A debate about the moral limits of markets would enable us to decide, as a society, where markets serve the public good and where they do not belong.
The A380 was designed to fly point-to-point (bypassing hubs) with more people but less frequently (it was suppose to disrupt the hub-and-spoke model). This Forbes article supports the idea that this strategy was not as profitable as the existing hub-and-spoke model nor did it serve what the market actually wanted – more frequent routes with more options. On a side note, it looks like there was a lot of political pressure by EU political leaders for AirBus to build the A380 (can anyone say jobs program).Quotes from the Forbes article:
I also think it’s interesting that at the same time AirBus was pursuing the jumbo A380, Boeing was actually planning the phase out of the 747 by replacing it with the existing 777 fleet (a smaller more efficient aircraft that can still handle transoceanic routes) which can still operate within the domestic and international hub-and-spoke model.
If this is true, perhaps Boeing actually wanted AirBus to build the A380 and sink a bunch of money in a project that Boeing felt was doomed to fail because they already knew the 747 jumbo jet didn’t work well within the more profitable hub-and-spoke model. The more I think about this, I don’t think Boeing would have built a larger jet regardless of what AirBus did. I think they were planning to go the opposite way all along.
“…news reports followed the company line that the A380 was designed to disrupt the airline industry’s hub-and-spoke model of airline operations…”HT: Sam and Rick
“…the A380 program will be remembered as a massive money loser. It did, however, achieve its political masters’ goal of employing lots of European aerospace workers and keeping the Continent relevant in the high tech aviation manufacturing world.”
“….But given the power of hubs to collect hundreds and hundreds of travelers a day to funnel into multiple profit-making hubs, airlines weren’t about to abandon that successful operating style….. High frequency service aboard multiple mid-size planes was the model that they believed would continue to produce the most revenue and profits because it better fit what travelers actually wanted – lots of access and relatively low prices – than limited access service on one big plane each day in each market. The economic power of the hub was too obvious for airlines to throw it all away in pursuit of Airbus’ grand vision of a mega-plane flying once a day on major international routes.”
Rent controls are a textbook example of a well-intentioned policy that does not work. They deter the supply of good-quality rental housing. With rents capped, building new homes becomes less profitable. Even maintaining existing properties is discouraged because landlords see no return for their investment. Renters stay put in crumbling properties because controls often reset when tenants change. Who occupies housing ends up bearing little relation to who can make best use of it (ie, workers well-suited to local job opportunities). The mismatch reduces economy-wide productivity. The longer a tenant stays put, the bigger the disparity between the market rent and his payments, sharpening the incentive not to move.
... It is unrealistic to expect politicians to ignore voters’ demands. But the danger is that one abuse of power is replaced by another as renters, just like NIMBY's, campaign for regulations to lock newcomers out of the market. Although today’s residents might benefit from capped rent increases, outsiders, faced with less supply and fewer opportunities, will suffer. Just ask the 636,000 people who were queuing at the end of 2018 for a diminishing stock of rental housing in rent-controlled Stockholm. There, the average waiting-time to find a long-term tenancy is ten years and black-market rentals have begun to thrive. Rent control harms almost everyone eventually because the housing stock deteriorates.
In August the knights of the Business Roundtable announced that they are putting “stakeholders” ahead of shareholders as their primary business purpose.
...Every company with revenue of more than $1 billion would have to obtain a new federal charter, in contrast to the current system of state charters.
Instead of serving the interests of the shareholders who own the company, CEOs and directors would have to serve some combination of “the workforce,” “customers,” “the local and global environment” and “community and societal factors.”
...Wu’s assertions about U.S. corporations wholly focused on profit without regard to “employees, suppliers, customers, and the communities to which they belong” would have meaning if he could produce evidence that the best get that way while running roughshod over the aforementioned.
