Finally! A Step In The Right Direction

Dec 5, 2002
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One of the greatest strengths of the US is its free market, laissez faire form of capitalism. It may be ugly at times and it may result in some non-value maximizing outcomes (though rare), but it is the best way to ensure productive growth of our society and it is the reason that US per capita GDP is USD 36,300, while that of France is USD 25,400. A key facet of our system is the destruction of failed business models and the reallocation of those assets by superior managers. That is what will happen to UAL. And as we lament the end of this current version of UAL, we should all feel confident that our system works. The ATSB was a mistake. It should never have been created. And by taking this stand, the ATSB shows that political pressure from self-interested Illinios Senators will not result in the US being like France (e.g. France Telecom).
So what will happen now? The planes will still fly. But they may be fewer of them, allowing other airlines to grow or raise prices. Assets may be sold off by creditors, but if they are good assets, other airlines/investors will pay for them and use them more productively than UAL. Employees may be let go, but that is what happens when a failed business model restructures and we rarely feel sorry for smaller firms that fail. They never make the Channel 5 news. The remaining employees will likely be paid less, but the UAL cost structure and business model could not support the lower revenue derived from lower ticket prices. Passengers have placed a lower value on air travel (leftward shift of the demand curve), so UAL employees will have to get used to it...or leave.
At the end of the day, our economy will be better off. It''s brutal. It may be ugly, but it works. What all UAL employees should be upset at is the unions. Not because the unions failed to act fast enough or raised costs too high. Those are the GOALS of unions. They should be upset they were sold the 1994 ESOP. Employee ownership never works. Never has, never will. The interest of employees and those of equity holders can never be fully reconciled and usually result in poor decisions (e.g. hiring of Goodwin over Edwardson).
That''s it. See you on the otherside.
 

Segue

Senior
Oct 31, 2002
276
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www.usaviation.com
It was a grand experiment. The workers actually owning the means of production. Think of it. The communists parties of the Soviet Union and China could have only dreamed of such a model - the workers sacrificing for the greater good of the larger organization. It sounded like the beginning of a new era.

But like other grand experiments, this one failed.
 

Segue

Senior
Oct 31, 2002
276
0
www.usaviation.com
It was a grand experiment. The workers actually owning the means of production. Think of it. The communists parties of the Soviet Union and China could have only dreamed of such a model - the workers sacrificing for the greater good of the larger organization. It sounded like the beginning of a new era.

But like other grand experiments, this one failed.