FILE - In an Oct. 26, 1978 file photo Alfred E. Kahn, named by Pres. Jimmy Carter to head his new anti-inflation program speaks to reporters after Carter introduced him at the White House, Wednesday, Oct. 26, 1978, Washington, D.C. Kahn, who presided over the historic deregulation of the airline industry during the Carter administration died Monday Dec. 27, 2010. He was 93. (AP Photo/File)Anonymous/The Associated Press
Long before anyone advocating deregulation and less government interference in business was automatically slotted in the rightist Reagan-Thatcher camp, there was U.S. economist Alfred Kahn, who died last month at 93.
Mr. Kahn's political views were decidedly liberal and Democratic; but he never let politics stand in the way of what he regarded as sound economics. Which is why, as head of the U.S. Civil Aeronautics Board [CAB]in the late 1970s, he pushed through a dramatic deregulation of air fares. Thanks in large part to his efforts, airlines were forced to compete on price and allowed to develop new routes, a move that saved consumers millions and paved the way for the rise of low-cost, no-frills carriers.
A lot has gone wrong with deregulation in the years since Mr. Kahn's breakthrough during Democrat Jimmy Carter's presidency. Today, after the global financial debacle, the derivatives scandals and numerous problems in other deregulated sectors, deregulation itself has become something of a dirty word. And in the airline business itself, it has become harder than ever to turn a profit.
But Mr. Kahn never changed his mind about dismantling the airlines' pricing and route protection. Deprived of their artificially high fares and restricted competition, air executives were understandably furious at the time. But he had a ready answer for those who said he knew nothing about planes. "To me, they're all marginal costs with wings." And he said he wished he could have done the same to the phone business years before it finally happened.
The old system, he declared, ''had all kinds of advantages, but it was predicated on people being willing to sit still and accept prices that were outrageous.''
Mr. Kahn was beloved by those of us in the scribbling game, because he insisted on using plain language and abhorred the jargon so beloved by too many economists and all government bureaucrats. As related in a tribute by economist Robert Frank in The New York Times, Mr. Kahn wrote a famous memo after taking over at the CAB. Here's one of his requests to staff: "Every time you're tempted to use 'herein' or 'hereinabout' or 'hereinunder' or, similarly, 'therein,' thereinabove' or 'thereinunder," and the corresponding variants, try 'here' or 'there' or 'above' or 'below,' and see if it doesn't make just as much sense."
Later, when he became Mr. Carter's leading adviser on inflation, he warned darkly that a failure to corral then-soaring prices could trigger a deep depression. The White House ordered him not to use such a scary term, and he complied by using an entirely different description. "We're in danger of having the worst banana in 45 years."