Of course, competition, corporate restructuring and eliminating
inefficiency are all necessary to keep an economy healthy. A moderated
meritocracy allows competition to thrive right up until the point where
it becomes destructive, and then it steps in to prevent trouble. The advantage
of such a system is that competition becomes sustainable. It is
a supreme irony of unrestricted meritocracies that what starts out as a
wide open field of competition sooner or later winds up as no competition
at all.
We have already described how deregulation affected the airline industry.
After a brief period in which new airlines formed to compete for customers,
there was a shake-out. To cut costs, airlines began paring back their maintenance
and safety crews, which outraged the flying public. Since 1978, a dozen
airlines have merged or gone out of business. Some 50,000 employees lost
their jobs. Now that a few majors exist, air service is being dropped to
130 smaller communities, many others are served by only one airline, and
air fares are climbing faster than the planes themselves.1
After the trucking industry was deregulated in 1980, truckers ran their
trucks without maintenance until they became road hazards. More than 100
companies have gone out of business since then, and 150,000 truckers at
those companies have lost their jobs. The surviving majors hired them back,
but only after cutting their wages. At least 350,000 truckers are now private
owner/operators, which are not reflected in government trucking statistics;
they make even less than their corporate counterparts.2
In 1982, Savings and Loan lobbyists bribed Congress to quietly deregulate
the industry. In effect, Congress promised to cover any losses if S&Ls
made bad investments with their customer's savings, but also promised not
to regulate or oversee these investments. Industry experts call this arrangement
"moral hazard," because it tempts investors to abandon their
normally cautious, conservative investments and make high-risk, high-return
gambles instead. Not surprisingly, fraud and abuse soon ran rampant in
any institution that called itself an S&L. Investments turned sour;
to cover their losses, the culprits committed even more sins. Charles Keating
was caught attempting to bribe five U.S. Senators to bail him out of trouble.
To date, about 650 S&Ls have gone under, and another 400 are threatening
to. The final bill to the taxpayers: half a trillion dollars.
With amazing audacity, Congress then set out to deregulate the banking
industry.
After the cable television industry was deregulated in 1984, prices
soared, quality of programming plummeted, and cable systems began selling
their channels in indivisible blocs that prevented subscribers from voting
with their dollars. From 1986 to 1990, the cost of basic service rose 56
percent -- twice the rate of inflation.3
The problem? Growing monopolization, at several levels. There are now 11,000
cable systems across the nation, almost all of them exercising a local
monopoly over their municipal region. They in turn are controlled by a
handful of national companies. By far the most dominant is the ever-expanding
TCI, which is a gatekeeper over national programming. Its owner, John Malone,
owns all or part of 25 national or regional cable channels, including Turner
Broadcasting.4 Because there is little
or no competition, cable programmers search for the cheapest shows to produce.
Quality of programming has sunk to network TV levels. It seems that each
year, Congress passes yet another cable deregulation bill. Every single
one has been touted to "open competition" and "benefit the
consumer." But the concentration of power in the cable industry keeps
getting worse, not better.
The deregulation of cable is only a small part of what is happening
to the media in general. In 1983, Ben Bagdikian published The Media
Monopoly, which warned that continuing deregulation of the media under
Reagan's FCC was allowing the media to be bought and controlled by
an ever-shrinking number of corporate owners. Once called "alarmist,"
the book is now considered a classic, because all its predictions have
come true. By 1992, the number of corporations controlling the media had
fallen from 50 to 20, and more media mergers are inevitable. ABC is
controlled by Disney, NBC by General Electric, CBS by Westinghouse
-- and all these parent companies are renowned for their conservative political
activism. Most cities have become one-newspaper towns, with giant companies
like Gannett and Knight-Ridder buying every paper in sight. Once a newspaper
has been taken over by one of these giants, the same things happen: to
maximize profits, editors lay off journalists, reduce local stories, rely
more heavily on national news wires, publish more sex and violence, and
increase their advertising. The drop in quality is so great that even Gannett's
CEO admitted his papers were journalistically "embarrassing."5
Almost every year, Congress deregulates the media still further, even as
dizzying new mergers make headlines. The 1996 Telecommunications Act became
notorious for censoring sexual content on the Internet, but perhaps even
more insidious was its massive deregulation of the media. By the time information
has become centralized in this country, we will have finally abandoned
the ideal of a free press.
Deregulation in the telephone and transportation industries have brought
different results to different sectors of the nation. Companies have dropped
routes and services to poor communities, or only offered them by raising
prices exorbitantly. Senator Byron Dorgan (D-North Dakota) said as early
as 1983: "There have been some benefits from deregulation, but they
have gone largely to population centers, while the costs have gone to rural
areas."6 Long distance telephone rates
fell 38 percent in five years, but about three-fourths of the calls were
routed through 18 major cities; for the rest of the nation, local service
climbed 50 to 60 percent.7
Labor unions also suffered heavily from deregulation. In 1986, Alfred
Kahn, an architect of deregulation under Carter, admitted that 3 million
union members in airlines, telecommunications, trucking, bus transportation
and other industries had taken a severe blow after deregulation.8
On the other end of the spectrum, surveys in the late 80s showed that businessmen
gave only qualified support for the era's deregulation. For example, although
they enjoyed the lower air fares of their business trips, they were troubled
over airline delays, loss of routes, long reservation requirements and
air safety reductions.9
To be sure, some regulation in the past has been ham-handed and ill-conceived.
But this means it should be improved, not eliminated completely. A good
analogy is that of a referee who makes a few bad calls in football game.
The solution is to find better referees -- not throw them out completely.
Return to Overview
___________________
1 Donald Barlett and James Steele,
America: What Went Wrong? (Kansas City: Andrews and McMeel, 1992),
pp. 106-112.
2 Ibid., pp. 112-118.
3 Study by the federal General Accounting
Office, cited in "Cost of Cable Service Up 56%," Washington
Post, July 19, 1991.
4 Jeff Cohen and Norman Solomon, Through
the Media Looking Glass: Decoding Bias and Blather in the News (Monroe,
Maine: Common Courage Press, 1995), p. 3.
5 Ben Bagdikian, The Media Monopoly,
4th ed. (Boston: Beacon Press, 1992). Gannet CEO quote is on p. 6.
6 "Deregulation Gone Haywire,"
Atlanta Journal and Constitution, November 27, 1983.
7 "Five Years Later," Columbus
Dispatch, December 11, 1988.
8 "Deregulation a Rough Jolt for
Workers," Boston Globe, March 9, 1986, p. A1.
9 Kevin Phillips, Politics of Rich
and Poor: Wealth and the American Electorate in the Reagan Aftermath
(New York: Random House, 1990), pp. 99-100.