Mises’s diagnosis is that SAA suffers from perverse incentives
Things are so bad that SAA is not just bankrupt, it is threatening to bankrupt the government as well
The mess that is South African Airways (SAA) is widely known today. What many do not realise is that in 1944, Yale University published a book that laid out the reasons for the mess. While it is true that Ludwig von Mises’s Bureaucracy does not mention SAA by name, it does dissect the differences between "profit management" and "bureaucratic (or political) management". Mises argues that under each system of management, there exist incentives. Managers and/or owners respond to those incentives. Transfer the bureaucrat to a system of "profit management" and his actions will change. Put a businessman in charge of a bureaucratic system of governance and he will act like all the bureaucrats before him. Change the incentives and you change the response. It is not that Mises says there is no place for bureaucratic management, but government-owned business is not one of them. Selling police protection to the highest bidder is a problem, but selling airline tickets at a profit is not remotel...
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