Neoclassical bizarreness!!!

[Eugene Coyle <eugenecoyle@xxxxxxx>]

On Page one of the WSJ, today, Sept 19th, there begins a story on the
airline industry.  About 50% of the capacity of the top airlines
operates under bankruptcy protection.

The Journal's story comes close (the Journal has been coming closer) to
conceding that airline dereg doesn't work.

But Severin Borenstein of the Univerity of California Energy Institute,
with the insight and confidence provided by his neoclassical economics
training, is quoted as follows:



> "There's nothing wrong here," says Severin Borenstein of the
> University of California at Berkeley, an economist who studies the
> dynamics of airline deregulation. "From a consumer perspective, prices
> are low. Levels of service rebounded quite nicely after 9/11. There's
> no sign of inadequate investment. We should stop worrying and learn to
> love bankruptcy, which is simply the transfer of assets from equity
> holders to debt holders."



The story is worth reading.  Borenstein overlooked, by the way, the
transfer of pension obligations to you, the taxpayer.  And you can add
other bits to this.

Gene Coyle