Consumers do complain that standards of service have fallen. So they have--because passengers are unwilling to pay for them. Through competition, the market has discovered that consumers prefer cheap tickets to frills.

Indeed. This reminds me of something that was on the tech news and opinion site Ars Technica a while back. One of the main authors of the site (a very smart, center-left leaning guy) posted a comment about how wonderful wi-fi on flights was and how he thought it should be viewed as an absolute necessity on all flights.

In their comments forum, several posters asked the author how much he would willing to pay extra on a flight for this necessity. He responded that he would be willing to pay nothing-- that for $5, or even $2 less he would book a flight without wi-fi from a competitor. Despite this, he claimed that it was an absolute necessity, should be on all flights, but that he would never pay any extra for it. Many of us were left shaking our heads.

Is it any wonder that faced with such customers, standards of service goes down? People like that author clearly, despite his statement, value price over service. People like cheap flights.

Still, every so often there are articles in the New York Times and elsewhere where rich travelers who could afford to fly easily before complain about how the service has gone down.

Dan's question, alas, is not an especially interesting one, since all markets are driven by regulation. We have disclosure requirements, patents and copyright law, bankruptcy law, etc., etc., etc.

So the proper question is, what is the nature of the "re-regulation" you propose? What is it designed to do? What are the other consequences of it, and are those trade-offs worth it?

I don't happen to know what Dean's answers to those questions are -- I doubt he can even answer the first one coherently -- but no credit to Prof. Drezner for turning a question that has both empirical and ideological components into a wholly ideological one.

Question for Governor Dean? What about Brad DeLong? Howard Dean will most likely be the Democrat presidential nominee. He, though, apparently supports economic policies that DeLong finds highly questionable. How will Professor DeLong remain a faithful Democrat?

I thought Dean's comments were utterly wrong, but I'm not sure our proprietor's post addresses them.

The post mostly talks about airline dereg, something Dean said nothing about. Dean, as quoted, is talking about:

-- Big Media (aka Fox and Clear Channel, I'm afraid.)

-- Telecom (guess he's still mad that he can't understand his phone bill)

-- Utilities (remember that small problem in California?)

-- Any companies using stock options (guess he's trying to regulate practices that inflate stock price in order to juice up the options. If Dean knew anything about the relevent provisions of the tax code -- he'd know that the whole stock option problem resulted from legislation based on a Clinton promise to deny a tax deduction on exec comp over a million dollars. So he's trying to correct a problem by regulation that was caused by an attempt to correct a similar problem by regulation.)

I guess the problem I see here is that Dean's specific industries are troubling. Regulating Big Media ususally are "progressive" code words for "ensuring a diversity of voices that drown out those nasty right wing talk shows and that awful O'Reilly person.

Re-Regulating telecom -- well, since the Baby Bells keep merging together, there may be cause for discussion. I'm sure not qualified to discuss it.

Utilities -- This is really a state,not a national problem. But has there been a state utility deregulation that has worked? California's case is famous, but the natural gas deregulation here in Georgia certainly has not delivered on its promise of lower prices.

In Washington State, de-reg of electrical utilities has also been a flat-out disaster -- we were part of the Enron scam. Deregualtion = open season on consumers.

Airline travel? I remember when flying was actually rather pleasant. Those days ended with de-reg. Nowadays, I swear airlines are engaged in an experiment to see how much lousy service and physical discomfort and utter indifference we'll put up with before we decide we'd rather take the train. De-regulation, I should point out, allowed profiteering CEOs to take over airlines for the express purpose of stripping their assets and then abandoning the corpses. (Sic transit Eastern Airlines, among others.)

Deregulation is a lot like Marxism in that it sounds great in theory and sucks in practice.

The SEC is now immersed in what we could call 're-regulation'.

Are we against that?

Dean hasn't said anything specific about what he has in mind and until he does how can you criticize him?

"Utilities -- This is really a state,not a national problem. But has there been a state utility deregulation that has worked? California's case is famous, but the natural gas deregulation here in Georgia certainly has not delivered on its promise of lower prices. "

Texas and Pennsylvania seem to be doing okay with their deregulation plans.

"Airline travel? I remember when flying was actually rather pleasant. Those days ended with de-reg. Nowadays, I swear airlines are engaged in an experiment to see how much lousy service and physical discomfort and utter indifference we'll put up with before we decide we'd rather take the train."

