The travails of United Airlines over the past several years have been a common topic on this blog, so Professor Bainbridge’s “enough is enough” declaration with regard to flying on post-bankruptcy United caught my eye. And lest you think that the good Professor’s experience was anecdotal, get a load of the following excerpt from this Scott McCartney/WSJ ($) column regarding the dire status of airline travel this summer:

Last Wednesday, an employee at UAL Corp.’s United Airlines made a mistake that crippled a crucial computer system and its backup for two hours in the morning. Because airlines schedule planes so tightly, they can almost never recover from early problems on the same day. On June 20, only 30% of United’s flights arrived on time; about half of all flights were more than 45 minutes late, according to FlightStats.
Even when travelers get to their destination, it doesn’t always mean the woes are over. United lost National Public Radio host Scott Simon’s luggage on a flight from San Francisco to Las Vegas last week. After filling out paperwork in Las Vegas, Mr. Simon was given a phone number and email address to contact the San Francisco baggage office — with the caution that San Francisco never answers the phone or responds to email.
More than 30 calls later, Mr. Simon, an elite-level frequent flier on United, has yet to reach a United baggage official in San Francisco, or learn anything about the fate of his baggage, which includes irreplaceable items after adopting his second child in China. Calls to the airline’s main toll-free line haven’t yielded any information, either. American Express Co. is also trying to track down information, a service for its platinum customers, but hasn’t gotten through to United, either.
“It’s incredibly frustrating,” Mr. Simon said. “I know they are overworked, and it seems they have decided the best way to avoid more work is to not answer the phone or respond to email.” He likened the baggage office to someone deeply in debt who simply stops opening bills that arrive in the mail. A spokeswoman for United says the airline is trying to find Mr. Simon’s lost bag.

At least it sounds as if United is keeping its overhead expense low in the customer service department. ;^)

Harvard Law professor Elizabeth Warren wants to establish a federal commission to regulate subprime mortgages and other “dangerous” financial products that are foisted on unsuspecting consumers. For a number of reasons, that’s a bit like using a sledgehammer on a problem for which a scalpel is more appropriate. But if it comes about, Don Boudreaux informs us about a really dangerous financial product that the new commission needs to examine:

If such a commission does its job, I suggest that the first dangerous financial product that it attacks be Social Security. Not only are Social Security’s returns lousy; not only are its “customers” never vested their “contributions”; not only does the institution providing it have no sound plan to keep it solvent; not only does this institution intentionally mislead its clients about its insolvency (witness its discussions of the illusory “trust fund”) – but its “customers” are forced to buy it. That is a dangerous financial product!

C.S. Hayden. who is serving an internship at Koch Industries, Inc., the world’s largest privately-held company, provides this entertaining interview of Charles G. Koch, the company’s CEO. Koch is the author of The Science of Success: How Market-Based Management Built the World’s Largest Private Company (Wiley 2007), which he expands upon in the interview. Of particular interest is Koch’s view toward Koch’s advantages in the marketplace:

Q: What separates this company from those in the Fortune 500?
Mr. Koch: The MBM culture and management philosophy are key. We are privately held, which gives us tremendous advantages in this business environment of regulation and litigation. Also, we have continuity of leadership. As Deming said, constancy of purpose is a key. A 20% yearly return will make your money double every 3.5 years, which adds up over time. Others try to change their purpose all the time, they have some successes, but they end up bankrupt and have to start all over again.
Q: What are the advantages and disadvantages of the private vs. public ownership structure?
Mr. Koch: In today’s regulatory and litigious society, about every company is better off private. The only reason to go public would be if the shareholders want liquidity or if the business can finance takeovers through public offerings. [I think this is what he said, but I’m not certain about the second point, financing takeovers; the key is that he emphasized the vast benefits of the private structure.]
The equity markets are not free markets, but highly regulated and distorted.

Also impressive is Koch’s analysis of his decision-making:

Q: What have been your best and worst decisions?
Mr. Koch: The best decision was a deal with J. Howard Marshall to gain control of the Great Northern Oil Company, which established the refining business and eventually propelled us into many other industry areas. The worst decisions are way too numerous to recount. Making so many mistakes is definitely a humbling process. The very worst decisions occur when we don’t take advantage of good deals, when we have massive opportunity costs. We get scared and don’t take risks. Fred Koch said, “Don’t take counsel of your fears.”

Koch’s final piece of advice is also insightful:

Finally, if you lose your humility, you’re on your way out.

Read the entire interview.