It seems that once again, government regulation is making things worse for consumers and businesses. A new regulation on airlines is about to kick in this April. It involves a hefty fine if passengers are stuck inside a plane for more than 3 hours without taking off. To avoid this fine, airlines will be canceling flights if there is any chance of a delay. From USA today,
The government announced in December it would fine airlines $27,500 per passenger for long tarmac delays — or $2.75 million for a 100-passenger flight.
Cancellations cost far less than a huge fine, especially since seats are routinely prepaid and airlines save fuel cost.
“You’re not going to get penalized for tarmac delays if you don’t fly the flight,” said Massachusetts Institute of Technology professor John Hansman, an aviation expert.
$27,500 per passenger is an extreme amount of money, especially when you realize that many jets hold 180 or more passengers. Airlines are in business to make money, not pay fines to the government. With fines this large, airlines will be forced to cancel delayed flights just to stay in business. According to the same USA Today article, JetBlue has already made that decision in order to avoid fines,
The fines for lengthy tarmac delays — defined as three hours or more — go into effect April 29. Airlines such as JetBlue Airways have already made the decision that it is better to aggressively drop flights from their schedules when bad weather strikes.
So if you are trying to fly somewhere after April 29 and your flight gets canceled, you may want to direct your anger at the government, not the airline. What is so absurd about this policy is that most of the long delays, where passengers are stuck in an airplane for hours, are caused by the government or by weather conditions, both of which are out of the airlines’ control. As I stated earlier, airlines are in business to make money. Having an aircraft sit on the tarmac for hours causes an airline to lose money, not make it. They are paying salaries for all the employees working the flight, they are burning lots of expensive jet fuel, and every flight for the rest of the day that involves that aircraft will now be late which means lots of angry passengers and probably a loss of repeat customers. My point is that airlines do not want a plane sit for hours. It costs them money and customers. However, because of our outdated and inefficient government run air traffic control system, aircraft are sometimes forced to sit on the tarmac for hours, not because they airline wants to, but because the government employees in the tower are telling them to.
I work at a small regional airport for a major domestic airline. Our airport does not have lots of air traffic, but we still have planes full of passengers sit for 30 or 45 minutes because the tower has not given them permission to take off. The reason they are being held is because there are so many planes in the air all over the country that the air traffic control system is running at full capacity and can’t handle anymore. So, they make our plane sit there until they can handle another aircraft. Of course, the passengers get mad at us (the airline employees) because they think we made them sit in that plane for 45 minutes before taking off.
If you are ever stuck in a plane for hours waiting to take off, it’s because the government employees in the tower are not allowing you to take off. Sometimes it’s because of weather conditions (out of the airlines and the government’s control) but many times it’s because of what I just explained. They have outdated computer systems and just can’t handle the amount of traffic in the air.
So in short, the government sometimes makes aircraft sit for long periods of time before giving them permission to take off, and now the government is going to fine airlines for waiting too long to take off. The government is setting this up where they can force an airline to pay hefty fines by not allowing a plane to take off. They can make a plane sit for hours and then collect the fine from it. The only way an airline can get out of paying the fine is to cancel the flight… and that is exactly what they are going to do. Can you blame them? If you were faced with the choice of either paying a 3 million dollar fine or canceling the flight and flying the passengers out on the next plane, what would you do?
The next time you are on an airplane and are stuck on the tarmac for hours, you can thank the government and the outdated and inefficient air traffic control system. Then, if the flight cancels, you can thank the government again. The government is trying to fix a problem that it created by levying heavy fines on the airlines, which in turn will cause more problems and headaches for passengers and will not solve the problem.
I guess we should be used to this by now. The government creates a problem, then tries to fix it and ends up creating a bigger problem. Then it tries to fix the bigger problem and creates and even bigger one… and on and on it goes.
No related posts.
I just spent some time searching the internet for some of the stories I have read over the past couple of years about people sitting in airplanes for absurd numbers of hours without being let off the plane.
I found a few stories but didn’t seem to find the ones I had read about before.
I don’t know what the Federal Governments regulatory role should be on this issue. There certainly should be no fines for an airline who kept people on an unflying plane because of Air Traffic Control.
