Smaller government or smarter governing?

One of the conservative ideologies in governing is that we need a smaller government and freer enterprise. The premise behind that thinking, I suspect, is that we trust companies to do well by doing good. The problem is they don’t often do so.

Here is the new initiative by AT&T

Enjoy more data. Starting with your October 2019 bill, you’ll get an additional 15GB of data on your Mobile Share plan. This bonus data comes with a $10 price increase. AT&T confirmed to The Verge that there’s no way to opt out of this “bonus.” Here’s the company’s statement:

“We are communicating with some customers regarding changes to their mobile plans. Customers have the choice to change their plan at any time and can always contact us with questions or to understand their options.”

This probably won’t surprise AT&T customers one iota, of course — this is the company that was just finally slapped on the wrist with a $60 million fine for throttling what were supposedly “unlimited” plans back in 2011, and the company that’s now pocketing an extra $800 million in “admin fees” every year after more than doubling that inexplicable surcharge last June. This is the company that’s now making you pay its property taxes on your business internet bill, while it repeatedly jacks up the rates of its few remaining grandfathered unlimited cellular plans.

Source: The Verge

The predatory practice is so disturbing that I don’t have the word to describe it.

Another example is Boeing with their 737 Max woe.

“The culture was very cost centered, incredibly pressurized,” Adam Dickson, who worked for Boeing for 30 years and led a team of engineers that worked on the 737 Max, told BBC Panorama in a program airing Monday night.

“Engineers were given targets to get certain amount of cost out of the airplane,” he added.” Certainly what I saw was a lack of sufficient resources to do the job in its entirety.”

Source: Business Insider

The cost-cutting goal at Boeing led to the company using $9/hour engineers on the planes that sell for millions of dollars and can decide the fate of thousands of passengers. This is a company that enjoys a duopoly of the sky, along with Airbus.

There are certainly a lot more examples of how companies do not volutarily act in the interest of consumers. You will find out more by watching a few episodes of either Patriot Act or Last Week Tonight.

My point is that companies care more about bottom line than consumer interest. Sometimes, those two issues align and be sure that they will advertise the hell out of what they do “for you”. Unless there is a party that can help keep the companies in check, consumers will be at their mercy. There are a few cases in which consumers can threaten the existence of companies such as the #DeleteUber movement a while ago, which suddenly kept Lyft from administration. However, those cases are not common or not common enough.

That’s why we need rules and governments to enforce those rules. It is understandable that red tape and unnecessary regulations are a pain and should be removed (trust me, as an immigrant dealing with all these immigration policies, I already had a bit of American bureaucracy). But that means we need to be smarter in governance , not less governance. By removing all regulations, we help companies reduce compliance costs and be legally less responsible.

As citizens, we don’t have the time and resources to understand all these regulations and conduct studies on how they affect business. The job is left to people who are dedicated to making laws: lawmakers. Hence, whenever somebody mentions that we ought to remove regulations, be sure to ask who and what will protect us citizens from the excessive corporate greed?

Weekly readings – 19th October 2019

Amazon published their official position on a few social issues

Global electric car sales and market share, 2013-18

Source: IEA

The poor in America pay a higher tax rate than the rich. I guess the tax cut is doing what it is supposed to? (I am being sarcastic)

TurboTax’s decade-long war to prevent Americans from filing taxes online for free. I was angry when I read this article. Billions of hours and dollars are wasted every year on filing taxes and only a handful of people benefit at the expense of millions

To buy a phone in China, a face scan will be required as of 1st December 2019

Bob Iger’s massive bet on Disney’s future.

Sleep Deprivation Shuts Down Production of Essential Brain Proteins. The sleep deprivation pandemic is real in our society and there doesn’t seem to be signs of its abating.

How Amazon is redefining the expensive and wasteful process of returns

Boeing lead pilot warned about flight-control system tied to 737 Max crashes, then told regulators to delete it from manuals. Frankly, this is just disgusting. Boeing is one of the two plane manufacturers that dominate the sky and it still has this kind of behavior

Egregious lack of competition in the sky

I came across this short clip by CNBC on the dominance of Boeing and Airbus in the sky. The two companies are the two major players in a lucrative industry with incredible high entry barriers. They or at least Boeing has a close tie to the government as it is the second biggest vendor for government contracts.

