Trump's Deregulation Isn't to Blame for Airline Crashes

The passengers of the Ethiopian Airlines jet that crashed March 10 had not even been buried before some commentators had identified the cause: deregulation.

The passengers of the Ethiopian Airlines jet that crashed March 10 had not even been identified or buried before some commentators thought they had identified the cause: President Trump's push for deregulation.

"On an earnings call in April 2017, Boeing's CEO [Dennis] Muilenburg was asked how deregulation early in Trump's term affected the company," CNBC reported, noting that the aerospace executive replied, "Things like FAA certification processes is one place that we're seeing some solid progress."

A Wall Street Journal subheadline faulted "a pattern of lax regulation" by the federal Department of Transportation, of which the Federal Aviation Administration is a part.

The Wall Street Journal column went on to quote a vice president at the National Consumers League, John Breyault, who complained that the Trump administration's transportation department, led by Secretary Elaine Chao, "seems to be even less willing to engage in serious consumer protection efforts than it did under President Obama's watch, which is a pretty low bar."

A plane of an Ethiopian or Indonesian airline crashes, and the person blamed is not the pilot, not the Ethiopian or Indonesian airline regulator, and not even the president or prime minister of Ethiopia or Indonesia, but rather President Trump.

Call it "Blame America First."

Had the downed jet planes been European-designed Airbus models rather than American Boeings, doubtless the race would have been on to trace the problem to a U.S.-made component.

In the case of the Ethiopian and Lion Air crashes of the Boeing 737 Max, the Trump deregulation narrative doesn't pass the test of logic.

A long investigation by the aerospace reporter of the Seattle Times begins, "As Boeing hustled in 2015 to catch up to Airbus and certify its new 737 MAX, Federal Aviation Administration (FAA) managers pushed the agency's safety engineers to delegate safety assessments to Boeing itself, and to speedily approve the resulting analysis."

Did you catch the year "2015" in that sentence? President Trump was elected in 2016 and inaugurated in 2017, the same year the 737 MAX finally did enter commercial service.

The same Trump critics constantly assuring us that he is an ineffective fool manage simultaneously to ascribe to him the mysterious, even miraculous power of controlling the actions of federal bureaucrats during the prior administration.

If Trump wasn't to blame for crashing the planes, then what was the cause? The Seattle Times offers up the claim that "The FAA, citing lack of funding and resources, has over the years delegated increasing authority to Boeing to take on more of the work of certifying the safety of its own airplanes."

This is an agency with a roughly $16 billion annual budget and the equivalent of about 45,000 full time employees. When the Republican-majority House of Representatives passed a bill last year reauthorizing the agency and essentially shelving the idea of privatizing air traffic control, it was legislation to spend $90 billion over five years. The measure was approved by a vote of 398 to 23.

Maybe with $16 billion and 45,000 employees, the FAA still has a "lack of funding and resources." But government agencies seem to want more funding and resources regardless of whether they are succeeding or failing. And the taxpayers and passengers who are being saddled with taxes and fees to pay for the bureaucrats do not have bottomless pockets.

There is a problem of "regulatory capture," where regulators become too cozy with the industry they regulate. But that risk underscores that the most effective regulation is free market competition, which avoids the "capture" hazard. The most powerful force, in other words, wasn't the government grounding the 737 MAX, but passengers rebooking their flights to avoid the plane. It's not as if Boeing or its management have strong commercial incentives to sneak a dangerous plane past regulators. Plane crashes are hard to hide, and they are bad for the business of a plane manufacturer.

The situation raises the question of why the press and the self-described consumer advocates are so desperately eager to discredit airline deregulation. Perhaps it's just the way they are. The New York Times Book Review over the weekend somewhat astonishingly quoted one of that lightly regulated newspaper's own in-house lawyers, David McCraw, as writing in his new book, "The reportorial default is to think that most regulations are good."

Airline regulation, though, is a special case. The Airline Deregulation Act of 1978 was signed into law by a Democrat, President Carter. It was championed by another Democrat, Senator Edward Kennedy, and by Kennedy's aide Stephen Breyer, who is now a Supreme Court Justice. A key role was also played by Alfred Kahn, a Ph.D. economist who was a professor at Cornell University.

That Act mostly got the government out of the business of setting airplane ticket prices and of allowing or disallowing new domestic routes. It was a huge success in democratizing air travel, allowing the growth of discount carriers, and decreasing costs for consumers without adverse effects on safety. On a fatalities per billion passenger mile basis, U.S. commercial air travel, after deregulation, is less dangerous than traveling by railroad, bus, car, or truck, according to a 2013 study by Ian Savage of Northwestern University.

Perhaps the reason critics are so eager to pin the plane crash on deregulation is that they are afraid that once people realize how well deregulation worked for the airline industry, they might be tempted to try similar approaches in other heavily regulated sectors of the American economy.

Ira Stoll is editor of FutureOfCapitalism.com and author of JFK, Conservative.