The Roots of Boeing’s 737 Max Crisis: A Regulator Relaxes Its Oversight
nytimes.com
nytimes.com
https://www.travelandleisure.com/airlines-airports/history-o...
https://m.aviationweek.com/blog/law-changed-airline-industry...
https://www.theatlantic.com/business/archive/2013/02/how-air...
Southwest back then was a very different airline vs. today; they acted more like a bus service between the major Texas cities than an airline- cheap fares, departures every 20 minutes to each destination, tickets generally available on extremely short notice without a markup.
They had to change their operating model significantly after 9/11 because of the new security measures. For example, They were exclusively using at-gate checkin, with reusable boarding cards that you gave back when you got on the plane.
That’s the origin of their first to checkin is first to board system; it originally reflected the order people physically arrived at the gate. And with the frequent departures, the first boarding card generally went to someone who had just missed the previous plane; there was no upcharge or hassle for getting on an earlier plane than you had a ticket for, so long as there were seats available.
Southwest was founded before deregulation and planned to fly exclusively intra-Texas routes to avoid federal route & fare planning. Obviously they also saw a market for the shuttle service they were running.
Separately, as part of the plan to build DFW all operating airlines at Dallas and Ft Worth signed agreements to move all service to the new airport once it opened. Key word: operating, Southwest wasn’t flying yet when the agreement was signed.
Between the agreement and DFWs opening Southwest started flying their shuttle service. Knowing that wouldn’t work from DFW, and since they hadn’t signed the agreement to leave, they planned to stay at Dallas-Love.
This sparked a bunch of lawsuits and other fights but the end result was the Wright Amendment which heavily restricted flights from Dallas-Love. The restrictions were a response to Southwest, not an initial factor in their plan. They were also another form of regulatory capture, since the incumbent airlines used their connections in the federal government to get a law passed restricting their competition.
The alternative is to let all the folks who know the meanings of those sorts of things make the rules. Note that they will not be representative of the country as a whole. In particular they will be overrepresented by special interests andoneyed, entrenched incumbents.
One of the arguments for deregulation is that we just aren't good at fair regulations sometimes and no regulations is at least even-handed.
Hand waving all that as 1/3 the insight lacks quite a bit of nuance... and the lack of nuance is really why "good regulation" is so hard to come by.
Would you say that your attitude describes typical de-regulation as a policy? I have a hard time believing that it's a nuanced view if instead of trotting out specific examples that you care about and will specifically address, you say "de-regulation" so your constituency cheers. (Not you, specifically)...
While most political positions are at least coming from a place of truth, what I think of when I hear de-regulation is not "some regulation is overreach and should really be peeled back because it's not fair xyz, here's what's not fair", it's the "government has no business injecting itself between me and the money I could make by introducing untold externalities into a free market system."
Good regulation is hard to come by, I think, because we don't like to maintain things. We see a problem, let's make a rule. Now the rule is a problem. Let's remove the rule. How about you decide if the problem would exist in the same or another form without the rule and try to adjust it to match the new problems?
Prepare again for more nuance. My position wasn't about rights but about competency. And it's not niche for folks with libertarian leanings. Reagan famously said the nine most terrifying words are "I'm from the government and I'm here to help" when criticizing government overreach.
I think part of the problem is that your mental model of problem solving presumes individual actors can have a lasting impact in complex and bureaucratic contexts.
It's not the same getting a committee of folks to think through problems the same way and to maintain the same rational approach over time. Keep in mind that these folk are biased (maybe unconsciously) in different ways, particularly in favor of competant lobbyists and potential corporate employers.
So it might be simpler to presume simple mechanisms, even doing nothing, might be the sanest and most democratic approach. Often problems, like lack of progressive pricing, should just be solved directly, through minimum incomes for instance.
We can get next day packages from Amazon, for example, because of the deregulation of the airline and trucking industries: https://parcelindustry.com/article-5131-De-Regulation-of-the.... Previously, package delivery would take much long because packages would be transferred from carrier to carrier operating on regulated routes with regulated prices.
In the electric industry, deregulation of the generator side of the industry has caused wholesale electricity prices to plummet. Today, more than half the cost of electricity is from the still-regulated, retail distribution side.
As to airline deregulation: fatality rates per million passenger miles has trended linearly down since the 1960s. So have ticket prices. https://www.fastcompany.com/3022215/what-it-was-really-like-....
We have also largely avoided regulation of the first major post-FDR industry: the Internet. If the US operated the way it did in the 1950s and 1960s, we’d likely have regulated prices per ad impression and things like that. Instead, the industry has flourished in the absence of regulation.
There is a reason anti-deregulation screeds focus on isolated incidents and are heavy on narrative. Why are we fixating in one instance of failure instead of looking at what airline safety records have looked like over the past decades overall? Objective views of numbers and long term trends make the situation look far more rosey.
When you talk about the positive results of deregulation, that’s all economic regulation. Freight being run on regulated routes with regulated prices was protecting various groups’ economic interests. Usually at the implicit expense of the economic interests of everyone else.
Safety regulations are a completely different beast. Safety regulations in aviation have increased massively over this same timeframe, and the result has been an even more massive increase in safety. Crashes went from routine to unheard of despite a huge increase in activity. Cars have seen a similar increase in safety regulations and in actual safety, although the safety gains have been more modest and seem to have stalled out in the last five years or so.
That doesn’t mean safety regulation is necessarily good or that deregulation couldn’t be helpful sometimes. But the actual track record in recent decades is completely contrary to this idea of decreasing regulation providing better results.
We’re fixating on one instance of failure because it looks like a canary in the coal mine indicating a threat to the safest mode of travel ever devised.
Only they're not. If you impose a billion dollars in fixed regulatory burden then you can no longer have sub-billion dollar companies.
