Markets not regulators should determine safety cost tradeoffs

Discussion in 'Flight Following' started by PeterNSteinmetz, May 15, 2019.

  1. PeterNSteinmetz

    PeterNSteinmetz Line Up and Wait

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    Last edited: May 15, 2019
  2. Let'sgoflying!

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  3. flyingron

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    Eh Peter? Your article says just about the opposite. You can't trust the market influences to do safe things because as Ford said back in the exploding Pinto days "people won't buy safety."
     
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  4. X3 Skier

    X3 Skier En-Route PoA Supporter

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    The article says the majority of travelers would fly anything if the price is cheap. IOW, safety is good enough that it doesn’t significantly affect choice of flights. If airplanes were crashing every day, people probably wouldn’t fly.

    I, for one, will never fly a third world Airline. OTOH, I’ll fly any US Major Airline (except Allegiant). If it’s a short flight, I’ll even fly Frontier.

    Cheers
     
  5. Dean V

    Dean V Pre-takeoff checklist

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    When given the choice between profit and safety, profit is the winner. Thus the need for regulation.
     
  6. PeterNSteinmetz

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    This question is of course a long debate and one which has been studied extensively. There is a fairly good case to be made that a free market with the businesses responsible economically for the cost of their decisions (not insulated by the present legal regime which favors large established carriers) is a more effective solution.

    So for example, an airline which makes poor decisions in the cost-safety tradeoff, would go out of business, have higher insurance premiums as well as potentially losing customers.

    If one is interested, here is some starting reading - https://mises.org/library/primer-regulation .

    In our present regulatory environment, consumers are conditioned to think all airlines are equally safe because their safety "is guaranteed" by the regulators. In a truly free market, people would have to rely on independent rating organizations or their own research. But if all carriers were about equally safe (for example, if the use of the 737 Max doesn't really matter when flown by a competent US based crew) then consumers would rightly not care and carriers and manufacturers would not be burdened by unnecessary changes.

    One size does not necessarily fit all when it comes to the safety - cost tradeoff.
     
    Last edited: May 15, 2019
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  7. tspear

    tspear Pattern Altitude PoA Supporter

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    For this to work, the companies must have required insurance, which is regulatory. Note: I have not read the thread you provided but I have seen this analysis before. Often they leave significant holes in it; such as the required level of insurance. Without it, there will always be some fly by night operation or business taking a gamble.

    Tim
     
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  8. PeterNSteinmetz

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    And consumers might well learn to check if companies involved in providing potentially lethal services to themselves and their family have adequate insurance.

    But I agree a good improvement on the present system would be to simply require adequate insurance coverage for particular operations, rather than compliance with a pre-determined set of regulatory requirements. That would be an excellent step toward free markets. There are lots of experiments like that to try, no need to jump in whole hog. Try things and see how they work.
     
  9. Palmpilot

    Palmpilot Touchdown! Greaser!

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    How do you feel about anti-trust laws?
     
  10. PeterNSteinmetz

    PeterNSteinmetz Line Up and Wait

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    Starting to get off into pure politics I think, unless you have some aviation nexus in mind (and I prefer to avoid being scolded again).

    It is not really an area I am expert in, but here is a link to an article about it which may be of interest - https://mises.org/library/anti-trust-anti-truth.
     
  11. Palmpilot

    Palmpilot Touchdown! Greaser!

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    That happened with your link in post #6, IMO.
     
  12. Ravioli

    Ravioli Final Approach PoA Supporter

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    I'll take Allegiant before SouthWorst any day!
     
  13. Bell206

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    And a perfect example of that scenario is LSA and E/AB aircraft. Why? By most people here, the preference for reduced oversight and over burdening regulations. So why should every one else be expected to follow a different path?

    But to clarify, regulations are needed to protect the general public at large who do not understand the various industries. And I think the current regulatory levels work just fine. Do they need to be tweeked? Sure, like allowing TC aircraft to operate as a E/AB.

    However, what I find ironic in the MAX discussions is Boeing followed the existing FARs. They didn't try to circumvent them. Yet most detractors point out Boeing forgot to cross that "T" or "dot that "i" when they themselves, and the aircraft community as a whole (to include a number of people on this forum) conciously do not follow those same FARs when operating/maintaining their own aircraft on a daily basis.

