published Sunday, November 18th, 2012

Economic survival 101

Is it unkind or just realistic to say that a lot of Americans would benefit from a crash course in basic economics — or at least consumer math?

For a moment, disregard the biggies. Forget the chilling indifference of many citizens toward a national debt that now exceeds the value of everything the U.S. economy produces in a year.

Set aside the fact that an astonishing number of Americans hold the unfathomable view that we can rapidly add tens of millions of people to government-run medical care through Obamacare without serious financial consequences.

No, one needn’t look at the Jupiter-size examples of fiscal lunacy to realize that something is badly amiss in the public’s — and Congress’ — understanding of economic reality.

Take the ceaseless uproar over airlines’ efforts to shore up their finances.

The outrage toward the carriers is formulated more or less along these lines: “Did you hear that (fill in the blank) airline is making you pay nowadays for your first checked bag? It’s even charging for things like pillows and bottled water that used to be free! What a bunch of greedy fat cats! I wish they’d go out of business.”

Wish granted!

Or very nearly.

American Airlines filed for bankruptcy last November, “following in the footsteps of United (2002), US Airways (2002 and 2004), Delta (2005), and a host of others that have gone under or have been merged into anonymity, including TWA, Pan Am, Eastern, and most recently Continental and Northwest,” writes James Glassman, an adviser to the U.S. Securities and Exchange Commission, on Forbes.com.

And here is another choice fact for those who think paying for extras on airlines is just a gouging scheme — and for lawmakers who know better but are ever eager for a pickup game of class envy: The airlines lost 150,000 employees and a jazzy $55 billion during the first 10 years of this century.

Everybody happy now?

What gets missed in the discussion of paying for extra legroom or food or baggage is the original purpose of those fees: to hold down basic ticket prices.

Facing a recession and skyrocketing fuel costs in recent years, airlines have had to restructure and rethink their business models.

Now, instead of paying higher across-the-board fares to subsidize for others the snacks, luggage conveyance and similar amenities that he may not want, a passenger can pay in a more a-la-carte fashion for the things he does want. In other words, the actual users of certain goods and services get to foot the bill for them.

What a concept!

With half a moment’s thought, many of the critics would realize that this is precisely what they have been clamoring for from cable TV companies: to let them pay only for the channels they want, not for slow-motion train wrecks such as E! and MSNBC.

Alas, uninformed chatter by the flying public is not the real threat — except to the extent that it gives populist cover to members of Congress who never miss a chance to raise taxes.

Uncle Sam slaps a 7.5 percent tax on airline tickets. But the tax doesn’t apply to baggage fees. That’s a boon to passengers and airlines alike. It reduces travel costs and encourages more people to fly, spurring economic activity.

But in Washington’s eyes, missed tax revenue is a disaster on the order of Madonna’s film career. So, The Washington Post reports, Congress is contemplating slapping a tax on baggage fees, too. Just so they don’t get too fat-catty, you know.

That presents the troubling prospect that federal lawmakers may soon be seen throwing planes under buses.

Just what a beleaguered industry needs: yet another reason to go bankrupt.

30
Comments do not represent the opinions of the Chattanooga Times Free Press, nor does it review every comment. Profanities, slurs and libelous remarks are prohibited. For more information you can view our Terms & Conditions and/or Ethics policy.

Yes, because finding ways to evade taxes is a behavior we should encourage in this country?

Why don't these airlines just forego all the services provided for by the taxes?

But heck, apparently you haven't noticed that as they've done all these things, the companies keep doing worse and worse.

Maybe these solutions you endorse aren't actually doing any good for some reason.

November 18, 2012 at 12:18 a.m.
nucanuck said...

And why did those airlines go bankrupt? Through bankruptcy they were able to shed their pension obligations and push them off on the American taxpayer.

Welcome to the world of corporate bailouts...airline style. Corporate welfare is crushing the middle class through the build-up of government debt...numbers far greater than the welfare for the poor that we here so much about.

Our rich have never had it so good...ever! And just who set that honeypot in place?

November 18, 2012 at 1:07 a.m.
rolando said...

Yes, encouraging it is exactly what we need these days, bulbs.

It's the waste -- e.g., billions in "tax credits" [aka free money] to illegals for the their un-provable claim for children in Mexico. Yeah, right.

Tax everything for the chil-l-l-ldren [and the lazy, good-for-nothing leeches -- the 47% who pay zero federal income tax].

November 18, 2012 at 7:34 a.m.
conservative said...

