign on the back of a truck. Till deregulation “Drivers Needed”. Made more money in 78 then I did all of last year. Driving more miles and more hours,still made less. You look at a carrier like Swift,who at one time had a 300% turnover rate and quite happy with it at 150% today. I like everyone else jumped on the bandwagon with my own specialized equipment and customers struck out on my own. What a mess with so many getting into the industry making their profits strictly off the back of the drivers. Could of stayed in it if I wanted to pay no benefits to my folks. Nothing towards their retirement. Minimum wage. Today their are far fewer “true owner operators” then before Deregulation. You tell me who won out. Just retired. Had been a great industry at one time. Wish everyone luck in it today. In 62 Kennedy was the first to look at dereg,75 Ford called for the dereg, Carter followed Ford pushing for it. The ATA fought so hard to keep it. Today with the carriers paying their bill. They would be dropped like a hot potato to ever consider regulated lanes again. The industry isn’t fixed yet. Don’t think it ever can be.

  9. Tommy Teissere says:

    Last thought. Like Mike what drove everyone onto the steps of a city haul whether in LA Dallas DC or anywhere was the 73 gas crisis then the next one then the next on. Stood up there with Danny Herman myself and a lot of others upset. Have more miles walking around bumping my tire then a lot will ever drive. Feel like I have earned a right to speak my mind. “accident free”. With the immigrants coming into from everywhere. Not just one group. If you are truly for dereg. You could not possibly be upset about cross border trucking. It is deregulation, just expanding the places you can now go. Same opportunities to gather freight there as they do here. I couldn’t compete with the groups arriving, throwing the rates in the cellar. That is deregulation. You cannot pick and choose. Carriers are now going into Mexico and they will make it work. Hell I think Danny did or his kids are now. Not picking on anyone. Just got tired. Now starting my second trip. Mouth still works good. Think I will become an Auctioneer. Thanks

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