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> But the cost of flying had already been falling before deregulation, and it kept falling after at about the same rate. What a bizarre argument, that absolute

> But the cost of flying had already been falling before deregulation, and it kept falling after at about the same rate. What a bizarre argument, that absolutely demands more examination than a throwaway line upon which the entire premise of the piece hinges. There’s lots of reasons why fares would be falling in the early days that you wouldn’t expect to continue for decades. Yet the author seems content to pretend there’s some mysterious factor that causes prices to fall for decades that we can infer from just a few year’s data. From first principles, you should always expect that regulation increases prices and the burden of proof is to argue why it would not. Embarrassing that the author is a professor and didn’t bother making a proper argument. A key argument that led to deregulators winning is showing that intra-state fares—which were not federally regulated—were about 40% cheaper than one might expect when comparing to interstate. Anyway, there are articles that go into various reasons why deregulation very probably substantially decreases fares.

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pyrolistical 3y ago
> From first principles, you should always expect that regulation increases prices and the burden of proof is to argue why it would not I don’t see how that is true.
- sdvnwsdf 3y ago
  Regulation has to increase some expenses. If nothing else it's one more thing on the todo list and time has a cost too. Note: I'm not saying anything about cost/benefit. It could definitely be true that the benefits are well worth the cost. And it could also be true that a benefit is a lowering of an expense somewhere else lowering overall prices. (which is the thing that is not obvious and need to be explained) But there is a cost that needs to be covered by something. And that cost is usually going to result in increased prices in one form or another.
  - francisofascii 3y ago
    Not always. Some regulations set price ceilings, which is essentially sets a lower prices than the market rate. This leads to shortages, of course, but it is the obvious counter example.
  - metabagel 3y ago
    Some regulations limit prices or price increases, or create a more favorable environment for consumer price negotiation. Some regulation may lead to negligible higher prices, so it bears asking not just is there an effect, but what is the magnitude of the effect. If minuscule, then we can ignore it.
    - AnthonyMouse 3y ago
      > Some regulations limit prices or price increases, or create a more favorable environment for consumer price negotiation. Even these regulations can increase prices, for example by driving market consolidation or reducing price transparency and increasing overhead as people devise convoluted workarounds. Price controls also have a tendency to create shortages, causing the product to only be available via black markets that carry a risk premium (and so high prices). > Some regulation may lead to negligible higher prices, so it bears asking not just is there an effect, but what is the magnitude of the effect. If minuscule, then we can ignore it. A regulation setting a maximum price of a trillion dollars would have negligible negative impact because nobody would charge that much anyway, but it would also have negligible positive impact because nobody would charge that much anyway. You can obviously pass a regulation that does nothing and then it does nothing. Customers prefer lower prices all else equal, so that's what they'll choose when all of the options are on the table. Prohibiting certain things only takes options away. If they weren't the lowest cost options to begin with then prices may not increase, but then you have to ask why anybody would have chosen that to begin with over the thing that costs less. If the thing you prohibit was the lowest cost option, prices go up.
      - ffgjgf1 3y ago
        > Even these regulations can increase prices, for example by driving market consolidation or reducing price transparency Or (as they occasionally do) they can achieve the complete opposite. Making such an argument (from both sides) completely worthless without additional context.
- bluGill 3y ago
  Because regulatory capture is a thing, and in absence of competition your goals are often to increase your costs which in turn means that you can charge more while still appearing to maintain a small profit margin. It doesn't need to be higher prices, but regulation tends to bring in enough distortion that isn't transparent so we cannot know what a proper price really is.
  - specialist 3y ago
    Yes and: regulation is just a scary word for rules. As you know, there's always rules. Even informal markets have rules, known by all the players, even if they're not written any where. Being an idealist, I prefer rules which lean towards fairness, legibility, and predictability.
- inquirerGeneral 3y ago
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- labcomputer 3y ago
  In this case it is trivially true because the CAB indeed did set the minimum price that an airline could charge (mainly to avoid railroads going bankrupt—when Amtrak took over passenger rail, that fig leaf was removed) Air travel was glamorous because if you can’t compete on cost you compete on service.
