Appointed “inflation czar” in late 1970s, Alfred Kahn is most famous for deregulating the airline industry. At the time this seemed to make sense, although in retrospect I’m less a fan of consumer-driven policies than I used to be. When I was a kid we subscribed to Consumer Reports and so I just assumed that everything that was good for the consumer–lower prices, better products, etc.–was a good thing. Upon reflection, though, I think it’s a mistake to focus too narrowly on the interests of consumers. For example (from my Taleb review a couple years ago):
The discussion on page 112 of how Ralph Nader saved lives (mostly via seat belts in cars) reminds me of his car-bumper campaign in the 1970s. My dad subscribed to Consumer Reports then (he still does, actually, and I think reads it for pleasure–it must be one of those Depression-mentality things), and at one point they were pushing heavily for the 5-mph bumpers. Apparently there was some federal regulation about how strong car bumpers had to be, to withstand a crash of 2.5 miles per hour, or 5 miles per hour, or whatever–the standard had been 2.5 (I think), then got raised to 5, then lowered back to 2.5, and Consumer’s Union calculated (reasonably correctly, no doubt) that the 5 mph standard would, in the net, save drivers money. I naively assumed that CU was right on this. But, looking at it now, I would strongly oppose the 5 mph standard. In fact, I’d support a law forbidding such sturdy bumpers. Why? Because, as a pedestrian and cyclist, I don’t want drivers to have that sense of security. I’d rather they be scared of fender-benders and, as a consequence, stay away from me! Anyway, the point here is not to debate auto safety; it’s just an interesting example of how my own views have changed. Another example of incentives.
Regarding airline deregulation, a lot of problems have been caused by cheap flights. And, even though I’ve personally benefited from the convenience, maybe overall we’d be better off with the old system of fewer, more expensive flights. Or maybe expansion was going to happen anyway, in which case it was probably a good idea to try to do things right.
Anyway . . . I never met Alfred Kahn but I heard a lot about him because he was my mother’s adviser in college. She studied economics at Cornell and had only good things to say about Kahn, (She also took a course with Feller, the famed probabilist, but she didn’t get so much out of that.) We were all very excited in 1978 or whenever it was when Kahn was in the news as the inflation czar. In a slightly different world, my mom would’ve been doing something like that, rather than staying at home with the kids and getting a mid-level job later in life.
P.S. I’m not claiming any expertise on airline deregulation! My point in bringing this up was to just indicate how my thinking (and that of others too, I’m sure) has changed since the 1970s. When the name of Alfred Kahn comes up, I’m immediately sent back in my mind to 1948 and 1978, so it’s interesting to reflect upon intellectual and cultural changes since then.