    And to restate, does Boeing own some fault in this? Yes. Will increasing regulations toward Boeing and other OEM based on the MCAS issue make things safer? In my opinion/experience, doubtful.

    But when the final reports are out don't be surprised if the "holes in the cheese" line up directly at the local CAA and these respective airlines as owning the root cause of the actual accidents, which Boeing had/has zero control over.
     
  14. Kenny Phillips

    Kenny Phillips Pattern Altitude

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    And in the case of the Pinto, the risk was grossly overblown, because people fear fire.
     
  15. Art Rose

    Art Rose Pre-takeoff checklist

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    There is a genuine need for the regulation of Aviation activities, especially for safety. But, for a regulatory process to function properly, the regulating body must be required to accept feedback, and be subject to oversight by those who are affected by the decisions of the regulating body. We don't have oversight in our current system, hence, the massive decline of General Aviation in this country.
    When a regulating entity simply tells you how it should be, you eventually get what we now have. An insanely expensive and burdensome system that everybody tries to work around or avoid all together. You could insert Boeing here if you like, but it affects everybody involved in aviation activities.

    It reminds me of the bean counters sitting at their desks making safety rules for the working man in the field. Bean counter doesn't have a clue what it's like outside of his cubicle. He gives the subject some lip service, looks at his charts and tables, and then blindly adds unnecessary massive costs to the job. We need to wake up.

    The old, "We're not happy till you're not happy" is far from being funny any more.
     
  16. LoLPilot

    LoLPilot Pre-takeoff checklist

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    A lot of my research and some of my teaching is in the area of transportation safety. A few points.

    1) People will buy safety, or rather they will not buy things perceived to be unsafe. That's one of the reasons that auto makers tout good crash test ratings. It's one of the reasons that the Pinto never recovered from the scandal. People didn't choose to buy a car because it was safe, but they chose not to buy the Pinto because it was perceived to be unsafe. In aviation, look at the 737 MAX. Nobody cared or went out of their way to fly a certain airline or aircraft because it was perceived as safe, but they'll go out of their way to avoid one perceived as unsafe. Same as the DC-10. Our brains tend to be "management by exception" driven. "Unsafe" is considered the exception. So marketers know they aren't going to woo the public by saying they built the safest widget in the world, but they know that they cannot have the reputation of having built the unsafest widget in the world.

    2) Deregulation will make things more dangerous. That basic argument was made with fare deregulation for the airline and motor carrier industries in the 70's. People assumed that if rate regulations were taken off of the table, then carriers would enter price wars and start cutting corners in terms of safety in order to maintain margins. Airline and motor carrier safety did not tank in the 80's and 90's. Quite a few carriers went out of business because they couldn't operate at the lower costs, but it wasn't the mass chaos that naysayers predicted. In the trucking industry, some regulations are killing the entire industry right now by making it difficult to recruit talent and making it difficult for drivers to operate effectively.
     
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  17. UngaWunga

    UngaWunga Cleared for Takeoff

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    ...and make the product more expensive for the end consumer.
     
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  18. LoLPilot

    LoLPilot Pre-takeoff checklist

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    I was making a case for deregulation. Deregulation did not make things more dangerous, as many said. It was probably the best thing to ever happen to the flying public as now your typical middle class family could afford to take a flying vacation. It was also harmful to GA because it made commercial flying so cheap. I look at the cost of flying myself to a destination now and I don't because Southwest or JetBlue can get me there in 1/2 the time and 2/3 the price, and I can have a beer on the way.
     
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  19. PPC1052

    PPC1052 En-Route

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    But Ford is objectively wrong. There are numerous posts just on this web site from folks on this board talking up the value of Cirus aircraft and the BRS, despite high purchase costs and ongoing expenses (re-packing fees) because of the additional safety.
     
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  20. Dean V

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    Drug tests is what is keeping most of the talent out of trucking. There is also a ban on drivers with a second DUI, that is some the talent that is excluded, which is a good thing.

    I really don’t care if people smoke dope, but I don’t want my surgeon, my airline pilot or the truck driver in the lane next to me on it.
     
