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Why
Bail Out The Airlines?
By
Theresa Fritz Camoriano
The airlines have certainly suffered financially from the
hijackings that were used to attack the World Trade Center and the
Pentagon. In addition to the
losses sustained due to the hijackings, and losses caused by government's
forced grounding of airplanes, people are now more afraid to fly, so
airline revenues are down. Of
course, many other people and businesses have suffered as well, including
those who lost their lives and property in the attacks.
People’s fear of travel has also caused financial losses in other
sectors, such as hotels, resorts, and convention centers.
The U.S. government has promptly decided to use billions of
taxpayer dollars to bail out the airlines.
In the heat of the moment, few people have asked whether such a
bailout is a good idea. But
the questions should be asked.
What would
happen if the airlines were not bailed out by the government?
What will happen as a result of the bailout?
It is unfortunate that the airlines have had their hands tied by
the federal government in terms of the types of security they can provide
their passengers. For
example, the federal government has prohibited the airlines from arming
their crews, and the federal government has been in charge of airport
security. But relieving the
airlines of responsibility for lax security by bailing them out will
certainly not improve the safety of air travel.
If the airlines felt the economic impact of their security
failures, some of them might go out of business, but those remaining would
have an incentive to demand that they be allowed to have control over
their own security, so they could provide the level and types of security
they believe their passengers want.
Those airlines that were found to provide the best security with
the least hassle and expense to their passengers would then thrive, and
others would be inclined to imitate their success.
This is not a time to make air travel slow and difficult, pushing
more people onto the highways, where their risk of death is much greater
than it is on a plane. It is
a time to let the market work to provide the best security at the most
reasonable cost.
Of course, the government should pay for the losses that were a
direct result of its grounding the planes for the benefit of public
safety, but that is a drop in the bucket compared to the amount of the
bailout.
If large businesses know they will be bailed out by the taxpayers
when they make a mistake, they are much more likely to be careless and to
make many more serious mistakes. The
S&L disaster is a perfect example.
And why should the hard-working taxpayers be forced to bear the
burden of losses over which they had no control?
As I learned in law school, the best place to put the risk in a
contract is on the party who is in the best position to control and
minimize the risk. Taxpayers are totally powerless in this situation, but the
airlines are not. The
airlines could and should take charge of their own security measures for
the benefit of their customers. They
should not be able to duck responsibility and operate in a protective
cocoon, especially when people’s lives and safety are at stake.
Shifting the burden for lax
airline security from the airlines, who could and should take steps to
improve security, onto innocent taxpayers, who have no control at all over
airline security, is another example of the government causing great harm
while claiming to do good.
Of course, corporate welfare in all its forms is a bad idea, since
it distorts the signals that should be sent to producers from consumers
due to their buying habits, and since it unfairly burdens the taxpayers.
So, not only should we oppose bailouts of the airlines, but we also
should oppose bailouts of the hotel industry, the entertainment industry,
the restaurant industry, the gambling industry, the tobacco industry, the
dairy industry, and any other business enterprise that wants to stick its
hands into our pockets.
Related
articles:
"The
early sign of the (economic) trouble to come is the spending panic already
under way on Capitol Hill. With last week's decision to bail out the
airline industry, Congress has encouraged everyone from insurance, steel,
hotels and restaurants to hold out their hands. Ideas are also
flowing fast to push money for unemployment benefits, raise the minimum
wage and undertake a whole new national effort for schools, roads, bridges
and waste disposal. Reviving the New Deal won't be far behind."
- Wall Street Journal editorial, 9/26/01
Don't finance the murder of the
Bill of Rights (If the airlines won't let you defend yourself, don't
fly, let them go under, then buy them up at bargain prices and run them
the right way!)
http://www.jpfo.org/alert20010919.htm
On Hill, it's bailouts vs. budget restraint
http://www.csmonitor.com/2001/0927/p2
s1-usec.html
Airplanes and Property Protection
http://www.mises.org/fullstory.asp?c
ontrol=792
Airline bailout criticized
http://www.worldnetdaily.com/news/articl
e.asp?ARTICLE_ID=24684
Aboard
Flight 564
(A pilot speaks to his passengers)
http://www.washtimes.com/commentary
/20010919-6357240.htm
Safe
Travel
http://www.mises.org/fullstory.asp?co
ntrol=783
Brazil
reportedly to let air passengers carry guns
http://www.sierratimes.com/archive/fil
es/sep/17/arbz091701.htm
Safety versus freedom: the false dichotomy
http://www.lewrockwell.com/murphy/
murphy47.html
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