Having acknowledged that I don’t know how the Law should handle the matter I have some questions.
I remember an airline CEO (was it JetBlue?) apologizing for a bad decision to keep passengers on a plane.
These are the things that are important to me (and I’m not necessarily saying that they should be enforced by law – self government by the airlines would be best):
1) After a certain amount of delay on board an airplane, customers should be allowed to deplane, regardless of how inconvenient or financially challenging that may be to the airline. Perhaps 5 hours should be the case?
2) There needs to be a plan to feed, heat (or cool), provide medical care for, provide reasonable comfort for, etc. the people on the plane in a delay that is over a couple of hours long.
I have definitely felt “herded” before when dealing with airlines. I would be terrified to be stuck on a plane on the runway. Fortunately, I’ve never experienced more than an hour or so of delay on an airplane.
On another note: If I had to chose between my flight being canceled or being stuck on board for 8 hours without takeoff, I would usually chose cancellation.
There is a problem with forcing a plane to return to the gate to allow people off for a break. When an aircraft leaves the gate, it asks the tower for permission to take off and fly to it’s destination. The tower then gives them permission but there may be 50 other planes in front of them that have to take off first. Each of these 50 planes may be held for a few minutes before being given permission to pull onto the runway. If a plane has been waiting several hours for permission to pull onto the runway and is forced to go back to the gate to let people deplane, they loose their position in line and have to start all over again. In a big airport during a busy travel day or if there is some bad weather, this could ensure that a plane will never be able to take off. And you must remember, if you are on a flight from Atlanta to Philadelphia that is delayed by 3 hours, it’s not just you and the people that are on the plane with you who are inconvenienced. Every other flight that the aircraft you are on was supposed to fly for the rest of the day will now be late. After flying from Atlanta to Philly, that plane may have to go from Philly to Boston. Then from Boston it may go back to Philly and then head on to Las Vegas. Hundreds of travelers will be late and may miss connecting flights because one plane got held up in one city. And if this one plane is forced to go back to the gate it makes the people waiting in the other cities even more late. People should not have to sit in a plane for hours and hours, but other paying customers in other airports want to get where they are going too and they want that aircraft to take off as soon as possible. The solution to the problem isn’t making more rules and regulations for the airlines to follow, it’s making the air traffic control system more efficient. Many people think that air traffic control should be privatized, and I agree with them. Right now it literally takes an act of Congress to update computer and tracking equipment.
You nailed it. Government causes problem, and it’s “fixes” make the problems progressively worse.
I covered this last year and someone had an interesting comment on my blog about this (you commented, too:
“It is actually FAA regulations that limit the amount of time pilots and crew can be in the air flying. They are required to have a certain amount of down time between flights.”
http://harrisonprice.com/2009/08/17/9-hours-on-a-runway-because-of-unions/
This blog post is about a new regulation going into effect this April, but I remember the story you mentioned. A plane had to divert to an airport because of weather. There were no employees at the airport because it was late, so the pilots were forced to keep people on the plane. They also could not leave and fly to another airport because of FAA regulations on how many hours a pilot can fly in a given time period.
This new regulation that I covered in this post would cause the airline in the story you wrote about to be fined $27,500 per passenger. The airline in your story was caught between a rock and a hard place and now the government is looking to capitalize on future situations like that. Airlines will have to choose between paying millions in fines or just canceling flights. Both options are bad for customers. Thank you government for making flying easier!
I think that story is what spurred this new law, actually. Airlines will cancel flights in response I think. It was an interesting story you posted. I had not read about it before seeing it here.
I think airplanes should be able to take off when ever they want and they should just get rid of air traffic control. It’s just one more government intrusion in my rights. We should take responsibility for avoiding our own mid-air collisions. I don’t want government bureacrats giving me cancer with their “radar’
Gus,
I think a better solution would be to have the air traffic control system privatized. That way much of the red tape is taken away and their would actually be an incentive to be more efficient.
Gus’s comment is a perfect example of how liberals can not logically debate. Instead they insult, demean and/or become sarcastic to avoid having to defend their own beliefs.
