By Per Bylund, American Institute For Economic Research’s Daily Economy
The extended partial government shutdown has led to long lines of frustrated passengers at airports nationwide as unpaid Transportation Security Administration (TSA) agents walk out. Officials even warn that small airports may shut down due to the absences. If we for a moment disregard the Washington Monument syndrome likely also at play, the lesson to be learned here is not the importance of funding government services — but the exact opposite.
The TSA has a long history of failing to such a degree that it could never survive had it not been run by and within the government. Costing taxpayers and travelers $10 billion annually, not counting the inconvenience and time lost, the agency fails even on its own terms. The failure rate in 2015 was over 90 percent. The same in 2017. If these data seem dated, it is because they are. Instead of fixing the problems, the results of the agency’s internal testing were classified. In the absence of data, the only reasonable interpretation is that the agency remains a catastrophic failure to this day.
The recent airport chaos stresses how the security theater has become an unbearable bottleneck. It also stresses how dysfunctional government services become problematic beyond the waste of resources and the inconveniences they cause. The difference between government services and market solutions offered by businesses is stark. A private business that fails to deliver loses customers, and therefore both revenue and market share. Its failure is its own problem, which is a strong incentive to fix it.
As a government agency, the TSA’s failure is not its problem but is instead shifted onto travelers (their “customers,” as it were), who are, in some cases, left waiting six hours in line to get through the security checkpoint. In fact, this failure can easily be construed as a benefit for the TSA, which now — because the government requires all passengers to pass through its bottleneck — has leverage to demand more funding. As a result, the destruction wrought by dysfunctional government becomes an argument for more of it, and taxpayers are left with the bill.
The arguably zero value added by the TSA’s security theater thus becomes a self-enforcing bloating of the bureaucracy, making the agency an ever-expanding jobs program that burdens taxpayers while harassing travelers.
Imagine if security had instead been the responsibility of airlines. Rather than cause constant delays and inconvenience, it would be in the airlines’ interest to streamline the process and make it as unobtrusive as possible. A failure to staff security functions would not be travelers’ (customers’) problem but the airlines’, who benefit only when we fly — and remain liable to keep travelers safe. The TSA has no such responsibility.
But a government service is worse than what can be explained by destructive operative incentives. We often fail to realize that what exists in the present is a result of developments in the past and that the future too will be different. In other words, the market economy as well as society overall are processes in constant flux, not a static state. Privately provided security would, just like any other service offered in the market, be subject to constant innovations — creative destruction, as economist Joseph Schumpeter called it.
Creative destruction is the power of disruptive entrepreneurship to cause leaps of improvement. As entrepreneurs introduce innovations that bring great benefit, consumers abandon the solutions they previously chose to use. For example, when Henry Ford introduced the Model T, people flocked to the affordable automobile — the greater value — and stopped relying on horses and carriages. The automobile became the new, higher standard for transportation. Automobile manufacturing and gas stations replaced horse breeders and stables.
We would thus see continuously improved security measures provided at lower cost — taking less time and being more convenient for travelers. The value to airlines is that it benefits their customers. It’s a competitive advantage and a value-add.
The very opposite is true for government services such as the TSA. They have nothing to benefit from providing the service they are tasked with effectively and efficiently. In fact, the very opposite is true: if the TSA would find ways of reducing the cost, the agency’s budget would likely be cut in response. They would effectively be penalized for improving.
And therein lies the crux: government agencies have little or no incentive to serve the users of their service. But private businesses stand and fall by providing customers with value. It is no surprise, therefore, that airport security is a hassle and inconvenience — and that it is expensive. The TSA is a bureaucracy and a jobs program that does not keep us safe.
Recognizing this fact helps us understand the chaos at airports. More funding would do more harm than good.
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With only a few exceptions, whenever the government undertakes an effort to solve a problem, the problem only gets worse. The list is long - the war on drugs, the war on poverty, affordable care, the Department of Education, homelessness, Dodd-Frank, etc.
Why? Because the creation of the government-funded solution creates the incentive for the problem to grow. A new agency generously staffed with 6-figured salaries, benefits, retirement plans and expense accounts. Needing an army of foot soldiers to carry out the mission. Extensive travel to parts unknown to divine "root causes". Junkets to the Napa Valley for retreats to "whiteboard" possible solutions. Offices, laptops, cellphones, maybe even a cafeteria.
And guess what? If they do their job and solve the problem, it all goes away. Poof. Gone. Bye-bye. No one on the inside wants that. Why would they? Who would work themselves into obsolescence? As Stafford Beer said "the purpose of a system is what it does". So the problem grows.
So, for example, the effort to solve the homeless problem turns into people farming. The larger the crop (the homeless), the more farmers you need (government). And around and around it goes with the only thing changing is the ever-growing number of government agencies and employees.
TSA is a jobs program.