"When you pay social security taxes, you are in no way making provision for your own retirement. You are paying the pensions of those who are already retired. Once you understand this, you see that whether you will get the benefits you are counting on when you retire depends on whether Congress will levy enough taxes, borrow enough, or print enough money...." ~ Allen Wallis
NoFly Takes Off!
The headlines are grim: At American Airline's St. Louis hub, departing flights are down from 361 to 226. Fliers have 58 destinations to choose from, compared to 82 in 2000. One hundred and thirty four big jets serve the city, down from 193. As you read these headlines, you undoubtedly remember my thoughtful presentation of a solution to the economic plight of the airlines a couple of years ago: the reaction to it was electrifying, or perhaps more accurately, stupefying.
Airline profitability, I pointed out, would be achieved when airlines'modeled after my conceptual NoFly Airlines'disburdened themselves of the accoutrements which are so expensive to buy and maintain: airplanes, crews, insurance, fuel, etc. NoFly would simply sell tickets, called travel notes, for air travel. How could you travel on an airline without airplanes? Other airlines, willing to shoulder the burden of aircraft ownership, maintenance, crews, etc., would accept these travel notes. Why would they do that? Because the government would declare NoFly travel notes a legal tender for airline tickets.
That means that NoFly couldn't exist without the assistance of government, but that is nothing new in the airline business, or the government business. The fact that the airlines shut down for several weeks after September 11, and then received five billion in cash from Uncle Sam to forestall bankruptcy, indicates quite clearly that airlines'like other businesses--are private only nominally, and quite satisfied to get into bed with Uncle Sam.
NoFly would be able to sell tickets at a discount, because of the economy of its operation. Other airlines would soon realize the futility of printing their own tickets, since no one would buy them; and if anyone did, those passengers could only use those tickets for that particular airline, whereas NoFly travel notes had to be accepted by any carrier. Thus, operating airlines--i.e., those with aircraft--could effect a savings on ticket printing by lining up at NoFly's discount window. Additionally, NoFly would arrange for the scheduling, thereby saving the operating airlines still more money. Finally, NoFly travel notes wouldn't fluctuate in price according to the day of the week of departure, or arrival, or length of stay, or whether the flight was over a weekend or not. Simplification would mean further economies.
Several pesky readers (actually, both of them) poked holes in this scheme. One niggling technicality raised was that the airlines would soon have bushel-baskets full of NoFly travel notes. What to do with them? Redeem them for cash from NoFly? NoFly didn't want them back! Sell them to customers? Only NoFly could sell airline tickets--er, travel notes. Uncle Sam said so.
Well, that's no problem. If NoFly's travel notes were a legal tender for travel, they could just as easily be declared a legal tender for air crew wages, for fuel, for hangar space, for airplanes, for insurance, etc. Problem solved. The airlines would 'spend' them to meet expenses. What's more, NoFly, as the issuer of travel notes, could issue more of them when the travel business seemed to need a boost, and cut back on their issuance when air travel became overheated, so to speak. A controlled air travel economy! Absolutely wonderful!
Ok, Ok, I grant you that another problem would then arise: What would the pilots, flight attendants, mechanics, fuel vendors, airplane manufacturers, etc., do with all those NoFly travel notes? Well, they could use them to travel, but that would still leave an awful lot of them accumulating in the pockets of the people who had to accept them. There could only be one solution to this problem: declare the notes a legal tender for everything!
But more problems would arise. NoFly, as the only authorized creator of the notes, could create an immense amount, thus becoming very rich, while destroying the utility of the notes. After all, about the only thing that can block the acceptance of a legal-tender note is their issuance in such amounts that their worthlessness becomes obvious. In that case, no one will accept them, legal-tender or not. So NoFly would switch tactics. Instead of selling the notes, it would loan them into circulation. After all, by this time, NoFly notes would be used as money, and why would NoFly sell its note for'its notes? No, it would just lend them, instead. Thus, no matter how many existed, a greater amount would be owed. NoFly would collect the interest perpetually, and the notes would assume 'value' because they had to be paid back, and there were never enough of them. At the same time, a system of note taxation would be introduced to sop up whatever excess might accumulate'except in the pockets of those whom the government believed worthy: big campaign contributors, for example, and other patriotic citizens.
I realize that this is very general, but great schemes cannot be delayed until every possible contingency has been foreseen and dealt with. Just get started, and fine-tune the system as you go.
A correspondent in Pago-Pago whines that my scheme is already in effect: The Federal Reserve and Internal Revenue Service already exist. Well, nonsense! Is the Fed a quasi private organization? Does it print and issue notes in an attempt to regulate the economy? Does it issue its notes unbacked by tangible wealth? Are its notes redeemable? Was the income tax created simultaneously with the Fed? Does the IRS somehow find loopholes to exempt some firms or individuals? Does--hey, wait a minute!
They've beaten me to it! NoFly took off 89 years ago! Back to the drawing board; I'm crushed. As I've heard said, 'Freedom and fiat are incompatible.'