Everyone outraged by Spirit Airlines’ decision to start trying to charge an extra fee for people who want to use the overhead bins—including Chuck Schumer who seems to be aiming for a quasi-regulatory solution or else a way to get on camera—should consider Paul Krugman’s argument that price-discrimination in monopolist-dominated markets is socially optimal. Here’s page 280 of his economics textbook, part of Chapter 7: Market Structure Beyond Perfect Competition:

This is a somewhat counterintuitive result to most people, but the argument is extremely convincing. You’re never going to have air travel meet the textbook definition of a perfect competition (there’s not enough demand on most routes to support a large number of competing airlines) so business-process innovations that help airlines think up more precise ways of tailoring prices to specific elements of consumer demand help advance human welfare.

Any pure partisan Democrats out there afraid that the right wing is going to hit upon some genius ideas to appeal to middle class voters’ economic aspirations have, I think, little to fear from the notions in this National Review symposium. Yuval Levin proves to have the solidest right-wing bona fides as he manages to incorporate a proposal for a giant tax cut for rich people (key phrase: “cut the number of tax brackets”) into an unrelated proposal for a larger child tax credit. You also get innovative proposals like James Capretta vision of recycling

John McCain’s substantively unsound and wildly unpopular health care plans. But some of these ideas—like Reihan Salam on housing affordability—are pretty good, albeit probably not huge political winners.

And then there’s Robert Poole on making airports better. His main proposal is something I’ve been supporting for a while:

Today’s landing fees are proportional to the weight of the plane, which encourages airlines to clog these airports with lightweight regional jets providing hourly service (e.g., from New York to Chicago), when the same number of passengers could be accommodated on larger jets operating every other hour. But no airline wants to be the only one to reduce flight frequency, so they all create a “tragedy of the commons,” producing massive delays. Market-value runway pricing would change those incentives, dramatically reducing congestion.

And here’s another idea about which I know little:

Air-traffic control needs to be reinvented as well, so it will have enough capacity to handle continued growth at an affordable cost. This means replacing manual, radar-based control with GPS satellite navigation, digital communications, and automation of routine functions. But it also requires institutional reform. Instead of being a tax-funded, congressionally micromanaged bureaucracy, the air-traffic organization should be detached from the FAA and converted into a user-funded, user-governed nonprofit entity like the highly successful Nav Canada (and similar entities in Australia, Germany, the U.K., etc.). That would free it from interference by Congress and dependence on always-uncertain annual appropriations.

As best I can tell, this Nav Canada story checks out. And as the correspondent who drew my attention to this proposal wrote, “I don’t consider the Canadians either insane or prone to unsafe behavior.” Clifford Winston and Robert W. Crandall at Brookings have also made this proposal: “We and others believe stronger actions are advisable, actions which would transfer the FAA’s responsibility for managing air traffic control to an independent private entity such as Nav Canada, the Canadian air traffic control organization.”

So provisionally I’m on board—we need a Nav Canada for the United States. Or maybe we could team up and have a Nav North America. But if there are readers out there with more intimate knowledge of air traffic management than I have, please do send in some emails with thoughts and links.

I was getting mad yesterday about private jets. Mark Kleiman reminds us that there’s actually something perfectly sensible we could do about it—charge market rates for runway slots.

Private jets completely aside, this would be very good public policy. In essence, it would create incentives for the runway slots at peak-demand times to be filled with large-capacity planes meaning that more customers could travel during the aforementioned peak demand times. It would also provide an additional discount for flights happening at low-demand times creating options for travelers for whom budget is the primary concern. And as a side-effect of all of this, it would make it much more expensive to fly a private jet into a major airport.

Citigroup may be an insolvent zombie bank whose stock only has any value because investors are willing to bet on the possibility of a government bailout, but that’s not stopping them from buying a $50 million new corporate jet:

Even though the bank’s stock is as cheap as a gallon of gas and it’s burning through a $45 billion taxpayer-funded rescue, the airhead execs pushed through the purchase of a new Dassault Falcon 7X, according to a source familiar with the deal. [...]

