Enabling The Left’s Economic Lies

What is unwritten in a New York Times article is always the real story.

What they write is what they want to show you–with the goal of stirring up anger.

Even NY Times readers have been rebelling in comments sections. The NY Times’ effect on the public debate is not always political, but it can reveal the motivations behind their bias. This summer, the NY Times became angry with airline profits and mark ups.

Those rascals at the airlines are ringing up fees: bag fees, seat change fees, fees for whatever you could imagine. Oh gosh, the fees are insane. The airlines have enjoyed record profits (in absolute dollars), and dang it, their revenues are up 8% over 2 years. That is just unacceptable.

Did you click the link and see how the Times used a black guy as the frequent business traveler? This is an attempt to to make the thousands of television ads true. The airlines have increased their revenues with “tricks.” The Times never bothers to follow the fees through, like the bag fees. Fewer bags, less luggage, less luggage, lighter planes, lighter planes less jet fuel use and lower operation costs. Add in lower demand for baggage handlers, and it’s a win-win for the airlines, at it places the focus of packing back on the traveler. This is misplaced, lazy anger.

Does the Times see the odd anger over the airline industry finally having a healthy balance sheet? This is an industry at the whim of oil prices, and with oil down, they have breathing room. The Times is treating it like an evil, unearned windfall profit. This is ridiculous, especially given the history of bailouts for the airline industry. Not everyone can run the oil futures hedge game that Southwest ran for years during the oil spike of the mid-’00s. Not everyone can devote cash to such a hedge, and keep a risk mitigation scheme in house. We should be happy to see service remain the same but with a healthier industry that avoids strikes and is not on the precipice of destruction.

Something is missing from the NY Times article. Something does not make sense. If all of these airlines are jacking up fees, then there should be a huge opportunity for someone to not charge those fees and capture the market. The key of every firm is to find a way to position the firm’s products or services in a monopoly position to enjoy monopoly pricing power. Business is not designed to make everything cheaper for the customer; there are two sides of every transaction. The supply side has to have a reason to exist. Southwest has been built as the low-cost provider, so surely they would do this. Why is no one doing this?

Because mergers and acquisitions have created such consolidation in the airline industry that there are only a handful of carriers left. At least the AP knows what is going on in the industry. Here is the key section conveying the message of consolidation means less competition:

Over the past decade, mega-mergers reduced nine large U.S. airlines to four — American, United, Delta and Southwest — with the result that travelers are increasingly finding their home airport dominated by just one or two players. Over the same period, domestic airfares rose faster than inflation, and analysts believe one leading factor is the decline in competitive pressure.

It really is that simple. Less competition means more pricing power for the suppliers. With a sector like transportation, the limited players can leave markets to others for what is in effect monopoly pricing power. The NY Times conveniently left it out. Why? Reading the AP story reveals the hard truth. The government allowed these mergers and acquisitions. Our government regulatory bodies are all captured. They have gone along with every merger and every change in business structure. Who else has benefited from mergers? The big banks that advise on those mergers and offer bridge loans (at high rates) to fund them. These banks also advertise plenty in the Times and keep those positive analyst reports for the media giant. The system’s bankers need strong, centralized propaganda outlets, and the Times fits the bill. Our progressive Gospel, the New York Times, cannot be a bankrupt and floundering business.

For the Times to report the marriage of big business and progressivism would eradicate the illusion that the Left is the party of the little guy. This facade must be maintained no matter how much the opposite is true. The Left’s foot soldiers froth at the mouth over the Koch brothers, while George Soros and many other billionaires fund the Left’s pet causes and candidates. A cousin of this is the Times omitting genetics when discussing the racial test score gap. This omission is to protect the political narrative that the Left’s mandarins at the helm of the state care about the underclass that supplies them the voting muscle, which then gives them legitimacy in our media-run system. Team Obama was voted in on a swell of anti-banker sentiment, yet not a single banker is in jail seven years later. The Times will push this lie as long as possible to maintain power.