Yeah, but before dereg there were an awful lot of people that didn't have any choice but to take the train or drive, because they couldn't afford taking a luxury air cruise. Now if you play your cards right, you can drop $100 and you're "free to move about the country" on Southwest Airlines. That kicks ass.

If you feel like paying more for a better experience, well, that's what First Class is for.

I took the Dean comment to be a sort of general philosophical comment, not a commitment to favoring all possible regulation of all industries. (Just as when a politician says he wants to cut taxes, he does not mean that he would favor all possible tax cuts of any amount you might name.) Accordingly, I think we can hold off thinking about how the Interstate Commerce Commission would get reestablished just yet.

Of course, Dean would not be calling for the re-regulation of the major news media if it were not for the success of conservative talk radio and Fox News. Re-regulation is code for stifling the conservative voice.

Ken - I don't agree that, before dereg, air travel was only for those who could afford it. I was a student, a full-time student, and was able to afford to travel around the country. Now, granted, my living expenses were quite low (this was Seattle in the mid- to late 70's, when it was possible to live comfortably on about $500-600 a month)but still...

Mr. Mark S,

Congratulations for stating what should be obvious, but is uncommon insight in these degenerate times. Markets exist by regulation, and not in spite of them. The question is what kind of regulation, and not whether regulation.

Also to call airline deregulation an almost unqualified success is to be completely blind to history. Airlines have been in and out of bankruptcy, each time the system refuses to let them fail. Instead they have their debts wiped out and their labor contracts renegotiated, and they go back in as Zombie Carriers artificially inflating supply. These bailouts are done on backs of stockholders, creditors, workers, and the Federal Government. Let us not forget the huge subsidy in the wake of 911.

The carriers like JetBlue and Southwest are the true future of airlines - not massive national carriers with a huge stable of plane types servicing hubs and spokes - but regional carriers to whom the hubs of the futures will be exchange ports on layovers. The new carriers will only have a half-dozen or so types of planes to service.

To speak of airline deregulation is to speak of something that never really occurred. What we have is a pseudo-competitive system that is jury-rigged and jerry-mandered to such an extent that to claim it as an example of deregulation is to say that the Soviet Union was capitalistic. It can only come from sheer economic and business ignorance.

Likewise the "deregulation" of the utility business has not delivered promised benefits, being only regulation that encourages a lack of investment in infrastructure and speculative price jumps.

Finally, telecom deregulation hasn't worked in the long run. The reason why is that there's still a major difference between the "last mile" and the long distance lines that connect people up. In any event, even the cell-companies are moving toward consolidation. And eventually like media-conglomerates there will have to be increasing anti-trust investigation to make sure that competition remains.

If we attempt to intellectually associate the concept of "competition" with what is loosely called "deregulation" in the American marketplace, then we can see that in the long term in every case it has not delivered sustainable competition and long term price savings. A point in case is Microsoft. In every case, eventual consolidation and monopoly or federal intervention snarls the system up royally.

I'd be in favor of real marketplace regulatory stream-lining and encouraging sustainable competition, if I ever saw a real proposal that could deliver it! Market theologists like poor Dan here praise what they do not know, like preachers telling the congregation that heaven is a real nice place. I'm sure it is, but it ain't here yet.

Mr. Mark S,

Congratulations for stating what should be obvious, but is uncommon insight in these degenerate times. Markets exist by regulation, and not in spite of them. The question is what kind of regulation, and not whether regulation.

Also to call airline deregulation an almost unqualified success is to be completely blind to history. Airlines have been in and out of bankruptcy, each time the system refuses to let them fail. Instead they have their debts wiped out and their labor contracts renegotiated, and they go back in as Zombie Carriers artificially inflating supply. These bailouts are done on backs of stockholders, creditors, workers, and the Federal Government. Let us not forget the huge subsidy in the wake of 911.

The carriers like JetBlue and Southwest are the true future of airlines - not massive national carriers with a huge stable of plane types servicing hubs and spokes - but regional carriers to whom the hubs of the futures will be exchange ports on layovers. The new carriers will only have a half-dozen or so types of planes to service.

To speak of airline deregulation is to speak of something that never really occurred. What we have is a pseudo-competitive system that is jury-rigged and jerry-mandered to such an extent that to claim it as an example of deregulation is to say that the Soviet Union was capitalistic. It can only come from sheer economic and business ignorance.