I guess it’s hard to take seriously people can reflexively blame ALL problems on the government or more specifically the Democratic party or ‘liberals” (whatever that means). The logic of that position is on it’s face ridiculous. It’s as if you can’t define yourself without some left-wing boogieman conspiracy to rage against.
I’ve know my share of angry left-wing wackos too. It’s the same mindset, just irrationally focused on “big business” or again, the government.
In the end it’s just a way to cope with your own personal failures and disappointments. I understand it, but it’s kind of sad.
My guess anybody who calls himself “liberty” doesn’t have much or doesn’t want other people to have any either.
Or as they used to say on the playground, he who smelt it, delt it.
Gus,
I work in the airline industry so my opinion on this matter is anything but a “reflex”. I deal with it 5 days a week. I find your comments interesting because I wrote a post based on facts and personal experience and you have responded with sarcasm and insults. Are you able to use facts to debate my position and support your own? Why are you so angry at me? What have I done to you? I’m just someone with a blog who is sharing my opinions and I’m not forcing anyone to read it. Are you anti free speech or intolerant of other people?
I am not an anti-government “wacko”. I am someone who believes the government should stay within the confines of the Constitution as it is legally required to do. I believe the government does some things well, such as providing a national defense, and a judicial system to enforce laws and settle disputes. But when the government does things it wasn’t designed to do, it does them very very very poorly. This is not a Republican or Democrat issue but a fact that can be observed by looking at history. If there is any information I can provide you with about Conservatism and why I think it is the best route for our country, then I will be happy to do so. However, I would ask that you refrain from making insults because it does nothing to advance your opinion and makes it hard for others to take you seriously.
If you take you line of reasoning, then there should be no other public institutions other than the military and law enforcement. Condeming the rest of government by pulling out “sound bites” and and selective horror stories as the noise machine loves to do, is dishonest You have no creditable level of proof to the larger premise that the government does everything badly except the standard Rush Limbaugh, Glen Beck talking points.
What criteria are you measuring against? How squeaky clean does government have to be to justify your tax dollars? How realistic is this gold standard of good governance?
All human activity has a built-in level of corruption and incompetence. Each of us is guilty of slacking off occasionally or taking advantage of something we’re really not entitled to. I could pull out some selected example in the military and law enforcement sleaze to make my case that I shouldn’t have to pay taxes to support either institution.
What I hear in this debate over the constitution is an attempt to justify a personal, pathological aversion to participating and contributing to society except when it serves your narrow interests. It reminds me of the one guy at the restaurant who wont’t split the tab evenly but wants to itemize the tab because somebody ordered one chicken wing more than he did. That guy.
This line of thinking also heavily laden with a disturbing willingness to blame your problems on people who are poorer, less powerful, and living on the edge.
In your world the only explanation for their plight is that they are lazy, stupid and of low moral character. Not be rewarded with any help from society.
What it comes down to is that you’re arguing that government is only about protecting you because you’ve ‘got yours” but not about try to help anybody else trying to get some too.
There are no taxes that any of us like to pay. There are no government regulation that protects one person’s rights that doesn’t limit another person’s right to do what he pleases. That’s just the price of civilization. Annoying messy, sometimes corrupt but necessary if large groups of people are going to live peacefully together.
Sorry if you’re insulted. Welcome to the blogosphere.
gus,
Have you studied history? Do you know what the purpose of our government is? Have you ever read the Declaration of Independence? Do you know the reasoning behind a Constitutional government? Do you even know what a Constitutional government is?
In America, we believe that all power rests in the people. We are a free people. We are not beholden to a monarch or dictator’s claim to power. “We the people” have to give power to our government because the government does not have any power on it’s own. The Constitution is the document that gives our government its power and tells it what “we the people” have decided it can and cannot do.
Our founders decided to put strict limits on the authority they were giving the government because they knew from history that a government without firm limits would eventually lead to tyranny. They were students of history and knew the paths of previous governments and civilizations. They came up with a Constitution that put onto paper the specific areas of authority that the people were handing over to the government. The Constitution is very important to the fabric of our society and the legitimacy of our government because it is what gives our government its authority. It transfers power from the people to the government. It is basically a contract between the people and the government. When the government partakes in something that it is not authorized to do via the Constitution, then it is taking something that belongs to “we the people”. It is morally and legally wrong for the government to seize power or control over something that “we the people” have not authorized it to do in the Constitution.
