On the radio this morning, I heard about a recent scandal involving the FAA and Southwest Airlines¹, willfully ignoring established safety regulations. Now, it might be the case that Southwest is an evil corporation exploiting customers who suffer from informational assymetry. But what about the FAA, the government agency charged with protecting the public from evil corporations like Southwest? If the agency is in bed with the evil corporations, what does this tell you about the nature of government agencies?

The presence of a government oversight agency is no real safeguard against danger, but is often believed to be just that! People are lulled into a false sense of security, believing that the government will protect them: from terrorism, from criminals, from evil corporations. But time after time, we catch the government in bed with business. Most people blame businesses, but when government controls business, the same incentives plague the business world that are readily acknowledged as pervasive in the sphere of government. When the government establishes and maintains through force a business environment which rewards scofflaws and scheisters, there can be no surprise when scofflaws and scheisters do what they’re expected to do: defraud people.

ABC News reports on some instances of the FAA flat-out ignoring airline safety regulations.

The FAA’s oversight of airlines has come under fire since it was revealed that Southwest Airlines flew planes without the required safety checks, even though FAA inspectors knew about it.

In a related story:

[Southwest] failed to do required safety checks on its older 737 planes. Southwest flew 60,000 flights without the required inspections, and once the FAA learned of the missed inspections, it failed to ground the planes as required.

Southwest was fined $10M. The FAA proceeds with business as usual. Odd, isn’t it? The overseer isn’t penalized!

I think the problem is endemic to governments, not markets and businesses. The current environment fosters the sort of business which thrives on the bureaucratic inefficiencies, loopholes, privileges, and protections afforded it by the government. “Evil” corporations poison rivers and pollute farmlands because government allows and encourages that behavior.

Of course, this sort of thing might happen even in the absence of an FAA overseeing the airlines. But who would fly on any airplane that didn’t have someone’s seal of approval and a good track record? That approval, that track record would need to be market generated, and in a free market, there isn’t much profit to be made by lying to people. On the contrary, it’s a fast-track to insolvency!

There’s no reason to believe that the government bureaucracies are at all interested in your well-being. There is a strong case to be made: if they were, they wouldn’t be government bureaucracies! Whatever Southwest did in order to avoid audits, or hide their results, was only possible because there was a corruptible government agency. Without an agent or an agency to manipulate, this sort of thing can’t really happen on a large scale. Private firms with their own resources and reputations at risk are always more concerned with their clients’ well-being than any government bureaucracy, anywhere, ever.

1. In the interest of full disclosure, I am usually a champion of Southwest airlines. Sure, their seats are uncomfortable and the flights are crowded. But their business model opened the skies to thousands of travelers who otherwise could never have afforded cross-country flights. Southwest fought the Civial Aeronautics Board and the entrenched interests of regulated airlines, on more than one occasion, and won, striking a victory for the average Joe.