Wednesday, April 14, 2010

Please, Federal Government, Don't Get Involved

I know that I promised a blog entry according to the outcome of the recent poll (thanks for voting), but I heard a story on the news today (read about it here) that really caught my attention as an American.  I need to voice my opinion.

In summary, a small Florida airline, Spirit Airlines, will start charging its passengers $45 to check a carry-on bag starting on Aug. 1!  ONE carry-on bag costs you $45!  This might sound crazy - a ridiculous price to pay for wanting your laptop, bookbag, or iPad on the plane as entertainment.  And, in fact, I believe it is completely absurd.  But that news isn't even the appalling part of the story...

 "No no no.  That's not even the appalling part," says Charles Schumer.

The FEDERAL GOVERNMENT, specifically Six Democratic Senators headed by Charles Schumer (pictured here) of New York, wants to hit the airline with a TAX to prevent this from happening.  The first thing that went through my mind was the follwing: "Why doesn't Spirit have the right to charge whatever the heck they want without the GOVERNMENT getting involved?!"  As a business entity, they have the Constitutional right to run their company however they please.  "But that's completely unfair to the customers who have to pay $45!" some would say.  "If the government taxes them, they will lower their prices and everything with return to normal."  How about we just give the government all the control?  Let them set prices, wages, health care benefits, etc.  With the powerful Federal Government protecting us, we won't have to worry about the "unfair" world around us.  I hope you sense the sarcasm, and if you're interested, keep reading.

Using a model simple enough for a 6th grade economics class (do those exist?), suppose there are two coffee shops - both with equally satisfying product and atmosphere, both equally convenient for the customer.  One charges $1.75 for a cup of coffee, and the other charges $5 per cup.  Both have the equal right to set whatever price they want (and should be able to hire whomever they want, and set wages at whatever level they want - but that's another discussion for another time).  The smart consumer will choose the cheaper coffee, right?  This will lead to decreasing sales for Coffee Shop B and will force their hand.  They can either go out of business because their prices are too high, or they can lower their prices DUE TO THE COMPETITIVE NATURE OF THE FREE MARKET SYSTEM.  I think you see where I'm going with this.

You would think it's absurd if the coffee drinker went to their senator looking for a tax on "overpriced coffee"  when they can simply choose the other coffee shop.  I think it's absurd that these six (Democratic) senators feel the need to barge into the free-market system and impose a government tax on this airline company.  Let the market decide.  Let the customer choose not to fly Spirit.  Let the American economic system do its part to decide what an acceptable fee is for carry-on bags, or cable television, or scented candles, or coffee.  But please, Federal Government, don't get yourself involved.