The Constitution was designed to protect us. When the government stops obeying the Constitution, even for something that might seem good or charitable to you or me, it sets a dangerous precedent and can eventually lead to the loss of liberty and traditional rights.
For instance, you might think it would be great for the government to give everyone a decent house to live in (let’s ignore the financial impossibility of this for the time being). Of course the government does not have the Constitutional authority to give everyone a house, but because you like the house policy, you are willing to overlook the Constitutional issue. But what happens later when the government decides it wants to have the FBI start regularly searching your house without your consent and without a warrant to make sure you aren’t breaking any laws? The government does not have the Constitutional authority to do this, but who cares about the Constitution anyway? Besides, if you aren’t breaking the law, why would you mind having FBI agents search your house every week or so? The Constitution protects us, but we can’t pick and choose what we like and ignore the rest. It doesn’t work that way.
When the government creates something that it has no Constitutional authority to do, it is never as efficient or effective as the private sector. Can you name any government agency that is more effective or efficient than its private sector counterparts?
Think about wellfare. How much waste, fraud, and abuse is involved in that system? Imagine if only half of the tax dollars used for the wellfare system were given to private charities. Do you really think the private charities would not be able to do a better job helping the poor than the government?
Limited government, and a free market have proven themselves historically to raise the standard of living for all citizens and create a greater degree of innovation and wealth. Liberty, limited government, and a free market allow the best, the brightest, and the hardest workers to succeed and advance the entire society. That’s a fact. When government tries to “level the playing field” it kills innovation and the drive to advance and succeed. All you have to do is look at the Soviet Union for the end result of what leveling the playing field does. It is impossible to make everyone equally rich or equally middle class. When the government tries to make everyone equal, historically everyone becomes equally poor, because all innovation and initiative is destroyed.
For a more recent example, just look at France and the result of its socialist policies. Until the recent economic downturn, France for years had an unemployment rate that was twice as high as ours. If socialist/progressive policies really help lift everyone up, why has there historically been so many more unemployed workers in France? By the way, have you ever been to France? They don’t have nice suburbs with 2 or 3 cars in each driveway like we do. Once you get outside of the nice touristy areas of the cities, the housing areas look more like ghettos than nice family dwellings.
One last question. Do you give any part of your income to charity? I know most liberals are very stingy when it comes to personally giving to charity. Do you believe you have any responsibility to personally take care of those who are in need, or do you believe the government should do it for you? Do you take comfort in passing off a moral responsibility on to some bureaucrats in D.C. who then confiscate money from those evil rich people to pay for your share of taking care of your fellow citizens in need?
Liberals don’t realize how selfish they really are. They are too worried about creating some wasteful, inefficient government program to help the poor using other people’s money instead of rolling up their sleeves and getting to work right in their own hometowns. I guess it’s easier to get the government to do it instead of doing it yourself.
First of all I reject your term ‘liberal’. It’s a lazy way to lump together people who aren’t as right leaning as you are. I’m a moderate democrat, a business person and I do donate to charity. I’ve always found right leaning pundits (and politicians) habit of demonizing and reducing their opposition to stereotypes as cynical at best and a pretty good indication that they are not as confident of their positions as they’d like us to believe.It’s the behavior of teenagers trying to sound tough when they’re really scared to death.
But middle class, white people proclaiming their victimization to me indicates an amazing level of self absorption and cluelessness. As they trumpet ‘self reliance’ and limited government, they drive on roads paid for by taxes, farm with government subsidies, drinking water from municipal reservoirs, and camp in national parks. My tax dollars pay for upkeep on federal lands some guy in Utah gets to hunt on. My federal dollars pay some giant corporation like Cargill not to grown corn.
