On Capitalism and United Airlines

In the wake of the United Airlines video, and due to a coincidental clustering of interactions with socialists, I’ve been discussing and thinking about capitalism a lot lately. Socialists have decried the attack as the epitome of a capitalist system, and they have a pretty clear logical argument:

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The airline believed it could make more money by forcibly removing David Dao than it could by simply offering a better price to switch flights (or rent a car to drive their crew to their next airport instead of flying them). The airline was indifferent to the suffering of Mr. Dao and only considered their bottom line. And the state police aided them in this effort. (Let’s ignore for the moment that the airline was completely idiotic in their evaluation of their options, and in refusing to give up a few hundred extra dollars they lost a billion instead.)

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a graph of United stock price. guess when the video came out

Through this blog, I will be referencing Steve Bannon’s interview from Buzzfeed (yes, that Steve Bannon), particularly in reference to his two intelligent critiques of modern Capitalism, both of which are in display in the United incident. Bannon decries two forms of capitalism. He says:

But there’s a strand of capitalism today — two strands of it, that are very disturbing.

One is state-sponsored capitalism. And that’s the capitalism you see in China and Russia. I believe it’s what Holy Father [Pope Francis] has seen for most of his life in places like Argentina, where you have this kind of crony capitalism of people that are involved with these military powers-that-be in the government, and it forms a brutal form of capitalism that is really about creating wealth and creating value for a very small subset of people. And it doesn’t spread the tremendous value creation throughout broader distribution patterns that were seen really in the 20th century.

This type of oligarchic, militaristic capitalism is of fundamental concern to any American. The truth is that, after a series of mergers and consolidations, United Airlines does not exist in an entirely competitive environment. And, the very wealthy people at the top therefore have a smaller incentive to avoid aggressive, defensive behaviors (like beating someone and throwing them off a plane). Then, when the oligarchic corporation needs a blunt instrument to protect its interests, the state is more than happy to intervene on its behalf. Because, you see, when the corporation provides significant capital to the state, the corporation’s interest is the state’s interest. So, if United (de facto) pays the salary of the police offers who beat Mr. Dao, they’re all working together on the same team to protect United’s bottom line. That’s crony capitalism.

Bannon’s other strand of capitalism-gone-wrong:

The second form of capitalism that I feel is almost as disturbing, is what I call the Ayn Rand or the Objectivist School of libertarian capitalism. And, look, I’m a big believer in a lot of libertarianism. I have many many friends that’s a very big part of the conservative movement — whether it’s the UKIP movement in England, it’s many of the underpinnings of the populist movement in Europe, and particularly in the United States.

However, that form of capitalism is quite different when you really look at it to what I call the “enlightened capitalism” of the Judeo-Christian West. It is a capitalism that really looks to make people commodities, and to objectify people, and to use them almost — as many of the precepts of Marx — and that is a form of capitalism, particularly to a younger generation [that] they’re really finding quite attractive. And if they don’t see another alternative, it’s going to be an alternative that they gravitate to under this kind of rubric of “personal freedom.”

In Bannon’s view, the other disturbing trend in capitalism is one of amorality (he would say atheism, but let’s not be dramatic). A capitalist with a soul might weigh the moral or ethical consequences of assaulting a doctor on his way home to see patients in exchange for the amount of money saved, while an Ayn Randian capitalist might view that ethical scale weak, ill-founded, and contrary to the core fundamental of capitalism itself – the airline has freedom to remove anyone it wants from its planes, end of story.

The United video is indeed a microcosm of these two forms of corruption, one political and one moral. And, as far as capitalism goes, neither is new to the world (this is a fact that Bannon omits in his interview, probably for dramatic effect, reminiscing fondly of past times and somehow ignoring the gilded-y parts of the Gilded Age). But, it may be reasonably observed that modern American capitalism is becoming increasingly cronyistic, especially as Citizen’s United floods the system with secret cash-for-favors. I’m not so sure that we’re becoming less moralistic, though – I think Steve is probably just conflating being morally driven with being religious, which seems like a false dichotomy. We are definitely getting less religious, but we’re probably getting nicer and more tolerant of one another in the process, not less. But I digress.

In light of this critique, and the obvious dangers of state-sponsored (or sponsoring?) oligarchic capitalism or amoral, money-hungry capitalist, you might think that I’d be a socialist, or a “some men just want to watch the world burn” populist like Bannon, but you’d be wrong.

I scoured this for hours trying to find the right Jack Handey video but couldn’t find it, but here’s the quote:

If you saw two guys named Hambone and Flippy, which one would you think liked dolphins the most? I’d say Flippy, wouldn’t you? You’d be wrong, though. It’s Hambone.

Nope, in spite of all of that, I remain firmly a capitalist, with one really, really big caveat. But we’ll get to that at the end of this already-too-long missive.