"an astonishing number of Americans hold the unfathomable view that we can rapidly add tens of millions of people to government-run medical care through Obamacare without serious financial consequences."

I don't think it is so much ignorance as it is greed. Many voted for someone else to pay their bills. They don't pay federal income taxes so they have no skin in the game and could care less.

November 18, 2012 at 7:37 a.m.
lkeithlu said...

Both conservative and rolando have forgotten that the "47%" include veterans and the retired. Not to mention all of us tax payers that voted for Obama.

Don't let facts get in the way of a good stereotype.

November 18, 2012 at 9:04 a.m.
conservative said...

“Did you hear that (fill in the blank) airline is making you pay nowadays for your first checked bag? It’s even charging for things like pillows and bottled water that used to be free! What a bunch of greedy fat cats! I wish they’d go out of business.”

It is the same with the health insurance business and the utility companies. People can't or won't look past the billing agent. When that carbon tax is imposed on the utility companies and the utility companies pass the cost on to the consumer ( higher electrical bill) most will rail against the utility companies.

November 18, 2012 at 9:19 a.m.

rolando, indeed, your use of the "47% who pay no income tax" is demonstrating how fraudulent your claims are.

The reality is that most of that group is retired senior citizens, disabled, or children, not adults available for employment.

Most of the first group would have already paid their share of taxes, and they still may pay numerous other taxes besides the income tax.

And their income? What is it? How much? Let's see how much you can take in your resentment-based class warfare.

conservative, then how does this track with the number of times you've tried to convince us that requiring people to pay for their health insurance would be a burdensome tax?

You do realize that according to Mitt Romney, if you're poor, you can get all the health care you need, and he's ok with that, right?

Why are you supportive of that from him, yet claim resentment here?

Or do you know nothing about the health care reform which follows your own party's prescriptions, even if they'll never admit to it?

Or is it the more likely case that you don't care about your logical inconsistencies, you're just throwing any tar you can find around and hope it sticks.

BTW, our current health care system has already had serious financial consequences. There's a reason why the US on average pays twice as much for health care as other countries.

You can sit on your fanny and diddle while this country plows more and more into the health care industry to no greater gain, or...you can go with your own party's ideas, or you can adopt something else.

But no, all you have is complaining, without even admitting that it was your own ideas.

November 18, 2012 at 10 a.m.
conservative said...

"The Washington Post reports, Congress is contemplating slapping a tax on baggage fees, too"

The Liberal press will likely refer to this as closing a "loophole", a word which lawmakers and Socilaist use to stir up resentment in the frail of mind in order to justify the bringing in of more revenue for wasteful government.

November 18, 2012 at 10:06 a.m.
nucanuck said...

rolando, I think I recall that you have had a life of various government jobs and now multiple government pensions. If true, then wouldn't you be a poster boy for government welfare? Surely you understand that those pensions are paid out of the general fund, not a set-aside of YOUR savings.

Hypocrit much?

November 18, 2012 at 10:26 a.m.

conservative, actually, the person who said they were going to close loopholes was none other than the GOP candidate.

Now apparently you disagree with that tactic.

Huh.

November 18, 2012 at 10:52 a.m.
aae1049 said...

I am truly amazed at the number of Americans that think the Gov can stop the crash. Stimulus deferred or prolonged what is coming. Washington is extraordinary dysfunctional and full of narcissistic people that would only act in their own interest. Like it or not, we are going to get a crash course on less government is better.

https://www.youtube.com/watch?v=FPPUgykDc1g

November 18, 2012 at 12:42 p.m.
aae1049 said...

Senator Bob Corkers presentation is very informative. Ron Paul also gets it. I don't have room for blame, Dems and R's greed caused this, and it is unstoppable.

http://www.corker.senate.gov/public/index.cfm?p=america-s-debt-crisis

November 18, 2012 at 12:48 p.m.
conservative said...

I wish the business community would get together, calculate the cost that regulation and taxes add to the cost of their product or service and then post this on the ticket, on the menu, at the door, on the receipt etc., so the public could see the role government has in the final cost of the product or service they purchase.

November 18, 2012 at 1:45 p.m.

Only if they also calculate the benefits and protections they receive from said government, not society in general, but themselves.

I dare you, figure out what your life would really be like with that less government you so dearly praise.

See...Washington isn't the only place full extraordinarily dysfunctional and narcissistic people. There's plenty of self-serving John Galt Wannabes who think they are the gift to the world, not the other way around.

I'd almost wish you could go through your crash, to see what you cost yourself.

