Regarding a thoughtful comment to my post Friendly Skies,
Colin,
Thanks for taking a look at this!
I guess I should clarify a little bit and say let the airports be in charge of their own security.
I think you are raising good points in regards to the minutia of air travel and security, but I don't see why a private company couldn't take care of all of these issues far more effectively and efficiently than a Giant central government bureaucracy.
Having a plane crash is very, very bad for business in the airline industry. Take away absolutely all subsidies and tax breaks given to the airlines and airports, put them in charge of their own security, and watch it flourish. It will be more pleasant to fly, and you won't be treated like a criminal every time you board.
Also, if the US government would stop slaughtering innocent people overseas, I suspect it would help the cause of airline safety a bit.
It seems like your argument is based on the idea that a private business will do things well and efficiently because it is good for business. Since the business depends on consumers, it only makes sense that they would do things in a way that would please consumers and create confidence in their product. I'm not convinced that this logic or practice makes sense to the point that we should just entrust private industry with important responsibilities.
ReplyDeleteIt's sort if like saying that since an oil company would not want to lose any oil, we should trust those companies to write the regulations, provide the oversight and make all decisions regarding their industry. That's worked out incredibly well. I think the case could be made, especially in light of recent disasters, that opposition to government and the eventual lack of government oversight put in place by anti-government leaders has played a part in some of these failures (oil spills, mine explosions, failure to regulate financial industry, etc.).
Hi Tim,
ReplyDeleteI can't resist but to copy-and-paste part of my response to a previous post:
"...truly free markets don't last long under democracies because they create a huge vacuum for every crazed interventionist to use the power of the state to eliminate their market competitions.
Slowly, over time, democracies build up layer upon layer of interventionist bureaucracy creating greater and greater market irregularities (unemployment, crime, war, shortages, surpluses, homelessness, fraud, etc.)
What started out as free-market capitalism eventually morphs into the cronie-capitalism (aka corporatism aka "mixed economies") that we have today. Yet tragically tomorrow when Larry Lawnmower turns on the nightly news and hears about the latest Wall-Street abomination he naively will shake his head and think "They really need to regulate that more. This is the free market out of control." While somewhere else a libertarian will also be watching the same story and shaking his head and correctly saying to himself "They really need to abolish the Federal Reserve, the SEC, and the Sarbanes Oxley Act. This is corporatism out of control."
You are inadvertently making the case for free markets by bringing up the atrocious corporatism induced BP oil spill disaster.
Like the the airline industry the oil/energy industry is among the least free markets in our economy (healthcare is up there as well). You said:
"It's sort if like saying that since an oil company would not want to lose any oil, we should trust those companies to write the regulations..."
Well guess what. They do in large part currently help write the regulations! A highly regulated/subsidized market like oil guarantees that the biggest companies (the ones with enough capital) will make the regulators their bitches. The incentives are overwhelming. Big established companies love regulations because it eliminates their small upstart competitors who can't afford to comply with the new regulation, legal, and lobbying expenses.
I know everyone thinks of regulations as being written with good intentions of protecting consumers or the environment. I hate to break it to you, but the Ralph Naders of the world aren't the ones who end up writing and enforcing Airline, energy, environmental, financial, medical, etc. regulations. Greedy, self serving, and cynical bureaucrats and politicians do. And they do so while under the big money influence of "big-oil", "big-pharma", union heavies, the military industrial complex, etc.
But what is even worse (un-free-market) about your BP oil spill example is that the open ocean lacks ownership. So you also have the "tragedy of the commons" factor as well.
Let's say it together everyone:
"THE ENERGY AND FINANCIAL INDUSTRIES ARE NOT FREE-MARKETS."
A few videos about airlines:
http://reason.tv/video/show/were-the-tsa-and-you-can-count
http://reason.tv/video/show/faa
"Well guess what. They do in large part currently help write the regulations!"
ReplyDeleteI suppose you couldn't sense the sarcasm in my comment. Of course it's the industry that has been writing some of the regulations. That's part of the problem--industry has been given far too much influence in government and decisions that impact people other than their consumers. However, I believe that saying that these examples make the case for free markets is off the mark. Until I see some convincing evidence to the contrary, I'll maintain that just the opposite is true.
The Interior Department was turned into a satellite office for the energy industry during the Bush years, and is only slightly better now. Valuing industry input over input from its own staff, Interior did not require certain safeguards for oil drilling that are common elsewhere. What this example shows is that regulators need to be allowed to regulate. Eliminate industry influence and control over these decisions. How would a free market be a better system here? Convince me.
Sorry about that Tim. Man I am terrible at picking up sarcasm in the written form.