But lack of competition erodes everything -- even the safety rules, because bigger companies are more capable of capturing regulators.
Any regulation which is the direct cause of a lack of effective competition is doing more harm than good.
> That doesn’t mean safety regulation is necessarily good or that deregulation couldn’t be helpful sometimes. But the actual track record in recent decades is completely contrary to this idea of decreasing regulation providing better results.
That's kind of the point. The entire frame of "regulation bad / deregulation bad" is a farce. What you actually need is regulation that maximizes the ratio of benefits to regulatory burdens. That means removing burdensome and ineffective regulations and having efficient and effective ones.
But evaluating regulatory efficiency and effectiveness is dry and non-partisan. Framing it as "we need more regulation" is failing before you even begin.
This 737 MAX debacle is a case in point. It came about because Boeing was trying to avoid the high costs of recertification, so they didn't change things that could have made the plane safer because changing them would have required recertification.
So we have "safety regulations" negatively impacting safety by making it move expensive to improve safety than not. That's not a case of needing more overall regulation or less overall regulation, it's a case of needing to replace worse rules with better rules. The ideal outcome is that the net regulatory burden becomes lower and as a result it becomes less expensive to make changes that improve safety.
FAA was gamed, but If you think Boeing would self regulate, I think you are on a different timeline where stockholder dividends are not the prime directive.
Simply put, the definition of 'failure' of a regulation needs to be broadened. Regardless if it reduced deaths by the company itself in the near term, if it adds long term risk to deaths/accidents in the future by encouraging regulatory capture and eliminating any competition but Boeings to exist - we are worse off as a society, period. The only option we are allowing is some pseudo-market mega-corps with monopolies and the mediocrity in both service and safety or public gov run companies (which do make sense occasionally, but rarely).
There's a few solutions I can think of here which isn't "all regulation is bad" or "lets only have mega corporations in every market via poorly designed regulation" or "let gov nationalize the markets":
a) Contextual oversight. Allow a certain level of freedom at the lower tiers of markets so a future competitor to Boeing can exist and challenge them on everything from prices, to technology, customer service, and safety (which yes is a massive competitive advantage, ask all the people who now refuse to fly in Max, what other options do they have? A single European version of Boeing?). While allowing the courts to expunge any company that sacrifices on safety or any other externality via tort laws, liability, via stronger consumer and property rights.
b) Constant pressure on regulatory agencies (possibly by an outside agency) to look for regulatory capture within agencies and severely punish civil servants and companies engaged in any backroom deals, creating policy/incentives which are barriers for competition with little/zero benefit to citizens, punishing companies for obvious lapses, etc.
c) Stop politicians from anointing themselves job creators and promoters of businesses. They should strictly be in an administrative role when absolutely necessary (to eliminate any forms of violence, coercion, externalities that courts can't handle, etc). This is the biggest source of the worst of a) and b).
When politicians think their job is to 'create jobs' themselves by creating monetary/policy incentives for companies, this inherently create incentives for kickbacks to politicians and moral hazards for companies, and therefore should not be the job of politicians period. The only "help" to companies should be to help get out of the way by eliminating useless policy OR streamline necessary administrative systems. Otherwise don't help them at all.
Companies should not be able to buy success and maintain success in markets (by that I mean monetarily regardless of behaviour or outcomes) by having influence from politicians. All policy should be neutral of company size (or tiered based on size, the way modern rent control has tried to stop disincentivizing new lower income buildings by not applying to new developments) and factor in small firms who can't afford a team of lawyers or checkbox checkers.
Like most of the neoliberale 'economic theoretical models', the idea that the regulation is fully separated from the arena of the competition and thus cannot be captured and coopted is so ludicrous it begs the question how it ever became more than a joke in a b-list standup comedian's backup repertoire.
A German automaker was caught gassing the world population. They're still around, even having the audacity not to even change the brand name.
But I was replying to a pair of comments talking about the practical history of regulations over the past few decades. That history diverges wildly for the two types of regulation. Economic regulation was massively lightened, resulting in huge benefits. At the same time, safety regulations for airplanes and cars were massively increased, also resulting in huge benefits.
So, yes, the whole point is that “regulations good/bad/anything” is nonsense, as the recent history of economic and safety regulations illustrates.
It's also difficult to evaluate these things based on statistical trends, because it's easy to pass a safety regulation that e.g. mandates a specific safety method, and then you get an immediate safety improvement by making that state of the art method universal, but as time passes that ossified requirement becomes stale and prevents newer, better methods from replacing it. And all you see in the numbers is the improvement from the original mandate spreading through the installed base over time, not the comparison to what would have happened when something even better was invented a year later but was prohibited by the rule from being deployed. (As evidence for this, the original 737 was introduced prior to the moon landing.)
It's also problematic to look only at the one target. If we improve aircraft safety per mile but only by making aircraft more expensive (or destroying competition, which does the same thing), that makes flying less competitive against alternatives that are much more dangerous, like driving. So you can get a safety improvement on paper even though the result is more people are killed.
That doesn't mean you can't make a rule that actually improves safety, but it's harder than it seems to get it right.
Regarding measures that appear to improve safety but are actually a net loss because it encourages driving instead, the FAA does evaluate regulations this way. For example, this is why infants aren’t required to be in a child seat and are allowed to just be held by a parent. They determined that this requirement would cause more families to drive due to the extra cost, and the result would be a net loss of life.
Yes, and one of the possible definitions of a (technical, safety related) regulation is "the added cost that the society is reasonably willing (or capable) to pay for a reasonable increase in safety"
The issues always revolve around how much the "reasonably willing to pay" is and what is the corresponding "reasonable" increase in safety (and how exactly to measure the latter).
Based on available reporting, Boeing chose this path not to avoid higher cost, but reduced time to market to compete with Airbus because, again, shortsightedness, lack of innovation and planning, and even lack of imagination that their competitor would do exactly what they did, and had no contingency and no response for ~9 months after the Airbus 320neo announcement.
