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April 18, 2017

Dr. Dao Was Brutalized By Deregulation -- Is Life in America Today Barbaric?

Paul Craig Roberts


A couple of readers asked why I did not include in my column, “A Government of
Morons,” the violence used against the medical doctor Dao removed from his
confirmed seat on a United Flight as a result of airline overbooking. The 69-year old
was beat senseless by goons. A few days later United Airlines removed a bridal
couple on the way to their wedding from a flight only partially filled. No explanation was
given, but the couple wary of the beating that might be heading their way complied
with the order.

Clearly United is an airline you want to stay far away from. Clearly, the flight
attendants have no sense or judgment. Clearly “security” means the opposite.

The answer to the readers’ question is that I was writing a column, not a monograph
or a book or a long essay. One doesn’t need endless examples in order to make a
point. Yes, the treatment of Dr. Dao is a good example that America’s only solution is
violence, but so is two cops shooting down a 12-year old kid playing in a public park.

Thinking about Dr. Dao’s brutalization by United Airlines, I have concluded that it
follows from airline deregulation. Those whose experience of airline travel is limited to
the deregulated era have no idea how superior the experience was under regulation.
What deregulation has done is to force everything down to the bottom line. Nothing
else is important.

In the regulated era, flights were not overbooked. Flights are overbooked today
because the airlines want every seat filled and assume that some passengers won’t
show up. When they all show up, there is a problem.

In the regulated era, service was excellent. Even coach passengers were served hot
meals if their flights coincided with meal times.

There were spare parts and mechanics on hand and even spare airplanes. If your
airline could not get you to your destination on one of their aircraft, you could use
your ticket on any other airline.

If you could not make your flight, your ticket was fully refundable.

You could change your plans and rebook for a later or sooner departure without
charge. Today change charges can approach the ticket’s purchase price.

On international flights you were allowed three free stopovers at no extra charge.

I could go on.

This outstanding service was possible because the airlines were regulated.
Consequently, the airlines competed on service.

Costs were not a factor like they are today, because profits were part of the
regulation. To have mechanics and parts inventories on hand at airports and a spare
airliner did not mean that Wall Street would finance a takeover and drive up profits by
eliminating service components. You can think of airline fares in the regulated era as
a profit added to the cost of service. The Civil Aeronautics Board guaranteed airlines
a 12 percent profit on flights that were 55 percent full. To achieve a 55 percent
capacity utilization, the CAB regulated routes and partialed out the routes to the

In 1978 all of this changed. Free market deregulators and leading political liberals
claimed that deregulation would increase competition, lower fares and “democratize”
the system by permitting more people to fly to their destinations. However, the
consequence of deregulation was concentration. Today four airlines control 85% of
the market. A single airline can gain control over a major airport and thereby gain
control over pricing out of the hub. We now have unregulated monopoly pricing.
Average prices are higher today than they would be under the former regulatory

Indeed, I know of no instance in which deregulation produced a better result. Under
regulated AT&T, telephone service was excellent at a very low price. Compare today
the poor service and high price for the unregulated local or regional monopoly.

Today a telephone in the home is mainly used by telemarketers to invade your
privacy. I have to keep a telephone, because cell service is not free of dropped calls
and garbled words, and I do many telephone interviews for radio and Internet shows. I
estimate that 85% of the telephone calls I receive are telemarketing and political
messages, increasingly delivered as robocalls. Friends tell me that cell phones are
now targeted by telemarketers.

There is a “no call” registry, but enforcement is weak, and telemarketers now preface
their pitch by saying that they are calling in response to your request to learn more
about product xyz. If the US government can lie through its teeth, telemarketers figure
they can also.

If a telemarketer showed up at my door and barged into my home, he would be
trespassing, breaking and entering, commiting a crime. But he can come into my
home via the telephone.

That such intrusions are permitted is amazing to me. As an American student at
Oxford University I was given an orientation in proper manners. The telephone was
part of it. I was told that it was considered rude to telephone someone to whom you
had not been introduced, even an assigned advisor. First, you wrote a note to the
person. If you received a reply, then you could telephone.

A big change, along with airline service, in a few decades.

For my generation, life in America today is barbaric.