“Government deregulation – How it may impact under the new administration”

Can you imagine an environment where a government bureaucrat set the price of your airline ticket, what routes an airport could have and which airline could fly it? Well it wasn’t long ago that exactly how the airline industry functioned. In 1978 the airline deregulation act was signed, leading to more routes, more airline choices, and lower prices. While deregulation was positive for the consumer, airline deregulation led to competition, lower prices, and less profitably for the legacy airlines. Many airlines never made it and filed for bankruptcy. So it may be a fallacy to believe that deregulation always leads to higher corporate profits at the expense of the consumer.

Do you know why “toll free 800” phone numbers exist? They were used so you could call a company long-distance without paying a regulated long distance fee, which was quite expensive. Today there is effectively no long distance cost, so deregulation has led to a 100% price decline. This was possible because of the Telecommunications act of 1980 that led to the deregulation of the telephone industry.

Today we are accustomed to home delivery of almost any imaginable thing we could want. This would not be economically possible prior to the deregulation of the trucking and rail industries. Prior to deregulation a truck making a delivery from Columbus Ohio to Indianapolis, Indiana had to return empty because it crossed a state line. Of course, regulations such as this that required trucks to return empty was wasteful and costly.

Government regulations impact nearly everything we do, and certainly many rules and regulations can help protect us. But some regulations can reduce competition or lead to higher costs.

Deregulation, when applied effectively, as the above examples show, can lead to more choice, lower costs, and a more productive economy.