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  1. @Our progressive Gospel, the New York Times, cannot be a bankrupt and floundering business.

    praise be magic mexican carlos slim.

  2. Because of the hostile business climate ratcheting up in the USA it’s likely more businesses will leave for more hospitable shores. At some point airlines will also have to weigh benefits/expenses.

    As western culture disintegrates, airlines increasingly have to deal with dysfunctional, jihadist and suicidal passengers. It is a growing expense they are not equipped to deal with. The insurance premiums, security and staff training must be skyrocketing. Maybe they’ll develop robot aircraft without human pilots and few flight attendants or none at all.

  3. There’s also the effect that the internet has had on airlines. Internet shoppers – especially ones using aggregators like Expedia – buy tickets based almost solely on price. If your fare is $5 cheaper, you’re getting the customer. (Not only that, but the lowest fare comes up on the top of the listings, like being “AAAAAAAAAAAaron’s Plumbing” in the old phone book.) This has created an unsustainable race to the bottom, such that fares had to be lowered beyond the break-even point and the charges that were necessary in order to remain profitable had to be hidden in fees instead of in the fare itself. This is one way that an outfit like Ryanair is able to charge fifty Euros for a flight from London to Milan – unless you’re traveling with no bags and can go four hours without a sip of water, you’re going to pay more than the list fare.

    There’s some economic reality for you: Usually what’s good for the buyer is not good for the seller, and vice versa. But of course, the point remains that the Times is economically illiterate and didn’t bother to do the most basic research on this topic, preferring (*sigh* – of course) to simply blame “corporate greed”. Another example of the Gell-Mann Effect at work.

  4. I’m surprised there wasn’t some explicit racial conspiracy-mongering going on that this is to stop black people flying because of their lower socio-economic status. Meanwhile, plans should definitely be being drawn up for the return of zeppelin travel.

  5. Low fuel costs are a huge boon to the airlines, for sure. But it doesn’t take a genius to know that fuel goes down…until it goes back up again.
    As far as costs go, labor is second only to fuel. USG does everything it can to keep labor as expensive is possible (excepting bankruptcy). The Railway Labor act gives Unions near-complete control of airlines that have them. Employees can’t opt out (even in right-to-work states). The Union monopoly is a bigger efficiency killer than you can imagine, they try to proletize the whole workforce. The other major cost factor is FAR 117, a new-ish regulation that tightens duty limitations for pilots. More limits necessitate more pilots (of which there already is a shortage), or cancelling/delaying flights due to the new restrictions. It’s tough to slash fees with such a burdensome regulatory climate. How’s that for consumer protection?
    IA, you’re absolutely right about dysfunctional passengers. I work for a one of the four big airlines mentioned in the article. Not a day goes by where people don’t physically harass crew members, make bomb threats, shine lasers at aircraft, etc. Flight attendants at my airline are trained in a handful of basic self-defense moves (usually by Krav Maga instructors). Not sure that I’ve heard of crews using those moves on passengers, though.

  6. Long time reader, first time commenter December 3, 2015 at 1:21 pm

    This post really hits on the head the main reason I’ve been somewhat skeptical of the neoreactionary project. Though the NRx sphere is certainly home to some of the most interesting perspectives going today, I can’t help but shake the feeling that in an actually existing patchwork context mergers and acquisitions would lead to a few not-really-competing, not-really-that-different sovcorps that offer very little to their customer slaves. The state of affairs with airlines seems to be somewhat like choosing a cell phone or internet service provider in the U.S.- there are options, but little real competition or differentiation. In terms of those latter two there are even incentives to periodically switch providers (to get a new device when your contract is running out or the cost of the device exceeds the fee for canceling the existing contract prematurely), which is to say that these institutions even honor and some might even argue encourage the vaunted NRx concept of Exit. And yet to the end user, there is little difference.

    Please understand that this is in no way a defense of either democracy or progressivism, though it is something I’d love to see any of the writers at SM take up in the future.

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