Of course it increased efficiency. Miles traveled have skyrocketed since 1978, when deregulation first occurred. Prices have dropped, on average, by 40%. Here are some quick links with that data
Let’s see. Customers got more product at a cheaper price. Man, that’s terrible. That deregulation stuff is absolutely terrible.
If the airlines don’t invest to remain competitive, then they will fail. Many already have. Unless, of course, we choose to tax the citizenry to socialize the airline losses, like we are doing with the auto industry and the banks.
Mosier, your whole proposal involves replacing a shared system of greedy, self-interested “fatcats” (government and business leaders), with the same system run solely by one half of that (the government.) You’re just shifting the power, and in a bad way. I agree with you about gay marriage and censorship but, good god, most of the rest of your list is impractical to the extreme. And the day we completely, preempitvely, unconditionally destroyed our nuclear arsenal would probably be about 1 to 3 days before the day we were invaded by another country or countries. MAD saved the world and is still working to some extent.
The point is that a competitive market with liberalized price and wage should drive prices and profits down, increase efficiency, and decrease inequality. Allowing the market to determine price and wage is based on the presumption that a competitive free market exists. The real world is anything but a competitive free market. Monopoly and market power are pervasive and a normal part of economic life; therefore, in the real world, there is no competitive price or wage because there is no perfectly competitive firm. Wages are determined by relative wages, fixed production costs, and social norms.
The cost of air travel fell but the airlines used monopoly pricing power to price discriminate between consumers. Before twice filing bankruptcy, U.S Air paid enormous CEO salaries instead of funding its share of employee retirement plans. After Bankruptcy in 07, employee pensions were forfeited by the remaining airlines while CEOs emerged from the deal with generous multimillion dollar compensation packets. The attack on airline employee wages and union busting only shifted money to the top. CEOs were rewarded for bankruptcy, and the airline employee pensions became a taxpayer burden. This is not a competitive market. It is a rigged market.
On what are you basing the assertion that a competitive market decreases inequality? And what exactly do you mean by “liberalized” price(s) and wage(s)?
Liberalize meaning the market determines price and wage. It is a market without price or wage controls.
In theory, a competitive market will naturally drive down price, profit, and wage. If profits, wage, and price decrease simultaneously, the competitive market should reduce inequality not increase inequality. Wages are lower but profits are also lower and products are cheaper.
I am afraid that I don’t believe you that a competitive market always drives down prices, profits, and wages. A competitive market, moment by moment, matches the aggregate demand for something to the perceived supply. A competitive market for engineers, where engineers are in demand and also in short supply, drives wages for engineers up, not down. A competitive market pushes companies to innovate and increase efficiency. Companies that succeed at this in a competitive market see their profits go up, not down.
Nor is it the case that a competitive market necessarily reduces inequality - of wages, for example.
Consider a non-competitive market, such as a completely unionized labor market. Under union rules, everyone must be paid the same for eight hours of work. Wage equality is therefore absolute.
Now they de-unionize. The company now offers bonuses to those who exceed their work quotas, or pay piecework. The faster and/or more efficient workers see their wages go up, and the rest stay the same. Wage inequality is therefore increased in a competitive market in that example.
Examples like these can be multiplied almost without number. The market is completely amoral and impersonal. There is no “should” in the market place - only what is, and what is not.
It cares nothing, in other words, about equality - only equilibrium, and even that is a changing value.
There will always be a scarcity of resources. That is one thing all economists will agree on. A free market will cause resources to be used the most efficiently, better than any sort of central or managed planning, which is what you are advocating once you start demanding regulation. This does not mean that free markets will automatically guarantee equality for all, and I don’t know anyone in here that claims as such. It’s always about efficiencey. This also does not mean that there will be business cycles or downturns. It also does not mean that there will not be market distortions.
Regulation can be good, but always know that regulation has intention and political will behind it. Regulation always creates unintended consequences as well as market distortions, which often (if not always) beget more regulation, thereby increasing the size of government, thereby increasing government intrusion. Regulation should be transparent and and effective to all, to minimize externalities, NOT to “level the playing field.” Those types of regulation will always create the most market distortions, and often have the severest market corrections.
