The Power of Capitalism: The Aftermath of United

The Power of Capitalism: The Aftermath of United


(Nam Y. Huh/Associated Press)

The aftermath of United Flight 3411 was a demonstration of the power of Capitalism. Whether or not you agree that the doctor should have left voluntarily or not, it was very clear that the general public was not supportive at all. However, it did not take a government agency to force United to apologize, no, it was the power of the market.  

Businesses live and die by the grace of their consumers. Competition ensures that businesses compete in the interests of their consumers. When consumers are unsatisfied, businesses will suffer unless they can solve what’s bothering their customers. This is pretty elementary stuff and anybody with a basic understanding of the principles of capitalism can understand this.  

It was Milton Friedman who said:

The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another 

The lesson one can learn from the aftermath of the United incident is that competition ensures accountability. Friedman understands that individuals are motivated by self-interests. The self-interests of the United CEO is profit for his company. When his profits are under threat, this is what motivates the apologies, the compensation, and the change. The reasoning behind this is United has to compete. There are plenty of other airlines out there, and if the consumers are displeased with United’s services and a boycott happens, the options are limitless.

The beauty of the free market lies in the freedom of the individual to choose. Most individuals choose based upon their emotions, and others choose solely on the basis of opportunity costs. The issue with United is, the decision can be based emotionally and on opportunity costs.

Would you pay a little more with another airline if you are ensured you will not be thrown out if the plane is overbooked?

According to CNN money, Delta Airlines is considering to offer up to $10,000 to a customer who gives up their seat on an overbooked flight. This change to Delta’s policies did not come out of compassion, it came out as a strategic move to compete with United. The winner of this new policy change is the consumer. The consumer always benefits when the market holds companies accountable. The situation that unfolded on Flight 3411 led to serious conversations concerning the policies of Airlines and overbooked flights. The customer is king and the consumer always wins. United is taking drastic steps to ensure their customers come back. Sure, United was following the policy that all airlines follow, but now this policy has the potential to change.

The public does not know what United CEO Oscar Munoz actually feels. No one will ever know if he was actually sympathetic or truly apologetic but what held him accountable for the actions of his company was the market. Individuals are always going to pursue their own self-interests, and if their self-interests can only be achieved by serving their fellow man, they will be compelled to do so or risk losing it all.  

Markets hold corporations accountable, the government does not.  

Follow this author on twitter @Virak_Ath

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