The Government Spiral

by Eric Nolte

The graveyard spiral is a maneuver known to students of airplane accidents as one of the most common reasons that inexperienced pilots unwittingly kill themselves.

In this utterly preventable maneuver, a pilot untrained to fly on instruments flies into clouds. Disoriented and suffering tunnel vision, he doesn't notice the airplane's bank. At this point, the airplane's inherent stability has not yet become overwhelmed by the ham fisted exertions of the poor pilot. If he would just let go of the airplane, it would right itself, but he grimly hangs on, with the plastic of the control wheel oozing out from between his ever-whitening knuckles.

The airstream noise gets louder, causing him to pull back even harder on the control wheel because he thinks that simply raising the nose will pull him out of the dive. But this doesn't counter the fundamental problem, which is that the wings are banked. Pulling back on the wheel, heedless of the bank, tightens the turn. With the noise level of the dive up to the roar of a rock band in live performance, the airspeed and tachometer needles are pegged on the red lines, and the witless aviator hauls back on the controls with a mighty heave. The tail breaks off. He may wait as much as two minutes before impact with the earth puts an end to his terrified and uncomprehending ignorance.

The way out of a graveyard spiral is to level the wings, reduce the power, and ease up on the nose. But you first have to know what has gone wrong.

Regulating Blind

Government regulation is like a graveyard spiral: you know something is dreadfully wrong, but unless you understand the signals, there is no way out. Regulation blinds an economy to signals comparable to an airplane's pitch and bank, signals that would let producers and consumers adjust their activities in response to their desires and available resources.

All too many people who otherwise understand the virtues of a free market become committed socialists when they reserve an airline seat. When they think of placing their precious hide in some fragile tube of aluminum hurtling along at nine miles a minute, six miles above terra firma, while dodging all the forbidding forces of Zeus and Mother Nature, their guts turn to battery acid. Suddenly they are eager for Big Daddy Government to protect them from all those capitalist pigs at the helms of airlines, who everybody knows are immoral, greedy profiteers who would sell their children to cannibals for the right price.

A recent USA Today debate on airline safety offered the political mainstream's usual false alternative between lots of government and lots and lots of government. The editors held that too many violations go unreported, a situation they said would end with more Federal Aviation Administration inspectors wielding greater power to issue fines on the spot.

The editors lumped together every kind of violation. But not all violations are equal. Failing to dot an "i" in the aircraft logbook is a violation of federal aviation regulations; so is failing to install the bolts holding on the horizontal stabilizer. When these transgressions come to light, the public is scandalized to hear that there were two violations!

FAA administrator Jane Garvey, in her rebuttal to the editor's call for more regulation, correctly pointed to the dazzlingly good safety record of the airlines: 3.6 billion people on 55 million safe flights. Sleeping in your own bed is more dangerous! She credited government regulation.

That's a logical error, like concluding that x causes y because x precedes y. Goofy may suffer a streak of bad luck after breaking a mirror, but this conjunction of events is insufficient to show a causal connection. While the airlines' safety record is indeed impressive, that success is not half so impressive as it could be without government regulation. Allow me to explain this provocative assertion.

I have studied economics, history, philosophy, politics, and psychology for many years, and I have flown airplanes for 33 years. I know the aviation world firsthand. I fly DC10s for a major passenger airline that uses these 300-seat jumbo jets to serve destinations all over the world. I have seen the inside workings of two regional and two major airlines. Significantly higher levels of safety will not be achieved by passing laws for our own good that threaten and intimidate peaceful people into behaving as the regulators decree.

Government Caprice

The federal aviation regulations comprise many volumes of boilerplate legalese that is variously interpreted by every regional office of the FAA. Despite the best will in the world, any pilot or mechanic can be found somehow in violation of something at any time. The interpretation of a regulation may have as much to do with an inspector's digestion as with the actual wording of any particular edict. This arbitrariness gives to regulators the power to examine each case "on its merits" and to enjoy the power to act with a "flexibility" that would delight a KGB agent. James Buchanan and E A. Hayek have shown that such arbitrariness, which is the result of institutional incentives, frequently attracts those who lust after power.

When the regulators themselves cannot agree on what the rules mean (as is famously the case with such other documents as the Internal Revenue Code), then the rule of law has given way to rule by the arbitrary whims of those enforcing the police power. Those of us who are regulated then do business at the discretion of the government.

Most Americans would find it asinine to suggest that we live in a dictatorship, but what else can it mean when government forbids anyone to operate without its explicit blessings, or calls your ability to act peacefully on your own behalf a "privilege" granted by its largesse, and dictates-through the regulations of its dozens of agencies-virtually every detail of how a business is allowed to operate? The economic systems of Germany and Italy in the 1930s provided for private ownership of business, but the government dictated who could sell what to whom at what price, and the government decreed who, of which race, could be hired at what wages. If the soul of ownership is control, then we are experiencing a shift away from private ownership to state control of the means of production.

To insure that airlines fully complied with every regulation would require an inspector from each government agency with jurisdiction over the activity to hover diligently over each employee. But, as one wag put it, if people are too rotten to act responsibly, what makes anyone think the inspectors are any better than the inspected?

Lulling Consumers

Many customers mistakenly reason that if an activity is regulated, it must be safer than it would otherwise be. But government regulators don't make people safe. Aviation safety results from the combination of people's own prudence as passengers and an economic system in which enduring success depends largely on how well airlines satisfy their customers' desire to travel affordably, conveniently, comfortably, and safely. Regulators can be duped by fraudulent paperwork and other antics. But customers, given a choice, can seldom be burned more than once before they turn elsewhere.