I also can't take seriously any complaints about lack of competition in the U.S. market when it's so docile about competition law. The 1960's merger of McDonnell and Douglas is questionable, but the 1990's merger of McDonnel Douglas and Boeing directly lead to the loss of any remaining domestic competition in transport category aircraft. U.S. regulators are tacitly saying this is a natural monopoly, and yet should be regulated as if it's a competitive market.
> I also can't take seriously any complaints about lack of competition in the U.S. market when it's so docile about competition law. The 1960's merger of McDonnell and Douglas is questionable, but the 1990's merger of McDonnel Douglas and Boeing directly lead to the loss of any remaining domestic competition in transport category aircraft. U.S. regulators are tacitly saying this is a natural monopoly, and yet should be regulated as if it's a competitive market.
You're discounting the competition between Boeing and Airbus. They're clearly not a monopoly.
That said, it's possible to have two sets of bad rules at once, and it's even worse in that case. Then you get antitrust regulators approving mergers while industry regulators impose high barriers to entry, so that you get high consolidation with no way to break it because no one new will ever enter the industry.
Sadly that seems to be the status quo in multiple industries now. You have antitrust approving any merger that doesn't result in a literal monopoly even if there are only two or three companies left, meanwhile those companies practically ask the government for regulations that make sure nobody else can ever come up behind them because it takes a nation-scale company to survive the compliance costs.
One example of a third way would be that when a plane is 97% the same as one you're certified on, have something between no and full recertification which is only 3% as time consuming because it only covers the differences between the planes instead of going back to square one.
You suggest that we should sacrifice the rigor of pilot training to allow delivering planes without safety compromises ... I think there’s absolutely no justification for safety compromise in this scenario - the new plane will pay for retraining costs in a slightly longer amount of time than it would’ve had retraining not been required — oh well. That’s the cost of doing business and it’s absolutely without doubt that in this case - designing a plane that wasn’t inherently flawed would’ve been a better strategy for Boeing and for all of their 737 Max customers ...
The real question to learn from this tragedy is not how can we make it slightly less expensive to produce a new air frame — it’s how can we ensure that safety is not allowed to be compromised during the design phase of new passenger aircraft in service of _truly_ minor cost savings ... if we had a real regulator that was not captured - they should’ve had the flexibility to say no to the 737 Max very very early in the proposal process — and if necessary they should’ve been allowed to offer a tax incentive to offset some of the pilot retraining cost required by them not budging on safety requirements.
Building and deploying safe airplanes into real world use is more expensive than building unsafe airplanes — but that doesn’t mean it’s not worth the cost to society...
Describing this as "sacrifice the rigor of pilot training" is illegitimate. If someone is already certified on a similar plane, the training they need is really only on the difference between the planes.
> I think there’s absolutely no justification for safety compromise in this scenario - the new plane will pay for retraining costs in a slightly longer amount of time than it would’ve had retraining not been required — oh well.
The problem is that monetary costs are still safety costs. Now the new thing costs more and people choose alternatives that may be less safe. If new planes are more expensive then older planes that are more likely to suffer wear-based mechanical failures stay in service longer. If air travel costs more then more people drive.
Boeing obviously screwed this up, but we gave them the incentive to screw it up, and that's on us too.
> The real question to learn from this tragedy is not how can we make it slightly less expensive to produce a new air frame — it’s how can we ensure that safety is not allowed to be compromised during the design phase of new passenger aircraft in service of _truly_ minor cost savings
But that is how you do it. You figure out how to achieve the cost savings without compromising safety. There is no law of nature that says they're mutually exclusive, and without forcing them to be at odds there is no longer an incentive to choose the wrong one.
No WE didn't. THEY wanted to cut costs and it appears to me THEY cut corners to achieve it. This is like saying the professor made me cheat by making the exam artificially complicated and learning would have cost to much time.
This isn't a game or a class. If you have rules that result in preventable deaths in actual reality then you have bad rules. Even when there is plenty of blame to go around.
> ...Yes WE did...
Who is WE here? The general public who use the planes? The airlines who bought the planes?
The public and the airlines relied on the FAA. The FAA allowed boeing to self-cert. The FAA's job was safety. The FAA failed in that. It was their job and they didn't do it properly. It's the FAA at fault not some amorphous WE.
But that's not because 737 MAX aircraft flying in US airspace somehow didn't have the problem that caused the crashes. There has been plenty of coverage online of US pilots repeatedly filing reports with the FAA of "near miss" incidents in 737 MAX aircraft caused by the same problem.
Are you seriously suggesting that?
For example, some marks of Spitfire had engines that spun in the opposite direction to the rest of them. The aircraft were otherwise similar.
If a pilot gunned the engine during the take-off roll, the torque reaction will cause it to swerve. The pilot can catch it with the rudder if they are expecting it. If the engine is spinning the wrong way, and the pilot inputs opposite rudder, the aircraft will wreck it's undercarriage and roll over on the runway.
Whilst training to fly any variant, when a pilot has experience in other variants is obviously going to be quick and easy, expecting them to swap back and forth between variants is also clearly unsafe.
Whereas without that, what did Boeing do? They gave pilots an iPad for difference training, and kept them in the dark about the differences between 737 NG and 737 MAX. That was their choice. The lie of omission by manufacturers is the whole reason why we have type certifications in the first place.
You're talking about training for completely different planes. Type training is commonly multiple weeks long. What I'm suggesting is something intermediate for two variants of a plane that are much more alike than that ("subtype training"), so that it's hours or days rather than weeks because there aren't as many differences to cover between two 737 variants than between a 737 and a 787.
