Friday, September 10, 2004

Flying Low

Here's one high on the list of boring campaign issues nobody is paying any attention to: the federal government's "bail out" of the airline industry following 9/11. (It seems kinf of unfortunate to use the image of jumping out of a plane to describe a subsidy of the airline industry.)

The US Government (also known as you, taxpayer) has thrown at least $15 billion towards the airline industry since then. Well, not towards the industry: towards specific airlines. The worse off the airline, apparently, the more money it gets.

There seems to be little sentiment in Congress for another bailout, which may be a good thing, but it's illogical. If 9/11 caused a disruption in the airline industry, why then wouldn't the current world situation with high oil prices, resulting in high fuel prices, also be considered a war on terrorism-related 'act of god' requiring a bailout?

It's abundantly obvious that the major airlines are not constructed in an economical way, and are doomed, like most behemoth industries, to bankruptcy. It's called competition. Supply and demand will alter the fortunes of specific players within the industry, and that in turn means, if we're going to accept deregulation of industries like transportation, that we have to accept temporary shortages of supply when corrections (via bankruptcies) are made.

The hard part about all this is the completely outrageous loss of some workers' pensions, which, if they're honored, will in turn be paid out by the government (you, taxpayer). Yes, it's like paying into somebody else's 401(K) on top of paying your own social security and that for somebody else.

There's nothing really new here. The government felt obliged to bailout bankrupt passenger railroads like the Penn Central back in the early 1970s, when it had for years been stifling the effects of the marketplace by subsidizing road travel and forcing railroads to operate unprofitable branches. And remember the Chrysler bailout in the 1970s? Maybe that was a good thing, maybe it wasn't. But it's hardly fair to competitors within the industry to reward a company just for being incompetent.

This is the type of issue that should really be discussed in the Presidential election. It's bound to come up again. Under what circumstances would you, as President, agree to subsidize an industry? What's the relationship between the nation's strategic interests and the health of its domestic industries? Is the shipment of capital to foreign countries related to our domestic security and tranquility?

At the very least, the Congress and President ought to be held accountable for the money blown on the US Airline industry. Whatever problems resulted from 9/11, as the Business Week article from 2001 linked above indicates, they were trivial compared to fundamental flaws in the companies at hand. What role do special interests have in this kind of legislation? Which Presidential candidate is getting support from the airline industry?

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