  - mulmen 3y ago
    That’s only true if there were airlines that charged the minimum and would have charged even less in the absence of the regulation. The existence of the regulation is not proof of that alone.
    - AnthonyMouse 3y ago
      The existence of the regulation is evidence of that in itself, because the alternative would be that someone for unexplained reasons put in the time and effort to pass a regulation that has no effect.
      - mulmen 3y ago
        There is no law of nature that says all regulation has or had a purpose.
        AnthonyMouse 3y ago
        Which is why it's evidence. The presumption is that it was enacted with a purpose rather than without one because the vast majority of legislation is enacted to bring about some intended effect. To rebut this presumption you would need some explanation for why this legislation is an outlier.
    - labcomputer 3y ago
      I mean... you think that it was just random coincidence that essentially every single airline charged exactly the minimum fare? Say... would you be interested in a bridge?
- deleted 3y ago
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mxkopy 3y ago
> From first principles, you should always expect that regulation increases prices and the burden of proof is to argue why it would not. This reads like: From first principles, you should always expect that adding lines of code increases the time it takes to execute and the burden of proof is to argue why it would not. Just like code, economies can be made more complex, which can increase their efficiency.
- dmonitor 3y ago
  > From first principles, you should always expect that adding lines of code increases the time it takes to execute and the burden of proof is to argue why it would not. I would also argue this is true? Assuming more lines of code directly translates to more CPU instructions
  - metabagel 3y ago
    No, it’s not true. You can add lines of code which use a more efficient algorithm.
    - _gabe_ 3y ago
      > You can add lines of code which use a more efficient algorithm. Yes, so the burden of proof is on the algorithm. Adding more lines of code, by default, makes the code slower. If the algorithm is more efficient, it can make the code faster. But it must be more efficient. This logic seems to hold up to me, but maybe I’m missing something here?
      - michaelmrose 3y ago
        Having more lines of code doesn't even reliably map to having more machine instructions let alone time complexity of solution. Given 2 programs lines of code is a measure so worthless that no reasonable evaluator would start with the assumption that the smaller solution is faster and work from there. They would instead start with the actual code. The point of the analogy which is easily lost in comparing the mechanics of the actual thing is that you must in truth examine the regulation to discern if it on overall makes things more expensive rather than starting off by making the assumption that it does.
AdrianB1 3y ago
Cost of flying was dropping continuously in the past 50-60 years and it has less to do with competition but with advances in the industry. While many planes 60 years ago had 4 people in the cockpit (pilot, copilot, navigator and mechanic officer), now they reduced it to 2 (navigator no longer needed with inertial navigation and later on GPS, mechanic officer no longer needed as planes are more reliable and have more sensors and automation). Also the fuel consumption, the biggest cost today, decreased with every generation of engines, time and time again.
- cyberax 3y ago
  Look at European budget airlines like Ryan Air. They achieve low prices through business model streamlining, not through technical advances.
  - metabagel 3y ago
    Inferior service is usually cheaper.
    - hef19898 3y ago
      Plus, on average on the whole cabin, budget airlines are that much cheaper than others. There is a floor of what an average ticket can cost, defined by operating cost of an aircraft. And not even Ryan Air can ignore those without loosing money.
      - cyberax 3y ago
        Sure. And Ryanair does everything to lower down that cost: they operate only one type of aircraft and they do maintenance themselves instead of contracting it out.
    - mlindner 3y ago
      Yes let’s force people who can’t quite pay enough to no longer be able to fly...
    - 3y ago
flangola7 3y ago
[flagged]
tomrod 3y ago
> Embarrassing that the author is a professor and didn’t bother making a proper argument. People are people. Your argument is strong enough without the ad hominem.
- timr 3y ago
  It's not an ad hominem. OP is saying that the person's entire job in writing such an essay is to think and make intelligent arguments about this particular area, and they have failed to do so in an obvious and silly way. It's just like saying "embarrassing that $person is a firefighter and set their home on fire playing with matches" would not be an ad hominem. An ad hominem would be: "embarassing that $person is a Harvard grad, making such an argument.", or "of course, we can expect such reasoning from someone writing an article for $publication"
  - staunton 3y ago
