The Shutdown’s Real Lesson: Government Has Taken Hostage Too Much of the Economy
We are in the third week of the federal government’s
partial shutdown. The shutdown is affecting the lives of many
federal workers and may soon start disrupting the broader economy.
Because the government exerts control over major industries, when
the politicians butt heads, it damages activities such as aviation,
tourism and recreation.
The problem with the shutdown is not that President Trump is holding the government
“hostage,” as House Majority Leader Steny Hoyer
said, but that the government has taken hostage of too much of
the U.S. economy.
Consider security screening at the nation’s 450 commercial
airports. The government took over that function in 2001 when it
created the Transportation Security Administration. Over the years,
the TSA has generally done a poor job, caused
congestion and wasted a lot of money.
Political battles would
not impact important activities if they were separated from the
And now, because the TSA is the only screening organization we
have, the shutdown may affect the entire nation’s air travel.
A spokesman for the TSA screener’s union said
Tuesday: “Some of [my members] have already quit and many
are considering quitting the federal workforce because of this
shutdown … The loss of officers, while we’re already
shorthanded, will create a massive security risk for American
travelers since we don’t have enough trainees in the
He’s probably exaggerating the risk, but political battles
would not impact such important activities if they were separated
from the federal government. Many advanced nations, including Britain and
France, have privatized their screening or moved it to the control
of local airports. If we followed suit, there would not be just
one “pipeline” for trainees because airports could
contract services from numerous companies.
It is a similar situation with our government-run
air-traffic-control system. The spokesman for the federal controller’s union
said the negative “ripple effect” of the federal
shutdown may last months or years, while the head of the Airline Pilots Association said
“the disruptions being caused by the shutdown are threatening
the safe operations” of the nation’s airspace.
During the 2013 budget sequester battle, controllers were
furloughed and thousands of flights were delayed before the
politicians cobbled together a budget deal.
All of this is unnecessary. Dozens of nations have separated
their ATC from their government budgets. Canada privatized its ATC system in 1996 as a
self-funded nonprofit corporation. That structure has created
financial stability, improved management, and generated innovation.
The U.S. controller’s union has been so frustrated with
federal budget instability and the slow pace of innovation under
the current structure that it has backed Canadian-style ATC reforms.
Millions of Americans and the tourism and recreation industries
are being affected by National Park Service furloughs.
“National parks face years of damage from the government
shutdown,” a National Geographic writer said. The national
parks have long suffered from deterioration and mismanagement even
under normal operations.
The solution is to restructure the parks as nonprofit
organizations self-funded by fees and contributions, or to transfer
them to state control. Today, while the government’s Frederick Douglass National Historic Site in
Washington, D.C. is closed, the well-run and private Mount
Vernon in Virginia-home of George Washington-is open for
As federal deficits soar in coming years, budget battles will
worsen. That will cause more shutdowns, and it will mean that the
national parks, air traffic control system and other assets will be
starved for investment.
Our ATC system needs billions of dollars to upgrade to new
technologies such as satellite navigation, but it is not clear
where the money will come from under current federal control. As
for the NPS, it faces at least $11 billion in deferred maintenance
because appropriations must be spread over a bloated system of more
than 400 parks and sites.
Amtrak and the U.S. Postal Service are not affected by the
shutdown, but they are losing billions of dollars on their
inefficient operations and can’t make needed reforms because
of Washington’s dysfunction. They should also be cut loose
from federal control.
Privatization of such businesses may seem radical, but a privatization revolution has swept the world since the
1980s as more than 100 countries have moved more than $3
trillion of state-owned businesses to the private sector. Air
traffic control systems, postal services, passenger rail and other
activities have been successfully privatized abroad.
The federal government’s budget management is a total mess
and getting worse. To limit the damage, it’s time to untether
the government from as much of the economy as possible.