The economist Alfred Kahn passed away last month at the age of 93. Kahn, a self-described “liberal Democrat,” was by no means an Austrian economist nor even a consistent proponent of the unhampered market economy (e.g., he was, recall, Jimmy Carter’s “inflation czar”). Nonetheless, Kahn was justly known as the “Father of Airline Deregulation” for his work in the late 1970s as Chairman of the Civil Aeronautics Board (CAB). Created in the late 1930s, the CAB was the government agency responsible for organizing and controlling the cozy and profoundly anti-consumer commercial airline cartel that restricted free entry into the industry and suppressed internal route and price competition among existing airlines. As CAB Chairman, Kahn planned and implemented almost complete deregulation of the airline industry, opening the industry to competition from new discount airlines that led to a steep and welcome decline in air fares for consumers. Prior to deregulation routine air travel was affordable ony for business travelers and wealthy consumers while leisure travel for the middle class on airlines was prohibitively expensive. Kahn also presided over the dissolution of the CAB–a glorious moment in postwar U.S. history when a Federal regulatory agency actually dissolved itself.
Even before his stint at the CAB, Kahn pressed for deregulation as chairman of the New York Public Service Commission. In this role, he permittted electric utilities to institute peak load pricing, which more efficiently allocated electrical generating capacity and lowered production costs. He also enabled telephone companies to do away with the wasteful practice of providing “free” directory assistance, which used scarce personnel and equipment to look up telephone numbers that most users could find more cheaply themselves by using telephone books. And, of course, these directory assistance services were not really free to consumers at all because they inflated the phone bills of all ratepayers.
In his tribute to Kahn, Robert Frank, who was Kahn’s chief economist at the CAB and is now a prominent behavioral economist, emphasizes that Kahn’s devotion to deregulation went hand in hand with his devotion to “plain English.” Frank reminds us of Kahn’s “celebrated memo” written shortly after he took over at the CAB entreating his staff of lawyers and economists to write more clearly. The memo created a stir that went beyond the agency and the memo was even published in its entirety in The Washington Post. Frank quotes some of the scintillating passages. For example:
Every time you’re tempted to use ‘herein’ or ‘hereinabout’ or ‘hereinunder’ or, similarly, ‘therein,’ thereinabove’ or ‘thereinunder,’ and the corresponding variants,” try ‘here’ or ‘there’ or ‘above’ or ‘below,’ and see if it doesn’t make just as much sense.
The passive voice is wildly overused in government writing. Typically its purpose is to conceal information — one is less likely to be jailed if one says, ‘He was hit by a stone,’ than if he says, ‘I hit him with a stone.’
Kahn fearlessly pressed his campaign against the use of confusing and obfuscating language beyond the confines of policy memos and reports to the very heart of mainstream economic theory. Thus Kahn, Frank tells us, counselled macroeconomists in particular, “If you can’t describe what your model says in plain English without provoking derisive laughter, it probably doesn’t say anything of value.”
Clearly, Fed Vice Chair Janet Yellen was not heeding Kahn’s sound advice when she recently cited the meaningless model in the Federal Reserve Bank of San Francisco working paper “Have We Underestimated the Likelihood and Severity of Zero Lower Bound Events?” to support her ludicrous pronouncement that printing $600 billion under QE2 will create 700,000 additional jobs.