By stripping fares to a bare minimum, Spirit routinely undercut legacy carriers, at times offering base rates 30 to 50 percent lower on comparable routes and forcing competitors to follow suit. That was the “Spirit Effect.” The company compelled incumbents to introduce “basic economy” tiers and restructure offers to compete for price-sensitive travelers. One Delta executive even referred to the company’s basic economy option as the “Spirit match fare.” When Spirit exited a route, fares jumped 5.7 to 22 percent, according to an analysis by TD Cowen.
Yet disruption doesn’t guarantee durability. Spirit struggled financially for years, and by its first Chapter 11 filing in November 2024, it had lost more than $2.5 billion since 2020. A second bankruptcy followed last August.
There were moments when intervention might have changed the outcome. In 2022, JetBlue offered to acquire Spirit for $3.8 billion, offering a potential lifeline. Yet the Biden administration’s Justice Department sued to block that merger, and in January 2024, a federal court agreed. U.S. District Judge William G. Young reasoned that the deal would harm cost-conscious travelers. Ironically, the antitrust action meant to protect budget travelers from higher fares eliminated the budget airline entirely.
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It’s tempting to consider Spirit’s demise as a failure requiring correction; in truth, it is evidence of a system working as intended. The event tracks what economists call “creative destruction,” a phenomenon central to the work of Philippe Aghion and Peter Howitt, whose research was awarded the 2025 Nobel Prize in economics. Their central insight is that economic growth depends on the continuous cycle of innovation, transition and reallocation. Firms must be free to succeed and fail. Losses show resources are misallocated; profits show they’re well used. When governments block failure, they blur these signals, trapping capital and labor in less productive uses and slowing the growth that underpins rising living standards.
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If the United States wants to remain competitive, especially in such emerging sectors as artificial intelligence and advanced manufacturing, it ought to protect the environment that allows for experimentation and failure. Prosperity depends less on preserving specific companies than on sustaining the conditions that allow new ones to emerge.
As the youngest FTC chair to ever serve, Khan rose to prominence early in her career thanks to her 2017 Yale Law Journal article “Amazon’s Antitrust Paradox,” which argued that Amazon should be targeted for monopolistic practices despite the fact it wasn’t a monopoly at all. In Khan’s mind, the legal jurisprudence that had governed antitrust law for decades, known as the consumer welfare standard, was outdated. The consumer welfare standard asks, “Is a company a monopoly, and if so, has it used its power to harm consumers?” Only if that standard is met does the government have the right to take up antitrust actions against a company. The consumer welfare standard was a desperately needed bit of guidance in the early 1980s. Up until then, the government had wreaked havoc in the market, frequently targeting companies due to political bias or for simply being popular.
Khan’s contrasting theory was essentially that a business being big is inherently a sign that the organization in question is bad, and that the internal practices they use to maintain their market advantage should be grounds for action against them. Like most progressives, Khan sees success as proof of immorality.
President Trump has temporarily called off America’s legal blockade of its own ports, and the White House says the results are positive. Under the 1920 Jones Act, waterborne cargo between two U.S. points must travel on ships that are built, crewed, and owned by Americans. Because that constricts supply and raises costs, Mr. Trump waived the law after attacking Iran.
So far, about two dozen waiver voyages have been reported complete as of April 30, according to the Maritime Administration. A ship flying the Singapore flag took 322,000 barrels of gasoline blend stock from Texas to California. A Maltese-flagged tanker brought 300,000 barrels of Bakken crude oil from Texas to a refinery in Pennsylvania. A second Singaporean vessel carried 300,000 barrels of gasoline from Louisiana to Florida. Useful commerce, amid Iran’s blockade of the Strait of Hormuz.
Mr. Trump’s initial suspension of the Jones Act was for 60 days, but late last month he extended that for another 90 days, with the White House calling it a great success. “New data compiled since the initial waiver was issued revealed that significantly more supply was able to reach U.S. ports faster,” a spokeswoman said. “This extension will help ensure vital energy products, industrial materials, and agricultural necessities are maintained.”
Funny, it also sounds like a good argument for permanent Jones Act relief. In a crisis, such as a hurricane in the Caribbean or a menacing in the Persian Gulf, the archaic law becomes an acute problem, because it limits the flexibility of American supply chains to respond. Yet the Jones Act is always an economic drain, since it increases shipping costs and distorts markets for all sorts of products.
Wall Street Journal columnist Jason Riley bids good riddance to racial gerrymandering. Two slices:
The fainting spells on the left after last week’s Supreme Court ruling in Louisiana v. Callais were probably to be expected. Democrats these days reject colorblind public policies that they championed in a previous era and scoff at clear evidence of America’s racial progress. A court decision that reins in racially gerrymandered voting districts checked both boxes, so it is no wonder that Democratic elites from Barack Obama on down are outraged.
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What nonsense. The case before the court concerned Louisiana’s 2024 decision, under pressure from the courts, to draw a congressional map that included a second majority-black district. Supporters said the racial gerrymander was necessary to comply with Section 2 of the Voting Rights Act of 1965, which bars the use of qualifications, standards or procedures that make it harder for minorities to cast a ballot. Opponents contended that the map violated the Constitution’s equal-protection clause by sorting voters based on race. In a 6-3 ruling, the justices sided with the challengers and said Louisiana unlawfully discriminated by race when it created a second majority-black district.
Mr. Obama is pretending that the decision somehow threatens the black franchise, but it didn’t touch Section 2 protections against efforts to restrict black voting. All the court did was scale back a judicially created doctrine based on the assumption that most white voters would never support black candidates. The former president, of all people, should appreciate that this is no longer the case.
But the success of nudge behavioralism, after a first flush of success, yielded disappointing long-term results. Upon wider reading and investigation, Chater and Loewenstein grew so disenchanted with their own specialty that they turned against it entirely with the vengeance of the betrayed. They now attack nudge interventions as not just ineffective but actively harmful, in part because people who are concerned about societal problems can be seduced by the supposed effectiveness of nudges, thus eroding support for more aggressive interventions.
And their preferred alternative is a bold one indeed. They claim that the major problems of the day can only be solved by flushing away any pretense of voluntary inducement and going full speed ahead on banning (or mandating) the behaviors and outcomes they want abolished (or to see more of). They now consider it absurd and unjust to expect anyone in America to actually manage how many calories they eat, decide how their retirement nest egg is invested, or pick which health plan they pay for.
Everything must be federally mandated to ensure the just outcomes that the co-authors have already helpfully decided upon. Liberating Americans from the tyranny of making their own choices will leave them, readers are helpfully reminded, with ample leisure time for hobbies and entertainment.
Emmanuel Maggiori exposes the whackadoodleness of “Modern Monetary Theory” (MMT).
My Mercatus Center colleague Henry Oliver writes beautifully about Samuel Johnson.
