Thoughts on the downed airplanes and regulation
The whole situation in the Ukraine is surreal. President Obama’s response has been weak but it is hard to blame him because even the Ukrainian government appears indifferent to what the Russians are doing.
I Googled flights between Kiev and Moscow
Google listed a bunch of options including Expedia below.
Is this possible? Russia invades Ukraine, takes Crimea, and arms insurgents who commit mass murder. Ukraine does not even declare war. Air travel between Moscow and Kiev is uninterrupted.
The Europeans are more concerned about natural gas supplies that are transported through Ukraine than the murder of their citizens.
Many of the civilian airlines running through Ukranian air space are Russian airlines. Aeroflot being one. It was probably not an accident that the downed plane was not Russian.
It makes sense to me that planes should avoid war zones. However, there is no legal restriction that private airlines do so. The airline industry argued that they were not responsible for the loss of the plane because this was the government’s call.
I think this argument is pure BULLSHIT!!!!!!
Governments can’t or won’t make tough calls on banning flights over war zones. The recent reversal of a flight ban to Israel despite the existence of rocket fire suggests that it is politically impossible for governments to prohibit travel.
The primary purpose of having governments not airlines make safety calls is to shield industry from litigation.
This benefit from regulation is not unique to the airline industry. FDA approval and DOT safety tests help reduce respective industry exposure to litigation. Bank regulations of mortgages reduce the scope of anti-predatory lending laws.
Most economists will oppose banning travels through war zones even if the downing of planes becomes routine. This is because the economic benefits from air travel and the economic costs associated with it disruption are huge.
Interestingly, economists also tend to argue against regulations requiring the use of technology that will help planes evade regulations. Also, many economists vigorously argue against strict measures to contain pandemics either because they view the probability of a pandemic to be very low or the cost of the foregone activity to be too high.
Cost benefit analysis is a subjective exercise because both cost and benefit estimates are imprecise. Costs often not fully considered include the loss of credibility and the consumer confidence.