    Actually, an ad hominem is when you try to discredit an argument somebody made by attacking that person. The example you cite seems closer to attacking a person based on their arguments being (perceived or claimed to be) bad. If you say "embarrassing an XY grad would make such a stupid argument" it will only discredit the argument if I believe XY graduates are stupid (I guess the $publication example aims at this). Meanwhile, if I don't see why the argument is bad and don't have a bad opinion of XY, your statement is entirely unconvincing.
    - bobtheblob 3y ago
      Hard agree. If anything, it’s an ad-professorium attack using the discredited argument as (purported) evidence. Convincingly discrediting someone’s argument and then marveling that such error or oversight would emanate from someone so credentialed is not ad-hominem. Ad-hominem is the exact reverse. Let us at least strive to keep our error classification and biases in good order.
    - deleted 3y ago
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tmpX7dMeXU 3y ago
You don’t just get to say “from first principles” and then put forward your obviously-American POV as some immovable basis from which everyone else should be arguing from. Regulation routinely reduces cost. It’s all to do with the nature of the regulation. Only one party is incentivised to say trot out this “regulation is bad” BS and its businesses that want to operate in an ancap utopia because they weren’t lucky enough to make regulatory capture work for them. It’s always disappointing when individuals get swept up in believing this tripe.
- AnthonyMouse 3y ago
  > Regulation routinely reduces cost. Can you provide an example of this actually happening in a competitive market? > Only one party is incentivised to say trot out this “regulation is bad” BS and its businesses that want to operate in an ancap utopia because they weren’t lucky enough to make regulatory capture work for them. Businesses that want to challenge an incumbent who succeeded in making regulatory capture work for them would be an obvious counterexample, and for the same reason the customers who want to see the challenger succeed in making the market more competitive.
  - patmcc 3y ago
    >>Can you provide an example of this actually happening in a competitive market? Tobacco companies probably made a bunch more money as aspects of their advertising became restricted/regulated/banned - because they were basically in an arms race with one another and spending more and more to maintain market share. But that is a pretty specific case, I'm not going to make any claim that's general or applies to airlines. https://www.nytimes.com/1989/01/02/business/the-media-business-ad-ban-might-help-cigarette-makers.html https://www.nytimes.com/1989/01/02/business/the-media-busine...
    - AnthonyMouse 3y ago
      Making more money doesn't imply that they lowered prices, and in general the relationship is the inverse. Also, they did not lower prices: https://fred.stlouisfed.org/series/CUUR0000SEGA https://fred.stlouisfed.org/series/CUUR0000SEGA
Sai_ 3y ago
That prices were falling prior to deregulation and did not fall even faster after deregulation proves that deregulation wasn’t a factor. If you’re coasting to earth in a parachute and someone gives you a cup of coffee to drink which does nothing to change your rate of descent, would you then attribute your descent to the cup of coffee? You even say it yourself: There’s lots of reasons… but deregulation wasn’t necessarily it especially not in the axiomatic way you say when you say that by “first principles”, regulations increase prices. E.g., regulations and legislation around marijuana access have decreased prices, the ultimate “price” being a stint in jail for possession.
- arkis22 3y ago
  You are wrong that prices falling prior to deregulation proves that deregulation wasn't a factor in declining prices. A graph of numbers showing decreasing costs measures purely quantitative factors. The trend continuing completely excludes qualitative factors, of which you must understand to properly understand what is going on. For example, the article says that what was expected to happen was that costs would fall because there would be an influx of hundreds of competitors. That in itself is a misunderstanding of qualitative factors. Imagine there being 100 different airlines. More than half of them would be incompetent. The correct qualitative understanding of the situation is that deregulation allows the most competent airlines to consolidate/buy underperforming ones. Did service really get worse? Or is the difference really just that these airlines are now able to transport way more people at a cheaper cost because they are no longer catering to smokers who like to leer at PANAM blondes in short skirts? Also, regulation around marijuana has not decreased prices. This is obvious because in places where marijuana is now decriminalized people still prefer to buy from illegal sellers... because it is cheaper.
- throw0101b 3y ago
  > That prices were falling prior to deregulation and did not fall even faster after deregulation proves that deregulation wasn’t a factor. Do you have a source for this? I've seen graphs for prices since ~1980, but my search-fu fails to find anything before that.
- ffgjgf1 3y ago
Terr_ 3y ago
> some mysterious factor that causes prices to fall for decades Right back 'atcha: What mysterious event caused the null-hypothesis to become "technology never improves therefore prices are constant forever"? Not just in avionics, engines, etc. but also all sorts of operations that are now automated.

