Category Archives: Economics

Airline Seats

Why are they so miserable?

I found this interesting:

Brauer, a former Air Force officer and mechanical engineer, still has a lot to do with our in-flight comfort. He’s been researching it almost since he started at Boeing in 1979 and consults with airlines on how seat configurations balance comfort against the bottom line. His calculations largely led to the 777’s shift to three rows of three, from the “2-5-2” configuration, which allows everyone to have a free seat next to them when the plane is 67 percent full (versus 44 percent).

I’ve kvetched about this before, I’m sure [Googling…yup, here it is, in comments), but a big reason that I don’t like wide bodies is that the window/seat ratio is much lower on them, and I’m a window man. But at least with the 3-3-3, I can get a window and still have a decent chance of an empty seat next to me. That would almost never happen with a 2-5-2. I don’t know why this should have required a calculation, though. It seems pretty intuitively obvious that 3-3-3 is superior, just because a row of three seems preferable to a row of five. It puts everyone closer to an aisle, other than windowers.

Or does it? Maybe a calculation is required…

More Candidates For Tea Parties

GM bondholders:

This is what happens when the government picks winners and losers: big unions walk away with GM and small investors get thrown by the wayside. Sooner or later, we’re going to have to return to some kind of normal economic activity, and when that happens we will need investors, large and small, to feel it’s worthwhile getting back into the market. Deals like this one are going to make that awfully difficult.

People are reeling from having their 401ks wiped out in the current market slide. And now those who had for years bought what they thought were “safe” blue-chip corporate bonds are discovering they were only safe until they were told by the government to go fly a kite because government wants to pay off the unions instead. That is deeply unfair to small bondholders, and it’s dreadful economic policy. As a friend of mine put it to me, “Who in their right mind will buy corporate bonds now? And if nobody’s buying bonds, how exactly are our debt markets going to get humming again? What a mess.”

It’s almost like they want to wreck the economy.

[Update a couple minutes later]

Apparently, Ken Lewis, head of B of A, has been fired.

The question is, who did it? The shareholders and board (you know, the old-fashioned way), or was it our new head of the economy continuing to grab more power?

[Update]

Apparently it was the board. And he’s still CEO, just not chairman.

GM Thoughts

From Mitt Romney:

GM’s new proposal, clearly produced under government duress, is worse than virtually any of the alternatives. It would give GM to the UAW and the U.S. government and make taxpayers pick up the bills. Of course, billions more from government would be drawn down right away. But the UAW could also depend on the Obama administration to keep up the subsidy for years and years to come. Government and Union co-ownership: It would be as ineffective as it is un-American.

The right course for GM is an out-of-court restructuring or bankruptcy. Either would keep the company in business and rid it of burdensome costs, work rules and obligations. The government could backstop the post-restructuring debt, helping the company get on its feet. GM must not fail: If its costs are brought in line with its competition, it can ultimately thrive and grow jobs. What is proposed is even worse than bankruptcy—it would make GM the living dead.

I was never a big Romney fan, but he’s looking pretty damned good right now.

One Hundred Days

One hundred screwups. And here’s a pretty serious one:

The feds will ask the banks to increase their tangible equity by converting preferred shares to common stock, including the taxpayers’ preferred shares that were purchased with TARP funds. The WSJ editorial board called this a “backdoor nationalization.” That’s exactly what it is. It’s also a nationalization that increases taxpayer exposure to bank losses without recapitalizing the banks, without providing an exit strategy, and without building in effective safeguards against politically directed lending.

The country’s in the very best of hands.

“Card Check”

In action:

Milner says the men demanded that he erase his recording, and one of them took his camera, while Cerbo claims, in the Post’s words, that he “offered to erase his tape because he hadn’t been invited to the event.” No one disputes that Milner was outnumbered, or that it was he who called 911.

If this is what happens to a man at a public event, what do you expect a woman to do when these guys show up at her house with a card to sign?

I’ll be curious to see whether Benedict Arlen flips on this issue.

Swarm Savvy

This article about how bees and ants make collective decisions reminds me of my emergent stupidity theory:

So clearly it’s not enough to just put a bunch of dumb things together — how they are put together matters as well. But it at least offers the possibility that if you had a large enough bagful of Michael Moores (admittedly, it would require all of the burlap that the world will produce for the next century or so), you might have a chance of getting something intelligent as a result.

