Sunday, December 10, 2017

WyoFlot Q and A

With reference to the ENDOW plan's idea for a de facto state-run airline, an anonymous reader commented:
what is a meaningful macroeconomic result that would warrant the investment? Is there ever one to your mind? You provide no result or threshold where your opinion might change. Are you willing to make a case against air service as a component to a healthy economy? How about providing some insight into what an economy really needs? Again, I am with you that the state is not the best agent for this most of the time, but how do it in an economic desert otherwise?
Let me answer these questions one by one.
what is a meaningful macroeconomic result that would warrant the investment?
The answer is simple: when growth is strong enough for the private sector to be able to sustain commercial air services without government support. The question is, namely, based on the premise that it is government's job to run a commercial airline in the first place. 

Government running an airline is like government running a trucking business. Just like government should not control all commercial aspects of the trucking business, it should not control all commercial aspects of commercial air service. 

To maintain the trucking analogy, the only part of the industry where government could make a meaningful contribution is at the airport level. If that was what the ENDOW program suggested, then this conversation would take a different route.
Are you willing to make a case against air service as a component to a healthy economy?
No. Commercial air service provided by private companies is a vital part of our economy. 
How about providing some insight into what an economy really needs?
An economy really needs a government that: 

a) protects life, liberty and property;
b) produces public goods, defined as products for which there is no functioning market (strictly, there is no exclusion in consumption); infrastructure such as a highway and an airport can fall under this category;
c) the only economic regulations that exist are there to protect property rights and the enforcement of voluntarily signed contracts; and
d) is banned from engaging in economic redistribution between private citizens. 

For example, a commercial airline run by government - even if the actual flying of the airplanes is outsourced to a private entity - is economic redistribution. The state's airline exists only because it wants to be able to sell airline tickets below market price. In doing so, government taxes all citizens and provides entitlements to a few, namely airline passengers (and, to be precise, the airline that flies them on a monopoly contract with government). This is economic redistribution and has no place in the government that an economy "really needs".

There. If anyone has any more questions, I would be happy to answer them.

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