  21. tiger

    tiger Pre-takeoff checklist

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    Indeed. Nothing wrong with referencing the Mises Institute but lets just say that it wouldn't be many economists' first choice for an even-handed "primer" on regulation. :)
    That's true, but "deregulation" meant deregulating fares, routes, competition and so on. The FAA had safety oversight before "deregulation" and continued / continues to have it afterward. Commercial aviation is still very much a "regulated" industry operationally.
     
    Last edited: May 17, 2019 at 11:01 AM
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  22. PeterNSteinmetz

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    Yes, the link in post #6 is a pointer to an overview of the subject matter. It is about 3 pages or so and is a place for people to start then explore the issues mentioned. (I don't know that anyone discussing here has bothered to read it). It is too complex a discussion to really do it full justice here, IMO. There is a large body of academic literature on the effects of regulation.

    I think it would be fair to say that simple notions like "government regulation is necessary for safety in aviation" or "it is impossible for the market to function to improve safety" would tend to be rejected by a large number of workers in the field, but not all.

    I agree that had an aviation nexus, so permitted here, but I think a general discussion of anti-monopoly statutes would likely approach the line.
     
  23. ircphoenix

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    Deregulation and free market forces always work perfectly.

    See California's electricity crisis of 20 years ago and the country's real estate implosion of 2008 for perfect examples.
     
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  24. tiger

    tiger Pre-takeoff checklist

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    Fair enough, and I take it you personally approve of Mises et al - my point was that it's an unusual place to recommend people begin learning about the issue without mentioning that the Mises Institute promulgates a very specific and fairly radical position. It's rather like me saying "If you're interested in Labor Economics, Vol. 1 of Das Kapital is a good place to get started". :)
     
  25. PeterNSteinmetz

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    I agree that Mises has a specific point of view. I don't know that we have discussed this issue before so you are perhaps not aware of my rather strict position regarding attacks on the source in public discussions. I avoid all such attacks, both those against the speaker or the poster and those simply against a source. I don't mean to imply that these comments are particularly bad examples :)

    Thus I don't tend to note that a particular source is biased this way or that. Rather I focus on the factual truth and validity of what that particular source says. One can spend a nearly infinite amount of time arguing over whether CNN is more biased than Fox News and in what direction and it actually won't tell you much really about the underlying issue. I don't find that very interesting and prefer to focus on the issues at hand.

    So in this case, if people are interested, perhaps read the Mises article, find some alternate points of view, and bring them up if one really wants to discuss this issue here in the context of aviation.

    And if you've read any of my prior posts in other threads I imagine it becomes pretty clear what my bias is (we all have them frankly to greater and lesser degrees) -- I am a ultra-libertarian so those are the things I am interested in. And I tend to think most of what mises.org has to say is spot on and correct. Also, in fairness, I do think the article mentioned is a bit more of an overview appropriate for casual reading than Das Kapital.
     
  26. Palmpilot

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    I didn't know anything about the Mises Institute, but it appeared to me to be a non-aviation article that was presenting views favored by a particular portion of the political spectrum.
     
  27. PeterNSteinmetz

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    That is basically correct. It is related to aviation only because aviation is heavily regulated and that primer talks about one view of the general effects of such regulation, which I think apply in those ways to aviation and what the FAA does to the industry.
     
  28. LoLPilot

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    You also need to be 21 to have an interstate CDL. That means that you're not getting high schoolers becoming over the road truckers after graduation. They aren't sitting around and waiting for that career. They are going to trade school or the work force if they aren't going to college and doing something else.
     
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  29. chemgeek

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    Markets are institutions ostensibly designed to (a) make profits and (b) allocate limited resources. (Although history shows that (b) has not always worked out well for some commodities or products.)

    Safety--not so much. Markets thought it was acceptable to dump PCBs in the Hudson River, and mercury into Onondoga Lake, and the auto industry was dragged kicking and screaming into providing active and later passive restraints for automobiles decades ago. It's hard to appreciate the human cost of avoiding automobile safety unless you, for example, worked in the emergency room on Friday and Saturday nights back then. The DOAs were the ones without or not wearing restraints.

    A reasoned partnership between markets and regulation is necessary to promote economic activity while protecting the public.
     
  30. Palmpilot

    Palmpilot Touchdown! Greaser!

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    I think the viewpoint in that article is an example of someone wanting something to be true, and therefore they think it is.