–They don’t have to satisfy investors and creditors. They only have to satisfy passengers. So why not?

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●Austerity is the government’s method for widening
the gap between rich and poor.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Everything in economics devolves to motive,
and the motive is the Gap.

Of late, it has become oh-so-chic to adopt the Tea Party/Libertarian/Republican doctrine that the federal government should be reduced, because it is a corrupt, bloated “leviathan,” while state and local governments are honest, trim servants for the public good.

And don’t even ask the right wing about business, which supposedly is the ultimate of angelic integrity, and lives only to minister to the needs of Everyman.

The trendy effort is to cut federal spending, assign some of its obligations to states (which being monetarily non-sovereign are ill-equipped to handle them), and mostly leave everything to the private sector.

After all, as the right-wing will tell you, government doesn’t produce anything — except for building roads and bridges, paying for the army, inspecting our food and drugs, paying for our courts, supporting grants for Research & Development and providing the myriad other services we take for granted in the good old U.S. of A. The private sector is better at everything — so they say.

In some areas, the states, counties and cities may be more responsive than the federal government, to the public need, because they are “closer” to the citizenry. And the competitive profit motive of the private sector often results in improved product, service and price (if one closes one’s eyes to the ethical violations of the profit motive).

But the federal government has one gigantic advantage over local governments and businesses. The federal government never can run short of dollars. So it has the ability to provide benefits that would be unaffordable for a local government or unprofitable for a business.

I was reminded of this when I read an editorial in today’s Chicago Tribune, excerpts of which follow:

CEOs of America’s three largest airlines say their valuable international business is under attack by three Middle Eastern carriers benefiting from billions of dollars in unfair subsidies from their governments.

The three airlines are American, United and Delta. Have you flown them recently?

I’ve been flying for 50 years. I remember when a flight was a pleasant adventure. The seats were large and plush. The meals, very good, if not excellent. The stewardesses (they all were stewardesses, then) cheerful and helpful.

And we all dressed nicely and acted nicely, because the ambiance demanded it. When you’re in a beautiful, friendly environment, you act and dress for it. It might amaze you young ‘uns, but people actually looked forward to airline travel.

Those were the days of price regulation, which made profits with service possible.

In today’s U.S. airlines, the seats are crammed together, the meals either crummy or non-existent, the service rushed and rude, and the passengers play their slob role, appropriate under the circumstances.

You may find yourself squeezed between two, huge, fat, hairy guys wearing tank tops and no deodorant, who overlap their seats and much of yours.

When you’re in a slum, you respond to your environment. You look, act and dress slummy.

The way United, American and Delta calculate it, the three Persian Gulf states’ airlines (Qatar Airways, Etihad Airways and Emirates) have received $42 billion in subsidies and other benefits from their governments since 2004.

It’s enough money to upend reality in an industry that often struggles financially. And it’s been done, the U.S. carriers contend, in violation of international trade rules.

I’ve not flown Qatar and Etihad, but I have flown Emirates, and the only word I can use to describe the experience is: “Aahhhhhhhhh. What a beautiful ride.”

Airlines, like other global businesses subject to trade pacts, are supposed to compete fairly by standing on their own two feet and attracting enough customers to make a profit, or at least pacify investors and creditors.

But when Smisek and his colleagues look at Qatar, Etihad and Emirates, they see something else. “They’re not actually airlines — they’re an arm of government policy,” United’s CEO Jeff Smisek said.

So there it is as clear as a desert sky. Qatar’s, Etihad’s and Emirates’s flights provide service to passengers that is superior to United’s, American’s and Delta’s, because they are in whole or in part, supported by their government.

They don’t have to satisfy investors and creditors. They have only to satisfy passengers.

Now I ask you: What is wrong with that? What is wrong with a business whose sole goal is to give its customers the best possible experience at a reasonable price? Isn’t that what capitalism and competition are supposed to accomplish?

It’s a lot easier to offer Champagne and caviar on beautiful new planes when you get billions in government subsidies every year.

This is the picture of government meddling that (the U.S. airline CEOs) shared with us.

Oh, that nasty government “meddling,” which allows the general public to know the same kinds of flight experiences that rich people enjoy all the time. Outrageous, isn’t it?

The American CEOs think the only way for Qatar, Etihad and Emirates to grow (so fast) is to not worry about making profits — because their governments are giving them illicit subsidies.

The U.S. carriers want the U.S. government to meet with Qatar and the UAE to negotiate a resolution, and in the meantime impose a freeze on the Mideast carriers’ new routes and flights until this complaint is resolved.

The U.S. airlines haven’t said what kind of relief they want; that would come later, anyway.

Funny, how the solution always seems to punish, rather than reward, the middle-class. Don’t improve service. Instead, freeze the guys who provide the best service. Why? To benefit rich investors and creditors. To hell with middle-class passengers.

Experience says that price competition in the airline industry, harms the public by devolving to terrible service. The airline industry is in a “Spirit Airlines” race to the bottom.

What next? Standing room only, ala subway cars?

The very rich don’t care. They fly private planes, and they are the shareholders and creditors of those penny-pinching airlines.

Though the Tea Party/Libertarian/Republicans would have you believe that private always is better than government, the fact is that what’s “best” is what’s best for the public. That is the whole purpose of government: To provide what’s best for the public.

The solution:
1. Return to airline fare regulation and
2. Provide federal subsidies to airlines, making it possible to provide top service at low prices.

It won’t cost you taxpayers a dime and you fliers who are not among the rich, will receive much better service.

So why not?

Rodger Malcolm Mitchell
Monetary Sovereignty

The Ten Steps to Prosperity:

1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Federally funded, free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually. (Refer to this.)
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)
10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

Initiating The Ten Steps sequentially will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.


3 thoughts on “–They don’t have to satisfy investors and creditors. They only have to satisfy passengers. So why not?

  1. “Why not?” — well, I agree 100% about the desirability of quality service, but there are very good environmental reasons not to encourage air travel. In a word, ‘externalities’. So, although I accept your analysis, your vision of putting comfortable air travel in the reach of everyone does not account for the environmental costs of flying the planes.

    The fact that the U.S. federal government has unlimited access to dollars is not a solution to every problem. There are some things that money can’t buy.

    On the other hand, why not invest in a comfortable national passenger rail system that could move people much more environmentally cleanly? I am not opposed to giving the middle class cheap, comfortable mobility… For that matter, why not free national rail travel? Why limit the good to the ‘middle’ class?


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