The denial of federal loan guarantees to UAL deals a serious blow to the corporatist notion that the taxpayers should be on the hook for the management blunders of privately owned companies. Bravo! And as Bruce Bartlett writes, the airline’s troubles also offer a reality check on the fuzzy-headed notion that employee ownership represents a ideal form for capital/labor cooperation in a capitalist economic structure:

The benefits to each individual worker are too small to fundamentally change their attitudes. On the contrary, they often use their ownership to block productivity-enhancing changes. The result is that management is even more hamstrung than it was before, leading to losses and bankruptcies.

To signficant extent, UAL’s problems are rooted in the denial of economic reality engendered by majority employee ownership.

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