There was an interesting story in the paper (well, technically, on the S.F. Chronicle’s website) the other day about a court order which has resulted in the suspension of operations of the “Hawaii Superferry“. I think this is interesting primarily as a micro-example of how to make people poorer.
Background
In case you don’t want to read the article, here is the basic situation:
- Hawaii Superferry is a car and passenger service linking Oahu and Maui
- It was operating under the aegis of a 2007 state law which allowed it to begin operations before a full environmental review had been completed
- The state Supreme Court ruled (on 16 March) that the law was in violation of the state constitution
- Since the law has been thrown out, and since a full environmental review has not been completed, Hawaii Superferry cannot legally operate
Who Suffers?
The most interesting group in this to me is one you might not immediately think of. It’s not the employees of, or investors in, Hawaii Superferry. It’s the customers. Every person who ponied up for this service demonstrated, by doing so, that the service was worth more to him than the fare. (Otherwise, he wouldn’t have paid.)
These people were, in a very real sense, richer for having the option of taking the ferry; that option let them trade something of lesser value (the fare) for something of greater value (the trip). Deprived of the option, they’re worse off; in a sense, their money is worth less today than it was a week ago, since it can no longer buy the same goods.
Was Wealth Destroyed?
It’s an open question as to whether or not the court’s decision actually made society as a whole poorer, and that question hinges on whether or not Hawaii Superferry was profitable, was expected to become profitable, and/or was expected to remain profitable. If it was a going concern, then the decision almost certainly made the world quantitatively poorer.
In any event, it certainly made the customers poorer, and that’s not the sort of point that I think gets the attention it ought to.
