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?


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.