(Looks a little like Uncle Leo from "Seinfeld," doesn't he? I almost wonder if when summoned to the Oval Office to meet with President Carter he burst in, extended his arms and bellowed, "Jimmy -- HELLO!")
While the Reagan administration is generally credited with deregulation, the movement actually began during Jimmy Carter's short reign:
Mr. Kahn, drawing on considerable gifts of persuasion and media insight, led the struggle for enactment of the Airline Deregulation Act of 1978, the first total dismantling of a federal regulatory regime since the 1930s.
In fact, Kahn published The Economics of Regulation way back in 1970 -- eleven years before Reagan took office.
(It was also Carter, not Reagan, who appointed Paul Volcker, the slayer of the inflation dragon. But that's the subject of another post.)
Before deregulation, the airlines were tightly controlled by the Civil Aeronautics Board, which approved routes and set fares that guaranteed airlines a 12 percent return on flights that were 55 percent full. The changes Mr. Kahn orchestrated resulted in increased competition, lower fares and the rise of low-cost carriers like JetBlue and Southwest. But they also created severe financial problems for the industry, leading to bankruptcies and mergers.
“I have to concede that the competition that deregulation brought certainly was terribly, terribly hard on the airlines and their unions, who had heretofore enjoyed the benefits of protection from competition under regulation,” Mr. Kahn said decades later.
He added that he accepted “some responsibility” for the industry’s financial problems but said that it had eventually recovered, despite sharply rising oil prices and terrorist-related security costs.
My question is, was airline deregulation a good thing or a bad thing?
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