Late last month, as Winter Storm Jonas led to over 10,000 canceled flights and delays in the U.S. alone, thousands of air travelers suffered through the ordeal of waiting on time-consuming, inefficient lines at security that only added to the colossal delays. However, does it make sense that these lines were substantially longer, even though an estimated 50 percent less travelers traveled than expected? Furthermore, for anyone who travels regularly, waiting on these egregious lines at airport security is an all-too-familiar exercise, regardless of the weather.
By all intents and measures, the TSA has proven to be a failure. The TSA was mandated to assess threats to transportation, enforce security-related regulations and requirements, and ensure the adequacy of security measures at airports in a post-9/11 world, yet security seems to be an afterthought. Recent data show that TSA agents fail 95 percent of security tests involving passing weapons through security. In 2013, an investigative officer was let through security with a bomb, with absolutely no problem. The safety that the TSA provides, furthermore, is purely reactive rather than predictive in identifying terror threats. We put our liquids in small containers because of a 2006 liquid explosive terror threat. We take our shoes off because of the "Shoe Bomber." Even what seems like the benefit of human screening — the ability of screeners to detect irregular behavior of passengers — has shown to be about as predictive of deceptive behavior as a random number generator.
All of these failures — from unnecessary wait-times to more serious security issues — stem from the underlying incentive issues created by the organizational form of bureaucracies and their dependency on the government. First, as a government-supported bureaucracy, the government largely protects the TSA from failure, regardless of performance. Without tying performance and funding, the classic moral hazard problem emerges whereby employees and manager of the bureaucracy have less incentive to exert privately costly, yet performance-enhancing effort since they are protected from failure anyway. Perhaps even more insidious in this particular case is that the government granted the TSA complete authority in approving its own competition. Namely, the FAA Modernization and Reform Act of 2012, the legislation allowing for entry of privately funded independent airport security, grants complete authority to the TSA in approving applications. What organization in its right mind would approve of its own annihilation? Finally, the TSA remains inefficient due to (the lack of) incentives to monitor TSA performance. As taxpayers are the ultimate shareholders of government bureaucracies, with no residual income accruing from change in TSA firm value, and no ability to sell shares even if a residual income existed, the TSA can go virtually unmonitored (hence the 95% failure rate).
So what are the options to remedy these issues? One option is to reform the current system. As of last July, a new administrator for the the TSA has vowed, for instance, to implement new policies that would guide the agency toward better performance, instituting a new "culture of competence" through increased training of employees. Another option, of course, is a more concerted effort to privatize the security process. Privatization can increase performance by allowing the market to discipline firms away from the comfortable embrace of government financial support. A program that actually allows for free entry will increase competitiveness in the environment, providing firms incentive to increase performance. I show in a recent paper, for instance, that even partial privatization can increase performance in state-owned organizations due to increased monitoring by private shareholders. Of course, privatization would not come without its own challenges, as emphasis on cost-cutting and other profit-enhancing strategies may cause a reduction in safety. But as is stands, a regulated private market cannot possibly do worse in terms of safety than the current TSA, and can only cost taxpayers less.
Unfortunately, either of these major changes seems unlikely given the current setup. Instituting reforms aimed at changing performance without changing the underlying incentive issues of this organizational form is a naive salve for an economics-based wound. It is dreamy, yet unrealistic, to assume training alone will change employees from ambivalent to performance-focused. Furthermore, as long as the TSA remains the gatekeeper of entry into its own industry, privatization will never reach its full potential, as no organization can be expected to usher in its own demise. Thus, we wait in lines because of the underlying organizational form and the control that the TSA has over its own destiny. Not because of under-staffing; not because of a lack of funding; and not because of a snowstorm. So until the TSA is forcibly moved to a model where incentives matter, have fun in that line.
Poczter is an assistant professor in the Charles H. Dyson School of Applied Economics and Management at Cornell University. Follow her on Twitter @sharonpoczter.