Funny how these people waited to rage about imagined government overreaching when their party was out of power. Where were the speeches about “freedom dying” when the Bush/Cheney crowd was wiretapping your phones, creating laws of dubious (and subsequently repealed constitutionality.) Why dis your cherished unregulated markets with their un-level playing fields end enriching a few and screwing you out of your retirement? Why are bankers sending all their campaign contributions to the Republican party now? Where was the Tea Party when Dick Cheney was borrowing for a bogus war with and proclaiming that “deficits don’t matter.” Where was the outrage then? The fiscal responsibility? The careful reading of the Constitution?
I’ve lived through 50+ years of this country’s history. I know that well meaning people have made mistakes in their efforts to make this a better, fairer society. I came from a modest middle class background and with a lot of help from teachers, public universities and a variety of mentors. I’m doing well now. My tax bracket is one of the highest. I pay a bigger chunk of my income to support this country than most of these whining Tea Party folks. I’m subsidizing their kids, their infrastructure and their defense. Other people’s money is my money. And my friends who are successful are paying big taxes too. None of us have rich daddies. We earned our money. But we also know that we had help on the way up. We donate to homeless shelters, battered womens’ centers and to overseas aid organizations. The point is we don’t begrudge it. We’re fortunate and we know it. At least we’re are trying to make a positive difference. We trying to fix things. All I hear on the right is the wailing of self-pity. A sad, paranoid selfish effort to find somebody to blame. Glenn Beck and Rush Limbaugh getting obscenely wealthy convincing average people they are victims. People who have always had the most wealth, freedom and power in this country: white, middle class, men. They are the victims. The bullies? The poor, the uninsured, the immigrants. (What does that say about the state of American manhood?) I don’t recognize this version of America. We’ve always been about the underdog. We always extended a hand up the ladder. You can twist the Constitution around, try to rewrite American history to reflect you’re own self serving view but nothing beats this little piece of wisdom I recently found from that old cowboy from my childhood, Gene Autry. I think his ‘Cowboy Code’ pretty much sums up the America I believe in.:
1. never shoot first, hit a smaller man, or take unfair advantage.
2. never go back on his word, or a trust confided in him.
3. always tell the truth.
4. be gentle with children, the elderly and animals.
5. not advocate or possess racially or religiously intolerant ideas.
6. help people in distress.
7. be a good worker.
8. keep himself clean in thought, speech, action and personal habits.
9. respect women, parents and his nation’s laws.
10. be a patriot.
Seems like some folks need to study up on 1, 5, 6 especially.
In the end politics is not the same as government. Opinion is not the same as facts and narrow inflexible philosophies are doomed to fail. You can have your phony FOX News and your blowhard talk radio. You can threaten, and belittle. You can stock up on bullets and fuss and fume on your little blog echo chamber but history makes it’s own judgement on who’s right and who’s wrong.
Seems to me the people who deal with reality, try to move things forward, strive for justice and say ‘yes’ are always viewed more favorably than those who turn inward, run away from the future, demonize the poor and the powerless and have nothing more to say than ‘no’.
Gus,
You said, “I’ve always found right leaning pundits (and politicians) habit of demonizing and reducing their opposition to stereotypes as cynical at best and a pretty good indication that they are not as confident of their positions as they’d like us to believe.It’s the behavior of teenagers trying to sound tough when they’re really scared to death.”
You say this but that is exactly what you have done to me. You started this conversation with sarcasm and insults and have gone on to tell me how smart you are and how dumb and ill-informed I am. You may not consider yourself a liberal, but this is a well known liberal tactic. Instead of actually debating the issues with facts and logic, you insult the opposition and consider them so stupid or extreme that you aren’t obligated to debate their points.
For example, in this post, I am upset at the Federal government’s handling of something that they do not need to be involved in. By charging these huge fines instead of actually fixing the problem (that was created because of government inefficiency) they will inconvenience travelers and possibly cause many airline employees to lose their jobs. You responded to this point with sarcasm. Then, I countered that I believe it would be better to privatize the air traffic control system. Instead of telling me why you think the government can do a better job than private companies, you twisted my point claiming that I only want the government to provide a military and police and you accused me of using Limbaugh talking points. Then you went way off topic accusing me of blaming my problems on people who are poorer, less powerful, and living on the edge. Where did that come from?
