United Airlines’ Actions Show the Problem with Regulations, Not Free Markets

United Airlines’ assault of a paying customer was decidedly warped. There is simply no excuse for calling in the goons (in this case, Chicago Department of Aviation security officers) to forcibly remove—and injure—any peaceable person from an airplane, much less a physician trying to get home to take care of patients. But progressive’s response to United’s actions have been equally twisted. This is not, as progressives believe, another data point in the argument for a greater regulatory state, it’s a perfect example of the need for greater deregulation.

There is no getting around that United shamed itself. Contrary to earlier reports, the plane was not overbooked, a situation which typically results in bumped passengers not being allowed on a plane, not ejecting already-seated passengers. This was worse. This was administrative incompetence in the form of United needing to accommodate crew members who needed to be in Louisville for another flight the next day.

The airline began to offer increasing (though still paltry) amounts of money in order to get volunteers to leave, but when they didn’t get enough they somehow decided that force would accomplish what money could not. The result was a bloodied, beaten physician and a damaged, depleted airline. Nobody won.

Out of this mess—never let a crisis go to waste!—come progressives, who are tripping over themselves to use it as an example of the evils of capitalism.

“If corporate rules and the laws of capitalism lead to this, then they are unjust rules and laws,” James Martin writes in America Magazine. “The ends show that the means are not justified.”

This is a “world problem,” as opposed to a first world problem, Martin continues, “because the victims of a system that places profits before all else are everywhere.”

Matt Bruenig, writing for Jacobin, goes one causal step further, saying that capitalism is directly implicated in United’s swift devolution to violence.

“The forceful removal of the passenger is not an extraordinary aberration from our civilized capitalist order,” Bruenig argues. “Rather, it is an example of the everyday violence (and threatened violence) that keeps the capitalist order running.”

Others took it even further, suggesting that capitalism wasn’t the problem, America writ large was the issue. Using a corollary of Karl Marx’s quote, “You don’t hate Mondays. You hate capitalism,” Paste’s Shane Ryan argues “You are not mad at United Airlines; you are mad at America.”

In some ways Ryan is correct, the problem is peculiar to America, but it has nothing to do with capitalism and everything to do with an asymmetry of power borne out of government regulation. Kevin Williamson writes for National Review:

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. …

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

One of the main reasons that passengers are forced to “live with it,” is the utter lack of competition among airlines. Over the past decade, the largest 11 domestic airlines have consolidated into just five. The sheer size of the remaining power players now discourages smaller airlines from attempting to compete, and, well-established international carriers are expressly banned from competing.

The Air Commerce Act of 1926 in conjunction with the restrictions under the Civil Aeronautics Act set a maximum foreign ownership of 25 percent, and prohibits foreign airlines from servicing domestic routes. Together these essentially ban foreign airline competition.

Increased competition may expand service, but it may not have helped Dr. Dao because another federal regulation sets an artificial cap on what an airline has to pay for bumping you from your flight. Right now, the maximum an airline has to pay is the lesser of twice the cost of the ticket, or $675, if they can get you there within two hours of your scheduled arrival, and a maximum of $1,350 if they cannot. That eliminates any incentive airlines have to negotiate fair terms with their customers and encourages the use of force when no “willing” participant steps up to accept the “offer.”

Neither of these laws and regulations, which lie at the heart of United’s actions, comport with a free market. If we want to avoid this situation in the future, the answer is not more regulations, it is fewer. Then again, capitalism may yet get the last laugh. Within 24 hours of their dragging Dr. Dao from their plane, United Airlines lost $1 billion in market capitalization.