In Energy and Finance deregulation has enabled massive crisies, in the former a crisis that led to shut downs of electricity to the 4th largest and most innovative economy in the world, and in the latter a crisis the size of which hasn't been seen since the Great Depression.

Is it so surprising that less than 10 years after Graham-Leach-Bliley ('99) undid the last regulations put in place after the Great Depression (Glass-Steagal) that we have another GD-level event? We had a historically unprecedented 80-year run without one of those, then some bankers get greedy, captured both political parties, pay them off, and boom, another Great Depression crisis.

In telecom, it's enabling consolidation of the industry into a small cartel that controls the Internet's infrastructure and who are using their massive revenue to lobby against Net Neutrality so they can shape and toll net traffic at will, unleveling the Internet playing field that has laid so many golden eggs.

On a more subjective level, it's also made tons of cheap stuff we don't really need much cheaper, but at the expense of eviscerating the middle class, grossly increasing the wealth (and hence political power) gaps between rich and poor, and making developed economies more dependent and fragile rather than robust and self-sufficient.

Sometimes I think the deregulation/outsourcing mantra is the Emporer's New Clothes, and I wonder when the consensus will change to recognize that economic optimization may not be so good after all, that economic robustness is a better policy for any self-interested nation.

In fact, speaking as someone who helped build an ISP in the '90s, the adoption of the Internet --- as provided by indie IP-as-dialtone ISPs --- was owed entirely to the CLECs and their willingness to route numbers in hundreds of telephone prefixes down a PRI to a single server cage. The CLECs were almost literally the manifestation of telco deregulation; deregulation was practically a synonym for "let there be CLECs".

I call this out this simply as an illustration of the bogosity of the logic of your entire comment.

There are other domains where if left unregulated the expected payoff is asymmetrically negative. Banking appears to be the primary example here. You can make your ~5% yearly return relatively safely, but making significantly more than that can only be done with exposure to a much higher risk of a major collapse.

If you start at the Great Depression and work backwards in time, there's a financial crisis every 20 or 30 years for over a century. It wasn't until we figured out how and gained the political will to regulate the industry that that was mitigated.

Utilities may be another example. I grew up in the Southeast where electric is heavily regulated and boring, but always stable and predictable. It was interesting to witness the California energy debacle with Enron a decade ago, and compare the two.

Stable, predictable, and boring is the ideal state for systems like electricity generation/distribution and the monetary system. Underlie much of the rest of the economy and infrastructure? Check. Expected payoff is negative? Check. Then regulate for stability and robustness. Such states don't tend to naturally emerge from deregulation, except in the form of monopoly or trust, and then you've got innovation-crushing rent-seeking and anti-competitive behavior to deal with.

Now I'm not certain which domain the telcom system falls under, it doesn't seem vulnerable to the kind of major collapse enabled by deregulation in electricy and banking. However, it does have a history of monopoly and rent-seeking behavior that I think behooves us not to discount or ignore.

Do you really think the Baby Bells would have wanted to share their infrastructure with competitors? Judging by how they're trying to get back in bed with each other, my guess would be no.

Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.

The break-up of AT&T & the 1996 Telecommunications Act were nowhere near deregulations.

Also I certainly do not believe that AT&T would have broken itself up or the regional operators would have opened their lines up, had it not been for government regulatory actions.

California's problems do show, however, that people shouldn't uncritically think that any sort of deregulation is good. Its always important to to think carefully about what sorts of incentive are being created in any deregulation.