Antitrust

Selected Skirmishes: Rates of Kahn

All Aboard Air Al!

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I hate flying Southwest Airlines, a company which intentionally discriminates against important people such as myself. The method: Rather than assigning seats like a civilized air carrier, they distribute numbered passes on a first-come, first-served basis.

Arrive at the airport two hours early, you get to be No. 13. Get there 90 seconds prior to take-off, you're Mr. 128. Once I got my act together and showed up more than 10 minutes before scheduled departure, a Hazlett World Record. I moved all the way up to No. 122. Traditionally, I'm wedged into a center seat between the 300-lb. truck driver and the young mother with a 6-month-old screamer on her lap.

This happens to me all the time, by the way. Despite the psychological trauma of such torturous in-flight conditions, it turns out that Southwest has such convenient flights that I can't afford the luxury of shopping for more humane conditions. It really pains me, you know, to do this–but I've got to be in San Diego by 4 p.m. and I can't possibly leave before two o'clock. Dial 1-800-IFLYSWA.

Despite my personal torment, I can see the bigger picture. In San Diego, for instance. While awaiting a return flight to Sacramento last June, I began staring at the folks crowded around the Southwest terminal at Lindbergh Field. Not your normal business traveling bunch. No sir. These were the folks who couldn't raise Greyhound fare: families, the very young, the very old, guys who thought about driving the 500 miles but couldn't afford a big enough cooler for the beer.

And I suddenly felt warm for Alfred Kahn. Author of the preeminent textbook on economic regulation and professor emeritus from Cornell, Kahn served his country with distinction as chairman of the Civil Aeronautics Board. Most distinctly, as the last chairman of the CAB.

Professor Kahn came to Washington during the Carter administration and rearranged the federal agency that regulated the nation's interstate airlines. He saw that CAB's safety functions could be shipped over to the National Transportation Safety Administration and that the allocation of take-off and landing slots could be done by the Federal Aviation Administration. What CAB held onto was the ability to regulate (read: limit) competition. And then Chairman Kahn shut it down.

I doubt if many of the $79 (unrestricted) fares flying Southwest from San Diego last June paid Professor Kahn much attention, but it would have been entirely appropriate if they had hoisted a beer in his honor. His policy spade work allowed upstarts like Southwest to challenge established firms and drive prices down. Economists inform us that consumer savings since air deregulation have been in the billions and billions, but not even Carl Sagan seems much impressed. Indeed, I suspect that Professor Kahn flies under an assumed name, because most of what the industry has to say about the enhanced competition wrought by CAB abolition would make even that 300-lb. trucker sitting to my left wince.

The connection between those who harvest the fruits of successful public policy and those who laboriously–and bravely–tend the garden is tenuous. In a just, not to mention more efficient, world, Alfred Kahn would get a kopek for each transaction he makes easier, each family reunion his transportational reforms make possible.

Moreover, those who, unlike Mr. Kahn, come to Washington and really foul up do not seem to suffer. Just the reverse. As when a champion of some ill-thought intervention into the U.S. economy cleans up as an expert consultant–there's always healthy demand for help in dealing with a very bad law.

The disconnect between individual action and public policy success underlies so much of the mess we're in. I recently read an editorial in my learned local newspaper, the Sacramento Bee, roundly denouncing the undeserved antitrust exemption finagled lo these many years by Major League Baseball. They cited the horrors that such coddling had created–including the ugly, disloyal treatment of cities, with franchises moving cross-country at the drop of a municipal stadium subsidy.

The great irony is that baseball, because of its antitrust exemption, has not been the offender. When the National Football League, for instance, did try to block the Raiders from jumping to Los Angeles from Oakland in 1983, the league lost a $33 million verdict on antitrust grounds. Now, football teams hop around to new cities almost as fast as their tailors can produce new uniforms: Los Angeles lost both its franchises this year (the Raiders back to Oakland, the Rams to St. Louis). The NFL–or the NBA–is helpless to stop individual franchises from playing cities against each other; it would be an illegal restraint of trade!

It's complicated charting policy effects as they dribble out into the real world. Which is why when one guy figures it out and does the right thing, like our pal Alfred Kahn, I think we ought to do something special. Treating him like just another smart scholar doesn't get there. Awarding him a lifetime No. 1 pass on Southwest might do the trick.

Contributing Editor Thomas W. Hazlett (hazlett@primal.ucdavis.edu) teaches economics and public policy at the University of California at Davis.

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