Let’s start off with a few facts:

  • Taxes are coercive. You do not have a choice about paying them. If you do not pay them, men with guns will put you behind bars. Taxes are the diametric opposite of economic freedom.
  • Capitalism is the default state of human civilization. Since Day 1, if you were the caveman who knocked the most skulls (a valuable economic ability), you got to eat. You provided value (the skull knocking) and you were rewarded for that value (food, women, etc.)
  • Capitalism does NOT preclude community service. When you have economic freedom, you can give your money to charity. Many people (like Mr. Dan) do significant charity works because they want to. Some people (like many of the world’s billionaires” really go hard in da’ paint.

c9YIlv3thug life

  • In a capitalist system (non-monopolistic), a company must yield value to society, or it will perish. Therefore, the vast, vast majority of companies are inherently good, because if they weren’t, they’d die. (For the sake of argument, imagine living in the year 1875 and trying to get from Philadelphia to San Francisco. A man arrives and guarantees that he can take you there in 6 hours, soaring through the skies, but that he also might punch you in the face. You would accept immediately – the value being provided is so great that you wouldn’t even care, you’d take all the punches he can throw. In a sense, if there weren’t competitive airlines that hold each other accountable, we might say that occasionally getting beaten and dragged might be an okay exchange for the gift of flight. But again I digress).

There are clear times when the interests of a company are narrow and come at odds with the greater the interests of the society. The environment is the most obvious example of this – a chemical company might have a desire to make useful plastics for you. This provides value for you when storing foods in your fridge (thanks chemical company!). But, if they pollute all the lands and we can’t grow any more foods, we can’t use any more Tupperware. Since the company isn’t perceptive enough to understand that and change their behavior, the government has to intervene and regulate. Cool, that makes sense.

When these regulations are successful, we begin to view the power of governmental action (often confused with collective action) as something to be wielded for the common good. If we have a central, publicly-oriented group that can make rules that protect the environment, why can’t they also tax the wealthy and use that money to provide health insurance to all? And feed the hungry? Right the wrongs?

And so the government begins to levy taxes, grow its power and authority, gain influence in new industries. Corporations suddenly have a big interest in influencing this newfound governmental power, so they feed their handpicked representatives and senators cash, over or under the table. And, we are back to Crony Capitalism, now often thought of in lockstep with the Clinton-Obama “New Democrats” – increase government power as a function of the corporate-state complex.

On the one hand, there is an instinct to proceed down this path, to go further. Many of my further-left friends might say something like, “the Democrats lose because they don’t go far enough! We need Single Payer, expanded Medicare and Medicaid, free college tuition for all” and so on. And, oft-unspoken but acknowledged, this means higher taxes and more centralization of power (though admittedly a transfer from the military budget would probably do a lot to help out with this). And, finally, we arrive at the critical problem with socialism: on a long-enough timeline, socialism is incompatible with democracy. You gather all the power in one place, then you hold elections. Sooner or later you’re going to elect someone who doesn’t want to give up that power, and then you end up in the same place as every socialist or communist country ever has – one guy who usually sucks running the place into the ground. Usually a whole bunch of people die too.

So, my preference would be to reverse course – clearly identify the places where government has a role (the environment), argue over the places where it’s unclear (health care, education), use government to combat injustice and systemic inequality, but in general try to take as much power out of government hands. Because, when you put all the power in the government’s hands, it either ends up in a big company’s hands (hi United) or in a bad government’s hands (hi Donald).

So that’s why I’m a capitalist.

Ah yes, my caveat: capitalism only works because there is scarcity. If it was equally cheap, convenient, and efficient to fly a different airline, you would never fly the one that makes blood come out of your face. And, capitalism itself strives to reduce that scarcity by making goods and services more efficiently provided and therefore cheaper and more accessible. Eventually, we’re going to robot our way out of scarcity, out of capitalism, and into some sort of jobless Utopia/Dystopia coinflip. It really seems like even odds at this point.

Anyway, thanks for reading this long and text-heavy blog. Let me know what you think!


One thought on “On Capitalism and United Airlines

  1. I highly recommend this incredibly informative episode of Chapo Trap House, which gives a detailed history of the US health care industry from the perspective of some very vulgar socialists (apologies ahead of time if that’s not your thing)


    I’m slightly to the left of Bernie Sanders, but (to quote the man himself) let me be clear: I think that nationalization, for 99% of the many industries in the in the US, would be terrible! But health care in particular is mind-bogglingly complicated, and context is vital if we’re ever going to forge a sustainable (and affordable) health care system for everyone.

    It’s my belief that health care is a human right. But even if you don’t, the economic benefits of single-payer (not even single-provider! It’s barely socialism) are so totally self-evident that at this point, it’s laughable that we as a society allow our health care policy & pricing to be manipulated (even indirectly, even in the slightest) by the interests of private capital.

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