I have seen a lot of bad arguments regarding the United Airlines passenger debacle the other day. Time to shoot some of them down.
"This is what happens when your libertarian free-market capitalism runs amok!"
Airlines are one of the most heavily-regulated industries in the world. Startup competition is almost impossible. Government police were sent to enforce this airline's bad decision process. Everything here is proof of government failure, not free market failure.
'Well, don't you support private contracts and oppose trespassers? He was refusing to leave private property!"
The passenger paid for a ticket and was given a seat on the plane in accordance with his ticket. The time to deal with an overbooked flight (which could be termed fraud in the first place) is in the terminal, not after boarding passengers. A first-come-first-served approach would make a measure of sense if there are too few seats.
Since United messed up there, they did offer to buy out passengers, but the simple economic fact is that people valued reaching their destinations at the previously-agreed time over the $800 offer, so a higher offer needed to be made. Calling for the police demonstrates bad faith on the part of United, not criminal behavior on the part of the passenger who merely wanted to receive the service for which he had paid.
Arguments based on contract law assume there was meaningful consent to the contract. See the previous comment about the de facto cartel nature of the airline industry. Since megacorporations are so intertwined with government through the byzantine legal and political systems, it is disingenuous to claim private property privilege, especially when disregarding the property rights implied in a ticket to use their service.
"Well, he should have obeyed the police! Do what they say and you won't get beaten!"
No. That would be a fallacious appeal to authority with a heavy dose of victim-blaming. The airline called the police because bureaucrats didn't want to negotiate in good faith to fix the problem they created.
"Well, this still proves market failure!"
The plummeting stock price still demonstrates market disapproval. If competition weren't so heavily restricted, United would have been out of business long ago, especially since United breaks guitars!
Although I'm not sure to what event you are referring to in your post, I do agree with your statements.
In commercial business, the parties shall come to an agreeable solution; the airliner shall compensate sufficiently; the police shall be used for other duties, not to resolve conflicts over a contract.
In general, indeed it is not easy to compete to existing airliners, but I must say, many big airliners are playing the cards as they are allowed by law. Any large corporation has political influence, airliners, oil companies, food conglomerates, you name it.
Competition may not only come from private money, but also government money (china, emirates) or at least backed by governments (in Europe we have to deal with eg China Airlines and Emirates flying for such low prices per chair, so low it is for sure not sustainable, but with government shareholding and/or backing anything is possible).
In my book, the price for a seat in an aircraft is often not covering the really costs. Especially when we would add the cost to environment pollution/damaging into the cost price (we still do not do this anywhere in the world). The price difference for the same seat is getting bigger and bigger; with the businesses paying the top dollar since they require more than the private person to be able to fly personnel to their customers to close a deal, or to solve an issue, last minute. The last minute as well as the ever increasing price differences for the same seat, are actually direct causes from the free market, but that is another topic than you addressed in your post :)
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If I understand correctly, United Airlines boarded passengers ont a plane for a flight, and then after the fact decided they were overbooked because some UA employees wanted to hitch a ride too. SOP is to deal with overbooking in the terminal before boarding. Since people were already seated, they offered to buy out passengers with cash, a ticked for another flight, and a hotel room. There were no takers after they raised the cash offer. So they randomly picked 4 passengers to kick. One of those passengers was a doctor who objected to being kicked out of his seat, and the airline called the cops to beat him up and drag him off by force instead of trying to make a better deal.
UA screwed up, and they punished a customer.
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Very interesting approach to customer service. Indeed, I do agree, this should have been settled through negotiation and by offering the right compensation.
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