What best promotes these safe and pleasing outcomes? The free market. By "free market" I don't mean our mixed economy, the unholy marriage between big business and big government, in which special interests vie for success by lobbying for legislative advantages over their competitors instead of by satisfying their customers better than those competitors.

The elements of freedom in the mixed economy allow people to coordinate their activities and resources by mutual and voluntary action. When it intervenes, government forbids people to make voluntary choices according to their assessment of what will work best. Every action within the economic process is ultimately indivisible, as Ludwig von Mises pointed out so lucidly. Whether choosing a material, a supplier for an engine nacelle, a city to serve, or a price to charge, each action ultimately must be directed by the will of a single mind: that of a government bureaucrat or of a private individual. The idea of a "partnership" between business and government is as absurd as the notion of a partnership between a planter and the slaves who pick his cotton. In any disagreement, who gets the final word?

The Chimera of Risklessness

There is no such thing as absolute safety, contrary to the wounded, strident protests of such groups as the National Resources Defense Council, which finds even the tiniest risks anathema. The relevant questions are: how much safety, at what price, and who decides? So long as a legal system exists to protect individuals from violence and fraud, the safety of the flying public would best be served by the outright liquidation of the FAA.

"Oh, come on, now!" I hear lots of people protesting, with the exasperation of a practical, action-oriented American who hates pointy-headed theorizing. "That's voodoo economics! Ivory tower theory! Get real! What will protect people from fly-by-night predators calling themselves an airline?"

Disbanding the FAA would inform the public that its safety depends on its own judgment. In fact, this has always been the case, even when we think that regulators have done all our properly vigilant and wary thinking for us. Of course, it is absurd to expect ordinary people to become airline experts before buying a ticket. So how would they choose safe companies?

The power of reputation would once more matter hugely. A good reputation is not a perfect guarantor. But neither is the FAA. And I for one am happier with a sterling reputation maintained over a long time than with a government bureaucrat's stamp of approval. A good reputation is extremely hard to win--and quite easy to lose.

No airline with a desire to succeed in the long term could operate fast and loose with safety, because passengers would shun it. This is not just abstract theorizing. Observe how an outstandingly successful start-up like Air Florida found itself virtually without passengers from the day after its fatal crash of a 737 at Washington National airport until it financially bled to death shortly afterwards.

More technically accurate assessments of airline performance would be widely available through rating agencies similar to the Consumers Union, Moody's, Standard and Poor's, or Underwriters Laboratories. In the absence of the FAA, these companies would step forward to judge airlines, because the desire to stay safe would create a demand for this knowledge and the lure of profits would produce it.

Another powerful incentive for aviation safety in a free market is that no insurance company would dare cover an airline that operated without prudent procedures: the insurer would go bankrupt for covering a carrier that crashed airplanes willy-nilly.

Of course, a fraudulent start-up might somehow win capital enough to begin operations. Con men have swindled people since the dawn of time. But solid research shows that while sleazy operators can fleece some folks for a little while, customers wise up. No company in a relatively free market has ever achieved any huge and enduring success without winning the continuing satisfaction of its customers.

In a free market, money changes hands because producers and consumers expect to be better off for the deals they make. This too is not just abstract theory. Without this expectation, they do not do business, absent a club over their heads. The purpose of government is solely to protect every individual's right to life, liberty, and property-a purpose it accomplishes by punishing fraudulent, predatory, and violent crooks.

Finally, here is the most important argument for disbanding the FAA and other regulatory agencies: the safety engendered by innovation. Regulation always benefits the status quo, the fat cats already in business. The status quo tends to fossilize a given level of technology with laws that make innovations difficult to implement.

Consider one among many persistent and annoying examples: airlines are chronically late out of some cities. Normal, occasional mechanical failures and company mistakes don't explain this problem. So why does it happen? The reason largely is that the FAA's air traffic control system can't handle the traffic.

Why is that system the world's largest consumer of vacuum tubes? It needs them in the antiquated radar systems. Why hasn't a more modem system been devised? Because air traffic control is a secure government monopoly, like the post office, and therefore has no incentive to accommodate itself to the preferences of its users.

Money is not a problem. We airline passengers have paid billions of dollars in ticket taxes for 40 years, ostensibly collected into the airport and airways trust fund to improve equipment and facilities. But the fund is a political football. Moreover, it is used to mask the full enormity of the federal government's plunder: in reports to the public, this money is subtracted from the federal debt!

By contrast to air traffic control's ancient technology, commercial airliners, created by companies that do stand a chance of going broke, haven't sported any vacuum tubes for nearly 40 years.

It was the Wright brothers, not Big Brother, who invented the airplane. Before long, Big Brother told Wilbur and Orville they needed a pilot's license. Of course, Big Brother's own efforts at learning to fly, contemporaneous with the Wright brothers, involved subsidizing Samuel Pierpont Langley, whose flying machine, launched repeatedly from a houseboat in the Potomac, did not fly so much as it tumbled into the river on each occasion. 

[See also Frontiers: Last, Lost, and Found and Heart over Mind: The Death of JFK, Jr., by Eric Nolte]

Reprinted by permission, from the February, 1999 edition of IDEAS ON LIBERTY. For a free copy of IDEAS ON LIBERTY, contact the Foundation for Economic Education at 

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Eric Nolte is an airline pilot, a writer, and a classically trained pianist and composer of contemporary concert music. E-mail him at ericnolte@compuserve. com.

Robert J. Boser    

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