Saturday, April 14

Airline Deregulation: The One Event In The History Of Mankind Which Explains Everything It Touches *

George Eff Will, "Competition gives the airlines a bumpy ride". April 13

AS I've mentioned a few times, I know nothing about economics, for two reasons. First, because the section of Macroeconomics I signed on for as a college freshman turned out to be a) some sort of legendary way to avoid doing any hard work in order to obtain a necessary credit in some School or other, aka Rocks for Jocks; and b) taught by a guy who had a chip on his shoulder about that, and so combined a lecture style which should have required board certification in anesthesiology with a test schedule and attendance requirements that did require jackboots. The first hour was given over to his hectoring everyone in the large lecture hall about how tough he, the course requirements, and the subject matter were, and where the exit doors were for those who didn't like it. I was nineteen, but I'd been to public high school and I recognized bluster when I heard it. Workloads didn't give me pause--I took some real classes--but inflexibility about student participation did. I had a part-time job, and a large backlog of dope to sample.

I gave it a second week; fifteen minutes into that Wednesday I looked down the row I was sitting in, and every other person was asleep. And rightly so. End of my economics career.

The second reason is that after a childhood of middling sinus problems, I had discovered--courtesy of an ill-advised attempt to unlock the drawers of some woman in my dorm by reading, at her suggestion, The Fountainhead--that I did have a functioning sense of smell, and that this was a big, big handicap in that environment.

So let's hold our noses and turn to George Eff Will.

I have no idea why the historical foundation of (this particular example of) Will's prevarication should be of interest to his younger readers, since he can't possibly have any, but here goes: in the mid-70s, when it became obvious that the cultural syphilis introduced by The Pill had gone tertiary, President James Earl ("Jimmy") Carter got the Deregulation Mania ball rolling downhill. Carter came into office as the Washington Outsider/counter-Watergate candidate, and had vowed not to appoint the same old Democratic insiders to his administration. Apparently no one explained to him that this meant he'd be appointing Republicans. (Aside, that is, from State, and National Security, where it was important to reverse the disasters of the Nixon/Kissinger years by appointing Cyrus Vance and Zbiggy Brezezinski.) Carter's most important economics advisor was Alfred Kahn, the Vidkun Quisling Chair of Applied Pleorophorics at Columbia.

Kahn is the Father of Airline Deregulation, much like Brezezinski is the Father of Mika. While the overall consensus of Carter's economic advisors can be boiled down to 1) the US economy was in dire straits, and something needed to be done immediately; and 2) since they couldn't agree on what, it was better to just mark time and let Ronald Reagan take over. But when it came to Deregulation the idea seemed to be "Well, this is something, so let's fucking go nuts".

Two major industries were deregulated before the country wised up, cut out the middleman, and gave Reagan the power to just ignore regulation entirely. Why Will chooses to emphasize Carter's signature contribution to deregulation, and not Reagan's--Savings & Loans--is not altogether clear. People who claim to understand economics ("Liars") generally agree that Carter's deregulation of the trucking industry was an overall success, while the deregulation of the airlines was, let's say, fraught with minor difficulties, including recurring instances of massive shit precipitation.

But it was airline deregulation which got all the headlines at the time, and it's still the "sexy" example, assuming you like your sex as discussed by George Eff Will, and redolent of altarboy. So these types have been stuck defending it ever since, by pointing out the roaring success as evinced by the fact that the industry hasn't entirely collapsed yet:
In the last three decades, there have been 192 airline bankruptcies. Not coincidentally, fares, adjusted for inflation, are 18 percent lower than in 2000. Forty years ago, a majority of Americans had never taken an airplane trip. Now everyone is more free than ever to move about the country, air travel having been democratized by liberating it from government.

The Perfect Market. In that its apologists have a perfect excuse for anything.