> Whereas without that, what did Boeing do? They gave pilots an iPad for difference training, and kept them in the dark about the differences between 737 NG and 737 MAX.
Right, exactly. So they have the tiers too far apart. There is too big a jump between "here's an iPad" and tens of hours of training over multiple weeks, so there's a need for something in between for smaller variations.
Further the regulations say whether a type certificate is required, and what goes into it, is up to the administrator. It's not strictly defined. You can in in effect have subtype ratings.
FAA regulations are very much dependent on delegating authority rather than detailing every nitpicky thing. They really aren't that complicated.
Aren't the 737 and the 757/767 completely different planes? Isn't the difference between a 737 NG and a 737 MAX a lot smaller than the difference between a 737 NG and a 767?
> Further the regulations say whether a type certificate is required, and what goes into it, is up to the administrator. It's not strictly defined. You can in in effect have subtype ratings.
It's not surprising that the regulators have that level of discretion, but that only helps if it's expected they'll use it like that, which seems contrary to what Boeing did expect given their apparent aversion to it.
No. But then, given your questions thus far, we clearly don't have a common frame of reference, so I don't really know what you mean by completely different. They are not 100% different, that's for sure.
Consider this: the difference between a 737 NG and MAX is smaller than the difference between a 757 and 767. And yet the 757/767 share a single type rating. They were designed at the same time and have nearly identical cockpit layouts. And guess what, the Airbus 320 and 340 share the same type certificate as well, they're more different from each other than the 757 and 767 are to each other. But the two Airbus's also have the same cockpit layout, control systems, and software abstraction such that in normal flight they pretty much behave the same (obviously ground operations are different, they are rather substantially differently sized).
A "subtype" is just not applicable in this discussion. Any completely redesigned airplane from Boeing, in lieu of the 737 MAX, no matter its size, is going to so radically depart from any other airplane's flight characteristics and cockpit layout, that it would absolutely end up with its own type certificate. You can't design a new airplane model, and shove in the cockpit from a 737 NG. You can't and you wouldn't want to.
They dropped the ball. And the instant the Airbus 320neo was announced, Boeing was shown to have gotten caught with their pants down, and that has nothing at all to do with the regulatory paradigm.
In this specific case, though, I suspect that measuring the "X% the same", and what the new training should be, is much more difficult than it looks at a first glance.
No we don’t. Other companies have followed the regulations. Boeing chose to value cost avoidance over risk to human life. The owners and management of Boeing are culpable.
When we're talking about human lives, there is no regulation too burdensome or inefficient.
And your argument about there being too little competition is a little odd since hundred have been killed in two crashes because of competition.
> It came about because Boeing was trying to avoid the high costs of recertification, so they didn't change things that could have made the plane safer because changing them would have required recertification. So we have "safety regulations" negatively impacting safety by making it move expensive to improve safety than not.
That's absurd! The safety regulations were good, and the reason they didn't work is because the FAA hired Boeing to enforce them and Boeing didn't do so. Boeing only managed to flout the regulations because they fraudulently signed off their own planes as being airworthy. And the only reason Boeing got away with this is because they controlled the people in the FAA.
Your argument appears to be that Boeing cheated to get around the regulations, so it would be better if there were no regulations, because then Boeing wouldn't have to cheat. American capitalists are truly a special breed of human.
This is not only not true, it directly contradicts how regulations are evaluated. Regulations are judged at the cost per life saved (or similar metrics), and are rejected if that cost is above some threshold.
https://en.wikipedia.org/wiki/Value_of_life#Policy_applicati...
I recommend we ban all travel over five miles. This will eliminate all danger from air travel and substantially reduce traffic fatalities.
The first article you cite, about delivery companies, is from an industry publication. Naturally, they're going to advocate things they view as beneficial to the industry.
Your claim that deregulation is the cause of electricity prices plummeting, and that the regulated side produces more cost, are wholly unsubstantiated. Even if there was substantiation of the trend, that doesn't mean one caused the other.
Likewise, according to the article you cite, there's now _more_ regulation in some areas of the airline industry, like security. Maybe _that's_ why fatalities have decreased. (I don't actually believe that, but it's equally plausible.)
Objective views of numbers and long-term trends are meaningless in the absence of an effort to understand the causal relationships. Correlation does not imply causation. Compelling evidence that deregulation provides economic benefit requires an evidence-backed explanation of _how_ it has done so.
Edited to address your edit re: the Internet as an industry: Again, it's the same issue. You don't present any evidence that the Internet being unregulated is the reason it's successful - or even a contributor. And the scenario you propose about ad regulation isn't anything like the kinds of actual regulations that have been proposed, like net neutrality.
For example there have been numerous financial crisis over the years, generally in the wake of the financial industry deregulation.
The deregulation of carriers in 1996 (Telecomm Act) helped spur some competition within known telecommunication products (mainly wireline) but was unknowing of the new and emerging markets. Which is part of the problem with deregulation of moving markets.
I think, however, many have a perspective that deregulated industry often creates monopoly. Healthcare, telecommunication, search, retail, etc are all monopolized by a select few. Is there still small, heel-biter competition? Sure. But DigitalOcean isn't a worry for AWS, GCP or Azure. It's a facade of competition in the "open" market.
As stated:
> There is a reason anti-deregulation screeds focus on isolated incidents and are heavy on narrative. Objective views of numbers and long term trends make the situation look far more rosey.
This isn't the the case of regulation strawman argument. Financial markets were plundered by greed in 2008 due to deregulation. That isn't an "isolated incident". Almost nobody spent time behind bars for the actions of those who abused it. And we know that it wouldn't have taken place with proper regulation and oversight.
Regulation of safety is paramount. Auto manufacturers didn't buy into providing the 3 point seat belt as standard equipment until they were forced. Deregulation isn't a silver bullet, but in many cases it plays out as a zero sum game. Many people lose and many people gain. It's often a vehicle to shift power and wealth as history so directly has shown us.
