What... 1970's stagflation ?
But, but... I thought we had taken care of all that.....
QUESTION: Is there a relation to this deregulation to getting us out of the stagflation of the 1970s, creating the more efficient economy of the 1980s and 1990s?
ALFRED KAHN: Once you gave companies the freedom to decide where they wanted to go and how they wanted to serve, what kind of equipment they wanted to use, and the freedom to vary their charges depending upon whether they were overfull going in one direction or had empty space for the backhaul. That was illegal under regulation - it was regarded as discriminatory. You know, an economist would tell you it was not discriminatory, because the margin cost of carrying more traffic when your trucks are already full is an additional truck. The marginal cost of carriage when you have empty space coming back is zero almost.
Well, the restrictions permitting people to enter markets in competition with one another, thereby putting pressures on them for improved efficiency, giving them total freedom to configure their routes in the ways that seem to them most efficient - all of those promoted enormous increases in efficiency, as well as pressures of competition to push down theirs. It gave them freedom as well as it posed pressures on them to offer discount fares to fill their planes. And if one did it the other had to do it. And the end result was again load factors. The average number of seats on planes built in the decade before regulation was about 52 percent. Today it's around 70 percent. Now, that of course carries with it discomfort and crowding, and that's the price that you pay in order to have cheap fares.
But, again, it is a more efficient use of aircraft. And exactly the same thing is true - there have been surveys in trucking which should that the percentage of backhauls that came back empty has gone down sharply, because you have an empty truck - you look around, and you say, Well, here's something I could pick up, or there's a city nearby that I can go to - that would have been illegal under regulation.
pbs.org
and now Electricity is deregulated (almost -- not all states have passed it I believe)
So.. what is next ??
Maybe the cycles will be short lived ? |
