I have discussed in some detail airline deregulation as a case study of political change within the economic framework laid out in Madmen. Interstate trucking, long-distance telecommunications, railroads, banking, stock brokerage, oil and gas, are additional cases where deregulation occurred. Future research into these cases may suggest ways in which political entrepreneurs were able to “arbitrage between academic ideas and political inefficiencies.” But political change– or at least the potential– is in the here and the now.
My fellow guest blogger Todd Nesbitt discussed (here and here) the political economy of taxi cab medallions and the rise of ride sharing technology such as Uber and lyft. Whether these new technologies can overcome the vested interests of those who benefit from the status quo is unclear for now. As Todd points out, whatever the outcome, this current issue will be an interesting case for those who study public choice and the determinants of political change.
Another policy that is ripe for change is occupational licensing. As this New York Times article points out there is not only growing bipartisan support for the repeal of occupational licensing, but the economist’s critique of the rent-seeking nature of this type of regulation is part of the rhetoric in favor of reform. There has been some success in overturning licensing regulations, but so far major attempts to undo them have been blocked. Vested interests have so far, and to a large degree, won out over ideas.
The academic critique of laws that control the number of cabs in a city or that require an individual to have two years of college to braid hair has been around for some time. And as the New York Times article suggests, there is a significant amount of intellectual support from both the left and the right of the political spectrum for freer entry into occupations.
Perhaps what is lacking in the cases of occupational licensing and ride share technology is the political entrepreneur who can benefit from making these issues resonate with voters and innovatively usurp the power and influence of groups with an interest in the status-quo. It should be noted that “the Kennedy administration . . . sent a procompetitive reform bill to Congress in 1962 but [it] elicited no response. In neither house was the bill even reported to the floor”. * In the case of interstate transportation, early attempts at loosening restrictions on entry and prices were unsuccessful. During the 1960s, without “outward circumstances” and the powerful individuals (i.e., Madmen) each with a vested interest in reform, change did not happen.
* Derthick and Quirk 1985. The Politics of Deregulation, 56.