King Rat (gkr) wrote,
King Rat

Eco 200: air traffic control

(group) A letter to The Wall Street Journal attacking a proposal to privatize the nation's air traffic control system concluded as follows:

A business exists to maximize economic return. A government exists to maximize public benefit. No amount of imagined gain in efficiency will offset the loss of pulic control of either the town stoplight or the nation's air traffic system.

  1. What does it mean to say that business exists to maximize economic return and government exists to maximize public benefit? Is this a statement of intentions (whose?) or of outcomes?

    This is mostly a statement of intentions. A business exists for the benefit of its residual claimant. A government exists to give benefit to its constituents. In practice, neither may work out that way.

  2. Can a business ordinarily earn a large economic return if it does not provide substantial public benefits?

    Depends on what you mean by ordinarily. Many businesses do get by without providing much benefit through deceit and deception. Cigarette manufacturers and casino operators are an example on a large scale. On a smaller scale, pump and dump boiler room stock operations ordinarily make a lot of money. The vast majority of businesses provide some public benefit. But given the sheer number of businesses in existence, with just 0.1% of businesses providing little public benefit they are still ordinary and common.

  3. How can we measure the public benefits flowing from the air traffic control system if users of the system are required to pay the costs of providing those benefits? How can we measure them if users are not required to pay but all costs are instead financed from taxes?

    One could measure the average delay divided by the number of miles flown by aircraft. Other measures include the number of incidents of near-collision per mile flown. Both measures can be taken regardless of who pays for the service.

  4. The author of the letter quoted described himself as president of the Aircraft Owners and Pilots Association. Does this suggest to you any reason for his opposition to privatizing air traffic control?

    My guess is he doesn't want it coming out of his pocket. In his mind, the public benefits from not having airplane collisions so they should pay for it and not him.


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