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Granger laws

February 15, 2004

Granger laws were a series of laws which regulated long- and short-haul discrimination and other "abuses" against farmers. The California State Grange has a bit of propaganda on them here.

The type of analysis typically given to the Granger laws is steeped with what has been called "the nirvana fallacy". This is where Statists compare the results obtained on the free market to the ideal of "perfect competition". Yet, this is an absurd comparison, because in reality, there is no such thing as perfect competition, illustrating the dangerousness of Utopianism. Of course the free market isn't going to compare favorably to the "perfect competition" utopia: it's not heaven. What should really be done is compare the results obtained to zero, which is what there would have been had not entrepreneurs invested money in railroads.

When you look at the situation from that realistic (not idealistic) perspective, the "evil" railroad companies were responsible for great increases in the living standards of farmers. Thanks to railroad companies, it became possible to transport goods via means other than rivers, oceans, or horseback. It was possible not only to transport the goods, but also to transport them cheaper and faster. If farmers were so upset about "price discrimination", they should have found alternate means of transportation. For they were obvioulsy better off after the railroads then before them. Mises' Price Discrimination on the Part of the Seller is relevant here.

The real issue, which no-one mentions, is that we are talking about the property of the railroad companies. As the railroads are their property, they should have the right to choose whatever criteria they want for who can or can't use their services, and charge whatever prices they want. Of course, if they choose to price arbitrarily and unreasonably, they will forgo considerable profit. However, it should be their choice to make.

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