The TSA's False Tradeoff

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The national
furor over the TSA’s new procedures – culminating in yesterday’s
"Opt Out Day"
– has elicited the typical response from the bureaucracy and
its apologists. Why, these invasive scans and "enhanced pat-downs"
are only for your good, in order to ensure safe flying. You don’t
want another attack, do you?

This is a false
tradeoff. Especially in the long run, there is no tension between
freedom and safety. If airport security were truly returned to the
private sector, air travelers would achieve a much better balance
of privacy and legitimate security measures.

The Calculation

Whenever considering
government versus market provision of a good or service, we should
recall Ludwig von Mises’s famous critique of socialism. Specifically,
Mises argued that even if the central planners were angels, intending
only the best for their subjects, and even if these angels were
fully informed of the latest technical knowledge, nonetheless they
would be groping in the dark when they tried to design a blueprint
for the entire economy.

The socialist
central planners would suffer from a calculation
, meaning that they couldn’t evaluate whether a given
enterprise – such as a car factory or a farm – was making
efficient use of society’s scarce resources. Sure, the car factory
might be cranking out vehicles that the comrades enjoyed driving.
But that alone is not enough to prove that the car factory is economically
efficient. For all the planners know, the resources (steel, rubber,
labor hours) going into the production of the cars could be diverted
into other lines, increasing the production of items that the comrades
enjoy even more than the cars.

The market
economy solves this problem effortlessly through market prices and
the profit-and-loss test. If a car factory is using up resources
that consumers would prefer go into alternate sectors, this fact
manifests itself objectively when the accountant announces that
the car factory is "losing money." After all, to be unprofitable
simply means that the car factory cannot earn enough revenues from
its customers in order to pay the prices for resources that other
entrepreneurs are able to afford. That is the sense in which consumers
are "voting"
(through their spending decisions) that
the car factory either reform or shut down.

In Mises’s
view, the fundamental superiority of the market economy over socialism
was not that entrepreneurs happened to be bold innovators, while
government bureaucrats were dull yes-men. No, the problem was an
institutional one. In the market economy, the factors of production
are privately owned, which allows the generation of market prices
for every unit of every resource. Thus people in the private sector
get immediate and constant feedback on the success or failure
of their operations. There is nothing analogous in government, because
its "customers" cannot withhold their purchases if they
don’t like the "services."

The Calculation
Problem and the TSA

When it comes
to the apparent tradeoff between privacy and security, the TSA suffers
from the same calculation problem that plagues all socialist agencies.
The proper balance of the various considerations cannot be discovered
through some "objective" procedure if it doesn’t involve
private property and market prices.

Consider: Even
if there are no further terrorist incidents on planes, that won’t
prove that the new patdowns and scans were the right thing to do.
For one thing, it’s possible that there are other security procedures,
which do not humiliate large numbers of customers, that would yield
the same success of zero incidents. In that case, the current TSA
procedures would be inappropriate because they cause needless suffering
with no offsetting benefit.

But more importantly,
it’s possible that the "efficient" number of terrorist
incidents – for the rest of US history – is not zero.
In fact, no matter what procedures are implemented, it’s always
possible that wily terrorists will still manage to beat the
system. In real life, we can never guarantee safety. This is why
so many pundits’ discussions of airline travel miss the mark completely:
they assume that there is some objective answer of "the right"
amount of security, when this is a complex economic question.

To see this
last point, we should switch from terrorism to something far less
emotional: car crashes. If the government completely nationalized
automobile production (something that may happen eventually), and
insisted on making a uniform model for every driver in America,
we would hear the pundits discuss various issues in the abstract.

For example,
Rachel Maddow
might argue that the government-issued cars should have three sets
of seat belts, air bags for every passenger, and a top speed of
55 miles per hour in order to contain healthcare costs (which would
also have been completely nationalized by this point). On the other
hand, Sean Hannity might go ballistic over the nanny-state regulations,
and point out that the Founding Fathers didn’t even have mirrors
on their stagecoaches.

The Market
Is the Only Solution

Yet such hypothetical
arguments over "the correct" amount of vehicle safety
would be absurd if they conceded the premise that the government
should set the standard and apply it uniformly to everyone (except
for the politicians, who would get to drive vintage Ferraris). The
only way to solve the conflict would be to privatize car production
and allow consumers to spend their money, focusing on whatever attributes
they cared about the most.

The same conclusion
holds for air travel. Only in a truly free market – where different
airlines are free to try different approaches to safety – could
we approach a sensible solution to these difficult questions. Passengers
who don’t mind invasive scanning or sensitive inspections could
patronize airlines offering these (cheap) techniques – assuming
they were really necessary to achieve adequate safety. On the other
hand, passengers who objected to these techniques could pay higher
ticket prices in order to fly on airlines that hired teams of bomb-sniffing
dogs, or set up very secure prescreening procedures (perhaps with
retinal IDing in order to board a flight), or implemented some as-yet-undreamt-of
method to keep their flights safe, without resorting to methods
that their customers found humiliating.

The Role
of Insurance

Most people
who are sympathetic to the free market would endorse the above sentiments,
but with one nagging concern: How does the airline take into account
the huge damages imposed on others if one of its planes is

One possibility
is that the legal system would hold airlines strictly accountable
for such property damage, and that the airlines would need to purchase
massive insurance policies before obtaining permission to send giant
steel containers full of jet fuel hurtling over skyscrapers and
shopping malls.

I spell out
the mechanics of such a system here.
For our purposes, let me deal with one possible objection: Someone
might say, "But what happens if an airline has lax security,
and terrorists use it to cause an enormous amount of damage, wiping
out their insurers? That’s why we ultimately need the government
in charge of security."

Yet I could
pose the same question: What happens if the TSA screws up,
and a major terrorist incident occurs? Will John
and his immediate staff be fired? Will the TSA itself
have its budget gutted? And who is to say that even the US federal
government could "afford" such a catastrophe?

Once we consider
the incentives (and lack of consumer feedback) plaguing the TSA,
we realize that not only will it err on the "invasive"
side of the spectrum, but that it will do so ineffectively.

Here’s one
obvious example that numerous people have pointed out: What’s to
stop a terrorist from placing a plastic explosive in an area where
it would not be detected by even an "enhanced patdown"?
Therefore it is not even true that these scandalous new procedures
"at least keep us safe."


As Murray
Rothbard pointed out
, most of the vexing "social problems"
of the day would fade away if we lived in a voluntary society based
on private property. This result holds in the specific application
of airport security.

In the long
run, there is no tradeoff between freedom and security. To paraphrase
Franklin, those who would consent to temporary groping in order
to avoid terrorism will end up with both.


Murphy [send him mail],
adjunct scholar of the Mises Institute,
is the author of The
Politically Incorrect Guide to Capitalism
Human Action Study Guide
and The
Man, Economy, and State Study Guide
His latest book is The
Politically Incorrect Guide to the Great Depression and the New

Best of Bob Murphy

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