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Dr. Dao Was Brutalized By Deregulation
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A couple of readers asked why I did not include in my column, “A Government of Morons,” the violence used against the medical doctor Dao removed from his confirmed seat on a United Flight as a result of airline overbooking. The 69-year old was beat senseless by goons. A few days later United Airlines removed a bridal couple on the way to their wedding from a flight only partially filled. No explanation was given, but the couple wary of the beating that might be heading their way complied with the order.

Clearly United is an airline you want to stay far away from. Clearly, the flight attendants have no sense or judgment. Clearly “security” means the opposite.

The answer to the readers’ question is that I was writing a column, not a monograph or a book or a long essay. One doesn’t need endless examples in order to make a point. Yes, the treatment of Dr. Dao is a good example that America’s only solution is violence, but so is two cops shooting down a 12-year old kid playing in a public park.

Thinking about Dr. Dao’s brutalization by United Airlines, I have concluded that it follows from airline deregulation. Those whose experience of airline travel is limited to the deregulated era have no idea how superior the experience was under regulation. What deregulation has done is to force everything down to the bottom line. Nothing else is important.

In the regulated era, flights were not overbooked. Flights are overbooked today because the airlines want every seat filled and assume that some passengers won’t show up. When they all show up, there is a problem.

In the regulated era, service was excellent. Even coach passengers were served hot meals if their flights coincided with meal times.

There were spare parts and mechanics on hand and even spare airplanes. If your airline could not get you to your destination on one of their aircraft, you could use your ticket on any other airline.

If you could not make your flight, your ticket was fully refundable.

You could change your plans and rebook for a later or sooner departure without charge. Today change charges can approach the ticket’s purchase price.

On international flights you were allowed three free stopovers at no extra charge.

I could go on.

This outstanding service was possible because the airlines were regulated. Consequently, the airlines competed on service.

Costs were not a factor like they are today, because profits were part of the regulation. To have mechanics and parts inventories on hand at airports and a spare airliner did not mean that Wall Street would finance a takeover and drive up profits by eliminating service components. You can think of airline fares in the regulated era as a profit added to the cost of service. The Civil Aeronautics Board guaranteed airlines a 12 percent profit on flights that were 55 percent full. To achieve a 55 percent capacity utilization, the CAB regulated routes and partialed out the routes to the airlines.

In 1978 all of this changed. Free market deregulators and leading political liberals claimed that deregulation would increase competition, lower fares and “democratize” the system by permitting more people to fly to their destinations. However, the consequence of deregulation was concentration. Today four airlines control 85% of the market. A single airline can gain control over a major airport and thereby gain control over pricing out of the hub. We now have unregulated monopoly pricing. Average prices are higher today than they would be under the former regulatory system. http://www.huffingtonpost.com/david-morris/airline-deregulation-ideology-over-evidence_b_4399150.html

Indeed, I know of no instance in which deregulation produced a better result. Under regulated AT&T, telephone service was excellent at a very low price. Compare today the poor service and high price for the unregulated local or regional monopoly.

Today a telephone in the home is mainly used by telemarketers to invade your privacy. I have to keep a telephone, because cell service is not free of dropped calls and garbled words, and I do many telephone interviews for radio and Internet shows. I estimate that 85% of the telephone calls I receive are telemarketing and political messages, increasingly delivered as robocalls. Friends tell me that cell phones are now targeted by telemarketers.

There is a “no call” registry, but enforcement is weak, and telemarketers now preface their pitch by saying that they are calling in response to your request to learn more about product xyz. If the US government can lie through its teeth, telemarketers figure they can also.

If a telemarketer showed up at my door and barged into my home, he would be trespassing, breaking and entering, commiting a crime. But he can come into my home via the telephone.

That such intrusions are permitted is amazing to me. As an American student at Oxford University I was given an orientation in proper manners. The telephone was part of it. I was told that it was considered rude to telephone someone to whom you had not been introduced, even an assigned advisor. First, you wrote a note to the person. If you received a reply, then you could telephone.

A big change, along with airline service, in a few decades.

For my generation, life in America today is barbaric.

(Republished from PaulCraigRoberts.org by permission of author or representative)
 
• Category: Economics • Tags: Deregulation 
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  1. For my generation, life in America today is barbaric.

    This is so true.

    The free market utopia fails in the implementation. Unregulated Capitalism devolves into Feudalism. Don’t put your faith in the invisible hand.

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  2. Interesting points. I lived in the Dominican Republic for three years and I had a cell phone with Orange and as far as I remember, I never received an unsolicited phone call in the whole time I was there.

    When I returned to the US, I got a cell phone and had the firefighters calling me to plead for money on the very first day I had my new number, and now spam phone calls every day, and also spam texts, for example today I was notified, along with 25 other people, that I had $330 to pick up at Western Union and all I had to do was click on the link provided.

    Why do Americans put up with this? Since the country is a democracy, the answer, I suppose, must be that they don’t really object to it, and if pushed many people would say that corporations, scammers, people in India, and lunatics all have the same rights as you and me to make phone calls to anyone they want.

    Of course you could make lots of other arguments like legislators for sale to the highest bidder, a senile Supreme Court of superannuated government lawyers who can’t see the difference between a corporation and a person, but the bottom line must be that Americans and their cell phone companies must like it that way and Dominicans don’t.

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  3. The business model of today’s US airlines is to try to constantly push the limits of what abuse their customers will withstand and continue to fly. Every time they find that customers will take a level of abuse, they then form a plan to make it worse.

    When I used to fly regularly, I always tried to avoid United. They’ve long been the worst of the worst. The combination of United and Chicago at O’Hare was always truly awful. A combination of beauracratic inefficiency and corruption made any connection at O’Hare turn into horror. A truly nasty place. And now some Chi-town cop will probably shoot me if I fly again.

    United was always a pro a meaningless customer service. Employees trained to pretend they care, right up to the point where United might have to lift a little finger to provide service. Then you just got long explanations of policy and proceedure and how they couldn’t possibly provide customer service.

    For fun, watch an old 1960′s movie and see what flying used to be.

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  4. “Dog eat dog” competition sounds ok to most, until they realize there are much bigger dogs about.

    That’s the heart of modern American cutthroat capitalism.

    I’m glad to see that Mr. Roberts has come around to understanding that there is some good in regulation. Since he was in Reagan’s cabinet in the 1980′s, I suspect he was in favor of de-regulation in 1978.

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  5. Why do Americans put up with this?

    Because every time they vote to change things, it turns out that the politician was yet another lying con-man.

    Lying to the voters in an election should be a serious offense. Because it is a coup de etat against democracy. How can voters have a voice in their government if the politicians lie constantly? A lying politician is saying that power does not reside with the people, but instead is grabbing it for himself/herself.

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  6. Not mentioned in the article – in the era of regulated flight the cost of a coach seat was as much as today’s first class. Few people could afford to fly and most people had never been on a plane.

    You can still purchase that level of service and be guaranteed not to get bumped. And those on a tighter budget aren’t consigned to Greyhound.

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