Recently I went on to the American southwest with my wife, with periodic posts to Facebook as we went along. A friend of mine commented on my heading to “capitalism’s Mecca,” Las Vegas. So I decided I would do sort of the traditional “What I did on my Summer Vacation” school report but from a more capitalist point of view. This will likely end up being a series of posts covering various aspects of our trip, looking at what I see as positive and negative aspects.
When I started thinking about this series, the first thing that struck me is really how inexpensive domestic air travel is. I do not know if I got the absolute best price for our tickets, but they worked out to be about $36 per hour of travel time per person, not including layovers. While this is several times what I make per hour, it is still pretty reasonable when you consider you are traveling thousands of miles in relative comfort. In less than two weeks I can easily earn the money needed to travel across the country to see areas that it would be impossible for me to see without modern air travel.
Unfortunately air travel is pretty heavily regulated and true innovations are few and far between while rights violations abound.
A comment from this year’s Paris Airshow illustrates the lack of innovation:
“Look at all the aircraft … they’re exactly the same (as they used to be), they’re just using different material,” said Gerrard McCluskey, the vice-president of engineering at AERO Vodochody, a Czech aerospace manufacturer.
Not only are technological advances delayed, or prevented, by regulation, even business improvements are hampered as well. Recently American Airlines and US Airways were negotiating a merger. These talks included the Department of Justice Antitrust Division as the companies had to seek government approval for the merger. Doug Parker, the CEO of US Airways, who would head the new company explained why the companies wanted to merge.
“The combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace. Our combined network will provide a significantly more attractive offering to customers, ensuring that we are always able to take them where they want to travel, when they want to go.”
Despite this, the government announced a few days ago that it was filing suit to permanently block the merger claiming that such a merger would be damaging to consumers, reducing competition or creating a monopoly. As Attorney General Eric Holder put it, “This transaction would result in consumers paying the price — in higher airfares, higher fees and fewer choices.”
This completely ignores the fact that a true monopoly can only be created by government action and lack of competition is caused more by government regulations creating barriers to entry.
Nathaniel Branden described it pretty accurately in an essay titled “Common Fallacies About Capitalism” which can be found in the book “Capitalism: The Unknown Ideal” by Ayn Rand.
In the issue of monopolies, as in so many other issues, capitalism is commonly blamed for the evils perpettrated by its destroyers: it is not free trade on a free market the creates coercive monopolies, but government legislation, government action, government controls. If men are concerned about the evils of monopolies, let them identify the actual villain in the picture and the actual cause of the evils: government intervention into the economy.
Who can know exactly what differences would exist were there fewer government controls on the airline industry? Whatever they might be, I would be willing to bet my own money that travel would be faster, more comfortable, and/or less expensive than it is currently.
Speaking of monopolies in air travel, I cannot not mention the TSA, which has the government granted monopoly on airport security. This trip was my first experience with the full body scanners. The display on these did not show any details of the body, though having to stand in the middle of a crowded airport with my feet apart and my hands over my head was disturbing on its own. If someone had told me 10 years ago innocent travelers would willingly assume the position normally associated with a criminal I doubt I would have believed them.
On our return trip, I also got to see the failure of the TSA to actually provide what could be considered customer service. When checking in for a 5:45am flight out of Las Vegas, there were several hundred people waiting in a line that was being serviced by a single TSA agent while off to one side, two agents were servicing an area where the sign read “TSA Pre,” which I assume means TSA pre-screened or something similar. In that area there were only 1 or 2 passengers passing through every 5 minutes or so. After about 30 minutes of this they finally added additional staff for the “regular” folk.
One final comment about air travel is that it provides an excellent example of incentives and unintended consequences. Most airlines now charge fees for checked bags. I recently heard an airline CEO explain that this was partly in trying to be more transparent for the customer. Where in the past everyone paid a bit more for their ticket whether they checked bags or not, now base fares may be lower and only those who check their bags are required to pay a higher price. This is all sound in my opinion but does result in an unintended consequence, namely that of more people using as big a carry-on as they can to try to avoid paying the checked bag fees. This results in lots of time as passengers struggle to fit these bags in the overhead bins, resulting in delayed flights. In many cases, the passengers end up having to gate-check these bags which then get stowed below the cabin, but without paying the checked bag fee.
Next up: Food