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pyrolistical 3y ago

> From first principles, you should always expect that regulation increases prices and the burden of proof is to argue why it would not I don’t see how that is true.

sdvnwsdf 3y ago
Regulation has to increase some expenses. If nothing else it's one more thing on the todo list and time has a cost too. Note: I'm not saying anything about cost/benefit. It could definitely be true that the benefits are well worth the cost. And it could also be true that a benefit is a lowering of an expense somewhere else lowering overall prices. (which is the thing that is not obvious and need to be explained) But there is a cost that needs to be covered by something. And that cost is usually going to result in increased prices in one form or another.
- francisofascii 3y ago
  Not always. Some regulations set price ceilings, which is essentially sets a lower prices than the market rate. This leads to shortages, of course, but it is the obvious counter example.
- metabagel 3y ago
  Some regulations limit prices or price increases, or create a more favorable environment for consumer price negotiation. Some regulation may lead to negligible higher prices, so it bears asking not just is there an effect, but what is the magnitude of the effect. If minuscule, then we can ignore it.
  - AnthonyMouse 3y ago
    > Some regulations limit prices or price increases, or create a more favorable environment for consumer price negotiation. Even these regulations can increase prices, for example by driving market consolidation or reducing price transparency and increasing overhead as people devise convoluted workarounds. Price controls also have a tendency to create shortages, causing the product to only be available via black markets that carry a risk premium (and so high prices). > Some regulation may lead to negligible higher prices, so it bears asking not just is there an effect, but what is the magnitude of the effect. If minuscule, then we can ignore it. A regulation setting a maximum price of a trillion dollars would have negligible negative impact because nobody would charge that much anyway, but it would also have negligible positive impact because nobody would charge that much anyway. You can obviously pass a regulation that does nothing and then it does nothing. Customers prefer lower prices all else equal, so that's what they'll choose when all of the options are on the table. Prohibiting certain things only takes options away. If they weren't the lowest cost options to begin with then prices may not increase, but then you have to ask why anybody would have chosen that to begin with over the thing that costs less. If the thing you prohibit was the lowest cost option, prices go up.
    - ffgjgf1 3y ago
      > Even these regulations can increase prices, for example by driving market consolidation or reducing price transparency Or (as they occasionally do) they can achieve the complete opposite. Making such an argument (from both sides) completely worthless without additional context.
bluGill 3y ago
Because regulatory capture is a thing, and in absence of competition your goals are often to increase your costs which in turn means that you can charge more while still appearing to maintain a small profit margin. It doesn't need to be higher prices, but regulation tends to bring in enough distortion that isn't transparent so we cannot know what a proper price really is.
- specialist 3y ago
  Yes and: regulation is just a scary word for rules. As you know, there's always rules. Even informal markets have rules, known by all the players, even if they're not written any where. Being an idealist, I prefer rules which lean towards fairness, legibility, and predictability.
inquirerGeneral 3y ago
[dead]
labcomputer 3y ago
In this case it is trivially true because the CAB indeed did set the minimum price that an airline could charge (mainly to avoid railroads going bankrupt—when Amtrak took over passenger rail, that fig leaf was removed) Air travel was glamorous because if you can’t compete on cost you compete on service.
- mulmen 3y ago
  That’s only true if there were airlines that charged the minimum and would have charged even less in the absence of the regulation. The existence of the regulation is not proof of that alone.
  - AnthonyMouse 3y ago
    The existence of the regulation is evidence of that in itself, because the alternative would be that someone for unexplained reasons put in the time and effort to pass a regulation that has no effect.
    - mulmen 3y ago
      There is no law of nature that says all regulation has or had a purpose.
      - AnthonyMouse 3y ago
        Which is why it's evidence. The presumption is that it was enacted with a purpose rather than without one because the vast majority of legislation is enacted to bring about some intended effect. To rebut this presumption you would need some explanation for why this legislation is an outlier.
  - labcomputer 3y ago
    I mean... you think that it was just random coincidence that essentially every single airline charged exactly the minimum fare? Say... would you be interested in a bridge?
deleted 3y ago
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mxkopy 3y ago

