President Obama grabbed a few headlines the other day by calling for a top-to-bottom review of government regulations, so that his administration can weed out overlapping, conflicting or useless rules.

If you recall similar initiatives from other recent presidents, you're not alone. Properly packaged, "regulatory reform" can come from the left, right or center.

We have it on good authority, however, that there's enough dead wood in the federal rulebook to occupy woodcutters from across the political spectrum, so we welcome this initiative. Some good will come from it.

But getting rid of useless or outmoded rules is easy. What's hard is grasping the unintended consequences of regulation, even with good rules that seem to work.

A case in point is the familiar bumping rule for overbooked flights. When a flight is oversold, the airline can't just bump people at random. It must first ask for volunteers, using cash or free tickets as inducements if necessary, before it bumps anybody involuntarily.

There is also a formula for compensating those who are denied boarding.

The rule is straightforward and easy for gate agents and flight attendants to learn and explain to passengers. The airlines have decades of experience with it, and they keep involuntary bumpings at a statistically tolerable level. It was a reform that worked as intended. A success story.

This regulation was in the news recently because Delta has introduced a new wrinkle: When passengers check in for crowded flights, the carrier gives them the option of declaring the dollar amount it would take to get them to give up their seat.

The reverse auction saves time and reduces uncertainty at the boarding gate. It may even cut costs for the airline. It's a market-oriented innovation that seems to have a lot going for it. But it took the best and brightest minds of the U.S. airline industry 30 years to come up with it.

We think this is what they mean when they say that regulation stifles innovation.
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