You still have not debated the issue at hand here. What you did was to take my point, twist it into something else, then claimed that this new twisted point was absurd. This is called a straw man fallacy, and it is a common tactic among the left.
Lets examine some more of your insults/accusations/arguments and I will try to debate them so you can see what that looks like. You said, “But middle class, white people proclaiming their victimization to me indicates an amazing level of self absorption and cluelessness. As they trumpet ’self reliance’ and limited government, they drive on roads paid for by taxes, farm with government subsidies, drinking water from municipal reservoirs, and camp in national parks.”
Right off the bat you insult for the amount of money they make and stereotype people based on the color of their skin. This is sick and causes me to think you are a racist and believe you are superior to others. Both are common among liberals. I judge people not by the color of their skin or how much money they make but on the content of their character. I would advise you to do the same.
You say people are hypocrites for claiming self reliance and limited government but they drive on roads payed for by taxes. This is another common tactic of the left. When a conservative says that government is too big and it needs to return to it’s Constitutional roots, liberals claim that conservatives hate all government. This is akin to saying that an obese person hates all food and doesn’t want to ever eat again because they told you that they want to cut back on their food intake so they can lose some weight. Our government needs to cut back and lose weight, not dissolve completely.
Back to the road and tax issue – Did you know the Constitution (article 1, sec 8 ) gives Congress the authority to build roads? I have no problem with this. We the people have given Congress the authority via the Constitution to spend our money on road construction. Where is the problem in that?
As far as farm subsidies go, I believe they are wrong and distort the free market and food prices. They encourage farmers to grow crops that receive the most government money instead of what the market demands. This corrupts food prices and in third world countries has led to food shortages and starvation. Do you agree with me on this point?
Drinking water from municipal reservoirs? That is a local government issue and has nothing to do with the federal government or the Constitution. What’s wrong with a city or county making sure it has a water source?
See how a debate works? Now, if you actually want to have a debate as to whether or not privatizing the air traffic control system would be beneficial, we can have that debate. If you want to continue insulting people based on the color of their skin or accusing Bush and Cheyney of screwing things up, you have every right to do that. I believe in freedom of speech… unlike many liberals who only think the 1st amendment applies to speech they like. However, angry rants full of insults, racism, and class warfare won’t convince me that my opinions and views are wrong. It will only convince me that you are an angry person who has a hatred towards the middle class, white people, and conservatives.
I’m white, middle class and grew up in a Republican household. I guess if I dislike anything it’s a bully or a crook or a hypocrite. “Conservative” these days to me is a meaningless as “liberal.” Conservatives attack other conservatives for not being purely conservative enough. William F. Buckley was a conservative. David Brookes is a conservative. They are not bullies, or crooks or hypocrites. Apparently David Frum is now unemployed because he dared suggest that stone- walling on Health Care prevented the Republican’s from having any influence on the debate. Cast out as not a true conservative. Rush Limbaugh, Glenn Beck, Hannity, Bill O’Reilly, Conservatives? Don’t think William F. would recognize them as conservatives. Bullies, Hypocrites? Yes. Conservatives, doubt Bill would agree.
But if tone matters then my initial response to your post was silly and superficial and disrespectful. Maybe hurtful and bullying. For that I apologize. However you are dropping a few of the standard rhetorical bombs about welfare and ‘big government’ that the blowhards listed above love to lob. Surely you realize that when many people decry “welfare” what they’re really talking about “money that goes to lazy dark-skinned people.” And let’s be honest, their aren’t many black people in those Tea Party marches. I’m not being racist, just observant. But that’s not what you meant so I shouldn’t have gone for the cheap shot. Again, I’m sorry. I did resort to stereotyping.
That being said, let me lay out my general point of view to your specific question about private vs. public.
