Sunday, June 12, 2005

Another Contender for the Monthly Prize 4?

“Why Wright is so wrong, or the case for 'Free Love”

Cragg Hines
Copyright 2005 Houston Chronicle. Hines is a Houston Chronicle columnist based in Washington, D.C. (cragg.hines@chron.com)

“Dallas-Fort Worth at the expense of consumers and a free-market economy”.

Cragg Hines’ article is a classic example of an age old problem in business. A politician, keen to assist the then new airport at Dallas- Fort Worth, Texas persuaded the US Government to protect the commercial prospects for the airport by restricting an existing smaller and older airport in Dallas, Love Field, from flying just about anywhere where consumers might want to fly in 43 other US States. This became known as the Wright Amendment, after the Texan politician.

The case for protectionism (as always when it is first introduced) seemed justified 26 years ago if the investment was to pay its builders. But today, 26 years later, new protectionists oppose removing the now unnecessary protection.

Dallas-Fort Worth is no longer a fledgling ‘infant industry’. It is one of the world’s largest airports with 60 million passengers a year taking off and landing there. American Airlines, its main user, is among the largest, if not the largest, airline in the world.

What is the Wright Amendment protecting?

"It's an Economics 101 question ... , a no-brainer," according to Professor Craig A. Depken II of the University of Texas at Arlington, one of more than 20 economics professors in North Texas who have called for repeal of the amendment.

He goes on to observe that "it's politics where economics gets trumped," and "it's been that way since Adam Smith." How right he is, and for once we get an accurate use of Adam Smith’s legacy.

Smith believed that the purpose of the economy is to serve consumers, not producers. Depken says, "it does seem odd that business interests seem to be running this and that the consumer is out of the equation."

Congratulations to Cragg Hines (and Professor Depken) and the Houston Chronicle for their truly Smithian stance.

Another contender for the Lost Legacy Adam Smith Monthly prize?

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