4 ms·

> There are probably a bit too few customer and worker protections, but on the whole, airline deregulation shows just how bad command economies are at planning

> There are probably a bit too few customer and worker protections, but on the whole, airline deregulation shows just how bad command economies are at planning and allocating resources. Isn't each individual airline is itself a command economy, internally? Many large companies manage their assets centrally, for example Kroger or any other large grocery chain manages itself via central planning. Would they function more profitably if individual store managers were bidding to "purchase" groceries from the central supplier? The only datapoint I know of is Sears, which tried something similar and went down in flames

bpodgursky 3y ago
> Isn't each individual airline is itself a command economy, internally Yes. The difference is that an "airline command economy" collapsing from incompetence is an uneventful bankruptcy, and a national command economy collapsing means civil war and anarchy.
- tech_ken 3y ago
  That's a trivially true statement for any descriptor which can be applied to both a business and a nation? National economic collapse generally means civil war and anarchy in almost any case.
  - mcmoor 3y ago
    Nation is like "too big to fail" businesses and both are bad because of this. Free market system requires everyone to be able to be eliminated from the competition. Although sometimes I imaged UBI to instead enhance free market because it allows every person to contribute to the competition and can still fail gracefully. Instead poor person is now also "too big to fall" because they're betting their livelihood for each proposal.
lucas_membrane 3y ago
But Sears gave Donald Rumsfeld a lifetime discount card. Which brings us to the major government subsidy of US airlines. People work for airlines at reduced wages to have available very great discounts on their personal travel, totally untaxed. Live wherever you want, and commute on the airline! Second major subsidy is that people who pay or have their employers pay for airline tickets as deductible business expenses manage to use their kickbacks (free flights for repeat customers) for personal travel untaxed. Eliminate those subsidies and watch what happens.
cyberax 3y ago
> Isn't each individual airline is itself a command economy, internally? The difference is that airlines, no matter how large they are, have to deal with the reality via market forces. So there's a feedback mechanism that will eventually point out if your commands are correct. Command economies (or sectors of economies) don't have such a mechanism, so they can stay inefficient forever.
- tech_ken 3y ago
  >or sectors of economies I would argue that the energy sector of most developed nations as a counterexample. I think we can go back and forth all day about the extent to which they are true command economies, but the ultimate point that natural monopolies can and often are successfully managed by nations in a centrally-planned manner I think is clear.
  - cyberax 3y ago
    Oh! Let's talk about the energy sector! I worked professionally in that area. Europe and the US are most definitely not counter-examples. Power generation is almost everywhere done commercially. Transmission is more often publicly owned, but even that is not universal. The closest example to the command economy is rail in Europe. And it's predictably struggling.
    - sandpaper26 3y ago
      I fear you are confusing the concepts of central planning (which commercial monopolies can and often do have) and government control or ownership.
      - cyberax 3y ago
        The European grid is not centrally planned. It's certainly affected by the government policy, but its development is driven by private profit-seeking companies.
        3y ago
cryptonector 3y ago
> Isn't each individual airline is itself a command economy, internally? Perhaps, but in competition with others. Governments compete too, but the cost of switching brands is inordinately high, so the competition there is too weak to generate better results among the various governments.
- tech_ken 3y ago
  Idk why everyone interpreted this comment as asserting that we should switch to a centrally planned economy nationally, I'm just clarifying that the argument "centrally planned economies don't work, therefore nationalizing natural monopolies is folly" doesn't hold water.
  - cryptonector 3y ago
    > natural monopolies Most of the "natural monopolies" we have were created directly as such by governments. Electric utilities? There used to be competition. Idk what happened exactly, but then we had no competition and they were regulated. Public transportation? New York's subways (90% of existing track!) were built by two competing companies, then NYC regulated them into bankruptcy, and then NYC acquired them. Similarly with busses and trolleys. There used to be a vibrant trolley system in New York, then the city killed it and "nationalized" it. Compare to Buenos Aires, where they never nationalized the bus system, and which has a privately operated bus system that is the envy of every American city! Cable systems also had competition, but then all the towns regulated them. If Edison and Westinghouse could compete a century ago, they could compete today. Roads are pretty much the main case where I'd agree there's a natural monopoly, and then only because there's not enough physical surface space for competition. In any case, airlines are far far from natural monopolies. Airports might be, but not airlines.
    - tech_ken 3y ago
      Natural monopoly in the formal macroeconomic meaning of very high fixed cost with virtually zero marginal cost (ex. it costs ~nothing to transmit an extra watt of power, fly one more passenger, insure one more person, etc). In these cases basic econometric theory shows that production cost is lowest with a single provider, adding two or more competitors increases total cost of production without changing the total output. Obviously nothing obtains these conditions precisely in the real world, but in general the principal holds for big infra stuff. I think your example of a bus system faces the obvious fact that the US dumped a ton of resources into private auto travel which makes it challenging for any public/shared transit to succeed. The power grid is another classic example of a natural monopoly, it costs a lot to make a power plant and hang a bunch of wires, but once it's running it's basically free to send a small unit of additional power to a person. For this reason the US was going to nationalize the grid back in the 20s but at the last minute decided to lease to a "regulated monopoly" private corp (IIRC it was some dude in Chicago who convinced them to give him the lease). Texas tried to roll this back in the like the 90s and their power costs shot through the roof and still remain nationally high.