Likewise the "deregulation" of the utility business has not delivered promised benefits, being only regulation that encourages a lack of investment in infrastructure and speculative price jumps.

Finally, telecom deregulation hasn't worked in the long run. The reason why is that there's still a major difference between the "last mile" and the long distance lines that connect people up. In any event, even the cell-companies are moving toward consolidation. And eventually like media-conglomerates there will have to be increasing anti-trust investigation to make sure that competition remains.

If we attempt to intellectually associate the concept of "competition" with what is loosely called "deregulation" in the American marketplace, then we can see that in the long term in every case it has not delivered sustainable competition and long term price savings. A point in case is Microsoft. In every case, eventual consolidation and monopoly or federal intervention snarls the system up royally.

I'd be in favor of real marketplace regulatory stream-lining and encouraging sustainable competition, if I ever saw a real proposal that could deliver it! Market theologists like poor Dan here praise what they do not know, like preachers telling the congregation that heaven is a real nice place. I'm sure it is, but it ain't here yet.

Also to call airline deregulation an almost unqualified success is to be completely blind to history.

followed by

The carriers like JetBlue and Southwest are the true future of airlines

followed by

To speak of airline deregulation is to speak of something that never really occurred.

Except that those discount carriers were created by the airline deregulation you deride. And price has gone down tremendously, as Professor Drezner shows.

Finally, telecom deregulation hasn't worked in the long run.

Ignoring, of course, the tremendous drop in long distance rates, among other things, since telecom deregulation.

And Alfred Kahn is a disinterested observer? Um, didn't he kind of make his career on this stuff?

I don't know much about airlines and telephones, I confess. But I'm not sure that's what he was talking about, either. This is politics, and those industries aren't really what's on people's minds right now (there being few economists or historians in the general populace).

So how about these beauties, instead:

* Public utility deregulation.
* Securities market deregulation, through laws disabling class action suits for securities fraud and underfunding the SEC? (Or, why did we need Elliot Spitzer to show us we were being fleeced??)
* Corporate governance abuses, where we need new regulation (not reregulation) to address the scandal of CEO pay.

Dean is giving voice to a popular sentiment that insiders have managed to take unfair advantage of tiny corners of the market - or just those parts of the market that don't work very well.

To return to CEO compensation: this really is a scandal, and all the nostrums about the sanctity of the market don't excuse it. The top 13,000 individuals take in the same income as the bottom 20 million, according to not-very-liberal scold Gregg Easterbrook, largely thanks to clubby arrangements on compensation boards. What needs to be done? If I knew, I'd be running for office. But someone needs to give voice to the anger, put the issue on the table, and get to work drafting something. Perhaps no regulation will be forthcoming or even needed; but that will be true largely/only if the political center credibly threatens to act and scares some common sense into the main offenders.

Somehow I don't expect that from the present admin.

"Markets exist by regulation, and not in spite of them. The question is what kind of regulation, and not whether regulation."

Regulations like "stick to your contracts", "no outright lying to customers", and so forth facilitate trade and prosperity. Regulations like "you'll need to get official permission before you build or sell anything) are active impediments to trade and prosperity.

"Airlines have been in and out of bankruptcy, each time the system refuses to let them fail. Instead they have their debts wiped out and their labor contracts renegotiated, and they go back in as Zombie Carriers artificially inflating supply. These bailouts are done on backs of stockholders, creditors, workers, and the Federal Government. Let us not forget the huge subsidy in the wake of 911."

I'm with you there. We need to let the dinosaurs actually die, so that organizations that actually know what they're doing can buy up planes and other useful infrastructure and put them to good use.

"If we attempt to intellectually associate the concept of "competition" with what is loosely called "deregulation" in the American marketplace, then we can see that in the long term in every case it has not delivered sustainable competition and long term price savings. A point in case is Microsoft."

A point in case of what? Microsoft has, and has always had, plenty of competition; Microsoft consistently outclassed them in producing inexpensive, simple operating system interfaces and application interface frameworks that the masses actually want to use.

"In every case, eventual consolidation and monopoly or federal intervention snarls the system up royally."

It's federal intervention that tends to snarl the system up royally. Competition hums along just fine without such intervention. The thing is, somebody is always going to win, and they'll keep winning as long as they're the best at pleasing customers, which might go on for a while, but that's nothing to get worked up about.