Markets not regulators should determine safety cost tradeoffs

[PeterNSteinmetz]

This survey shows how markets are needed to determine subtle safety - cost tradeoffs, not regulators (who end up being captured by the industry they are supposed to regulate in any case).

https://www.nbcnews.com/business/bu...know-about-fatal-boeing-crashes-most-n1005836

 

[PeterNSteinmetz]

This question is of course a long debate and one which has been studied extensively. There is a fairly good case to be made that a free market with the businesses responsible economically for the cost of their decisions (not insulated by the present legal regime which favors large established carriers) is a more effective solution.

So for example, an airline which makes poor decisions in the cost-safety tradeoff, would go out of business, have higher insurance premiums as well as potentially losing customers.

If one is interested, here is some starting reading - https://mises.org/library/primer-regulation .

In our present regulatory environment, consumers are conditioned to think all airlines are equally safe because their safety "is guaranteed" by the regulators. In a truly free market, people would have to rely on independent rating organizations or their own research. But if all carriers were about equally safe (for example, if the use of the 737 Max doesn't really matter when flown by a competent US based crew) then consumers would rightly not care and carriers and manufacturers would not be burdened by unnecessary changes.

One size does not necessarily fit all when it comes to the safety - cost tradeoff.

 

[PeterNSteinmetz]

For this to work, the companies must have required insurance, which is regulatory. Note: I have not read the thread you provided but I have seen this analysis before. Often they leave significant holes in it; such as the required level of insurance. Without it, there will always be some fly by night operation or business taking a gamble.

And consumers might well learn to check if companies involved in providing potentially lethal services to themselves and their family have adequate insurance.

But I agree a good improvement on the present system would be to simply require adequate insurance coverage for particular operations, rather than compliance with a pre-determined set of regulatory requirements. That would be an excellent step toward free markets. There are lots of experiments like that to try, no need to jump in whole hog. Try things and see how they work.

 

[PeterNSteinmetz]

How do you feel about anti-trust laws?

Starting to get off into pure politics I think, unless you have some aviation nexus in mind (and I prefer to avoid being scolded again).

It is not really an area I am expert in, but here is a link to an article about it which may be of interest - https://mises.org/library/anti-trust-anti-truth.

 

[PeterNSteinmetz]

Indeed. Nothing wrong with referencing the Mises Institute but lets just say that it wouldn't be many economists' first choice for an even-handed "primer" on regulation.

Yes, the link in post #6 is a pointer to an overview of the subject matter. It is about 3 pages or so and is a place for people to start then explore the issues mentioned. (I don't know that anyone discussing here has bothered to read it). It is too complex a discussion to really do it full justice here, IMO. There is a large body of academic literature on the effects of regulation.

I think it would be fair to say that simple notions like "government regulation is necessary for safety in aviation" or "it is impossible for the market to function to improve safety" would tend to be rejected by a large number of workers in the field, but not all.

I agree that had an aviation nexus, so permitted here, but I think a general discussion of anti-monopoly statutes would likely approach the line.

 

[PeterNSteinmetz]

my point was that it's an unusual place to recommend people begin learning about the issue without mentioning that the Mises Institute promulgates a very specific and fairly radical position. It's rather like me saying "If you're interested in Labor Economics, Vol. 1 of Das Kapital is a good place to get started".

I agree that Mises has a specific point of view. I don't know that we have discussed this issue before so you are perhaps not aware of my rather strict position regarding attacks on the source in public discussions. I avoid all such attacks, both those against the speaker or the poster and those simply against a source. I don't mean to imply that these comments are particularly bad examples

Thus I don't tend to note that a particular source is biased this way or that. Rather I focus on the factual truth and validity of what that particular source says. One can spend a nearly infinite amount of time arguing over whether CNN is more biased than Fox News and in what direction and it actually won't tell you much really about the underlying issue. I don't find that very interesting and prefer to focus on the issues at hand.

So in this case, if people are interested, perhaps read the Mises article, find some alternate points of view, and bring them up if one really wants to discuss this issue here in the context of aviation.

And if you've read any of my prior posts in other threads I imagine it becomes pretty clear what my bias is (we all have them frankly to greater and lesser degrees) -- I am a ultra-libertarian so those are the things I am interested in. And I tend to think most of what mises.org has to say is spot on and correct. Also, in fairness, I do think the article mentioned is a bit more of an overview appropriate for casual reading than Das Kapital.

 

[PeterNSteinmetz]

I didn't know anything about the Mises Institute, but it appeared to me to be a non-aviation article that was presenting views favored by a particular portion of the political spectrum.

That is basically correct. It is related to aviation only because aviation is heavily regulated and that primer talks about one view of the general effects of such regulation, which I think apply in those ways to aviation and what the FAA does to the industry.