Commanding Heights? Command this!

I am not opposed to fixing what is broken.

If the market fails, then it may need to be fixed…or maybe our expectations of it functioning do…but I am a huge opponent of how we seem to think it needs to be fixed. It serves Congressional Interests, not national interests. They seem to have become de-coupled.

For example, I have been flying a lot for work lately and have come to loath air travel. It has about as much glamour as riding cross-country on a motorcycle. Not sure how bugs in my hair, split lips and constipation are glamorous, now that I have done it. When did air travel become so unpleasant?

  • The seats are too small (anyone larger than small or skinny is tight in the seat).
  • They seats are too close together. We have elbow battles laterally; we have the person’s head in our lap of the seat in front of us (no room for my meal nor to work).
  • We have to pay to check our bags. To avoid this, we carry on bags. But there is not enough overhead storage to stow them all (we are all responding with the same rational behaviors) so bags invariably get checked at the last moment
  • Who thought boarding 100’s of people through one tiny door is a good idea? Where is the cost-savings in that? Why not front, middle and rear boarding based on seating location?
  • We must be boarded to be de-boarded when the inevitable weather cancellation materializes that everyone knows is about to happen.
  • Why do I have to badger the airline customer sales representative to get me onto a flight once mine is cancelled or late when they have none of their own?
  • If I thought a free bag of peanuts with 6 nuts was silly, why would I decide to pay $7 for it instead?

Its just so mind-mindbogglingly irrational, I cannot understand how it endures. The only way to get my mind around this, is to remind myself that the travesty that is today’s airline industry is an aggregate behavior of many rational decisions – rational in the context of the circumstances in which they are made.

So what are those rational circumstances in this case?

The Commanding Heights

Well, a treatise on this is warranted here to answer these questions. But I do not have time for this right now. I am simply a pissed off traveler looking to rant somewhere without hurting anyone.

But I do believe the airline industry is a victim of the tug-of-war between two corrupt parties: executives and politicians. Both groups are known for acting out of pure self-interest under guise of stewarding collective interest, be they shareholders or citizens. Neither group has any right nor entitlement to do so, though that does not stop them, as we are in a time in our history where these entities they preside over (i.e. conglomerates and the US Economy) as just so big, they are un-monitorable, ungovernable and too-big-to-fail.

Some industry examples

  • Financial services
  • Automobile manufacturing
  • Railroads
  • Health care
  • Nuclear energy

The war between ‘business’ and ‘government’ for the The Commanding Heights of the economy rages on….But we are now at a point in which the interests of the stewards of collective interests from both camps have de-coupled from those they are charged to administer. Worse, I fear they may have rational basis to act this way. When the stakes are this big, its easier to forget about the ‘idea’ of representation and focus instead on the ‘reality’ of near and long-term benefits.

Agency Among Lousy Options

There are some bold and incendiary assertions here that warrant fuller development and corroboration.  Maybe some other time. For now, I am just pissed. So let’s just move on.

Suffice it to say, we need a balance. Both groups suck; and both are necessary.

Without executives responding to market forces, its not clear that what the people want ever comes into being or into the market for our consumption. But without politicians trying to provide appropriate governmental oversight, its not clear that those products are safe to use.

The history of executives going too far are well known….think of the industrial destruction of human and natural habitats in the last two centuries when businesses were too new, too fast moving and too big to monitor ran amok. By the time government figured out what was happening, what the impacts were and how to address it, they did affect positive changes in housing policy and environmental restoration and protection.

But then, buoyed by successes, government over-responds and over-reaches, creating market distortions in their wake that harm the very people they purport to help. For example, let’s talk price-fixing.

  • Rent-control is a significant contributor to the high cost of housing in New York City. When government restricts the price of housing for residents below the costs of providing that housing, who in their right mind would build new housing?
  • Medicare Resource Utilization Group (RUG’s) that dictate reimbursement rules for patient care delivery. By restricting the price of the treatment below the cost of delivering that treatment, health care providers are economically incented to drive down costs, typically accomplished by reducing pay, reducing hours, releasing experiences care givers. This last one is an exceptional distortion contrary to all reason. Experienced professionals are more efficient and through example setting, mentoring and knowledge transfer, life the expertise of the whole group while delivering excellent care. RUG basically undermines the entire model by negating their value altogether.


Impossible Choices But Forward Regardless

When over-regulation makes it impossible to be successful following the rules, protagonists have three choices if they want to stay in the story:

  • Fail
  • Quit
  • Cheat

I did not think that this was the goal of government, to force us into these options that go against all the mores and morals we espouse. Is the government hell-bent on making us all into criminals? Is it recreating serfdom? If so, for who’s benefit?

I think in the end, both executives and politicians are striving to create monopolies they can control to leverage power to advance their own self-interests. I do not think anyone seeking positions of power should be trusted with it. I think they are all ass holes.

But where do we go from here?

How do we establish and maintain some balance? It comes from visibility, transparency and checks and balances.

In the market, if the product fails to meet expectations enough, consumers stop buying it and the resulting losses trigger some response from the firm, be it leadership changes, operational adjustment, or product improvements. If the firm does not respond in a way that satisfies the market, the firm loses out until it does change or fails. I trust the dynamics of market forces and corporate actions when there is accountability enforceable through transparency.

In our system of government, counties, municipalities and states are close enough to the actual citizenry that visibility drives accountability and the checks and balances system overall works well.

But at the national level, it is all kaput, thanks to decades of sabotage wrought by deliberate partisan actions to undermine checks and balances, cementing them in power. We now have one political party with two wings, in cahoots with themselves and interested only in satisfying those who pay their way…and it ain’t the citizens. Ironically, it is those very executives in those very conglomerates.

The tug of war for the Commanding Heights of our economy is quite masturbatory in nature, as these two groups work tirelessly to pleasure themselves….and guess who cleans the mess! In your face, citizenry!

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