There is no monopoly that isn’t sanctioned by the government. Natural monopolies are an indication of increased efficiency, which is really the only tolerable type of monopoly. The regulations that cause firms to unnaturally have increased market share or market power are often the same reasons these firms have to bailed out later when the market crashes around them.
Would the CEO salaries have paid off the pension? The what, $1.2B shortfall? If it weren’t for the regulations giving US Airs unnatural market share in the first place would they have owed their union so much (the union also being a market distortion, given the laws protecting unions). Honestly, US Air is lucky to be around in any capacity. They should have went bankrupt and their assets liquidated.
It is an article of faith that government intrusion, i.e., “regulation”, is inherently bad. It is a faith I do not share. You are entirely welcome to witness for your faith, of course, but you seem to assume that it will be accepted as demonstrated fact.
For one thing, you are ignoring economic Darwinism. The bigger a corporation gets, the better its bargaining position, the more efficiently it operates to its own advantage. Then, the bigger it gets, so on and so forth until it arrives at the ideal state of corporate efficiency: monopoly.
“Monopoly” and “trust busting” are not simply terms from your child’s history books, they are a fact, they are a clear demonstration that unregulated capitalism fosters a ruthless and anti-social behavior system. The necessity of regulation is a demonstrated fact.
Um…you do realize all the dinosaurs have died off, right? Bigger is not necessarily better…nor is it usually the most efficient either. In either actual Darwinism or the corporate type.
The monopolies of the past you allude too were only possible because of government tinkering and distortions that ALLOWED them to become monopolies…and to stay around despite their inefficiencies and inherent long term non-viability.
It’s also fairly ironic that you would call another poster on witnessing and then give a fact free screed of your own along the same lines.
Sure. The devil though is in the details…and the hard part is figuring out what IS necessary and what isn’t. Look at the Republican’s deregulation efforts wrt our current economic fuck up. They THOUGHT that they were helping the market and the economy, but the regulations they took out set up the current crisis…while the one’s left in also had a negative impact. That’s the problem…there was so much regulation and the current economic model and things like hedge funds and international defrayed risk so little understood that the whole thing is a house of cards. The flip side of that of course is that adding more cards (i.e. tossing in new regulation without the understanding of how the system is working) isn’t really an optimal answer either.
I definitely believe that some amount of practical regulation is necessary in certain large industries, but what the OP suggested was so far beyond that I don’t even know how we got on the topic.
Which acolyte insists that the Sacred Free Market results in decreased inequality?
Once again, you are assigning an ‘objective’ to the Sacred Free Market. In this case, the objective of decreased inequality. Where that came from, I have no idea. But I notice you continually do it to create strawmen.
The Sacred Free Market has no objectives. I can repeat that again, if it would help.
Government intrusion is inherently biased. Even the best intended regulation can lead to unintended consequences through market distortions or coruption due to conflicts of interests. The government bails out one company but what about it’s competitors who don’t require government assistance?
No one is aguing for a completely unregulated environment. But some regulation is inherently unfair. If the government comes in and says who you can or cannot sell to, then by what criteria should they decide that?
Can you you provide any examples of what you are talking about? Of most recent corporate failures - Bear Sterns, Lehman Brothers, AIG and GM, none of these companies were monopolies.
Companies typically do not evolve into monopolies. They usually have at least one or two competitors of similar size.
To a great degree, but perhaps not as you intend. Where do we hire our financial muckity-mucks? From the financial sector, the good ol’ revolving door. Makes some sense, if you must have people of experience, that’s where you’re going to get them. But if those people have any political bias at all, its not likely that it leans in my direction, now is it? How many Marxist MBA’s do you know?
Now, as to whether a recent alumnus of Bear, Stearns is the man to tell them they must go off and commit *seppuku *for the good of the country, well…
And yet I can’t shake the feeling that if Obama brought on someone with no experience in Wall Street/Babylon, hence someone with less conflicts, you wouldn’t be all that thrilled.
You are outlining a number of mistakes that result from poor regulation, this has no direct bearing on regulation itself Like Idaho’s ethereal Free Market, it has no qualities, it isn’t “inherently biased”, it isn’t “inherently” anything. Smart people regulate, results probably good, dumb people regulate (or disdain to regulate), Dems win next election.