Unlike market participants, government relies heavily on raw coercion in “serving” its people. Essential as it is to our freedom and security, I just think that government should be held to a higher standard when discussing policy options. In my experience, and that of my ancestors, government failures are orders of magnitude more costly than market failures.

As for the “free content” wonder moment, I think it’s interesting that Socrates was providing “free content” in Athens well before anyone had any conception of captlist market economics. Perhaps intellectual fame, rather than market dynamics, is a more powerful motivator for those public domain university web materials.

is exactly what America needs. Whether its IRAQ, NAFTA, ENRON, GLOBALIZATION, DE-REGULATION or JET BLUE the right wing always have the Hodak’s of the world to publish the Big Lie.

Any one who doubts me ought to read the Illinois papers, today. Market de-regulation has made billions for AMEREN and others, doubled electricity prices, and will be closing thousands of small businesses.

Jet Blue’s management’s losses were “paper losses.” disinformation, a trick mastered by anyone who sat through 1/2 of A Good Shepherd.

such paper losses wholly fail to explain why management permitted such a dumb sequence of events and why no one is going to be fired, not even the idiots who would not retrieve passengers from off the tarmac for more than 10 hours.

remember, how do you tell when management is lying? Their lips are moving.

airlines are a dumb business, one in which the business model makes it impossible to make money. there are several finance studies of the industry that show it has consumed all invested capital with losses and will to such into the future.

When you have an industry with a broken business model, the only way to make money is through finance, viz Icahn and TWA. The fellow running Jet Blue is not an idiot. He knows these lessons and I assure the readers that he gets us every day with the same attitude toward Jet Blue that Icahn had about TWA

I’m not sure how you infer from my post that I believe all government intervention into markets is unjustified. Perhaps it’s your comment, not my post, that constitutes a “knee-jerk … impulse.”

I certainly accept government intervention into markets when there is a legitimate market failure that the government can cost-effectively remedy. For reasons M. Hodak details (and which are ALL OVER the news the last couple of days), I believe the market’s working pretty darn well at punishing airlines that screw up on service matters. That was the point of the post. (I realize it was a little subtle. I threw the bad-word thing in there to try to get readers’ attention. Sneaky, huh?)

W/r/t the environment, there are sometimes legitimate market failures (e.g., externalities) that merit some government intervention (though, I would argue, not necessarily the sort of intervention we’ve traditionally pursued). My post in no way suggested that all environmental regulation is bad.

W/r/t the various “isms” you cite (sexism, racism, anti-semitism), your argument seems inapposite at best. A “passenger’s bill of rights” isn’t aimed at alleviating some form of discrimination, is it? And can we really credit the government with “eliminating racism, anti-semitism, and gender bias” as you say? Last I checked, there was still a lot of that stuff going on. In fact, I’m aware of only one employer that has an express policy of refusing to hire openly gay people: the United States military. (That’s the government.)

“M. Hodak can offer no set of facts that explain why management did something so dumb, other than that management was going to profit by its actions.”

I’ll offer these facts. The president of JetBlue owns over 10 million shares. So, when the stock price drops five percent, as it has in the last couple of days, he is out about $7 million. That’s quite a loss for someone making $200K per year. He is entitled to a profit-based bonus, but he probably won’t get one this year because of this fiasco. Last year, the sharp rise in oil played havoc with their profit, and top management got nothing. The president’s compensation, by the way, is the same as the rest of his senior managers, except that he gets no stock or options–he figures he has enough.

So, I would appreciate it if John, so quick to judge this management on the basis of assumptions plainly contrary to these facts, is willing to alter at least the portion of his post dependent on these facts.

Oh wait, it was the government that did those things. Not to say that the governmet is always the solution, and I share your unease that more regulation is what’s needed to remedy this problem, but I think a knee-jerk deregulatory impulse is just as misguided.

Eric Posner’s work on norms shows that a market can hum along quite nicely, yet act in a racist, sexist, anti-semitic manner.

First, like our President, he seems totally unable to learn from history—”Those who fail to learn the lessons of history are doomed to repeat them.”—George Santayana

the bad history, the canard offered is that Jet Blue “lost hundred million dollars shaved off their equity value because of the bad publicity.”

By now, Mr. Hodak must be the only person in America who doesn’t understand that such considerations make absolutely no difference to any American business man or woman. If it did, the management of Jet Blue would never have permitted the events to take place.

Actions speak louder than words and it is plain from Jet Blues actions that management planned and intended that its passengers be treated as they were. The wire services and newspapers are full of reports that Jet Blue has failed and refuse in proper investment, personnel, and reservation systems to avoid what happened and that it decided to “fly” when other carriers had grounded their planes. Why were such conscious decisions made by the best and brightest?

M. Hodak can offer no set of facts that explain why management did something so dumb, other than that management was going to profit by its actions.

To understand how management could have profited, one only need to recall that stocks can be shorted, directly or indirectly, thorough re-sets on options and other techniques (management could even have an LBO in the works). One never knows.

This last observation points out Hodak’s failed analysis of regulation. If we had no regulation, say of stock shorting, then the management of a company would have a huge incentive to create an event like this to drive down the stock price.

This is just old corporate history. What we are talking about is arrogance and greed, plain and simple. There may have been 38 airlines offering some flights in or out of the airport, but the truth is that there is no real competition on terms, conditions, etc., for the passengers—they are just an inconvenience.

The proof in all of this. Jet Blue has already announced that no employee will be fired because of what happened, even though direct cash losses will be above $30 million

I see. So we need someone, either the states or the federal gov’t, to keep the airlines from victimizing their customers. Otherwise, the airline de facto monopoly, like the 38 of them at JetBlue’s home airport, would each have their way with passengers without any consequences. Is that it? Except, of course, for the hundred million dollars shaved off their equity value because of the bad publicity. And the threat of bankruptcy. Because, otherwise, it’s not as if the CEO really cares, or would fall over himself to publicly apologize and try to make things right. It’s not like when a public official does something wrong and quickly promises to make amends.

On the other hand, giving states the ability to use their police powers against the airlines…well then that would make everything better. We can trust that prosecutors will follow every headline to avenge bad behavior. But what if there is something that makes the papers, and the prosecutors find themeselves without a stick because the sneaky airline didn’t actually break any existing law against fraud or theft or something? Well TOBAL! (I think it should be pronounced “two ball,” as in a call for more muscular government. Maybe it should be amended to “The oughta be a law, Senator!” I’m still a novice at the acronym thing.) Because if the government can’t “do something” about every problem, why the people would be helpless.

The poor children.

as a consequence, no consumer in America has the right to bargain over any term or condition of an airline contract because the states are prohibited from exercising their police powers to assure a competitive market.

consumers must simply take what is offered by a de facto monopoly, which is why airlines can imprison people for hours.

all contract promises, if kept, increase the cost to the promisor, so that increased cost argument is a red herring. Following that logic, courts would never enforce a promise.