November 18, 2012 at 2:08 p.m.
aae1049 said...

Happy,

I want the government to take care of infrastructure, military, and essential functions only. They need to withdraw from economic puppeteering.

Free enterprise and drive to succeed built our country into the greatest nation in the world. Gov has ruined free enterprise by using public resources for private pursuits that chronically fail. Gov needs to stay out of picking the winners.

This is occurring at all levels of gov. For instance, local governments are issuing PILOT (exempting the chosen from property taxes, so we pay their share of services) and TIFs (working capital for private development, with tax dollars). Stupid local governments issue on a first come, first serve over basis, mostly for their political friends, rather than issuing on the return on investment. In fact, Gov is signing contracts that only stupid people sign, where we invest with no claw back if they fail to deliver. It is wrong to leverage public bond issue capability for private pursuits, while infrastructure deteriorates.

This why Chattanooga annexes, to raise the 10 percent of total assessed properties bond debt limit. Annexation is about preserving bond debt ceiling. Bonds issues are the en vogue method to rob tax payers. They want Mo Money for their political A List friends.

Gov needs to get out of the way of free enterprise. Barry Soetoro and the solar farm is a federal example. Get informed Mr. Happy.

I guess you support Corporate Welfare as well.

November 18, 2012 at 2:59 p.m.
conservative said...

"Set aside the fact that an astonishing number of Americans hold the unfathomable view that we can rapidly add tens of millions of people to government-run medical care through Obamacare without serious financial consequences."

They don't care, they don't plan on paying for it, it is just one more freebe in their minds.

November 18, 2012 at 3:39 p.m.

Actually, what built our country was having a surfeit of resources available, and which were exploited in a variety of ways.

Including some corporate welfare equivalent to those PILOT matters you're talking about. Check out the history of the intercontinental railways. Or Patents and Copyrights. Or the Homestead Acts. And yes, there was corruption there too. Watch the AMC program Hell on Wheels for examples, or look up James G. Blaine.

But great, you want the government to take care of "infrastructure, military, and essential functions only"

Which is about as useful a definition as saying you only want the government to decide the important stuff without bothering to be specific.

But hey, Solar Farm? What about you talking about? The US has had a steady growth in Solar Power Plants, and that market is growing. I don't understand the problem. Are you thinking about Solyndra? That's the usual example from the conservatives (despite the fact that it was there bill in the first place). But that's not a farm. Solyndra was a factory producing solar panels, and produced a fine product.

That got taken down by Chinese subsidies which drove prices down to the point where they couldn't compete. Now maybe you want to complain that the Chinese shouldn't have done what they did, but what were you going to do to stop them? Wave your hands in the air and complain about how terrible it is?

Sorry, but the government has a duty to its citizens, and a refusal to act because of fears of corruption? Only leads to somebody else less benevolent taking over.

You can pretend some laizzes-faire anarchy works better, but there's enough examples of that in the history of the US to show that to be false. Not just economic mind you, but social as well.

Keep your Lochner era mentality far away from me. I'd rather deal with corruption than pretend doing nothing leads to more virtue.

November 18, 2012 at 3:48 p.m.

conservative, we have serious financial consequences in the health care field already. There's a reason why the US is paying more than other countries.

Why won't you deal with that?

November 18, 2012 at 3:49 p.m.
lkeithlu said...

conservative: I wish the business community would get together...

Indeed-and set standards for decent wages, good benefits, care of the environment and standards for worker safety and product reliability, then set up an honest system of policing each other so government oversight and regulations (or unions for that matter) were not needed.

November 18, 2012 at 4:04 p.m.
aae1049 said...

Interesting Happy, you get your history and institutional knowledge of corporate welfare from "AMC program Hell on Wheels." Free enterprise and will did build our country, called the Industrial Revolution. Resources without ingenuity and drive to succeed mean absolutely nothing. Try a book, and quit relying on TV for your knowledge :-)

Typical liberal, you have inaccurate labels for less government, which does not mean no government. I like good government and support an infrastructure and military mission, and you call it, "laizzes-faire anarchy." Name calling is a typical response for concepts you don't understand, an easy way out for you.

You are part of the "Save Me Washington" mentality.

November 18, 2012 at 4:52 p.m.

Sorry aae1049, your petty insults only degrade you. I merely suggested one dramatic example with historical references and you decide to insult my sources of knowledge with an unsubstantiated bit of hyperbole. Your choice of actions reflect you, not me.