It’s a bit ironic that Boeing enjoys the influence and the lack of the competition that it has while government officials all seem eager to publicly end the alleged monopolies of tech companies. I said alleged since it’s not really clear cut to determine whether companies like Amazon are a monopoly even though many deem it to be. I am not saying that tech companies should be allowed to function in a monopolistic competition. But if fighting to avoid monopolies and to preserve consumers’ best interest is necessary, Boeing should be one of the first companies to be scrutinized.

If you remember the saga Boeing has had with its 737 Max this year, it’s even more unbelievable to see Boeing dominate the market. Even with its position and power, Boeing still tries to cut cost and bolster the bottom line at the expense of the very utmost thing they should be responsible for: safety.

Boeing Max – Failure from incentive, negligence and irresponsibility

“Show me the incentives and I’ll show you the outcome” – Charlie Munger

This is a stunning investigative story on the gross negligence and irresponsibility at Boeing regarding the design of the Max; which ultimately led to two crashes and 346 deaths.

The fatal flaws with Boeing’s 737 Max can be traced to a breakdown late in the plane’s development, when test pilots, engineers and regulators were left in the dark about a fundamental overhaul to an automated system that would ultimately play a role in two crashes.

A year before the plane was finished, Boeing made the system more aggressive and riskier. While the original version relied on data from at least two types of sensors, the ultimate used just one, leaving the system without a critical safeguard. In both doomed flights, pilots struggled as a single damaged sensor sent the planes into irrecoverable nose-dives within minutes, killing 346 people and prompting regulators around the world to ground the Max.

Boeing never disclosed the revamp of MCAS to Federal Aviation Administration officials involved in determining pilot training needs, according to three agency officials. When Boeing asked to remove the description of the system from the pilot’s manual, the F.A.A. agreed. As a result, most Max pilots did not know about the software until after the first crash, in October.

The disasters might have been avoided, if employees and regulators had a better understanding of MCAS. A test pilot who originally advocated for the expansion of the system didn’t understand how the changes affected its safety. Safety analysts said they would have acted differently if they had known it used just one sensor. Regulators didn’t conduct a formal safety assessment of the new version of MCAS.

On March 30, 2016, Mark Forkner, the Max’s chief technical pilot, sent an email to senior F.A.A. officials with a seemingly innocuous request: Would it be O.K. to remove MCAS from the pilot’s manual?

The officials, who helped determine pilot training needs, had been briefed on the original version of MCAS months earlier. Mr. Forkner and Boeing never mentioned to them that MCAS was in the midst of an overhaul, according to the three F.A.A. officials.

Under the impression that the system was relatively benign and rarely used, the F.A.A. eventually approved Mr. Forkner’s request, the three officials said.

Boeing wanted to limit changes to the Max, from previous versions of the 737. Anything major could have required airlines to spend millions of dollars on additional training. Boeing, facing competitive pressure from Airbus, tried to avoid that.

Despite whatever Boeing has to say about safety being the number priority, actions speak louder than words. As the article and the last paragraph in the quote section above show, they care more about profitability than about passenger safety. I am sure safety was mentioned somewhere in the process by caring and responsible individuals. However, in the end, getting ahead of competition and generating money seem to trump everything else. To make matters worst, the FAA leaves the required safety checks to employees of airplane manufacturers since it doesn’t have the necessary resources. When Boeing can play the judge role to its own performance in a game in which it’s incentivized to not be honest or critical of itself, what would the FAA expect then? You’d have all the recipes for a disaster to happen and it did, twice.

Incentives, unless done prudently and strategically to align with desired goals, could lead to unfortunate failures, sometimes of a great magnitude.

I used to feel safe when flying several years ago. Lately, there have been several unfortunate tragedies involving airplanes. Nowadays, I feel uneasy and anxious whenever a flight takes off or when there is turbulence, and I breath a sigh of relief whenever we land safely. The article doesn’t really help the issue here, from how manufacturers have interest in not doing their full due diligence to the authority not having enough resources to work properly.