THE LIBERTARIAN ENTERPRISE
Number 148, November 19, 2001
Government Interventions Mask Fault, Forestall Reform
by Vin Suprynowicz
Special to TLE
Why is there now a controversy about whether spent fuel from the nation's nuclear reactors shall be stored at Yucca Mountain in Nevada?
Because private utility companies decided to go forth with the construction of nuclear power plants, decades ago, without a firm commitment as to how and where that waste would be disposed of.
When those firms sat down to negotiate their insurance policies, why on earth didn't the actuaries of those private insurance firms insist that all such matters be contractually resolved beforehand?
Aha. Because the federal government waved its magic wand, all those decades ago, passing congressional limits on the liability the private operators could ever face in the event of any nuclear mishap.
The rationale at the time was that otherwise, "No such plants might ever be built."
And so the safeguards of the free market and the world's most finely tuned system for determining and distributing liability and risk were circumvented, the nation instead starting down a road where such decisions are decided in the political arena -- enforced by the threat of armed federal force -- rather than by private utility and insurance firms, perhaps simply offering large sums to any willing jurisdiction that could demonstrate competence to store or reprocess the stuff under private contract.
Examples like this should lead us to be cautious as the Justice Department -- under another such bill enacted by Congress less than two weeks after the events of Sept. 11 -- now struggles to determine how much compensation shall be paid to the families or beneficiaries of those who died in the World Trade Center or the planes flown into it.
The American Bar Association will oppose any effort to set an arbitrary cap on damages, warns Robert Clifford, chairman of the ABA's committee on terrorism and law.
Pardon me for temporarily siding with a group everyone loves to hate -- the trial lawyers -- but isn't that the unmistakable purpose here? Supposedly, the federal compensation plan is only for those who voluntarily waive their right to go to court. But should too many families resist the blandishment of a quicker, easier payoff, are we really to believe Congress will allow the airlines' financial future to hinge on the judgment of unpredictable citizen juries, considering whether the airlines tortiously represented that they had an effective security system when in fact they did not?
No one wants to see America's airlines close down. But American bankruptcy laws are among the most sophisticated and sensible in the world. They are designed not to close down entire industries, but rather to protect them from bugling creditors while they carry out real reforms in the face of changed conditions. The emphasis being on "real reforms."
The question is whether needed reforms would have followed so quickly on the heels of previous disasters -- from the Triangle Shirtwaist Fire to the Johnstown flood -- if private firms had been assured by the Congress, "Don't worry, you'll never be on the hook financially should anything like that ever happen to you?"
We can't know what airline security would look like in this country if we didn't have government interventions every step along the way, from federal smoking bans to purposely misrepresented FAA security directives (no, they don't really require that you "show a photo ID" - they even provide a procedure for handling passengers who won't or can't, specifically barring the airlines from refusing them passage ... or at least they did up through Sept. 11) to a requirement that airlines contract for their one-size-fits-all "security" with airports which are usually, themselves, litigation-proof agencies of local municipal government.
Would some airlines choose to charge higher fares, thus covering the cost of a guarantee of three armed crewmen or undercover air marshals on every flight -- while proudly advertising only citizens with FBI security clearances are allowed to service their planes?
Would other airlines experiment by simply declaring: "Trying to disarm passengers hasn't worked -- so we're actually cutting prices by the amount we used to spend on useless and humiliating passenger pat-downs, instead encouraging all active duty and retired military and police to bring their service weapons on board and help us 'arm our skies against terrorism' "?
We can never know how many creative solutions might be tried, so long as airlines never experience the goad of knowing they'll be held financially liable in court for the real effectiveness of their security, rather than merely patted on the back (and protected) by Big Brother for continuing to do what doesn't work, so long as they "put on a good show."
Are we now at war to defend our free market system -- or shall we adopt the credo of Benito Mussolini, who put government bureaucrats in charge of everything, crossing his arms and bragging that in the short term, at least, "the trains now run on time"?
"If the post office has no means of preventing the delivery of disease, and the government's jails can't keep out drugs, why would anyone believe the feds can improve the already federally supervised security at airports?" asks Llewellyn H. Rockwell, Jr., president of Alabama's Ludwig von Mises Institute. - - -