The headlines are grim: at American Airline's St.
Louis hub, departing flights are down from 361 to 226. Fliers have
58 destinations to choose from, compared to 82 in 2000. One hundred
and thirty four big jets serve the city, down from 193. As you read
these headlines, you undoubtedly remember my thoughtful presentation
of a solution to the economic plight of the airlines a couple of
years ago: the reaction to it was electrifying, or perhaps more
Airline profitability, I pointed out, would
be achieved when airlines — modeled after my conceptual NoFly Airlines
— disburdened themselves of the accoutrements which are so expensive
to buy and maintain: airplanes, crews, insurance, fuel, etc. NoFly
would simply sell tickets, called travel notes, for air travel.
How could you travel on an airline without airplanes? Other airlines,
willing to shoulder the burden of aircraft ownership, maintenance,
crews, etc., would accept these travel notes. Why would they do
that? Because the government would declare NoFly travel notes a
legal tender for airline tickets.
That means that NoFly couldn't exist without
the assistance of government, but that is nothing new in the airline
business, or the government business. The fact that the airlines
shut down for several weeks after September 11, and then received
five billion in cash from Uncle Sam to forestall bankruptcy, indicates
quite clearly that airlines — like other businesses – are private
only nominally, and quite satisfied to get into bed with Uncle Sam.
NoFly would be able to sell tickets at a discount,
because of the economy of its operation. Other airlines would soon
realize the futility of printing their own tickets, since no one
would buy them; and if anyone did, those passengers could only use
those tickets for that particular airline, whereas NoFly travel
notes had to be accepted by any carrier. Thus, operating airlines – i.e.,
those with aircraft – could effect a savings on ticket printing
by lining up at NoFly's discount window. Additionally, NoFly would
arrange for the scheduling, thereby saving the operating airlines
still more money. Finally, NoFly travel notes wouldn't fluctuate
in price according to the day of the week of departure, or arrival,
or length of stay, or whether the flight was over a weekend or not.
Simplification would mean further economies.
Several pesky readers (actually, both of them)
poked holes in this scheme. One niggling technicality raised was
that the airlines would soon have bushel-baskets full of NoFly travel
notes. What to do with them? Redeem them for cash from NoFly? NoFly
didn’t want them back! Sell them to customers? Only NoFly could
sell airline tickets – er, travel notes. Uncle Sam said so.
Well, that's no problem. If NoFly's travel notes
were a legal tender for travel, they could just as easily be declared
a legal tender for air crew wages, for fuel, for hanger space, for
airplanes, for insurance, etc. Problem solved. The airlines would
"spend" them to meet expenses. What's more, NoFly, as
the issuer of travel notes, could issue more of them when the travel
business seemed to need a boost, and cut back on their issuance
when air travel became overheated, so to speak. A controlled air
travel economy! Absolutely wonderful!
Ok, Ok, I grant you that another problem would
then arise: what would the pilots, flight attendants, mechanics,
fuel vendors, airplane manufacturers, etc., do with all those NoFly
travel notes? Well, they could use them to travel, but that would
still leave an awful lot of them accumulating in the pockets of
the people who had to accept them. There could only be one solution
to this problem: declare the notes a legal tender for everything!
But more problems would arise. NoFly, as the
only authorized creator of the notes, could create an immense amount,
thus becoming very rich, while destroying the utility of the notes.
After all, about the only thing that can block the acceptance of
a legal-tender note is their issuance in such amounts that their
worthlessness becomes obvious. In that case, no one will accept
them, legal-tender or not. So NoFly would switch tactics. Instead
of selling the notes, it would loan them into circulation. After
all, by this time, NoFly notes would be used as money, and why would
NoFly sell its note for — its notes? No, it would just lend them,
instead. Thus, no matter how many existed, a greater amount would
be owed. NoFly would collect the interest perpetually, and the notes
would assume "value" because they had to be paid back,
and there were never enough of them. At the same time, a system
of note taxation would be introduced to sop up whatever excess might
accumulate — except in the pockets of those whom the government
believed worthy: big campaign contributors, for example, and other
I realize that this is very general, but great
schemes cannot be delayed until every possible contingency has been
foreseen and dealt with. Just get started, and fine-tune the system
as you go.
A correspondent in Pago-Pago whines that my
scheme is already in effect: the Federal Reserve and Internal Revenue
Service already exist. Well, nonsense! Is the Fed a quasi-private
organization? Does it print and issue notes in an attempt to regulate
the economy? Does it issue its notes unbacked by tangible wealth?
Are its notes redeemable? Was the income tax created simultaneously
with the Fed? Does the IRS somehow find loopholes to exempt some
firms or individuals? Does – hey, wait a minute!
They've beaten me to it! NoFly took off eighty-nine
years ago! Back to the drawing board; I'm crushed. As I've heard
said, "Freedom and fiat are incompatible."