I do not share your faith in the perfect efficiency of the unfettered private sector. I don’t put my unquestioning faith in the perfection of any human design system or institution. The recent behavior in the financial sector confirmed that for me once an for all. Under-regulated markets will eventually lead to bad outcomes for everyone. In my view a just and healthy society exists in the space between unbridled self interest and oppressive, externally imposed sacrifice. Go too far one way and you have the Soviet Union. Go too far the other way and you have, well, the economic melt-down of 2007. Given that this crisis was the result of intentionally lax regulation by the SEC and others, you must surely agree that some correction is in order. What’s needed is a counter balancing. Something that offsets a society governed only by market norms. A society that seemed to say to citizens “Buyer beware, you’re on your own.” That counter-balance comes in the form of social norms. Call it what you will, the Golden Rule, whatever. It’s the altruistic side that keeps our purely selfish side in check. It’s what keeps the lid on our society. Without social norms you’d be charged for Thanksgiving dinner by your Aunt Sadie. Your five year old would pay rent. You would never buy a round of drinks. Fortunately we don’t live in a world ruled exclusively by market norms. Because at some level we recognize that if we tried reducing everything to a transaction and kept score whether were ahead and by how much, society would grind to a halt. So we don’t. It’s counterproductive. So why, you ask, do we give government the job of balancing market norms with social norms? Can’t we just do it ourselves? Make voluntary contributions instead of taxes? Make charitable donations rather than outsource welfare to the government? Basically because society got way too complex. Pretty earlier on. Four to five thousand years ago. Once we started living is groups larger than a tribe or a small village, it became easier to shirk the social responsibility that glues the society together. We couldn’t know everybody, so we couldn’t empathize with everybody and in this anonymity we could easily ignore problems that didn’t seem to affect us personally, like the pothole on the next street. Or the sick child in the next town. Social norms are a form of transaction just like market norms but they work specifically because they aren’t perfectly accounted for in dollars and cents. In your social group some people probably by more rounds of drinks than others. But you don’t keep score and it generally all works out. If you applied market norms to that situation then your little society of drinking buddies would probably disintegrate. People would be focusing on getting more free drinks than paying for drinks. Profit and loss would enter the equation and you’d probably stop paying attention to whether you were having a good time. Introducing market norms into key services like air traffic control would focus the organization’s efforts on the thing that is most important to a market, profits. I’d rather have them focused on my comfort and safety. Those are social benefits. I’m sure you can explain to me why we have such an antiquated system but I sense that it’s because Congress hasn’t invested in the system not because we haven’t turned it over to private contractors. In fact if you want an example of how disastrous turning a key government function over to private contractors can be I’ve got two words: Blackwater, Haliburton.
So in my opinion markets aren’t things that live outside social norms, they only function well if they are bounded and directed by social norms. It’s intuitive. A child could tell you that the recent behavior of credit card companies may be profitable, reflect good market norms, but purposely switching payment dates, hiding rate increases in fine print and sending people who are over their heads in debt “checks” to get further in debt is not fair or right. That’s not behavior we’d put up with from our friends and family. And this was aided an abetted by people in government who consciously prevented the regulators from enforcing social norms in the name of “free markets.” Markets distorted by the private sector to be uncompetitive, unregulated and unexamined. All in pursuit of market norms. That’s what happens when we create a cultural tilted only toward financial optimization. Everything else suffers. Detroit auto executives use campaign cash to convince sympathetic congressman to shield them from fuel standards until they bankrupted themselves. Putting not just the jobs of tens of thousands of autoworkers in jeopardy but jobs at thousands of suppliers and dealers on the line. Letting the auto industry collapse would have turned the midwest into human tragedy of massive proportions. Acceptable in terms of market norms, bad in terms of social norms. Was that a failure of markets or a failure to put the social cost of the risky behavior of a one product industry into the equation?
I’m not suggesting that capitalism is inherently bad or good. It does what it does. It’s like water. Essential but dangerous when it overflows the boundaries of the river bank and swallows everything everything in it’s path. Government, our democratically elected government, by the way, has a role in channeling that force so it serves both our material needs and our social needs. If your market advantage puts the rest of us at a social disadvantage you may not be entitled to pursue that course. And if there are services that have overwhelming social benefits that the private sector can’t or won’t provide, then I think it has a legitimate role there too.
Gus,
You gave a well thought out argument. However, I still feel like you are trying to straw man my view. You said, “I do not share your faith in the perfect efficiency of the unfettered private sector. I don’t put my unquestioning faith in the perfection of any human design system or institution.”
