Friday, November 13, 2009

The Real Purpose of Regulation

... is exposed beautifully, though I suspect not quite intentionally, in this article on the Obama administration's approach to the airline industry.
A parade of low-cost carriers have at times driven air fares below cost, Wytkind said. That causes economic chaos for mainline carriers until finally the new entrants go bankrupt in a process that hurts the entire industry, he said.
Bald-faced and clear. The incumbents, in bed with the regulators, don't want competition. It is inconvenient, makes their lives hard, and makes it harder for them to extract the rents that they and their union pals so clearly deserve. And I fear Obama's mentality is that they do, in fact, deserve the rents. As for whether the claims about driving fares below cost are true, this could of course depend on the airline, and also simply be window-dressing.
h/t Unbroken Window, where there is a lovely skewering of the premisses of the whole discussion.


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