This is a fascinating short post from Ed Lopez at Marginal Revolution. In a few short paragraphs he explains the process through which the airlines were deregulated.
Following up on my post from yesterday, the Civil Aeronautics Board (CAB) regulated U.S. airline rates and routes from the 1930s through the 1970s. It also kept mountains of data. Aspiring Ph.D. candidates found worthy dissertation material from the agency’s files. The research lent support to an important idea—regulation was failing in this market—but no one listened to these young academic scribblers.
By the early 70s, an established academic produced a groundbreaking treatise arguing for sensible regulation. Alfred Kahn would soon make the jump from academic to regulator—of public utilities in the State of New York, not airlines.
By the mid-1970s, criticism of airline regulation had moved from academics to economists in think tanks (Brookings, AEI) and in government. At an economic conference on inflation convened by the Ford Administration, the delegates focused unexpectedly on a different idea: existing regulations were producing high prices. Yet as every economist in Washington knows, many reform ideas never become policy. Then came the political entrepreneurs.
You are going to be surprised to learn that one of those political entrepreneurs and a prime mover of the airline deregulation movement was none other than that liberal icon, Ted Kennedy. Go read the entire article, it will bowl you over.
Perhaps we despair too often of nothing truly intelligent issuing from the US Congress.