“Why should I help you when what you write will be used to the detriment of our company?” replied Bill McNamee, head of CitiFlight Inc., the subsidiary that manages Citigroup’s corporate fleet, when asked to comment about the new 7X.

“What relevance does it have but to hurt my company?”

As an example of the difference between nationalizing a bank as part of a rescue package and simply getting its toxic assets “off the balance sheet,” in a nationalization scheme the taxpayers whose money is paying for the jet would also own the jet and be in a position to sell it off. Under a Classic TARP plan you pay for the jet, but Citigroup’s shareholders own the jet, and Citigroup’s managers get to use the jet.

Meanwhile, whenever you see these jets, keep in mind that (a) first class airfare is incredibly expensive, (b) first class air fare is cheaper than corporate jets, (c) first class airfare is very posh, (d) any company that needs a special subsidiary to operate its fleet of jets needs a union so as to redistribute some of the surplus away from managers and toward lower-level employees.

Interesting concept from Jason Kottke who’s listing all the cities he’s been to in 2008. My list (not counting places I just drove through or switched planes in) with asterixes for places I’d never been before:

• Washington, DC.
• New York, NY.
• Los Angeles, CA.
• Claremont, CA.*
• Riverside, CA.
• Tuscon, AZ*
• Austin, TX.*
• Miami, FL.
• Chicago, IL.
• Geneva, Switzerland.*
• Helsinki, Finland.*
• Kitty Hawk, NC.
• Minneapolis, MN.*
• Las Vegas, NV.*
• Baltimore, MD.

All told, I think I did more traveling this year than I had in some time which at times got exhausting (those were three separate trips to Southern California) but overall I found incredibly fun and interesting. I’m still very eager to get to the Pacific Northwest at some point as I’ve never been to Portland, Seattle, or Vancouver and not to the Bay Area since I was a little kid. That or, you know, Asia.

UPDATE: And Cambridge, MA! Apologies to SR my host in that fine town.

I’d really like to visit Copenhagen some day. For now, I’ll need to settle for Copenhagen Airport. Extremely elegant architecture and design here at the transfercenter as I’m waiting for my connecting flight to Helsinki to get a gate assignment. Also: A 7-11. Hadn’t realized there were 7-11s abroad.

I feel like crowing about how you’re going to sell two private jets in response to a jet-related PR fiasco is going to be counterproductive once people find out that you’ve still got three private jets. That’s way more private jets than normal people have. And it seems that GM CEO Rick Wagoner intends to keep flying private for all his personal and business travel.

These jets are not only a grotesque example of run-amok inequality in the United States, they’re an environmental disaster.

You would think that if car company executives wanted to take private jets to DC they could at least share a single private jet rather than going in three separate private jets:

Wagoner’s private jet trip to Washington cost his ailing company an estimated $20,000 roundtrip. In comparison, seats on Northwest Airlines flight 2364 from Detroit to Washington were going online for $288 coach and $837 first class.

After the hearing, Wagoner declined to answer questions about his travel.

Ford CEO Mulally’s corporate jet is a perk included for both he and his wife as part of his employment contract along with a $28 million salary last year. Mulally actually lives in Seattle, not Detroit. The company jet takes him home and back on weekends.

Meanwhile, conservatives are outraged that unionized workers get pensions.

I was rooting around in my bag a couple of hours ago looking for a nice pen I “borrowed” from the Mandarin Oriental in Geneva (very nice hotel — pushing US public policy in a more pro-Rolex direction is now my top priority) what did I find but a Swiss Army Knife that someone or other had put in one of my Switzerland gift bags. I didn’t really think much of it, but on reflection I carried the bag in question onto the plane for the Geneva-JFK leg of my return travel. And I cleared security for the JFK-DCA leg with the knife in the bag and only didn’t wind up boarding the flight because it got canceled.

In the latter instance, I was even singled out for special enhanced scrutiny, but they still let me take a knife on the plane — the precise thing all this security is supposed to prevent. But God forbid I’d tried to walk through security with a couple of brought-from-home Diet Cokes to drink while waiting — there are big markups and profits at stake in the liquids ban.