I never said that a laissez faire free market is perfect. But even though it’s not perfect, it has historically worked much better than any type of government directed economy. The reason it works and the reason I would put my faith in it is because it decentralizes power and provides the maximum amount of incentive and ability for people to better their lives.
I must admit that I am perplexed as to why you think the recent economic trouble was caused by an unbridled free market. I thought it was well known and accepted that it was caused by the bursting of the housing and mortgage bubble which in turned put many banks out of business. The housing bubble was caused because of government intervention in the housing and banking industry.
Do you remember when banks used to require people to put 20% down for a mortgage? Banks realized that if someone was able to save enough money to afford to lay down 20% of the value of their new home, they probably knew how to manage their money. It was also a safe bet that they would not walk away from the mortgage because they already had invested a lot of money into their house. But politicians decided that every American should be able to buy a home. They created Fannie, Freddie and Sallie. The Department of Housing and Urban Development started backing mortgages. A free market naturally has checks and balances in it like risk and reward. When the government started backing mortgages, it took the risk away from the banks and only left the reward. A bank could then give a $400,000 no money down mortgage to someone who may only make $35,000 a year with mediocre credit because the government was backing the mortgage. The financial collapse was caused by government taking away the normal checks and balances and trying to influence banks, not by a free market.
It’s no secret that corporations can be greedy. A free market turns this greed into a positive thing. It causes new products to be created so they can be sold. It causes companies to lower prices in order to bring in more customers or steal some away from their competitors. Sometimes this greed can get carried away but the “invisible hand” of the market eventually corrects it. The Depression of 1920-21 is a perfect example of this. There were several inefficiencies in the market as the country was shifting from a war time economy to a peace time economy. The reason we don’t call the depression of 20-21 “Great” is because our government followed a laissez-faire approach. President Harding knew the market would correct itself and come out stronger if the government stayed out of it. He also slashed the size of the government because he realized that the economy was shrinking so the government needed to shrink as well. Our economy rebounded quickly and strongly providing an extreme amount of economic growth during the 20′s.
Of course, there were some problems not fully corrected by the Depression of 20-21 (plus some poor government monetary policies) and we had the crash of 29′. Instead of our government allowing the market to correct itself, we had an enormous amount of government growth, spending and economic involvement. The result of this unprecedented government involvement caused the Great Depression to lag on and on until WW2 pulled us out of it. After all the government programs and spending, FDR’s own Secretary of the Treasury, Henry Morgenthau Jr., admitted, “We are spending more money than we have ever spent before, and it does not work.” Instead of having a market correction and a quick rebound after the crash, we had the Great Depression. Thank you FDR and big government.
A free market is not perfect, but it works better than anything else we have tried. With that said, there are some legitimate areas where the government can be involved in. For instance, the traditional role of ensuring honest weights and measures. I have no problem with a government official going around to gas pumps to make sure they are really giving us 15 gallons of gas when we pay for 15 gallons. This is a perfectly legitimate and traditional role of government in the economy.
Controlling the routes of tens of thousands of aircraft every day is not the role of government. The FAA has no real financial stake in the efficiency or safety of air travel. They are a government agency so there are no market forces to incentivize them to become more efficient or safe. You mentioned comfort and safety in regards to air travel. Let me tell you, the private airlines are more concerned about your safety than the FAA and air traffic controllers. To put it strictly in business terms, if one airline starts crashing a lot, people aren’t going to choose that airline to fly with. The same goes for comfort and the overall travel experience. If airlines don’t ensure that they provide safe, comfortable and efficient travel from point A to B at a reasonable price, they will go out of business. If the airline wants to make money (or in other words, it becomes greedy), it will make sure it’s planes are safe, it’s fares are competitive, and it’s providing an acceptable travel experience. The government doesn’t have any of these driving forces. If the air traffic control system was in private hands, we would have safer, more efficient, and more comfortable air travel. If you don’t believe me, go the the DMV and let me know how comfortable and efficient a government agency is.
By the way, I’m confused as to why you think that if we followed a laissez-fair free market system we would be charging our family members for Thanksgiving dinner and making a 5 year old pay rent. Why would a free market cause this? It has never caused it anywhere it has been tried.