12 Apr 2017

“United is Why People Hate Capitalism”

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United Airlines CEO Oscar Munoz.

Kevin D. Williamson explains that the big ugly corporations that we particularly hate, by some curious coincidence, really tend to be exactly the ones which are most in bed with the regulatory state.

Capitalism is unpopular for four reasons: banks, health-insurance companies, cable providers, and airlines. These all have something in common.

Airlines are in the wringer this week, with United shaming itself in spectacular fashion: Having overbooked a flight and seated the passengers, the company found itself needing four seats—not for paying customers but for airline employees who needed to be moved to another airport. When they did not find any takers for their paltry travel-voucher offers, they simply dispatched armed men to the airplane to force paying customers off, in a now-famous case, literally dragging one of them away. …

The FAA Consortium in Aviation Operations Research estimated a few years back that the inability of U.S. airlines to deliver the services they have been paid for and that they agreed to deliver costs businesses something like $17 billion. But that does not really capture the expense. A conference I attended not long ago was scheduled to get under way in the afternoon, but all of those who were speaking or who had other formal roles at the event were contractually required to arrive the evening before. There was plenty of time to fly in on the morning of the conference and arrive well before the opening of the conference, assuming the airlines kept to their schedule — but the organizers, who are not fools, were not willing to bet on that happening. I did a little back-of-the-envelope English-major math and concluded that the extra hotel rooms alone must have added a six-figure sum to the organizers’ expenses; if a significant number of the guests followed suit and decided not to bet on the airlines’ keeping their schedules, then the extra expenditure would have easily exceeded $1 million. There are thousands of events like that around the country every day. …

The airlines are terrible, of course, and every time one of them goes kaput, I do a little happy dance . . . until I remember that all that means is that the equally terrible remaining airlines have less competition. …

Airlines are like banks, health-insurance companies, and cable providers in that they work in very heavily regulated industries with relatively low profit margins, which creates enormous pressure for consolidation. (Notice how many health-insurance companies ditched markets they had previously served after the grievously misnamed Affordable Care Act was passed.) Those industries also are alike in that the relatively few players who remain in the market are heavily constrained by public-sector actors with powers that no private-sector monopoly would ever dare to dream of: the Federal Reserve, Medicare, the FCC, and the motley gangs of bureaucrats that have a hand in the airline business.

n the United States, it is regulation, not deregulation, that prevents foreign carriers from competing in the domestic market, which is not the case in New Zealand, which entered into a number of open-skies agreements to increase domestic competition, something our dinosaur airlines have fought against tooth and talon. And in New Zealand, airlines are obliged to compensate passengers if they bump them—up to ten times the cost of the ticket. No so in the United States.

And that points to one of the biggest reasons people hate banks, cable companies, health-insurance companies, and airlines: There is an in-your-face asymmetry of power. If the airline says your flight is going to be delayed by two hours — not because of a hurricane or unforeseeable events but because of straightforward managerial incompetence — then you basically have to live with it. You don’t get to say: “Okay, but I’m taking $50 off the airfare.” Your bank expects you to accept screw-ups on its part that might cost you hundreds or thousands of dollars if the mistake was yours. (My bank just spent 46 cents to send me a check for . . . 47 cents . . . because apparently I bank with people who cannot quite manage to calculate interest correctly.) Your cable service may go out for hours at a time, but if you’re one minute late with your payment, expect penalties.

That is one major problem with heavily regulated industries in which there is insufficient competition: The managers act as though the business were organized for their benefit rather than for the customers, and that attitude seeps down to front-line workers. The typical airline employee treats the typical traveler as though he simply is in the way. I once was introduced to an executive who informed me that he was in charge of “strategic planning” for a large municipal utility company. I asked him whether his strategic plan was to keep being a monopoly. “I’d really be exploring that angle, strategic-planning-wise,” I advised. He did not seem to appreciate my counsel.

If I were a better sort of person, I’d have a little sympathy for the senior executives at United, who must be having a hell of a week. I am not a better sort of person, and I’d be content to see them flogged in the streets. But that’s no way to make policy.

6 Feedbacks on "“United is Why People Hate Capitalism”"

Jay Dee

I would argue that this is not capitalism at all but crony socialism in all its glory. You want socialism. Stuff like this happens and it will happen to you gentle reader.

Steve Gregg

United Air Lines is not capitalism and capitalism is not United Air Lines. Yes, when an air line abuses you, you have options.

I got a bunch of abuse from an American Airlines gate agent in Chicago when something delayed my plane and I missed my connection. I slept in the airport that night.

I realized that I would get to my destination just as fast renting a car and the rental offices are so much nice to their customers. So, that’s what I’ve done ever since.

Any trip under 150 miles, you’re better off driving. Any trip under 250 miles, you should take the bus. If it’s more than 250 miles, take Southwest or Jet Blue. And never take the cheapest airline.

Dick the Butcher

The airlines do not run in a free market. Plus, there is insufficient competition.

The airlines industry is characterized by too many mergers and too few carriers. The carriers also own the FAA.

Crony capitalism: special interests formed strong alliances with government in order to secure economic monopolies and other privileges. Crony capitalists hid behind free market slogans.

If you hear somebody say, “We have free markets.” That person is putting on display rank ignorance or dire dishonesty, or both.

JK Brown

Funny, United was acting in accordance with government regulation. Perhaps their implementation was poor, but they were complying with the dictates of the government, i.e, socialist, control of their means of production.

The problem with capitalism is every ignorant buffoon has no idea what it means when they write about it. It doesn’t help that economists, even the economics professors, use the term to mean many things, such as corporatism, industrialism, etc.

Go ahead try to find a definition of capitalism beyond the simplistic and uninformative 11th grade economics class definition.

I came up with the following after reading far to many economics professors, even alleged libertarian professors, misuse the term.

“Capitalism is a name given to the individual liberty or, as permitted, by the current entity that has monopoly on violence, to retain their personal earnings over that required for subsistence and use this savings, or capital to create wealth for their own self.

“The type of capitalism one has is determined by who is permitted to engage in investments to better themselves up to State capitalism, commonly known as total socialism. Laissez Faire capitalism has the fewest restrictions and permit the most individuals to better themselves. Crony capitalism is when friends of the office holder are given special leave to better themselves. This is facilitated by interventionism and is better called government cronyism.

“Socialism, in contrast, uses government to limit the individual ownership of productive capacity up to total socialism where the individual is permitted no ownership/control of productive capacity except for their direct personal skills and even then may be prevented by the overseers from using their skills in a job that requires them, instead being assigned other work. Under socialism, the liberty to better oneself is limited to government bureaucrats, controlling policitial party members and their cronies. The rest of the populace being slaves regardless of the treatment they receive.

Precisely what makes a slave is that he is allowed no use of productive capital to make wealth on his own account.”


Every argument against the airline is an emotional argument and not a rational argument. The airline is required by law to have a flight crew at that second airport for that second plane to take off on time so therefore that had no other choice but to put their 4 employees on this plane to man that other flight. The plane was full so therefore the airline had no other choice but to bump four passengers. The airline offered money to those passengers bumped but the law limits how much they can offer so thhere was no other option for the airlines. When the recalcitrant passenger refused to deplane the airline is required by law to call in the police. And last this flight must leave on time or within a very short grace period again mandated by law. The airline couldn’t just sit there on the tarmac waiting for this passenger to deplane. So where did the airline do anything wrong? If your argument is that excessive force was used well that’s on the Chicago police not United. The airline did everything right.

Seattle Sam

Liberals who say that United’s behavior is a rap on capitalism argue at the same time that it is outrageous to use Jihadis as a rap on Islam.


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