On bangs and whimpers

be touched or the contractor would lose his license.

The problem with this variation on privatization is that it is difficult, if not impossible, to see what difference it will make at how security measures are being implemented at airports. There may be some money saved – which is always a good thing – if contractors rather than government employees are involved, but the claims made for the benefits of this change are exaggerated.

Problems with the strong version of privatization

Becky Akers writes in the libertarian New American that the only workable solution to airport security is to put it in the hands of bona fide aviation professionals “who’ve spent their lives around jets and runways” and who have a vested interest in protecting “their multi-billion dollar inventory and highly trained personnel.” The result of such a common-sense (and constitutional) plan would be that air passengers would not be treated like criminals before boarding planes and like prisoners during the flights they’ve paid for — and everyone concerned would enjoy “unobtrusive but highly effective security” of the same sort that “protects our homes, cars, or e-mail accounts.”

There are at least two glaring weaknesses in this argument.

First, the fundamental, inescapable problem with the strong version of privatization is that it was tried – and that it proved an abysmal failure.

Until 9/11, airport security was the responsibility of the individual airliners and individual airports who, in turn, hired private security contractors to do security.

The results (the numbers are taken from the 9/11 Commission Report):

• 823 Airlines hijacked worldwide 1970-2001
• 115 Incidents of hijackers thwarted by passengers/crew
• 109 U.S. airlines hijacked on U.S. soil
• 58 U.S. airlines hijacked on foreign soil
• 11 Foreign airlines hijacked on U.S. soil
• 30 Cockpit intrusions reported world wide in the 18 months prior to 9/11
• 31 Bombs on airlines worldwide 1970-2001
• 59 Airline Shoot-downs worldwide 1970-2001

The second flaw is captured by Akers’s contention that the airlines would engage in robust security practices because they have a vested interest in protecting “their multi-billion dollar inventory.”

The facts tell us a different story, and one example would suffice. It had been evident for a long time that one sure way to prevent the hijacking of a plane was to harden the plane’s cockpit doors and make them impregnable. Some foreign airlines – for example, Israel’s El Al — did install such cockpit doors after some of their planes were hijacked.

In the United States, though, the airlines resisted, and invested tens of millions of dollars in expensive lobbying campaigns to make sure that neither Congress nor the executive branch would mandate the installation of such doors.

Security experts warned of this weakness in the airlines’ security system, but political campaign money talked and nothing was done until it was too late.

There is nothing startling or unusual about the airlines’ pre-9/11 behavior. Their behavior perfectly illustrates what economists call the public goods problem.

Public goods are goods characterized by non-rivalness and non-excludability – and these characteristics cause problems in the production of such goods. In the cases of many public goods we witness a market failure: uncoordinated markets driven by parties working in their own self interest are unable to provide these goods in desired quantities.

Airline security is a public good which provides a good example of market failure: market-like behavior of gain-seeking individuals – or companies — does not produce efficient results. The production of public goods results in positive externalities which are not remunerated. If private organizations do not reap all the benefits of a public good which they have produced, their incentives to produce it voluntarily might be insufficient.

Airlines are private entities motivated by profit. Their responsibility is to produce value for their share holders, not to protect the public interest. If the government wants to have the public interest protected, then it – the government, using tax-payers money — should pay for it, rather than shift the burden of paying for it to private entities.

The weakness in the strong version of privatization, then, is that it is naïve and sentimental. Advocates of this position ignore history, experience, and economic theory.

The debate on whether or not to privatize airport security is a legitimate debate, but those who offer changes to the current system should come up with more compelling arguments.

Ben Frankel is editor of the Homeland Security NewsWire