Thanks for showing your character. Try being respectful instead of looking for whatever quick insult you can pull to hand.

Or just continue to be a typical conservative, always degrading others with imaginary claims that have no basis in reality.

It's an easy way out for you.

You are part of the "Attack and Destroy" mentality. With a side of hypocrisy, or didn't you notice how you're engaging in name-calling?

You're really bad for my humility though, opposition as terrible as yours is enough to give me a serious case of overconfidence.

November 18, 2012 at 5:32 p.m.
aae1049 said...

Your words, not mine. You did indeed direct me to "AMC's Hell on Wheels" for historical reference.

November 18, 2012 at 6:16 p.m.

Actually, your words were that I get my "history and institutional knowledge of corporate welfare from "AMC program Hell on Wheels." thereby making a claim about my resources.

An entirely fallacious one, done purely to try to get in a dig.

All it did was expose your behavior again.

Too bad you can't be responsible for your own words or conduct.

November 18, 2012 at 6:43 p.m.
aae1049 said...

Happy, You did indeed refer me to fictionalized television for history. Perhaps this is the problem, liberals need better source material.

This is what you wrote verbatim,

"Including some corporate welfare equivalent to those PILOT matters you're talking about. Check out the history of the intercontinental railways. Or Patents and Copyrights. Or the Homestead Acts. And yes, there was corruption there too. Watch the AMC program Hell on Wheels for examples, or look up James G. Blaine."

November 18, 2012 at 6:59 p.m.

Nope, your problem is still your conduct.

See you can't admit your words for what they were doing, namely trying to disparage me with an exaggerated and disingenuous claim.

You only succeeded in making yourself look bad. Heck, you even quoted my words again where I gave you another source to look up.

But you couldn't do that, you couldn't check for facts, you had to go derogatory.

You really need to stop being your own worst enemy.

November 18, 2012 at 7:23 p.m.
aae1049 said...

Happy, do you dispute referring me to "Hell on Wheels" for examples of history? Simple yes or no will do.

I make no apologies for my belief system to you or anyone else.

November 18, 2012 at 7:34 p.m.

aae1049, do you admit exaggerating and distorting what I said in order to attempt to disparage me? Do you acknowledge that you took one part of a statement and produced a complaint about references that shows no basis in reality?

Not that you've actually demonstrated any fault in the AMC program I referred you to, that's true as well. But even aside from that failing of yours, your decision to make such an empty attack of hyperbole instead of discuss matters is questionable enough.

And actually, when you consider that an "apologia" is an explanation, yes, you kinda do need to apologize for your belief system, because a belief system that cannot be explained or justified is a terrible one.

So tell us, what belief system lets you engage in such misrepresentations?

And from what Leonard Pitts had to say, you don't seem to be quite as much of an anomaly among the right-wing conservatives:

http://www.miamiherald.com/2012/11/17/3102291/gop-flame-throwers-estranged-from.html

Keep throwing those flames, you're just burning yourself.

November 18, 2012 at 7:51 p.m.
fairmon said...

happywithnewbulbs said...

Only if they also calculate the benefits and protections they receive from said government, not society in general, but themselves.

Regardless of any benefit to a business from governments all legislatively imposed cost by local, state and federal governments are included in the cost of goods and services when purchased, the consumer pays. A tax on what is spent instead of earned with protection for those on the low end of the income scale with a quarterly rebate would be fair and share the wealth better than any system proposed to date. It would also collect from all the black market, illegal income and all other unreported income that now avoids paying income taxes.

The air lines "user pays" concept could and should be applicable to more things that are supported by those never using or needing a government supported asset.

November 20, 2012 at 4:18 a.m.
328Kwebsite said...

The wall between editorial and the newsroom is not supposed to keep facts out of the Free Press.

Thanksgiving's right around the corner. New Cub Editor-in-Chief will soon have his first chance to operate machinery in his factory on Thanksgiving. Feed a head in the mailroom, Drew.

Then we'll hear what you have to say about improving manufacturing. Until then, you're still a cub. Happy Thanksgiving.

November 20, 2012 at 9:16 p.m.
please login to post a comment

videos »         

photos »         

e-edition »

advertisement
advertisement

Find a Business

400 East 11th St., Chattanooga, TN 37403
General Information (423) 756-6900
Copyright, Permissions, Terms & Conditions, Privacy Policy, Ethics policy - Copyright ©2014, Chattanooga Publishing Company, Inc. All rights reserved.
This document may not be reprinted without the express written permission of Chattanooga Publishing Company, Inc.