Alfred Kahn Remembered

, James F. Davis, Leave a comment

Alfred Kahn recently died.  He was most known for being President Jimmy Carter’s head of the Civil Aeronautics Board (CAB) when it began the deregulation of the airline industry in 1977-78. He was my Economics professor at Cornell University in the late 1960’s.

Although he was not particularly fond of unregulated competition, he ended up deregulating the airline industry.  It is thanks to him that we have much lower airfares today.

What is really ironic is that Kahn was not a conservative. He was a big government Keynesian liberal. Yet, when given the facts, he saw the need to deregulate the industry. Thus his greatest professional economic success came about by abandoning his Liberal Keynesian principles and adopting Austrian School free market principles.

President Carter later asked Kahn to be Chairman of the Council on Wage and Price Stability because inflation was on its way to being the highest in U. S. history. Kahn acknowledged his attempts to regulate wages, prices and inflation were a failure as it had been with FDR and Nixon.

At one point he was admonished by President Carter for suggesting in a speech that the continuation of Carter’s economic interventionist policies would lead to a “depression.”  The next day a reporter asked Kahn a question which required him to restate what President Carter had told him would cost him his job if he did.

Kahn, always the honest showman, replied that if the economic policies were continued, the U. S.  would experience the biggest “banana” we had ever seen. He later changed the word to “kumquat” when banana producers objected.

Kahn was right. Jimmy Carter left office with the highest inflation in memory and the highest unemployment rate since Franklin D. Roosevelt. Yet the Professor did not appear to notice that he espoused many of the liberal policies that caused the economic problems.

I only spoke to Professor Kahn twice. He tended to lecture without notes and pace back and forth similar to Groucho Marx with his hands behind his back.

Fifteen minutes into one lecture he noticed a glazed look on student faces, stopped and asked me, since I was sitting in the front row, “Is this Economics 420?” I replied, “No, Economics 355.”He quickly said, “I am so sorry. Let me start again.”

The second time I spoke to him was at a class reunion in 2002. After a lecture in which he spoke about bringing prominent economists back to Cornell, I asked him if he had asked Thomas Sowell, arguably Cornell’s most published and famous former economics faculty member.

It was the only time I ever saw Professor Kahn look sheepishly insecure. He replied, “Tom had issues here.” Thomas Sowell is a free market conservative economist and such intellectuals are not welcomed at Cornell or just about any other university in the USA.

Is it any wonder that the U. S. is in economic decline when the only economic principles that have consistently helped raise the standard of living of people, when applied, are not taught in just about every institution of higher learning in the USA?

James F. Davis is the president of Accuracy in Academia.