> I leave to Michael Perelman the working
> out the political economy of that). Proyect
> has pointed out how unions in trucking
> and the airlines were devastated by deregulation.
> So that is something that has to be taken
> into account when assessing Ted Kennedy's
> political record.
Here is a snippet from The Confiscation book
By the 1960s, the liberal establishment had run out of big ideas. They set
their sights on smaller targets. Conservatives had long favored
deregulation, insisting that regulation represented an unwarranted
intrusion into business management. By the time of the Carter
administration, many liberals joined conservatives in opposing regulation.
While conservatives saw regulation as opposed to business interests, these
liberals complained that regulation had long been excessively friendly to
business. In particular, liberals charged that regulation was penalizing
consumers by preventing competition from lowering prices.
Powell's nemesis, Ralph Nader, became one of the most vocal
advocates of the liberal demand for deregulation. Many liberal economists.
Senator Edward Kennedy of Massachusetts, often regarded as an icon of
political liberalism, also joined in. Topping off the pressure for
deregulation, in 1967 the Ford Foundation often incorrectly seen as a
progressive foundation began a $1.8 million grant to the Brookings
Institution that ran until 1975 for a program of studies in the regulation
of economic activity. This effort resulted directly or indirectly in 22
books and monographs, 65 journal articles, and 38 doctoral dissertations
(see Derthick and Quirk 1985, pp. 35 37).
The first big break in deregulation came in the transportation
industry, where Kennedy and Nader took the lead. This liberal pressure for
deregulation had two important consequences. First of all, regulation of
transportation originally began in the nineteenth century because strong
competition led to repeated bankruptcies. The underlying problem was that
the cost of carrying another passenger or another ton of freight is very
small although the capital costs for planes or track are huge. As I will
discuss in more detail later, competition drives prices down toward these
small costs, leaving the carrier unable to cover its fixed costs. A cost
structure like transportation inevitably leads to repeated bankruptcies,
like those that plagued the railroads in the nineteenth century before
regulation and the modern airline industry after deregulation (see Perelman
1999; 2006).
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
michaelperelman.wordpress.com
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