The TSA & the Economics of a Monopoly Protection Racket

MarketWatch reports,

Between shelling out hundreds of dollars in airfare and forking over even more for ancillary fees, travelers are already spending more than they have in years for plane tickets. And that’s about to get worse.

Starting on July 21, the Transportation Security Administration — you know, the folks who are in charge of confiscating your shampoo at the airport and taking you aside for an “additional screening” — will more than double the mandatory fee they charge many passengers and will no longer cap these fees. Under the old law, the fee, which is used for security, was $2.50 for each leg of a flight with a $5 cap on each one-way trip or a $10 cap on each round trip. But beginning July 21, the fee is $5.60 for each leg of a flight and that is not capped; if your layover is more than four hours on a domestic flight or 12 hours for international destinations, that counts as a second leg of the flight and you will be charged an additional fee.

While that may not sound like a lot, consider what this could mean for your wallet. If you book a domestic round trip and have two total connections (and the layover is four hours or more during each connection), you’ll end up shelling out nearly $25 to the TSA. That jacks up the average domestic airline ticket price by more than 5%.

This move will hurt all travelers — as the fees are mandatory and built into ticket prices — and it could especially hurt business travelers, says George Hobica, founder of

My friend Bob Allen commented on this story:

Starting July 21, you get to pay double or more for the pleasure of being molested by people qualified to be fast food workers who haven’t caught a single terrorist or hijacker in their entire existence as a Federal agency.

Yep, typical Feds: Accomplishing nothing, but wasting increasing amounts of taxpayer money with blinding speed, and locking-in another bureaucratic voting block for Liberals.

I suppose some might think this is cynical, but it is sober economic reality. It can all be seen in two questions:

  1. How much should it cost to protect people from terrorists?
  2. How can we know how much something should cost outside the market?

Here’s the problem: the answer to the second question is that we can’t know anything certain about how much something should cost outside the market. Prices are set in the context of people struggling to win customers. Without a social system where people are free to buy and sell, there is no way to figure out what prices “should” be. The concept is nonsensical.

Saying that people should only charge what the product costs begs the question because those costs are determined by market realities. Two competing producers who want to outbid one another, put pressure on their suppliers to offer them a lower price. Without that pressure, prices rise all the way down the supply chain.

Some people think that airline security is “priceless” but that would simply mean that no one could fly (I can’t deny I have a tin foil suspicion that such a situation might be the TSA’s endgame, but I usually am able to suppress the thought). Of course, if you knew that your life would end without the intervention of airline security, you would pay a great deal to live and not die. But you never know that. All you can do is risk management. Maybe your life has been saved by airline security. In light of the TSA’s record of not stopping anything, that “maybe” looks quite doubtful.

The bottom line here is that, until airports and airlines are providing and held responsible for their own security, we have no idea what airline security should cost.

Furthermore, we know of many instances where the private sector has provided societal protection, either through contracting third parties or the “do-it-yourself” method (see here and here with links, for example).

Even if the TSA was devoid of its many other problems, it would still be a socialist racket. It needs to be abolished.