Policy ideas do not always bear fruit in the real world. What was different with 1970s transportation deregulation?
In a previous post I noted that political entrepreneurs find ways to use ideas to break down resistance to change, to overcome “structure-induced stability”. Ed and Wayne write in Madmen that, “political change happens when entrepreneurs notice and exploit those loose spots in the structure of ideas, institutions, and incentives” (134). As noted by Rodrik, political entrepreneurs will seek to loosen policy constraints and enhance economic efficiency if by doing so they can enhance their power, influence, prestige, etc.
In my last post I described how the political climate had changed by the mid-1970s, during which time there was widespread dissatisfaction with government. Some of that dissatisfaction was generated by the behavior of regulators at the Civil Aeronautics Board (CAB). For example, to curtail competition that was making it difficult to maintain airline industry profitability, the CAB required the airlines to reduce their number of departures, significantly inconveniencing passengers. This brought regulatory policy and its rent-seeking characteristics into the spotlight.*
Senator Edward Kennedy seeking to “strengthen his record of legislative achievement” was convinced by his aides to bring airline regulatory issues before the Subcommittee on Administrative Practice and Procedure, which Senator Kennedy chaired. The ideas of academic scribblers were an important part of this process. Senator Kennedy used the testimony of economists, consumer groups, and others to highlight the dysfunctional nature of airline regulation, along with highlighting the too cozy relationship between business and government—that the CAB was more concerned with protecting the airlines from competition than protecting the interests of consumers. This was an issue that brought Senator Kennedy favorable publicity.
Senator Kennedy’s committee could not change the statutes governing the airlines, which was probably a calculated advantage. Since Senator Kennedy’s committee did not have direct ties to the relevant interests, it was less constrained in how it addressed the issues. But the committee’s actions did change how regulators interpreted the law. With the “intellectual underpinnings” available, regulators began to experiment with discount fares that proved to be popular with the public and profitable to the airlines. This chipped away at some (though not all) of the support for the status-quo. Even Senator Howard Cannon, a previously consistent supporter of protectionist policies and chairman of the Aviation Sub-committee (which was responsible for crafting any legislative changes), eventually moved toward supporting reform–due in part to Senator Kennedy’s efforts. **
There is more to this story, of course. President Carter appointed Alfred Kahn as chairman of the CAB. He was both an economist and a charismatic individual with a “vested interest” in ideas. His actions and rhetoric helped to “collapse” industry and political opposition to change. In addition, industry interests were too fragmented to have influence on crafting a new bill—hence the eventual elimination of the CAB.
In short, ideas and and the incentive to employ them conspired to make change possible. My forthcoming article in the Independent Review discusses many of these issues in further detail.
In my final post I will offer some thoughts on current policy issues and the role ideas play in political change.
*See Noll and Owen 1983. The Political Economy of Deregulation. Washington D.C.: American Enterprise Institute.
**See Derthick and Quirk 1985. The Politics of Deregulation. Washington D.C.: The Brookings Institution