Ask the grumpies: Privatizing nation’s air controllers?

Crone asks:

opinion on privatizing our nation’s air controllers. I oppose but was told the whole system should be moved to computer based GPS system and then Highways in the Sky for planes could be free form making flights faster and private industry can do this more rapidly than government. (I was in social situation so could not say I have never known a single computer system that did not ‘go down’ or ‘have ‘undocumented features ‘ so how would that work…) The topic of pipelines that ‘will not fail but ALL LEAK at some time’ had already come up.~~ I had been assured I was wrong on that point and ignorantly female. SO, back to air controllers: If this would be profitable for private companies to do why isn’t it done profitably or better by public government?

OMG, the WORST IDEA. OMG OMG OMG.

Well, it’s only the WORST IDEA if you think that airplane passengers are more important than prisoners. If you think prisoners are people too and should have rights, then privatizing prisons is actually the worst idea and this is only second worst. I guess there’s also privatizing foster care systems… if you think all people are equal then that might be slightly above air traffic control but still below prisons in potential harm done by privatization. (Foster care systems empirically aren’t as bad as prison systems, even though the potential is there to be as bad. This has to do with better state oversight.)

I had a section on privatizing public systems in one of my classes last semester and students brought in stuff– if I’d known it would come up as an ask the grumpies I’d have taken a picture of the whiteboard commonalities of when it works and doesn’t that we came up with. It can be ok, but it depends on a lot of stuff and it really shouldn’t be something where you know, people could die.

Ugh, so no, not you being ignorantly female. There’s a reason there’s a role for government for various systems.

We generally think that there is a potential role for government intervention when there is market failure in the competitive markets.  One form of market failure comes from monopolies.  Something like air-traffic control is what we call a “natural monopoly”– natural monopolies occur when it just doesn’t make sense for more than one company to be in one market.  A lot of utilities are in this kind of situation– where it doesn’t make sense for two companies to lay down pipes or what-have-you.  (You can also have government-private partnerships, where, for example, the government owns the rail-lines but allows different companies to pay to use them.)  Air traffic control is an example of a natural monopoly.  At an airport, it makes sense for only one company to do the air-traffic control.  Any more could lead to planes, for example, hitting each other.

The government in this situation could still allow private contractors to bid on the ability to be that one company doing all the air traffic controlling.  Unfortunately, air traffic control benefits a lot from experience and there are switching costs when an old company leaves and a new one takes its place.  Those switching costs could lead to not just inefficiency but also death.   Finally, oversight is really important with privatization.  Unlike the government, companies can just go out of business when they cut costs so much that people die, so they don’t have as much of an incentive to stay safe when it means cutting into profits.  Government can combat that by making it costly for them to cut corners before someone ends up dead, but that oversight comes at a cost.  Those costs could be large enough (and the possibility of bribes could be high enough) that it makes sense for the government just to do it itself.

 

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17 Responses to “Ask the grumpies: Privatizing nation’s air controllers?”

  1. bogart Says:

    Gosh, so markets aren’t perfect. Who knew? /sarcasm

  2. Leah Says:

    I love how much I learn from your page!

  3. purple Says:

    I picture private company A using software 1 handing off to private company B using 33software and they are not 100% compatible and……..

  4. chacha1 Says:

    Privatizing air-traffic control seems like one of those really knee-jerky, not-thought-through proposals that always come up when people want to talk about how to reduce government spending but don’t want to address the elephants in the room (Medicare, Social Security, and the Defense Department, not necessarily in that order). It’s pretty well established that you can eliminate ALL federally-funded programs except those three, and you will still be running a deficit. Those are where the deficit lives. Air-traffic control equipment and personnel account for an utterly trivial amount of the federal budget.

    The complexities of the air-traffic system are so overwhelming that handing it over to *competing* private companies would accomplish two things more or less immediately:
    1. require a vast reduction in the number of flights handled per day by various air fields, as the communication between the private companies is predictably poor and the risk of accidents therefore predictably great;
    2. cause an increase in the average ticket price such that air travel becomes one of the many things soon to be affordable only to the very rich.

    Of course (2) essentially accomplishes (1) all by itself.

    But the secondary result of this would be a crash in airlines’ stocks, especially after the first dozen air-field-adjacent accidents involving passenger injuries or deaths. Then a slowdown in air-reliant inter-state and international commerce. Then consumer prices going up. Also a slowdown in postal service, FedEx, UPS, and other courier delivery times, so consumer purchasing of delivered goods would go down, and the pace of inter-state and international business would slow. Which would eventually necessitate the couriers (and Amazon) building their own airfields. All of which would also involve consumer prices going up, but likely result in profits going down, which would cause stock prices to go down, which would involve pain in the pocket for all the rich motherfuckers who think this kind of crap is a good idea because they short-sightedly think *their* companies would profit. “Oh hey, my company can totally run a safe airport.” No, it can’t, you idiot.

    • nicoleandmaggie Says:

      (yes, actually, in that order– you got it right)

      And what would happen instead of all the crashing, is that they’d privatize this and then spend more money on government oversight and regulation. So basically not saving any money but putting some money into private pockets.

      • becca Says:

        If the elephant in the room is Medicare, than the elephant in the room is REALLY healthcare writ large, and how we spend 17.9% of GDP on it. If we could get that down to the (still relatively high) ~11.9% of Sweden (2014 data), we could do it in a way where we’d still be a lot healthier, but I really don’t see a way to cut that much without cutting jobs (and many healthcare sector jobs are comparatively good).

        What do all the countries that spend so much less on healthcare and defense spend all that money on??

      • nicoleandmaggie Says:

        We used to think we knew why our healthcare costs were so high and our health outcomes so low– we used to think it was a mainly problem with too many uninsured because we had ruled every other cause out. But that does not actually seem to be the case according to the last 10 years of health research. We just do not know. There’s an enormous amount of research activity on this question.

        Other countries spend it on socialism, obviously.

      • nicoleandmaggie Says:

        (Also other countries have higher borrowing costs)

      • chacha1 Says:

        Yeah, pretty much anytime corporate types talk about the benefits of privatizing anything, the benefit they really have in mind = money flowing to them. Can you imagine the oversight network that would be required?? Oy vey.

  5. Harri Says:

    I was reading an article which basically argued that privatizing air-traffic control would lead to small airfields having to pay full price for air-traffic control (since it would have to be funded via user fees) rather than the current system, where large airports cross-subsidize small ones.

  6. gasstationwithoutpumps Says:

    “(You can also have government-private partnerships, where, for example, the government owns the rail-lines but allows different companies to pay to use them.)” In the US, it is the other way around, with private companies owning the rail lines and Amtrak (the government monopoly) having to pay for their use.


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