A Most Unlikely Savior

Senator Charles Shumer, NY (D) today announced that he is going to rescue beleagured American air travellers from the evil airline companies who are planning to charge for the first bag of luggage they must check. Senator Shumer is outraged at this horrible abuse of air travellers by the airlines. These companies, by Shumer's estimation, are able to charge for baggage simply because they are greedy - and worse, they feel they can get away with it.

So, our well-intentioned Senator, out to save the world (and perhaps to make people forget that he isn't really their savior after all) has decided that what the airlines need is a new regulation making airline baggage a necessary part of travel and  therefore something that must automatically be included as part of their travel fare.

All this, ostensibly, to save the airline passengers from the ravages visited upon them by those powerful airline companies, who everyone knows, have a strangle hold on their passengers' wallets. Shumer knows, even if no one else living in the real world of business knows, that airline companies set prices whereever they want. 

Mr. Shumer knows nothing of free markets, or markets of any kind for that matter. In Senate-world, prices are things set by government, and markets are things that academics talk about but are not for the "real" world. Therefore to him, the simplest thing in the world to fix is a charge for baggage. And best of all, he gets to claim that he is helping out the poor abused travellers at the same time!

The real world, of course, never cooperates with the likes of Mr. Shumer. The Law of Unintended Consequences always seems to trip him up. What he intends as a boon to the travellers and a stick in the eye to the airlines will actually turn out to be favor to the airlines, and higher air fares to the customers. The air lines, after all, have been struggling to find a way to boost their revenues - even concocting the idea of charging for luggage. But they have not been successful.

Well, what has been holding the airlines back up until now? A little understood concept to the Senator, tbe concept of competition. We may take it as a fact that if the airlines could get away with charging extra for the first bag of luggage then they would have gleefully done so already. But they have not done it. They know that as soon as one airline chooses to break from the pack and charge extra, there will be some other airline who will announce that they are not going to charge extra for it, and thus drive the offending airline out of the market.

The market easily punishes or rewards as it sees fit, and the companies are powerless to do anything about it.

But now enters Mr. Shumer with his bullying tactics. The airlines, if he is successful, will begin to "not charge" for the luggage anymore. And Shumer will loudly trumpet that he has "saved" the interests of the hapless American flying public. Kudos to Shumer!

But what will actually have happened? The airlines will simply raise their prices - all of the airlines in lockstep- since they no longer will compete in the area of luggatge charges. So since there will no longer be competition in that area, price can go up without market penalty to the airlines. In fact, the increases in fares will reflect, in the long run, more than simply the cost of the luggage but will prove to be a convenient way to make up some lost profits that competition had previously taken out of their hides.

Regulation, you see, does not protect the consumers from the companies; it protects the companies from the consumers.

So in the end, Shumer's intervention will prove again that government cannot regulate markets; it only destroyes them and harms the public. Try to explain that to the Progressive/Socialists who haunt the halls of Congress. Shumer, like almost all of the members of Congress, regardless of Party, doesn't understand free enterprise because he has never lived it.  He and his fellow travellers style themselves as "above all that." They aren't really, of course, but their blundering just continues to waste our nation's wealth, and perpetuates a system that is destructive of Liberty and our lives.

Shumer is the problem that needs curbing, not the airline’s baggage fees.