bpodgursky 3y ago

> Isn't each individual airline is itself a command economy, internally Yes. The difference is that an "airline command economy" collapsing from incompetence is an uneventful bankruptcy, and a national command economy collapsing means civil war and anarchy.

tech_ken 3y ago
That's a trivially true statement for any descriptor which can be applied to both a business and a nation? National economic collapse generally means civil war and anarchy in almost any case.
- mcmoor 3y ago
  Nation is like "too big to fail" businesses and both are bad because of this. Free market system requires everyone to be able to be eliminated from the competition. Although sometimes I imaged UBI to instead enhance free market because it allows every person to contribute to the competition and can still fail gracefully. Instead poor person is now also "too big to fall" because they're betting their livelihood for each proposal.

lucas_membrane 3y ago

But Sears gave Donald Rumsfeld a lifetime discount card. Which brings us to the major government subsidy of US airlines. People work for airlines at reduced wages to have available very great discounts on their personal travel, totally untaxed. Live wherever you want, and commute on the airline! Second major subsidy is that people who pay or have their employers pay for airline tickets as deductible business expenses manage to use their kickbacks (free flights for repeat customers) for personal travel untaxed. Eliminate those subsidies and watch what happens.

cyberax 3y ago

> Isn't each individual airline is itself a command economy, internally? The difference is that airlines, no matter how large they are, have to deal with the reality via market forces. So there's a feedback mechanism that will eventually point out if your commands are correct. Command economies (or sectors of economies) don't have such a mechanism, so they can stay inefficient forever.

tech_ken 3y ago
>or sectors of economies I would argue that the energy sector of most developed nations as a counterexample. I think we can go back and forth all day about the extent to which they are true command economies, but the ultimate point that natural monopolies can and often are successfully managed by nations in a centrally-planned manner I think is clear.
- cyberax 3y ago
  Oh! Let's talk about the energy sector! I worked professionally in that area. Europe and the US are most definitely not counter-examples. Power generation is almost everywhere done commercially. Transmission is more often publicly owned, but even that is not universal. The closest example to the command economy is rail in Europe. And it's predictably struggling.
  - sandpaper26 3y ago
    I fear you are confusing the concepts of central planning (which commercial monopolies can and often do have) and government control or ownership.
    - cyberax 3y ago
      The European grid is not centrally planned. It's certainly affected by the government policy, but its development is driven by private profit-seeking companies.
      - 3y ago

cryptonector 3y ago

> Isn't each individual airline is itself a command economy, internally? Perhaps, but in competition with others. Governments compete too, but the cost of switching brands is inordinately high, so the competition there is too weak to generate better results among the various governments.

tech_ken 3y ago
Idk why everyone interpreted this comment as asserting that we should switch to a centrally planned economy nationally, I'm just clarifying that the argument "centrally planned economies don't work, therefore nationalizing natural monopolies is folly" doesn't hold water.
- cryptonector 3y ago
  > natural monopolies Most of the "natural monopolies" we have were created directly as such by governments. Electric utilities? There used to be competition. Idk what happened exactly, but then we had no competition and they were regulated. Public transportation? New York's subways (90% of existing track!) were built by two competing companies, then NYC regulated them into bankruptcy, and then NYC acquired them. Similarly with busses and trolleys. There used to be a vibrant trolley system in New York, then the city killed it and "nationalized" it. Compare to Buenos Aires, where they never nationalized the bus system, and which has a privately operated bus system that is the envy of every American city! Cable systems also had competition, but then all the towns regulated them. If Edison and Westinghouse could compete a century ago, they could compete today. Roads are pretty much the main case where I'd agree there's a natural monopoly, and then only because there's not enough physical surface space for competition. In any case, airlines are far far from natural monopolies. Airports might be, but not airlines.
  - tech_ken 3y ago
    Natural monopoly in the formal macroeconomic meaning of very high fixed cost with virtually zero marginal cost (ex. it costs ~nothing to transmit an extra watt of power, fly one more passenger, insure one more person, etc). In these cases basic econometric theory shows that production cost is lowest with a single provider, adding two or more competitors increases total cost of production without changing the total output. Obviously nothing obtains these conditions precisely in the real world, but in general the principal holds for big infra stuff. I think your example of a bus system faces the obvious fact that the US dumped a ton of resources into private auto travel which makes it challenging for any public/shared transit to succeed. The power grid is another classic example of a natural monopoly, it costs a lot to make a power plant and hang a bunch of wires, but once it's running it's basically free to send a small unit of additional power to a person. For this reason the US was going to nationalize the grid back in the 20s but at the last minute decided to lease to a "regulated monopoly" private corp (IIRC it was some dude in Chicago who convinced them to give him the lease). Texas tried to roll this back in the like the 90s and their power costs shot through the roof and still remain nationally high.