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Deregulation: High Prices, Bad Service
Published on Friday, August 31, 2001 in the Miami Herald
Where there is greed, there is no vision.
Deregulation: High Prices, Bad Service
by Molly Ivins
AUSTIN, Texas -- Most of us assume that the fatal weakness of libertarian thinking, so dominant in this administration of recycled Reaganism, is its tendency to apply simple solutions to complex problems -- which is of course the reason for its appeal. All is reduced to the market, the market rules, the market is God.

James Arnt Aune, formerly with the Bush School at Texas A&M, however, provides a more-comprehensive indictment of libertarian thinking and finds its most striking feature is the avoidance of empirical investigation.

Or, as a Texas pol observed recently, ``My God, Bush is doing the same thing to the nation he did to Texas, and in even less time.'' The same thing is, obviously, the endless Bush Jr. mantra, ``Tax cuts good, regulation bad; tax cuts good, regulation bad.'' Do they never stop to look at what tax cuts and deregulation achieve? There are always winners and losers under deregulation, but even the briefest summary shows the unmistakable pattern.

  •  Savings and loan dereg. $500 billion charged to the taxpayers. Enough said.

  •  Utilities deregulation. So far, no good.

  •  Telecommunications deregulation. As per usual, we were promised lower rates, greater choice, the magic of the marketplace, and milk and honey for all. What we got was more telephone marketers calling during dinner. Cable rates have risen 33 percent, three times the inflation rate, since the 1996 telecom-dereg debacle.

    Cable customers continue to be gouged by local monopolies; there is almost no head-to-head competition. Ditto local phone competition. Prices are up 12 percent, and the companies that were supposed to compete against the Bells are in bad shape, as is competition in the long-distance field. Calls for re-regulation abound.

  •  Airline dereg. A mess. Most ex- perts blame two factors: deregulation and the Federal Aviation Administration's disastrous attempt to develop a new air-traffic-control system.

    The 1978 deregulation did indeed make flying a form of mass transit. There are three times as many flyers today as there were 20 years ago, according to a New York Times Magazine article of last year, and fares, on average, are 40 percent lower, adjusted for inflation.

    The gradual development of near-monopolies -- only the biggest survive -- is also a familiar pattern in these cases. Airlines have dropped service at small communities and routinely over-schedule at major airports. The system drifts into worse shape annually, with no end in sight, and Congress has done nothing because God forbid anyone should interfere with the free market.

  •  Trucking dereg. Since dereg in the late '70s, competition indeed has driven prices down. It also has created ``sweatshops on wheels,'' with drivers making 25 cents a mile, working 90-hour weeks. According to a series in June in The Ottawa Citizen, truckers average less that five hours sleep a night.

    The industry also has the seen the growth of scam schools that turn out poorly trained or completely untrained drivers. The trucking industry has a 150 percent annual driver-turnover rate and is short 80,000 drivers.

    We could go on and on, and each of these situations should be studied in more depth, especially by those who casually make lofty pronouncements about the need to deregulate and privatize absolutely everything. Perhaps the main point to keep in mind is that there were reasons for regulation in the first place.


    Libertarians seem to believe that government is bent on a mindless quest for ever-greater power. In my experience, there are only two ways something gets regulated: a public disaster of such epic proportions that people demand regulation, or the industry itself asks for regulation.

    That may strike you as unlikely, but every year in every legislature, the watch-repairers, lawn-sprinkler installers or other groups demand that their high calling be regulated and practitioners certified.

    In the case of natural monopolies, such as utilities and phone companies, regulation is needed for the very reasons of which we now are so unpleasantly being reminded -- because a monopoly will just gouge the hell out of consumers.

    I believe in perpetual reform and am as annoyed by bureaucratic paperwork as anyone else, but willful stupidity in the face of evidence is annoying, too. Capitalism works well only in a carefully constructed cradle of law and regulation. Greed is not good. Where there is greed, there is no vision.

    ©2001 Creators Syndicate


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