Or, as otherwise known, The Law of Unintended Consequences Doesn't Apply to the Shibboleths of the Right. Imagine arguing, in 1977, that what the airline industry--which, leave us remember, was Federally regulated because without the Federal government it doesn't exist--needed was 200 bankruptcies (all of companies run by entrepreneurial heroes), the destruction of collective bargaining rights, the ability to refuse you service if you had the gall to live somewhere unprofitable, the right to charge extra if you had the temerity to try to fly with baggage, and the right to shoehorn you into an amenity-free flight, for which your fare, adjusted for inflation, would be reduced on average 18%. In other words, if they'd tried honesty ** instead of theology, what sort of reception would it have received? (See also Iraq War II)
In 1938, the Civil Aeronautics Act codified a government-managed cartel.

Y'know, for all the times you hear that, do you ever hear a plan for having the industry which stands to benefit from the Miracle of Hands-Off Driving pay taxpayers back for making its profit possible in the first place?

Something like eighty percent of air travel is done by twenty percent of fliers, mostly business travelers. The airports are built by taxpayers and accessed almost exclusively by the interstate highway system. Flight safety is insured by taxpayers. Gasoline taxes are higher than aviation fuel taxes--considerably higher than commercial aviation fuel taxes. Who benefits? The "public"? Or a specific class of consumer, and stockholder, at the public's expense? If "lower prices" were the be-all and end-all of economic discussion we'd have had national health care for the last sixty years, wouldn't we?

* Not involving Jesus

* * Not quite; "honesty", at the time, would have involved saying "We have no fucking idea what's going to happen here. So let's not wait to get started."


ifthethunderdontgetya™³²®© said...

I did major in Economics, meself. (Started out as a Math major, found I could count all those courses toward Econ.)

Anyways, the single biggest thing Carter did to get Reagan reelected was appoint Paul Volcker as Federal Reserve chairman.

Volcker raised the federal funds rate, which had averaged 11.2% in 1979, to a peak of 20% in June 1981. The prime rate rose to 21.5% in 1981 as well.

Goodbye inflation, hello, Ronald Wilson Reagan (666).

P.S. There was also an Iranian Hostage Crisis™ going on...

Porlock Junior said...

I well remember Herb Caen's comment when Carter announced his cabinet-level appointments. One of Carter's guys -- Ham Jordan or the other one -- had assured us that Carter was starting things fresh, and we wouldn't see Cy Vance or Zbigniew Brzezinski doing national security.

So, per Caen, when the the National Security Adviser was announced, Jordan or the other guy was heard to say, "Oh, that Zbigniew Brzezinski!"

BTW, glad to see from a couple of people's recent postings that Quisling starting to get the notice he deserves. Some people should not be left in polite obscurity. In recent years there has been a degradation in the discourse, from the time when a person could be called simply a quisling, no capitals, down to Quisling; and then to Quilsing plus a parenthetical little explanation. A sad failure of cultural memory, that was.

Anonymous said...

"fifteen minutes into that Wednesday I looked down the row I was sitting in, and every other person was asleep. And rightly so. "

I taught for ten years. That guy was on the faculty in my department. The students called him "Captain Quaalude."

Anonymous said...

The airline industry is heavily subsidized by the taxpayer. As the corporate welfare for airlines, shareholder value and management pay has increased, the wages for laborers has decreased. Factor in the fact that taxpayers are footing the bill for all of airlines security needs and the facts of what airlines cost us as a society compared to how much of their cost goes to the ruling power elite is extremely disturbing. We would not have had 911 if the airlines were required to provide their own security from the first hijackings in the 70s onward. IMHO.

DocAmazing said...

Zbigniew Brzezinski is not merely the father of Mika; he's also the father of al-Qaeda, through the Afghan Mujaheddin. It was Brzezinski that thought fucking with the Soviets in Afghanistan was a peachy idea; Reagan's crew expanded the program beyond all recognition, to be sure, but it was the Carter Administration that got the ball rolling.

Anonymous said...

I think you spelled his name wrong; it's supposed to be "Eff George Will" or something along those lines. He and Brooks are sharing brandies at the club, dontchyaknow? I can not seriously recall the last time the bow-tied little priss has had anything constructive to add to our national dialogue...and yet he's treated like the second coming of [insert favorite pundit here]. Thanks for listening to the little shit, so I don't have to waste my time.