Re: Neoclassical bizarreness!!!

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

I thought the article was quite good, except for the uncritical
Borenstein quote.  He must be the anti-Coyle.  Wierd that B. does not
mention how the bankruptcies also reduce the assets of workers.  It
just shows the narrow perspective of most economists.

On Mon, Sep 19, 2005 at 03:46:42PM -0700, Eugene Coyle wrote:
> 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

--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu