Deregulation is a Failure

Take telecommunications, for example. Most of us remember the bad old days when AT&T was a monopoly and we paid through the nose to have a phone. All that has changed. After the court-ordered breakup of AT&T, we got our phone service from the Baby Bells for a while. Then most of them were merged, bought out and taken over, and/or involved in scandals and bankruptcy. AT&T recently announced it is leaving the consumer phone business forever. Its biggest competitor, MCI, just got out of bankruptcy, having been part of the infamous Worldcom scandal. The biggest survivors, VERIZON and SBC, are busy raising our phone bills every month. Oddly enough, they were the ones that charged the most in the first place.

Our phone bills for long distance are lower, but not on account of deregulation. It was the Internet that provoked lowered rates, because digital technology makes placing calls to anywhere almost free. AT&T, MCI and the RBOCs weren't the ones who pioneered the Internet. A bunch of universities, computer companies, and folks inspired by computers, were the ones who did it. For a long time, IBM had the best network in the world. It is true MCI was in the running for a while, but Global Crossing and many other bankrupt companies far exceeded anything the telecom companies ever did. While the phone companies have inherited the fiber optic networks built by others, they have done very little to bring broadband to our doorstep. The United States lags far behind Korea and other 2nd rank countries in providing state-of-the-art telecommunication services.

Free marketeers have attributed the much lower long distance rates to deregulation, but, actually, all that deregulation ever accomplished was causing scandals and bankruptcies in the telecommunications industry. So, like the airlines, telecom has lost more money in 2 decades than it ever made in a century. Along the way, hundreds of thousands of "widows and orphans" lost their principal stake and their income while a few CEOs walked away with hundreds of millions.

Then, there's the case of the electric power industry which the ultra-capitalists are trying to deregulate. They've run into a few speed bumps along the way; for example, the fraud upon California was discovered, and ENRON collapsed.

It does seem bankruptcy and scandal follow deregulation. I think that's because the capitalist bees smell a pot of honey when a company gets deregulated. They find it and suck it dry, leaving nothing for the employees and shareholders.

So, are we better off as a result of deregulation? I think not. But, I'm just your stupid old socialist. Some industries should operate in a relatively free market, and others should be heavily regulated. (I do think a so-called mixed economy is optimal.) Were I making the decision, airlines, electricity and some telecommunications would be regulated. And, I wouldn't have been so quick to dump Bank regulation a few years ago. That's the next big one: banks and financials. Right now, they are undergoing merger, takeover and buyout (aka consolidation). In due time, maybe within 5 years, we'll get to the bankruptcy and scandal stage.