RALEIGH – It’s time for a big new investment in rail capacity in North Carolina and other states.

No, not to move people. That’s a silly idea, born of wishful thinking, nostalgia, and a bureaucratic attempt to dictate how and where individuals will live and work. What I am referring to is the need for improved and expanded track to accommodate rail freight, which is a viable competitor to trucks.

The Chicago-based Heartland Institute has just published a new report on the subject. Author Wendell Cox notes that rail still moves more freight than any other transportation mode when both tonnage and distance are measured, and could probably move significantly more if various impediments were removed. Operating speeds are declining, for example, partly because of inadequate investment in track maintenance and expansion and also because the federal government requires freight trains to wait on side tracks to allow passenger trains to pass.

There are several compelling reasons why increased use of rail freight would benefit taxpayers, motorists, and consumers. One is efficiency. It remains far less expensive to move freight by rail (when possible) than by truck or some other means. Rail is three times as energy efficient as trucks per ton-mile. Consumers would benefit from such efficient gains in the form of lower prices at the store.

Another is traffic congestion. As I’ve noted many times before, congestion on North Carolina’s major highways is costly, dangerous, and worsening. It is expected to double over the next 25 years, costing us billions of dollars in lost productivity and higher consumer prices. A good bit of this will be caused by increasing truck traffic. If a larger share of future freight traffic shifted to rail, that would help to unclog the transportation arteries most of us routinely use.

Finally, while the trucking industry is responsible for a sizable share of highway revenues, it accounts for a somewhat-higher share of the cost of maintaining and expanding highways. Essentially, there is a cross-subsidy for trucks that is not available for freight trains, the costs of which are passed along directly as customer prices. Why should taxpayer dollars be used to give one transportation competitor an advantage over another?

The solution is not to clamor for state or federal bailouts of the railroad industry. Transportation policies need to move back towards markets, not further away from them. What policymakers should do is remove some of the government-imposed barriers to freight-rail expansion and then let market competition determine how transportation dollars get spent over time. These barriers to rail expansion include:

• The aforementioned highway-tax subsidy for trucking. Gas and auto taxes ought to be reformed to charge more accurate prices based on estimated highway wear-and-tear.

• The aforementioned federal preference for passenger trains. Ideally, the federal government would divest itself of Amtrak entirely and take no position on how privately owned railroads price access to their track capacity. Until that happens, at least there should be a clear recognition that freight is the paying customer and deserves as least as much consideration as passenger service running at a substantial loss.

• Differences in taxation of bonds. Trucking (and shipping, for that matter) typically utilize government infrastructure paid for with tax-exempt bonds. Railroads should have the same access to tax-free capital investment, or else state transportation bonds ought to be taxable. Similarly, private railroad companies ought to be allowed to accelerate their depreciation of new investment, essentially reducing the tax penalty they face when competing with other industries whose capital costs are embedded in government budgets.

To be sure, North Carolina policymakers have been talking a lot lately about rail as an element of a truly “multi-modal” transportation system. But their priorities are all out of whack. Instead of spending scarce time and money pursuing intercity passenger-rail service and other relative trivialities, they ought to take the step necessary to free railroads to serve their paying freight customers more effectively. There would be a tremendous net benefit, fiscally and economically.

That’s not enough, it seems. Politicians will probably only respond if we give freight rail more cachet and a catchy acronym. How about TOOT – Taxpayer-Optimal Option for Transportation!

Hood is president of the John Locke Foundation.