But to get back to my NASA example, I have a theory that the converse is true as well. You can aggregate a bunch of really smart things (like rocket engineers) and come up with something really, really dumb — an entity that would make decisions that no single individual among them would ever make, sans psychotropic drugs. Call it, if you like, the “committee effect.”

I’m not sure how to quantify it, but I suspect that it’s kind of like the rule for determining the resistance of a parallel network of resistors.

[Danger Will Robinson! MATH ahead!!]

If resistors are in series, that is, connected end to end in a long row of them, it’s easy to determine the total resistance — just add them up. So two resistors of ten ohms each become one resistor of twenty ohms when one end of one is connected to one end of the other, and the resistance is measured across the two free ends.

Parallel resistors, in which both ends of the resistors are connected to each other, so that the current flows through them all simultaneously, instead of first one and then the next and so on, has a different rule to compute the net resistance.

It’s: Total Resistance = 1/((1/R1)+(1/R2)+…+(1/Rn))

where the “R”s represent the individual resistances, and there are n resistors. In words, it’s the reciprocal of the sum of the reciprocals of the individual resistances.

For the example given above, it would be one over the sum of one-tenth plus one-tenth, or one over two-tenths, or one over one-fifth, or five ohms. So instead of doubling the resistance, as in the series case, we’ve halved it.

It can be shown (exercise left for the algebra student) that if all of the resistors are of equal value, the formula simplifies to the original resistance divided by the total number of resistors.

[End MATH]

Which is a frightening thought, if the same rule applies to my “emergent stupidity” theory. Assuming for simplicity that everyone in a government bureaucracy has the same I.Q. (it doesn’t change the answer that much if you allow variation, but assuming that they’re equal makes the calculation much simpler, as one can see from the formulas above), that means that the net I.Q. will be that I.Q. divided by the number of agency employees.

If you add the number of lobbyists and interest groups to the mix, you can drive it down another order of magnitude in value, to the point that it has the intelligence of a lobotomized fern (only slightly smarter than Joe Biden).

And my theory would seem to be borne out by the quality of decisions coming from, for example, the U.S. Agriculture Department, or the INS, or the State Department.

All of this, of course, is a long way of saying that I’m not encouraged by the prospects of merging several federal agencies and departments into a much larger (and probably dumber) one called the Department of Homeland Security, and then actually entrusting it with homeland security…

Just for those morons in comments who imagine that I was ever in favor of the DHS. I think the theory goes a long way toward explaining the hundred days, hundred f-ups that we’ve been seeing since the end of January as well.

The Workers Take Over The Means Of Production

At Chrysler:

The agreement with the union essentially relieves Chrysler of a portion of the $10 billion it owes to the union’s retiree health fund. In exchange for giving up its claims to some of that $10 billion, the union is getting the significant equity stake in the company.

Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass., said that if the union winds up with a majority stake in its employer, that “puts the UAW in a strange position.”

“If it takes company stock as a part owner in the company, it would be bargaining against itself,” he said. “It can never act as adversarial in that relationship. Also it’s in a position that to make the company more stable, it has to reduce health-care benefits of its own retirees.”

“A strange position.” No kidding.

What I don’t understand is why Fiat would want a 35% stake in a company that is owned by the UAW.

[Update a few minutes later]

It seems to me that shareholders of GM, Chrysler, Bank of America and many other companies that have been screwed over by the government have massive grounds for lawsuits. The tricky part, of course, and particularly with this particular government, is getting permission from it to sue it.

Busted

The country’s in the very best of hands:

The cavalier use of brute government force has become routine, but the emerging story of how Hank Paulson and Ben Bernanke forced CEO Ken Lewis to blow up Bank of America is still shocking. It’s a case study in the ways that panicky regulators have so often botched the bailout and made the financial crisis worse.

In the name of containing “systemic risk,” our regulators spread it. In order to keep Mr. Lewis quiet, they all but ordered him to deceive his own shareholders. And in the name of restoring financial confidence, they have so mistreated Bank of America that bank executives everywhere have concluded that neither Treasury nor the Federal Reserve can be trusted.

Boy, that’s not a very flattering picture of Hank Paulson. Looks like Darth Vader without the mask.