To use financial deregulation as an example. Yes, the 2008 crisis was bad. But on the whole, are people still worse off? When my parents bought a house in 1989, their interest rate was multiples higher than I’m paying now. One of the things that caused interest rates to collapse was securitization. Moreover, the boom times of the 1990s was also partly due to the financial system. It was deregulated banks that provided the private capital for the first tech boom. And, this website covers an industry that resists regulation at every turn—its bankrolled by investors largely free of regulations applicable to investors managing retail deposits, and numerous companies stay private to avoid public company regulations. What is the net cost-benefit from financial deregulation over the last 30 years, accounting for both benefits and costs? Pro-regulation folks never look at it in those terms.
There is no doubt that deregulated markets are leas predictable than regulated ones. Regulation can smooth out the boom-bust cycle. Thus looking at busts, instead of long-term trends, is a convenient way for pro-regulation folks to distort the overall impact of deregulatory measures.
In 1980, Congress passed the Depository Institutions Deregulation and Monetary Control Act.
> Moreover, the boom times of the 1990s was also partly due to the financial system.
So surely you remember the tech bubble then and all of the consumer loss. One snippet to jog your memory: "Pets.com stock had fallen from its IPO price of $11 per share in February 2000 to $0.19 the day of its liquidation announcement." [0] I'm sure there were plenty of consumers who bought into that company under false pretenses.
> Thus looking at busts, instead of long-term trends, is a convenient way for pro-regulation folks to distort the overall impact of deregulatory measures.
What about if we flip that around, maybe... Looking at falsely inflated markets, instead of real earnings and growth, is a convenient way for pro-deregulation folks to distort the overall impact of regulatory measures.
Get rich schemes are unfair to the unknowing victim. There are more parallels with many of the questionable financial vehicles and products that turn up when no rules are in place.
Yes. Entire generations. Permanently and irreparably.
True cross-country air freight can easily cost >$100 to ship a small package weighing a single pound. Nothing you buy online is using this service unless you're paying out the wazoo for it.
Also, for an apples-to-apples comparison, try buying that cross-country plane ticket 2 hours before takeoff.
You don’t even have to take their word for it, you can get an instant quote right now from the freight companies (most places that aren’t amazon-scale probably pay about 30-40% of that retail rate)
Also, the passenger thing isn't remotely comparable because last-minute plane tickets aren't that cheap, and you're forgetting to account for the 12+ hours of labor involved in sending a mule along with your package. If you already had someone going there and back that day anyway, sure, sending the package along with them would be cheaper than sending it through UPS Next-Day. But if not, just sending the package will be way cheaper.
This is incorrect. Deregulation only started in the late '70s. There was adequate oversight and anti-trust enforcement until then. The unusually high growth in that period was during an _expanding_ government role (and wider union membership and 90% tax rate for the extreme brackets). Since the 80s, GDP growth has slowed to low single digits with continuously rising inequality.
>In the electric industry, deregulation...
Deregulation in this area also resulted cutting of power to tens of millions as blackmail for orders of magnitude higher rates until the state stepped in again.
And while initial deregulation of airlines has had many advantages, stifling the already inadequate oversight from FAA and thinking it will produce better out comes is literally fatally flawed reasoning.
And also during a unique period in history, when the US economy was the only one in the world not devastated by World War II and when there were huge new markets opening up that made corporations willing to pay high wages and taxes in order to capture market share. By the 1970s that was ending as markets saturated and other countries rebuilt their economies and caught up.
And incidentally dispelling the idea that, where necessary, adequate oversight does not kill an economy.
I work for a large company whose goals are not only to become largest, most profitable, and never lose money ever again. But also, to gain strategic ownership where ever possible by acquisition.
This is such a ridiculously untrue statement.
Deregulation is often a key to more competition. The change in telecom industry in Western countries between approximately 1985 and now is a great example. The evolution of Internet and mobile communications could not have happened with the regulatory framework, institutions and practices of 1985.
There can be too little regulation. There can be too much regulation. There can be wrong kind of regulation.
Fully agreed. All markets are constructed, all markets are regulated — even if only by the existence of a court system for resolving disputes. But it is a difficult task to craft minimal regulation which fosters enduring competition and forestalls the natural tendency of markets towards monopoly, monopsony, and other varieties of market failure.
Deregulation won't result in more competition when there are big players that can use their money for advertisement, consolidation, buying smaller competitors, cartels, and so on.
What can result in more competition is regulation that favors competition. Breaking up behemoths after a certain size (a la AT & T) is one good way...
After the financial crisis the regulations added only further excluded small firms from the banking market because they had ridiculous rules meant for mega banks applied to all banks. So why wouldn’t all the small banks just sell their firms to the big ones?
“Too small to exist” is the reality, not simply “too big to fail” (aka too well connected to fail). Now we only have 5 mega banks further entrenched. Aircraft manufacturer market is even more limited (the incident with Canada’s Bombardier vs US Boeing showed everything you need to know about that ‘private’ market).
I’m not sure what fantasy world people live in when they talk about deregulation of these markets as a common phenomenon, especially airlines, finance, health care, telephony etc (all of the worst industries for consumers in the US, which I should note has nothing to do with the value of public gov run markets which these are not). Absolutely none of those have less administrative oversight than a few decades ago. I guess they listen to politicians instead of any indicators from the market place or history.
If the ‘deregulations’ all further entrench the massive companies, while leaving all of the barriers to entry for the small firms. What outcome did you expect? More competition between the 3-4 mega companies that remain? Is that how we were supposed to benefit from competition?
