Capitalism and Our Infrastructure

airlinesIn the interest of furthering our discussion concerning the economics behind capitalism and socialism, and in looking for places where we can find balance, I would like to begin here by focusing on the airlines.  As a worldwide traveler I’ve flown on just about every major airline in the world, multiple times. So when it comes to air travel, I guess I could be considered an expert.

Just this past week I had an experience where my Cathay Pacific flight from LAX to Hong Kong was delayed an entire day due to a mechanical failure on the incoming flight, which resulted in an emergency landing in Alaska.  It wasn’t that bad, as when I got to LAX, the airline already had the flight and our connections rebooked and hotel rooms waiting for all 300 of us to stay the night in LA.  When I finally boarded the flight the next day, I was sitting next to an Australian businessman. We got to talk about how great Cathay Pacific is. That we’ve both flown them numerous times, this being the first delay we’ve experienced with them, but that the airline handled the situation wonderfully. Then we were in agreement, imagining if it was an American airliner that this happened with. We were both quite certain it wouldn’t have been handled nearly as well. We both went on to praise how great all the other Asian airlines are. Japan, Korean Air, Malaysia Airlines, Singapore Airlines and Thai Air are all top notch. Also the Middle Eastern airliners of Emirates (which is now the largest in the world), Qatar and now Etihad out of Abu Dhabi are again all top rate airlines. I would like to add that LAN in South America and a number of other South American airlines have drastically improved over the past few years. The absolute, hands-down, worst airlines in the world are all American carriers. Traveling on U.S. airliners with outdated old planes, plagued by constant delays, horrible customer service and added fees for everything from baggage to soft drinks, makes traveling in the U.S. by far the worst experience.

While no airplane food is anything like a home cooked meal or a five-star restaurant, the food on many airlines isn’t bad and some are quite good. I actually look forward to the Bimbambop (Korean rice dish) whenever I fly Korean Air. The food on most of the airlines I’ve mentioned above is quite decent. But American airliners, if you are lucky to get a meal, are still pretty horrible.

So why is there a big difference in quality between U.S. air carriers and Asian/Middle Eastern carriers? The answer is government subsidies! While all U.S. airlines are privately owned and operated, almost all of these other airlines mentioned are heavily funded by the Asian governments. They do this because they want to make their countries attractive to foreigners, and no better way to attract foreign interests by the first impression a foreigner gets while traveling to a country on their airline.

korean air

Korean Air cabin

Actually the airline Cathay Pacific that is from Hong Kong is a 100% privately owned airline, but they do get some government help and they have to compete with all the other government subsidized airlines in the region.

Just about every year we hear of American airline companies going bankrupt. Warren Buffet has even stated “you’ve gotta be crazy to go into the airline business. The expenses and logistics of it are a losing business proposition.” Hence the biggest investor in the world will not invest in airlines.

Here is just one example of a need, which is necessary for society, individuals and businesses alike. But running an airline can often be too overwhelming for a private company to handle and do well.  Am I suggesting the government should takeover running our now private airlines? Not at all. But as a nation, do we recognize certain areas where businesses need the help of government? The first and most obvious area that government can and already helps with is at our airports and our air traffic controlling systems. Most airports are already run by government entities, but with recent budget woes, funds to help upgrade these systems have been cut and withheld. Again this is one of those areas where private business and government need to work together to help provide the country with what is best, but of course government needs the funds to do it.

America is a great place for innovation and advancement. Hell, we invented the airplane and the airline business. So why have we fallen so far behind? We can find comparable situations looking at other industries. We invented the cell phone and were the first to advance cellular technology and bring it to market. But then came  the more advanced system of GSM networks that we have been slow to adopt. The same could be said of our train system and even our power standard. America was the first to distribute electricity to the public and we did so at 120volts. Then Europe figured that a 220volt system would be more efficient and more cost effective. After we’ve already spent and developed our 120volt systems, it would be too expensive for us to switch over. As globalization ensued and many countries have been able to develop rapidly, they were able to first implement these systems using the better method, while we are stuck with our original, outdated implementations.

This is where government assistance and initiatives are needed. All of these systems, if we want to improve and move ahead of the curve, need some form of government backing. Both in will and in monetary assistance. If we want to advance, we do not need government takeovers, which is socialism. It is Social Capitalism, where government plays a role in helping businesses to advance and progress for the good our entire country. But progress cannot be made if people continue to simply believe government should get out of the way, and that government should simply spend less. Here is where I would like to end with a quote from President Obama “We cannot simply cut our way to prosperity.”