Wednesday, April 19, 2017

Note to Paul Craig Roberts: It Wasn't Deregulation that Brutalized Dr. Dao

A friend points out this bizarre piece by Paul Craig Roberts, bemoaning "deregulation" and blaming it for, among other things, the recent incident in which Dr. David Dao was brutally assaulted and dragged off a United Airlines flight.

For those KN@PPSTER readers who are not familiar with Roberts, he was Ronald Reagan's Assistant Secretary of the Treasury for Economic Policy in 1981 and 1982.  Here's his Wikipedia bio. For those KN@PPSTER readers who are familiar with Roberts, chances are you came across his stuff on e.g. and may -- may -- have assumed that this meant he was an Austrian or some other free market type economist. Well, no, as this piece demonstrates.

Not a full Fisking by any means, but let me take apart some of Roberts's complaints, keeping in mind that as a youngster my own experiences with air travel and paying phone bills began in the mid-1980s, a few years after "deregulation" of both began.


"Today four airlines control 85% of the market. A single airline can gain control over a major airport and thereby gain control over pricing out of the hub. We now have unregulated monopoly pricing. Average prices are higher today than they would be under the former regulatory system." [Roberts links to this HuffPo piece to substantiate that last claim]


The next major airport I come across that is controlled by a single airline will be the first. Even the little airport in my town of Gainesville sports two (Delta and American). Jacksonville, 90 minutes or so away, has eight airlines operating out of it. Orlando-Sanford,  a couple of hours away, seven. Orlando International, FORTY.

I don't fly a lot these days, but my wife and kids travel once or twice a year from Florida to the midwest, generally at a round-trip cost of less than $200 each. Tamara is able to search for the best deals, find them and book them in minutes. That's thanks to deregulation of telecommunications, which Roberts complains about elsewhere.

The HuffPo case that prices would be just as low if the airlines had remained regulated is based on a price curve trend. Which is fine, except that it assumes nothing else has changed. And lots of stuff has changed. The simple fact is that more people fly more often for less money than they did before deregulation. Even if deregulation wasn't responsible for that, it would not follow that deregulation is responsible for bad things happening.

The bad things that happen in air travel today are, so far as I can tell, largely a function of War on Terror security theater. The TSA lines mean you have to arrive at the airport earlier, submit to sexual assault before getting onto the concourse, pay insane prices for food in an area that you can't freely leave and return from, and then risk getting dragged off the airplane by thugs if you fail to instantly do as ordered by anyone wearing a uniform, or if the air crew or your fellow passengers just don't think you look right.

Now, to telecommunications, where we reach the truly bizarre:

"Under regulated AT&T, telephone service was excellent at a very low price. Compare today the poor service and high price for the unregulated local or regional monopoly."

Real telecom deregulation happened in the 1990s, although Ma Bell was broken up in 1982. Today, I pay about as much for phone service to one of my many choices as I did to AT&T in the mid-1990s. The differences:

  • I'm paying in inflated dollars that are worth much less.
  • Back then, I got local service and then paid by the minute for long distance. Today, unlimited long distance is included.
  • In addition to the local telephone line monopoly, I can get phone service from the local cable monopoly, or via VOIP from various companies, or from my cable/Internet Service Provider (I have several to choose from), or from any number of cell providers, at various price points for various levels of service. In fact, the last cell phone I had (before one of my clients sprung for service through their group plan) cost me a whopping $6.67 a month to keep operational (the phone itself cost about that much, too), and I never used all of the minutes that came with the plan.

So, what is Roberts's main complaint with deregulated telephony? "Today a telephone in the home is mainly used by telemarketers to invade your privacy."

Well, there's a way to avoid telemarketers: Look at the Caller ID and don't answer for people you don't know. Just let the telemarketers go to voice mail.

I don't know if Roberts has noticed, but while Caller ID and voicemail were in development prior to deregulation, it was after deregulation that they really took off -- and I strongly suspect a big reason for that was the competition that deregulation made possible. I distinctly recall receiving my first caller ID unit from a long distance company as a bonus for switching from AT&T to them back when you still had to pay for long distance but started being allowed to purchase it from a company other than the local monopoly.

Looping back, Roberts's complaints about air travel become similar -- regulated airlines included meals on their flights, regulated airlines had to let you use your ticket on any airline if the one you bought it from had a problem and couldn't get you where you were going, etc.

I am not as old as Roberts, but I am old enough to remember that neither air travel nor phone service was as realiable, or as cheap, or as competitive, in the 1970s as it is now, with the single exception of the government security apparatus that delays and often brutalizes passengers.

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