On the downside, many people are underemployed even in a so-called tight labor market, fewer and fewer people own anything like a house or car and are highly indebted. Few people have any savings whatsoever and the administration in conjunction with the monied classes seeks to strip whatever protections remain while scapegoating immigrants. Additionally, the US and the west appear to be better off than they are because we use the power of our military, monetary system, and relationships to make sure items are produced cheaply overseas with negligible labor protections resulting in abusive labor conditions.
Also, the planet is dying due to unlimited resource extraction.
It’s deeply sad to know that future generations won’t have as much opportunity as I had to enjoy life ... but to pity them will feel patronizing to them - and so what is left for them to know of me and me to know of them ...?
Dear citizens of the future, know that some of us are sorry for how your life will go — and know that some of us are not for they got theirs before you arrived and that was enough for them ... for some of us this wasn’t enough - we lived your pain in our imaginations while enjoying a physical life of abundance that, in the end, has helped you in no way at all ...
This study might be related: "Empirical evidence of mental health risks posed by climate change" https://www.pnas.org/content/115/43/10953
Just about everything else is worse though. Wages stay the same while costs rise, markets continue to monopolize and we get fewer choices.
The vast majority of law and regulations in the U.S. are written by industry trade groups, lobbyists. A huge part of the media depends on the massive advertising component of lobbying, both direct and what lawmakers end up spending to reach constituents.
We're way past time to take this seriously, but alas most conservatives had exactly zero problem with Citizens United, actively arguing in favor of the idea that corporations are persons, that money is speech, and corporations have free speech too and therefore can spend essentially unlimited money in the political system via advertising their positions totally disproportionately to the intent behind individual free speech. What we have now is an aristocratic concept, more money more speech. More money, more say. More money, wider broadcast of opinions and propaganda.
Individuals should be having these conversations and debates using critical thinking rather than inundated with corporate talking points delivered into our lives via devices that we pay for.
I think a company can issue unlimited press releases saying whatever the company wants to say. But the amount of money they get to spend on political, policy, and perhaps even social advertising, should be limited.
The foundational problem is this. Media companies like CNN and The Wall St Journal are corporations and their business is talking about politics. What does it even mean, then, to restrict how much money they can spend on it? How do you even measure the value of being able to choose which anchor with which viewpoints gets which timeslot, or which story goes on the front page? Or being able to just not report on stories (like media consolidation) that they're not interested in people knowing about?
But if buying a TV network to get airtime for your viewpoint is speech then so is buying airtime from that TV network.
The solution to this isn't to restrict corporations from saying things. It's to make sure that everybody else gets to say things too. So that's things like public financing of elections, and decentralized social networks (in the style of email) so that nobody gets to gatekeep information.
Make it cheaper to reach voters without corporate sponsorship and you erode the corrosive utility in corporate sponsorship. Making it more difficult only does the opposite and makes it worse -- nobody wants Zuckerberg to have the power to determine the President with an algorithm.
The value of that should be zero, because the rational response of individuals in the situation you describe (which is basically the situation as it is now) should be to simply stop watching and listening because the media have proven themselves untrustworthy.
> In their place, the F.A.A. appointed an engineer who had little experience in flight controls, and a new hire who had gotten his master’s degree three years earlier.
This is how you grow an army of YES-men without any substantial backbone. The type that makes good middle managers and keeps the process moving smoothly. Unfortunately for these engineers, they might ultimately be responsible for the system they signed off on.
Boeing did not build great planes because of the FAA. They built them because their culture and expertise were aligned to do so.
In the fact, the safety culture at Boeing was once so great that they often worked with the FAA to establish standards and guidelines, because the FAA simply did not have the expertise that Boeing had.
When that culture failed, Boeing failed.
People say things like this, that when a company is competent, or ethical, or whatever, that it's not thanks to the government.
Yet I hear/read every day where a company says that they cannot do a given sensible, or ethical thing because it is not mandated by law. Every disclosure (e.g. privacy) I get with a financial account says that they cannot give customers more rights than are mandated by law.
I wonder what the reason for this disconnect is?
And Wall Street does not care about sensible or ethical things, so the companies are not allowed to. Not anymore.
Aircraft are much more difficult. When making the 747, Boeing was faced with needing to have it certified by the FAA, but FAA did not have the expertise to do that. So Boeing worked with the FAA to develop the regs and tests and so on. I really cannot imagine how the FAA would ever be able to hold on to a competent aviation grade software engineer for very long. Even if they could hire one, within a year or two their skills would atrophe.
I'm sorry but there is no evidence for this claim. I can't think of a single Big Food company that wants to sell healthy food. Look at the poultry industry. Look at how milk, pork, and beef are produced. There's no reason to believe that "Big Shrimp" would be any more ethical.
Local corporations put profit before health and safety just as much as foreign corporations do.
The tech industry is the same: we'd love to protect users' data better than regulation demands, but it's hard to make the business case because you just do a lot of work to put yourself at a competitive disadvantage while the users don't notice or don't believe the difference. If data protection were effectively regulated then compliance woudn't be a competitive disadvantage, and then we might have a hope in hell of shipping a good product.
They do not give more rights. Because it is easier to do the minimum.
The US, at least, has backslid.
Yeah, don't be that guy and whistle-blow on such things.
You say that as if that's an excuse. What Boeing's customers wanted is irrelevant, but in any case, your claim is incorrect.
Airlines just want a plane that can make them money. Boeing could have build them a plane much better than the MAX, but they chose not to because if they had done so, then the airlines would have the option to switch to Airbus. The Airbus option would not be on the table if Boeing was just selling them another 737 variant.
What about the impact of a new model on the ground for several months, maybe a year, even maybe (with a tiny chance, of course) forever?
I bet it would have been cheaper if they started adding a new model to their operations already (for those who don't have it already)
Sure, customers always want the cheapest option, and it's up to Boeing to say when enough is enough.
In hindsight, yes, but Boeing had been modifying it for fifty years, so I get why they thought they could do it again.
