Deregulation Fails All Over Again
Most of us assume the fatal weakness of libertarian thinking, which is so dominant in this administration of recycled Reaganism, is its eternal tendency to apply simple solutions to complex problems–which is, of course, also 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 deregulation. $500 billion charged to the taxpayers. Enough said.Utilities deregulation. So far, no good.Telecommunications deregulation. As 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. Scholars will recall the bill was heavily influenced and indeed partly written by the industry’s lobbyists, part of the pattern with dereg. 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, not down at all; the companies that were supposed to compete against the regional Bells are in bad shape, as is competition in the long-distance field. Calls for re-regulation already abound.Airline dereg. A mess. Most experts 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 has indeed driven prices down. It has also created “sweatshops on wheels,” with drivers making 25 cents a mile and working 90-hour weeks. According to a June series in The Ottawa Citizen, truckers average less than five hours of sleep a night. The industry has also 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 abso- lutely everything. Perhaps the main point to keep in mind is that there were reasons for regulation in the first place.
Libertarians, even those who actually cover government, seem to believe 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 it is to be seen every session in every legislature as the watch-repairers or the lawn-sprinkler installers or some damn group arrives to demand 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 are now so unpleasantly being reminded–because a monopoly will just gouge the hell out of consumers.
I am a great believer in perpetual reform and just as annoyed by bureaucratic paperwork as anyone else, but willful stupidity in the face of evidence is also annoying. Capitalism works well only in a carefully constructed cradle of law and regulation (Russia being one case in point). Greed is not good. Where there is greed there is no vision and, not to coin a phrase, those who forget history are condemned to repeat it.
Molly Ivins is a nationally syndicated columnist. Her book with Louis Dubose, Shrub: The Short But Happy Political Life of George W. Bush, is out in paperback.