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Lessons from Deregulation
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Lessons from Deregulation

Telecommunications and Airlines after the Crunch

Alfred E. Kahn
Brookings Institution Press, 2004
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Editorial Rating

6

Qualities

  • Analytical
  • Innovative

Recommendation

You would hardly expect economist Alfred E. Kahn, the grandfather of deregulation, to back down on the concept now - and he doesn't. This helpful, up-to-date guide gives a snapshot of Kahn's take on the state of aviation and telecommunications deregulation amid the economic struggles of the post-bubble, post-Sept. 11 era. Does deregulation still serve the public's interest? Kahn, whom you can thank or curse the next time you board a cheap, overcrowded flight, argues staunchly that deregulation's biggest problems come from regulatory authorities who succumb to the temptation to, well, regulate. This is particularly true in the arcane field of telecommunications policy, where some governmental bodies have passed regulations designed to stimulate artificial, rather than market-driven, competition. Overall, the book is stronger when Kahn analyzes the complexities of aviation deregulation than it is when he unravels telecommunications policy. getAbstract highly recommends it to policy wonks who love what Kahn hath wrought and to those who wish they could hang up on it.

Summary

Changing the Rules of the Game

Do the post-deregulation financial woes of the telecommunications and airline industries call for a return to regulation? No. Exactly the opposite. Deregulation is more important now than ever, and those areas where governmental authorities have kept their fingers in the pie are more troublesome than those where regulators have backed away. Should deregulation be reconsidered or reversed? No. It must be practiced more assiduously than ever.

The airlines were deregulated in one sweeping stroke in 1978. The government abolished the Civil Aeronautics Board (CAB), which once controlled domestic fares and routes. Telecommunications deregulation is proceeding gradually down the same path. But, the telecommunications' regulatory body – the Federal Communications Commission (FCC) – is presiding over deregulation itself. Since passage of the Telecommunications Act of 1996, the FCC's volume of decisions and proceedings has nearly tripled. Membership in the Federal Communications Bar Association has increased by more than 73% since late 1994. Apparently, deregulation has been good business for insiders.

While the methods differ, airline and...

About the Author

Alfred E. Kahn is considered the leading authority on public utility deregulation in the United States. A former economic adviser to President Carter, he chaired the New York Public Service Commission. He is currently a professor emeritus at Cornell University.

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