Time and time again regular people are getting screwed by the same patters, the previous paragraph basically summarizes what led to the 2008 financial crisis as well.
In a heavily regulated you still got dieselgate. It got exposed by the private sector.
There's many factors at play. There exists no world where Boeing benefits from having their planes crashing.
It's the same thing that occurs with risk analysis using customer data. They only fund exactly as much security as they need. Does the company benefit from having private data leaked? Not particularly, but if the cost of having data leaked is less than the cost of securing that data, then businesses will not secure their data.
Which is where regulations come in.
In any case. The result of the calculation will always be:
"crashing planes = not good for our company"
Was it really exposed by the private sector, I thought it was bunch of university students and their prof doing some research.
Is this not what capitalism is?
All very serious problem. But regulatory capture comes only from money in politics.
One specific example to highlight the issue...
Ali Bahrami works for the FAA, lobbies to delegate oversight to the airlines, then leaves for a lobbying job, then is back at the FAA again at a higher position. It's hard to believe he's always acting in the public's interest with so much industry money and connections.
https://www.seattletimes.com/business/boeing-aerospace/with-...
It's also alkind of a paradox: the safer something appears to be, the more the safety is taken for granted and pushed to unsafe levels. C.f. the mortgage crisis or a million other examples.
[0] https://www.reuters.com/article/us-aviation-safety/2017-safe...
2018 saw a couple hundred deaths in jet crashes.
Where does one get the idea that airline safety is regressing? Well....
I wanted to know what statistical basis he's working from, because the phenomenon he describes is not at all self-evident, not when airline safety has been solid for decades. That we just recently had the lowest annual crash-fatality count, in a decade that is arguably the safest decade in history of passenger travel, undercuts his claim. Unless he thinks the Boeing crashes are the harbinger of this inevitable safety regression.
I don't understand your comment if it's meant to be a rebuttal to me. The fact that after 2017's record safe year, hundreds of airliner passengers have in crashes involving new Boeing airliners, is support for the NYT article's thesis that Boeing is to blame. Not just, "shit happens as things get better".
That's not even necessarily bad, unless the bad thing that happens is so catastrophic that it destroys whatever safety record you previously had.
From the idiot in their car, "Last time I drove I texted, and there was no problem...."
To ancient Babylon: the ruling class was partying the night they were invaded by Persia because they thought there was no way the Persians would ever be able to breach their walls. They had no sense of hazard.
Kind of reminds me of politicians today. They actually have no idea that their stupidity has a real chance of breaking things.
Neither "regulation" nor "government" are single dimensional quantities that can be compared with a simple "more" or "less".
Having regulatory agencies act in the public interest is probably going to require constant oversight and guidance. It's a hell of a lot harder to have conversations like that when more than half of the political influence in the US is able to dismiss any suggestions with reflexive "more regulation = bad" arguments.
Some regulations decrease competition. Some regulations increase competition. Some regulations provide incentives aligned with the public interest. Some regulations don't. They need to be evaluated on a case by case basis.
Safe regulations are to avoid people dying not to stimulate competition. Without safety regulations, way more people will get sick, injured or die.
And, in this case, it is not about adding more regulation. It is just about making sure that the current one is in place.
Someone though, too much regulation is reducing my profit and 350 people died. Will deregulation bring that people lives back?
This is pure WTF, right here.
> So even some of the people who have worked on Boeing’s new 737 MAX airplane were baffled to learn that the company had designed an automated safety system that abandoned the principles of component redundancy, ultimately entrusting the automated decision-making to just one sensor — a type of sensor that was known to fail. Boeing’s rival, Airbus, has typically depended on three such sensors.
“A single point of failure is an absolute no-no,” said one former Boeing engineer who worked on the MAX, who requested anonymity to speak frankly about the program in an interview with The Seattle Times. “That is just a huge system engineering oversight. To just have missed it, I can’t imagine how.”
https://www.seattletimes.com/business/boeing-aerospace/a-lac...
The plane was made by Boeing, and signed off by the FAA as being safe. Some airline on the other side of the world isn't going to even pretend to know more about the plane than Boeing and the FAA do. It was a completely reasonable assumption to make that the aircraft was airworthy.
The only airlines who would know that the FAA is actually corrupt (captured by Boeing) and could be failing at their regulatory function are the US airlines.
It's unfortunate that you seem to be blaming Lion Air and Ethiopian Airlines for the crashes because apparently they should have known better than to trust that Boeing and FAA would approve a faulty plane. Keep in mind that the FAA approved the plane as is and not "airworthy only if you buy the extra features"
They stopped being an engineering and production company and became a marketing and accounting company.
You can read more here
https://mattstoller.substack.com/p/the-coming-boeing-bailout
What if executives could only sell their shares five years after they acquired them? What if they experienced losses when the company does?
Boards and shareholders need to get smarter. I'm hesitant to regulate it but I see no problem the SEC rating companies for their incentive structure. It should be updated whenever leadership changes or the company changes compensation.
Companies lad by founders who still have most of their wealth in company stock should garner the highest rating. Companies that don't require CEOs to invest and who allow CEOs to exercise options stock and sell stock whenever they want might get the lowest.
How executives can sell stock should be part of that rating. If executives can only sell an amount of stock gradually, say in 8% increments every month for the next year and can't change that schedule, that is safer for shareholders than allowing them to sell whenever they want.
That way, you have a vested interest -- even after you leave the company -- to make sure it does the right thing.
This is something like what Salomon Brothers did. Results were mixed.
That said, I like the idea of spreading them out a bit. CEOs and top execs do behave a lot like how agency theory predicts, it's just that if you can come up with the perfect monitoring scheme, you don't need a CEO.
It's human nature to find ways to get from point A to point B using the least amount of energy even if we need to break the rules. We should all keep that in mind.
