Deregulation

"Ask Yourself Why Government Doesn't Start Helping to Fix This Mess"

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In this weekend in The Washington Post, David Ignatius deplores the effects of airline deregulation. Among them:

In the years since deregulation, nearly 200 airlines have come and gone. These inadequately financed carriers — whose principal goal has often seemed to be merely to exist long enough to reap the rewards of an initial public offering — have consistently cut prices to attract passengers.

But this is exactly how we know that, as a general matter, airline deregulation has worked pretty well. Nowhere is Schumpeter's line about the perennial gale of creative destruction more relevant (or more metaphorically apt) than in the airline industry. Challengers arise, competition brings down prices and encourages innovation in services, and the losers have to sell their toys to the winners and go home.

The airline industry is far from a perfect market, of course. And even if it were, traveling would still be annoying, inconvenient, and subject to the vagaries of bad weather, mechanical malfunctions, and morons trying to jam an elephant into the overhead bin. Europe has been whupping us lately in the sustained deregulation stakes.

But Ignatius gives away the game in his own article:

The cost of domestic travel has gone up just 52 percent since 1978, compared with a 218 percent increase in the consumer price index. But otherwise, the U.S. industry has been a total loser.

Yep, other than the fact that prices for flights remain almost magically, absurdly low–low enough, in fact, for the number of American flying the friendly skies to have doubled in the 20 years after deregulation went into effect –no good has come of deregulation. Nope, none at all. After all, workers are "embittered." Air travel is "a staple of late night comedy." Dear god, no!

Ignatius instructs us to "ask yourself why government doesn't start helping to fix this mess." But that's the wrong question. There are problems with American air travel, but bipartisan action from Congress–the holiest of grails for the Washington Post opinion writer, doesn't exactly have a flawless record of efficient on point solutions, either.

Go buy a cheap ticket somewhere fun at expedia.com and then don't forget to enjoy a sample from the enormous archive of news articles from the airlines-are-going-to-hell-in-an-handbasket-because-of-evil-corporations genre. Like this one ("The numbers for 1986 suggest that the nation's airlines are flying closer than ever to disaster, but by some combination of wit and luck are emerging with an improving safety record") or this one from 2002 ("this is shaping up to be a year for passengers to write their travel plans down in pencil, not ink.")