ReplyDeleteMy point is that big businesses having disproportionate influence over lawmakers and regulatory agencies is a predictable result of giving the government more and more regulatory powers.
It's the symptom NOT the disease. I can't emphasize this point enough.
You said:
"The Interior Department was turned into a satellite office for the energy industry during the Bush years, and is only slightly better now. Valuing industry input over input from its own staff, Interior did not require certain safeguards for oil drilling that are common elsewhere."
Yes. Exactly! That's exactly what everyone should expect because when you have an agency with that much influence over an industry you are providing enormous economic incentives for oil companies to spend more and more of their time "influencing" politicians or in your example, a dim-witted presidential candidate from Texas.
Let's pretend we could wave a magic wand and remove every last politician and regulator currently in DC and replace them all with honorable/ uncorrupted saints. You know... start fresh. They would eventually become corrupted by K Street lobbyists or be replaced (through appointments or elections) by ones who were.
The more you increase government bureaucratic regulations the more you decrease the market's self-regulating (property rights, price feedback, robust competition) mechanisms.
The thing that I find endlessly frustrating is when market interventions inevitably lead to the problems as predicted by libertarians, people's confirmation biases almost guarantees their response will be:
"What this example shows is that regulators need to be allowed to regulate. Eliminate industry influence and control over these decisions."
No. What this example shows is that regulations are the very source or that industry influence. You are confusing the cause with the affect. What this example shows (as well as the housing market collapse, health care problems, Wall St. corruption, stories of SEC regulators ignoring tips about Maddoff because they were too busy viewing porn online, etc.) is that economic incentives matter. Coercive regulations that ignore property rights and the non-aggression principle inevitably backfire because they ignore economic law. They either cause more of the very problems they were claiming to fix or they cause 2 bran new unintended problems somewhere else in the economy.
Regulations cause the problems you wish they cured.
Thanks for your comments Jules--I appreciate that you share your thoughts here. As with most debates, both sides of the argument see predictability in the opposing viewpoint and feel frustrations with that "typical" response.
ReplyDeleteI can understand your argument that establishing regulators and regulations inevitably leads to corruption--there are plenty of instances where that has happened. However, I don't agree that it is a certainty. To me, assuming that end result removes any accountability from individuals, industry and government.
Perhaps we can move on to something that I'm sure we can all agree on--how about healthcare? (Please note sarcasm)
To take it back to the original post for a moment, I want to comment on a presupposed notion held by Woodegg...
ReplyDelete"Take away absolutely all subsidies and tax breaks given to the airlines and airports, put them in charge of their own security, and watch it flourish."
I agree that holding their stock value on a chopping block would be incentive for airlines and airports to take safety seriously, rather than rely on lazy TSA standards and practices. I also believe we would be safer if security were deregulated.
Unfortunately, with our society's current expectations of air travel, that model can't work.
Simply put, no airline has ever been profitable without government subsidies. As an industry, air travel is billions in the hole, and would be more so without past contributions.
In this day and age, air travel has the "air" of public transportation, which seems to make people think it is okay.
Realistically, air travel is extremely consumptive, unsustainable, and not accurately reflected in ticket prices. Next time someone complains about $15 to check a bag, remind them that their ticket should maybe be around $1200.
Now consider that tickets do reflect the true cost of flying...now less people can afford to fly, and prices go up further. Then airlines have fewer flights, so more connections and ground travel, and before long, air travel isn't so great anymore. If it takes you 3 days to get from New York to Seattle, I wouldn't consider that a pleasurable trip. And that is what I expect the current commercial model to morph into. More likely, there would just be a whole slew of private pilots operating their own planes and flying contract routes.
One more thing, I'm not saying that all of this is a bad thing. I believe air travel should be more expensive, to reflect it's true cost. And I'm okay with the repercussions, I like trains. I just wanted to tell you why I think you're wrong.
Sam,
ReplyDelete"Simply put, no airline has ever been profitable without government subsidies. As an industry, air travel is billions in the hole, and would be more so without past contributions."
This touches on exactly the point I am trying to make; no airline has been profitable WITH government subsides, as a result of government subsides. The crucial factors of profit and loss consideration is taken away from the business as soon as money is given freely like it has been to airlines for decades by taxpayers.
I have flown from California to Boston on a 747 with ten people on it. Would an airline do something so environmentally irresponsible if it was run like a free business? I think not.
I guess flourish may be a bit extravagant a word, but flying would be a lot less like checking into prison, which you clearly agree with.
I love the point you bring up regarding how other forms of travel would flourish more if not for these subsides. That makes me think of a good idea for a new post. Thanks for the thoughtful comment sam.