At the moment we appear to be confused and think the goal of society is to have markets, so we regulate for the market and hope society gets an outcome.
> In the middle of the Max’s development, two of the most seasoned engineers in the F.A.A.’s Boeing office left. The engineers, who had a combined 50 years of experience, had joined the office at its creation...In their place, the F.A.A. appointed an engineer who had little experience in flight controls, and a new hire who had gotten his master’s degree three years earlier. People who worked with the two engineers said they seemed ill-equipped to identify any problems in a complex system like MCAS.
I assume engineers new to the industry (and government regulation) would be lacking in "big picture" thinking and in confidence and skill in navigating and investigating bureaucracy – the NYT notes that Boeing's early MCAS report "didn't prompt additional scrutiny from the F.A.A. engineers". But the NYT also reports that the engineers made what seemed to be a straightforward technical misjudgment:
> In several briefings in 2016, an F.A.A. test pilot learned the details of the system from Boeing. But the two F.A.A. engineers didn’t understand that MCAS could move the tail as much as 2.5 degrees, according to two people familiar with their thinking.
Though it's hard to tell from that paragraph and its context whether the misunderstanding came from simple technical error and incompetence – e.g. misreading or not fully reading the specs – or deliberate deception/obfuscation from Boeing, and/or inexperience and naivety in doing regulatory work.
I don't buy it.
> When company engineers analyzed the change, they figured that the system had not become any riskier, according to two people familiar with Boeing’s discussions on the matter...So the company never submitted an updated safety assessment of those changes to the agency. In several briefings in 2016, an F.A.A. test pilot learned the details of the system from Boeing. But the two F.A.A. engineers didn’t understand that MCAS could move the tail as much as 2.5 degrees, according to two people familiar with their thinking.
> Under the impression the system was insignificant, officials didn’t require Boeing to tell pilots about MCAS. When the company asked to remove mention of MCAS from the pilot’s manual, the agency agreed.
The "change" mentioned is Boeing overhauling MCAS to have a four-fold increase in magnitude of control over the stabilizer (2.5 degrees vs 0.6 degrees). Your belief is that the FAA, even with a better-staffed review team, and less of a culture of rubber-stamping industry engineer assessments, would have reached the same conclusion? And/or do you think the MCAS change is actually not a problem it's scapegoated to be, and that Boeing was right to tell FAA to remove it from the pilot's manual?
The meeting with the FAA pilot you mention only goes to reinforce this; nobody in the FAA is ever going to have all the right context to put this together. Rather than trying to find some meeting with the FAA where someone could have caught it, there were probably many many meetings inside Boeing where it should have been caught.
But I can sympathise with the people that made the decisions to put the plane in the air.
I never intended to make products that customers wouldn’t like. But I’ve shipped things that didn’t meet my own (low?) standards due to financial and social pressures for me and the companies I worked for.
Most employees have done the same. Most business owners have as well.
Fact is, the FAA has outsourced large parts of certification to the very manufacturer whose plane it was to certify. Either physically (by using Boeing manpower) or conceptually (by not testing everything because Boeing told them nothing has changed even though that was not true).
Unfortunately there's a massive hole in that argument, which is that (i) Boeing might be incentivised to do things which aren't in the public interest, such as take risks to make a great deal more money, and (ii) it might suffer a decline in competence due to contingent or management factors.
Perhaps in a perfect world incentives could be so perfectly aligned that no industry would need regulating. But that's not the world we live in.
Boeing looks around at all of the slaps on the wrists other companies get, including bail outs. Why shouldn't they hop on that gravy train also?
It's not a cliffhanger. It's an anecdote – a FAA employee asking what seems like a seemingly-too-basic question "days after the Lion Air crash". The Lion Air crash happened last year, and the body of this article is ostensibly the answer to that employee's outburst.
Another big problem is that there is very little competition. In reality there are only two players. Smaller manufacturers get absorbed by big ones. As a result grounding a single model causes economic catastrophe in many airlines - leading to significant ticket price increase!
And here I thought 'highest standards' meant not creating death traps.
If there ever was a time to take down a giant, this is it
Airline creating startups do not compete with Boeing, they compete with Lufthansa, Air-France-KLM, Delta and so on.
And even if they did create airplanes, small start-ups do not usually directly compete with giants the size of Boeing on their home territory. Airline manufacture - even with shitty regulation - of a new model passenger plane is not something a 'smaller airplane creating startup' would successfully pull off. It will take a very large amount of money and a huge team to do this.
And that would be to get the plane out of the door. Boeing (and Airbus) has several other non-tangible advantages to their product such as: extensive maintenance and parts logistics (including used parts that can be acquired), well known product, etc
There is one possible competitor in the future: COMAC
If your Boeing or Airbus plane suffers a non-trivial failure that makes it unable to fly, both companies have a team that are able to go and fix it there.
Boeing introduced the last new airframe for commercial passenger transport on 2009 (the 787). Before that, it introduced the 747 in 1994.
Which new airframes that enter the market all the time are you talking about?
Boeing in particular was under pressure from the more fuel efficient Airbus A320neo, and they needed bigger engines (larger fans) to compete on fuel efficiency. Those large engines don't fit under the 737 airframe, but getting a new airframe approved is time-consuming. So Boeing placed the bigger engines more forward from the wing, resulting in flight instability and pitch-up.
Boeing tried to fix that problem with software, but, as became apparent recently, weren't very successful with it.
I'm pretty sure the requirements are fine, but the process is not streamlined and hence avoided whenever possible.
You don't get to stay in business in a regulated industry with an attitude like that. What's next? Medical device manufacturers cutting corners because the regulations are too onerous? Regulations create a level playing field: all entrants get to abide by the rules. Or at least, that's how it should be. The FAA turning a blind eye here is as much a part of the problem as Boeing.