> From first principles, you should always expect that regulation increases prices and the burden of proof is to argue why it would not. This reads like: From first principles, you should always expect that adding lines of code increases the time it takes to execute and the burden of proof is to argue why it would not. Just like code, economies can be made more complex, which can increase their efficiency.

dmonitor 3y ago
> From first principles, you should always expect that adding lines of code increases the time it takes to execute and the burden of proof is to argue why it would not. I would also argue this is true? Assuming more lines of code directly translates to more CPU instructions
- metabagel 3y ago
  No, it’s not true. You can add lines of code which use a more efficient algorithm.
  - _gabe_ 3y ago
    > You can add lines of code which use a more efficient algorithm. Yes, so the burden of proof is on the algorithm. Adding more lines of code, by default, makes the code slower. If the algorithm is more efficient, it can make the code faster. But it must be more efficient. This logic seems to hold up to me, but maybe I’m missing something here?
    - michaelmrose 3y ago
      Having more lines of code doesn't even reliably map to having more machine instructions let alone time complexity of solution. Given 2 programs lines of code is a measure so worthless that no reasonable evaluator would start with the assumption that the smaller solution is faster and work from there. They would instead start with the actual code. The point of the analogy which is easily lost in comparing the mechanics of the actual thing is that you must in truth examine the regulation to discern if it on overall makes things more expensive rather than starting off by making the assumption that it does.

AdrianB1 3y ago

Cost of flying was dropping continuously in the past 50-60 years and it has less to do with competition but with advances in the industry. While many planes 60 years ago had 4 people in the cockpit (pilot, copilot, navigator and mechanic officer), now they reduced it to 2 (navigator no longer needed with inertial navigation and later on GPS, mechanic officer no longer needed as planes are more reliable and have more sensors and automation). Also the fuel consumption, the biggest cost today, decreased with every generation of engines, time and time again.

cyberax 3y ago
Look at European budget airlines like Ryan Air. They achieve low prices through business model streamlining, not through technical advances.
- metabagel 3y ago
  Inferior service is usually cheaper.
  - hef19898 3y ago
    Plus, on average on the whole cabin, budget airlines are that much cheaper than others. There is a floor of what an average ticket can cost, defined by operating cost of an aircraft. And not even Ryan Air can ignore those without loosing money.
    - cyberax 3y ago
      Sure. And Ryanair does everything to lower down that cost: they operate only one type of aircraft and they do maintenance themselves instead of contracting it out.
  - mlindner 3y ago
    Yes let’s force people who can’t quite pay enough to no longer be able to fly...
  - 3y ago

flangola7 3y ago

[flagged]

tomrod 3y ago

> Embarrassing that the author is a professor and didn’t bother making a proper argument. People are people. Your argument is strong enough without the ad hominem.

timr 3y ago
It's not an ad hominem. OP is saying that the person's entire job in writing such an essay is to think and make intelligent arguments about this particular area, and they have failed to do so in an obvious and silly way. It's just like saying "embarrassing that $person is a firefighter and set their home on fire playing with matches" would not be an ad hominem. An ad hominem would be: "embarassing that $person is a Harvard grad, making such an argument.", or "of course, we can expect such reasoning from someone writing an article for $publication"
- staunton 3y ago
  Actually, an ad hominem is when you try to discredit an argument somebody made by attacking that person. The example you cite seems closer to attacking a person based on their arguments being (perceived or claimed to be) bad. If you say "embarrassing an XY grad would make such a stupid argument" it will only discredit the argument if I believe XY graduates are stupid (I guess the $publication example aims at this). Meanwhile, if I don't see why the argument is bad and don't have a bad opinion of XY, your statement is entirely unconvincing.
  - bobtheblob 3y ago
    Hard agree. If anything, it’s an ad-professorium attack using the discredited argument as (purported) evidence. Convincingly discrediting someone’s argument and then marveling that such error or oversight would emanate from someone so credentialed is not ad-hominem. Ad-hominem is the exact reverse. Let us at least strive to keep our error classification and biases in good order.
  - deleted 3y ago
    [deleted]

