Let Consumers Fly the Open Skies
Economic authoritarians often claim that without government intervention, powerful corporations will run roughshod over consumers and small businesses. The truth, as the great economist Ludwig Von Mises first observed, is the exact opposite. In a free market, consumers are sovereign, so businesses must continuously strive to serve the needs and wants of consumers.
History is full of cases where large business are beaten in the marketplace by smaller competitors. For example, at the dawn of the personal computer era, most observers thought that the market would be dominated by IBM. But IBM, which had for years been one of the most powerful corporations in the word, was pushed out of the personal computer market by a couple of small start-ups named Apple and Microsoft.
In order to protect their position from more efficient small and new competitors, many large corporations use their wealth and influence to manipulate the political and regulatory process. They do this to gain special privileges that enable them to earn profits above what they would earn in a free market and protect themselves from competition. Often, big businesses support regulations knowing they can absorb the additional compliance costs, unlike their smaller competitors. Of course, this “rent seeking” is always cloaked in the rhetoric of public good, consumer protection, or “fairness.”
A textbook example of this is the current attack on Open Skies. Open Skies are agreements between two or more governments to allow private airlines to decide for themselves where and when to fly, instead of having those decisions made by government bureaucrats.
Open Skies agreements lower prices and increase choices for consumers while bringing new customers for American businesses to our country. Over 50,000 jobs have been created by the Open Skies agreement with Qatar alone.
Open Skies policies are popular with American air travelers and trade-dependent businesses — but not with certain major airlines. These airlines support a system where the government determines who can and cannot fly a specific route, shielding them from competition and enabling them to make monopoly profits.
No surprise, then, that airlines lobbyists — led by D.C. insiders including former Obama Campaign manager Jim Messina, leading Democratic activist Hilary Rosen, and longtime Clinton insider Philippe Reines — have launched a campaign against Open Skies. This campaign is disguised as a request that the government “renegotiate” the Open Skies agreement with the Gulf States.
The airlines claim the current Open Skies agreement is not “fair” because the Gulf State airlines receive government subsidies. However, the fact that other governments are foolish enough to subsidize their industries does not justify punishing taxpayers, consumers, and non-state favored businesses by giving subsidies and other special privileges to certain influential businesses. That so many “progressives” are lobbying against Open Skies should not be surprising. The so-called progressive Democratic establishment contains as many supporters of cronyism and corporatism as the so-called free-market Republican establishment.
Weakening the Open Skies agreements will increase prices for international air travel, potentially putting overseas travel out of reach for many Americans. Ending (or even temporarily suspending) Open Skies to “renegotiate” the agreement could also put many Americans — whose jobs are dependent on the increased trade generated by Open Skies — out of work.
The only beneficiaries of such a renegotiation would be the big airlines who wish to be shielded from competition. Hopefully President Trump will rebuke the crony capitalists and swamp dwellers and ensure that American consumers and small business can continue to fly the Open Skies.
Ron Paul is a former Republican United States Congressman.