The New Progressives Fight Against Consumer Welfare

The Biden administration wants to undo years of bipartisan consensus about antitrust regulation

By Phil Gramm and Christine Wilson. Excerpts:

"The first Progressive attempt to regulate competition occurred in 1887, when Congress created the Interstate Commerce Commission. Real rail-freight revenues per ton-mile had fallen 17.7% from 1870 to 1890. The ICC banned price rebates, a mechanism overbuilt railroads had used to reduce prices. When trucks began to compete with railroads, the ICC brought trucking under its regulatory control in 1935. Airlines were regulated in 1938 when they began to compete with both.

The Sherman Act of 1890 instituted the progressive antitrust agenda economywide. During the 10 years before its enactment, steel, copper, petroleum and sugar all had higher output growth and faster real price declines than in the 10 years after its passage—making it hard to claim that even at its inception, Progressive-era regulation quantifiably benefited consumers.

By the mid-1970s, evidence of failed regulation was overwhelming. America’s largest railroad, Penn Central, went bankrupt from overregulation. Planes flew half-empty, and travelers paid more for federally regulated flights than similar intrastate flights. President Jimmy Carter, Stephen Breyer and Ted Kennedy led bipartisan rejection of Progressive-era regulations for railroads, trucking, communications and airlines.

Deregulation unleashed a wave of innovation. The cost of moving goods fell by an astonishing 50% as a share of gross domestic product over 40 years. Airfares dropped 50% on a per mile basis, while air cargo surged from 5.4% of shipments to 14.5% by 2012, making air transit for people and packages a routine part of American life. Similar miracles occurred in telecommunications as landlines and phone booths faded. As government was deregulating markets to the benefit of consumers, the courts and antitrust enforcers adopted the consumer-welfare standard with similar results."