tmpX7dMeXU 3y ago

You don’t just get to say “from first principles” and then put forward your obviously-American POV as some immovable basis from which everyone else should be arguing from. Regulation routinely reduces cost. It’s all to do with the nature of the regulation. Only one party is incentivised to say trot out this “regulation is bad” BS and its businesses that want to operate in an ancap utopia because they weren’t lucky enough to make regulatory capture work for them. It’s always disappointing when individuals get swept up in believing this tripe.

AnthonyMouse 3y ago
> Regulation routinely reduces cost. Can you provide an example of this actually happening in a competitive market? > Only one party is incentivised to say trot out this “regulation is bad” BS and its businesses that want to operate in an ancap utopia because they weren’t lucky enough to make regulatory capture work for them. Businesses that want to challenge an incumbent who succeeded in making regulatory capture work for them would be an obvious counterexample, and for the same reason the customers who want to see the challenger succeed in making the market more competitive.
- patmcc 3y ago
  >>Can you provide an example of this actually happening in a competitive market? Tobacco companies probably made a bunch more money as aspects of their advertising became restricted/regulated/banned - because they were basically in an arms race with one another and spending more and more to maintain market share. But that is a pretty specific case, I'm not going to make any claim that's general or applies to airlines. https://www.nytimes.com/1989/01/02/business/the-media-business-ad-ban-might-help-cigarette-makers.html https://www.nytimes.com/1989/01/02/business/the-media-busine...
  - AnthonyMouse 3y ago
    Making more money doesn't imply that they lowered prices, and in general the relationship is the inverse. Also, they did not lower prices: https://fred.stlouisfed.org/series/CUUR0000SEGA https://fred.stlouisfed.org/series/CUUR0000SEGA

Sai_ 3y ago

That prices were falling prior to deregulation and did not fall even faster after deregulation proves that deregulation wasn’t a factor. If you’re coasting to earth in a parachute and someone gives you a cup of coffee to drink which does nothing to change your rate of descent, would you then attribute your descent to the cup of coffee? You even say it yourself: There’s lots of reasons… but deregulation wasn’t necessarily it especially not in the axiomatic way you say when you say that by “first principles”, regulations increase prices. E.g., regulations and legislation around marijuana access have decreased prices, the ultimate “price” being a stint in jail for possession.

arkis22 3y ago
You are wrong that prices falling prior to deregulation proves that deregulation wasn't a factor in declining prices. A graph of numbers showing decreasing costs measures purely quantitative factors. The trend continuing completely excludes qualitative factors, of which you must understand to properly understand what is going on. For example, the article says that what was expected to happen was that costs would fall because there would be an influx of hundreds of competitors. That in itself is a misunderstanding of qualitative factors. Imagine there being 100 different airlines. More than half of them would be incompetent. The correct qualitative understanding of the situation is that deregulation allows the most competent airlines to consolidate/buy underperforming ones. Did service really get worse? Or is the difference really just that these airlines are now able to transport way more people at a cheaper cost because they are no longer catering to smokers who like to leer at PANAM blondes in short skirts? Also, regulation around marijuana has not decreased prices. This is obvious because in places where marijuana is now decriminalized people still prefer to buy from illegal sellers... because it is cheaper.
throw0101b 3y ago
> That prices were falling prior to deregulation and did not fall even faster after deregulation proves that deregulation wasn’t a factor. Do you have a source for this? I've seen graphs for prices since ~1980, but my search-fu fails to find anything before that.
ffgjgf1 3y ago

Terr_ 3y ago

> some mysterious factor that causes prices to fall for decades Right back 'atcha: What mysterious event caused the null-hypothesis to become "technology never improves therefore prices are constant forever"? Not just in avionics, engines, etc. but also all sorts of operations that are now automated.