Matt Yglesias

GM Downsizing to Three Private Jets

I feel like crowing about how you’re going to sell two private jets in response to a jet-related PR fiasco is going to be counterproductive once people find out that you’ve still got three private jets. That’s way more private jets than normal people have. And it seems that GM CEO Rick Wagoner intends to keep flying private for all his personal and business travel.

These jets are not only a grotesque example of run-amok inequality in the United States, they’re an environmental disaster.

Security Theater: Now With Less Security

I was rooting around in my bag a couple of hours ago looking for a nice pen I “borrowed” from the Mandarin Oriental in Geneva (very nice hotel — pushing US public policy in a more pro-Rolex direction is now my top priority) what did I find but a Swiss Army Knife that someone or other had put in one of my Switzerland gift bags. I didn’t really think much of it, but on reflection I carried the bag in question onto the plane for the Geneva-JFK leg of my return travel. And I cleared security for the JFK-DCA leg with the knife in the bag and only didn’t wind up boarding the flight because it got canceled.

In the latter instance, I was even singled out for special enhanced scrutiny, but they still let me take a knife on the plane — the precise thing all this security is supposed to prevent. But God forbid I’d tried to walk through security with a couple of brought-from-home Diet Cokes to drink while waiting — there are big markups and profits at stake in the liquids ban.

Airline Deregulation

Most people, though presumably not most people who read this blog, aren’t interested in politics. They’re not interested in politics because they find political concerns to be remote from their lives. To me, though, it’s interesting to really understand how false that is, and how policy shifts about even very dull issues actually tend to have far-reaching consequences.

Consider airline deregulation. This was a complicated and multifaceted process, but the basic thrust of it was to increase the quantity of competition between airlines and to make it easier to compete on the basis of price. The result has, as intended, been a steep structural decline in the cost of air travel. But that, in turn, has had an interesting side consequence. Previously, airlines barred from competing on the basis of price engaged in fairly vigorous competition on the basis of service quality. So while products generally get better over time, the quality of air travel has deteriorated rapidly as a low-cost, low-quality equilibrium has proven to be consistently more profitable. It seems that that tradeoff has been good for tourists and people traveling to visit family because, evidently, that’s what consumers would prefer. But it’s been a disaster for business travelers since cheaper flights are worthless if you’re not paying for them, and crappy service is crappy.

Michelle Higgins’ New York Times article on the declining fortunes of the flight attendant ought to be understood as another consequence of this shift. In a world where firms are barred from competing based on price, they’ll compete based on quality. And firms competing based on quality need to be fairly generous to their employees — high-quality service requires a first-rate workforce which requires attractive compensation and working conditions. But as shift to price competition and everything looks different — priority number one is to cut costs as low as possible, and you don’t really care if that leads to high turnover or you not being able to hire the best people.

Devils

You know who’s in a really evil line of work? The community organizers trying to help struggling neighborhoods guys who tell airlines it makes sense to overbook flights causing inconvenience for all.