The Icelandic volcanic ash cloud has caused a global crisis in aviation. I’m currently in northern Europe, where reactions to the continental shutdown of flights have ranged from the whimsical to the anxious to the furious. On a very basic level, the perfectly cloudless sky over Berlin throughout the weekend has led to a sense of bemusement. Not least because of that invisibility of the ash cloud threat, it is difficult not to wonder about what acceptable level of safety, say, of particles in the air, will allow planes to return to normal flight schedules.
The question of standards, or requirements for opening airspace and resuming air travel, is of course the one being raised by carriers who conducted a few test flights without incident over the weekend. While presumably motivated by their financial interest in returning to the air, it would be unfair to allege that this is their only interest; safety remains a central value to their successful operation (if only, for the cynics, for their sustainable financial success). We have all heard about the few tragic or near tragic incidents that have occurred over the last three decades and demonstrated the dangerous potential effect of airborne ash on jet planes. Yet the scientific standards for understanding these potential effects remain largely theoretical and speculative. Despite this lack of more empirical evidence, the response of aviation authorities has been thoroughgoing and unequivocal: airspace has been closed to commercial flights in most European countries.
Compare this to the regulatory response to the banking and fiscal crisis beginning in late 2008 and continuing today, if now mostly in terms of determining what frameworks (if any) should exist within or across nations to govern trading. Obviously there are many, many differences. Among the most obvious is the difference between the physical risk of flying a plane that may crash and the financial risk that may ruin portfolios or lifelong investments but leave individuals alive and physically uninjured.
Yet the question of standards, murky in both cases, has elicited very different responses: in aviation, a shutdown; in banking, even in the darkest days of 2008 or 2009, few constraints, certainly not uniform across borders, were imposed on trading, say of CDOs or derivatives, by large banks. Even more, what also matters here is how governments or regulators are able to intervene in business operations, presumably, in the public interest, seem very different. I’m not necessarily advocating a greater or lesser level of governance or oversight of either industry. But together the two crises should prompt a discussion of how twenty-first century governments and regulators act (or don’t) in the public and corporate interests.
