4 ms·

That plane crashed because of an unpredictable freak event. The Max planes crashed because of budgets and sidestepping a poorly run regulatory body. I’m sorry,

That plane crashed because of an unpredictable freak event. The Max planes crashed because of budgets and sidestepping a poorly run regulatory body. I’m sorry, but when capitalism starts crashing planes, I tend to forget about “advances we’ve made.”

pdonis 7y ago
> That plane crashed because of an unpredictable freak event. No, it crashed because of a predictable event that a number of engineers had already warned could happen, based on an obvious design flaw that was not fixed.
- keitmo 7y ago
  Yes, exactly. I attended a presentation by Captain Haynes back in the early 90's. He showed several photos of the DC-10's hydraulic system. In many places the triple-redundant hydraulic lines were parallel and in close proximity to each other, close enough to be taken out by a single piece of shrapnel from an uncontained engine failure.
- dclowd9901 7y ago
  Ah, I see I've misremembered which flight disaster this was. Apologies.
ekianjo 7y ago
Funny you point to "capitalism" where everything in your statement points to cutting corners which has nothing to do with capitalism per se. We would not even have planes that cost hundreds of millions if we did not have a system for investments.
- ineedasername 7y ago
  If you replace "capitalism" with "competition for low prices" then I think the comment is a little less inflammatory while still making a similar point. The fact that a capitalistic system is what gives rise to macro economics that facilitate building planes like this doesn't mean it's perfect and can't be improved upon, say with regulation that doesn't outsource the checks to the company making the planes. Capitalism is fantastic, but the extremes it gives rise to can be checked by assiduous oversight. I'm not saying the government is a paragon of efficiency here, but it's better than nothing, and with some reform could be much better.
  - yostrovs 7y ago
    Can you point to safer commercial airplanes built by non-capitalist enterprises?
    - ineedasername 7y ago
      I could point to today's commercial airplanes which exist in a culture & regulatory framework, not pure free-market capitalism, that has consistently reduced the risks of commercial flying for decades.
      - yostrovs 7y ago
        I could point to a capitalist society where customers demand and expect safety and are part of the process that brings forth regulations. I'm sorry I didn't imply we live in a pure capitalist society.
- dredmorbius 7y ago
  A fundamental principle of capitalism -- the pursuit of financial profits, that is, revenues in excess of recognised costs -- leads directly to multiple practices which prove hazardous at scale and over time. Financial and economic theory don't recognise ecological inputs including the time and replenishment rates associated with nonrenewable resource formation. (By definition, a "nonrenewable resource" is on whose extraction or extinction rate exceeds that of its formation.) It invokes utterly nonscientific principles such as Hotellings Rule (precisely zero geological references cited) and the Rule of Capture to justify pricing and business behaviours. Capitalism relies on and exercises externalities of pollution, risk-shifting, and cost-burden shifting to increase firm profits at a cost of larger social burden. The legal structure of incorporation is literally a risk-externalising engine, recognised by name in some cases ("limited liability corporation"), in which risk-based costs are externalised or stoplossed. This can be useful in cases, but can also be grossly overused. "Wealth, as Mr Hobbes says, is power" is among the shortest sentences in Adam Smith's Wealth of Nations, a work not given to short sentences. Financial wealth leads to political and market power, including the power to distort markets. Much of Smith's book was a criticism of such practices. That lesson is largely lost by modern boosters of the work, who instead prefer stringing together synthesised passages across hundreds of pages of multiple sections of the book to advance their own, power-centralising ideologies. Capitalism, finance, and business have a schizoid and faulty relationship with risk. "Cutting corners" is precisely a capitalistic measure, one which arbitrages a potential cost with a present realised savings. The bet is that the potential cost will never be realised. Sometimes that's not the case, but sometimes it is, and the firms which win that bet, based entirely on luck, are rewarded by the market. The market makes no distinction between profit gained by full realisation of probabalistic costs, and profit gained by ignoring those costs, in the individual case. (In the aggregate profile case, the risks balance out, but specific performance matters and is independent of the profile returns.) In market returns to various goods and services, pricing behaviours of commodities (undifferentiated bulk goods), services, labour, rents, assets, and highly differentiated specialty goods vary. In particular, the iron law of wages (tending to subsistence, or lower, levels) and the law of rents (capturing all consumer surplus value) mean that over time wealth accrues to rentiers and owners of capital, at a cost of labour. Addressing these issues would require massive changes to accounting, risk premium, and legal regimes. That same "wealth is power" dynamic means that such reforms are exceedingly unlikely, because those who benefit by false models also benefit by ensuring that those models are protected and preserved.

pdonis 7y ago

> That plane crashed because of an unpredictable freak event. No, it crashed because of a predictable event that a number of engineers had already warned could happen, based on an obvious design flaw that was not fixed.

keitmo 7y ago
Yes, exactly. I attended a presentation by Captain Haynes back in the early 90's. He showed several photos of the DC-10's hydraulic system. In many places the triple-redundant hydraulic lines were parallel and in close proximity to each other, close enough to be taken out by a single piece of shrapnel from an uncontained engine failure.
dclowd9901 7y ago
Ah, I see I've misremembered which flight disaster this was. Apologies.

ekianjo 7y ago

Funny you point to "capitalism" where everything in your statement points to cutting corners which has nothing to do with capitalism per se. We would not even have planes that cost hundreds of millions if we did not have a system for investments.

ineedasername 7y ago
If you replace "capitalism" with "competition for low prices" then I think the comment is a little less inflammatory while still making a similar point. The fact that a capitalistic system is what gives rise to macro economics that facilitate building planes like this doesn't mean it's perfect and can't be improved upon, say with regulation that doesn't outsource the checks to the company making the planes. Capitalism is fantastic, but the extremes it gives rise to can be checked by assiduous oversight. I'm not saying the government is a paragon of efficiency here, but it's better than nothing, and with some reform could be much better.
- yostrovs 7y ago
  Can you point to safer commercial airplanes built by non-capitalist enterprises?
  - ineedasername 7y ago
    I could point to today's commercial airplanes which exist in a culture & regulatory framework, not pure free-market capitalism, that has consistently reduced the risks of commercial flying for decades.
    - yostrovs 7y ago
      I could point to a capitalist society where customers demand and expect safety and are part of the process that brings forth regulations. I'm sorry I didn't imply we live in a pure capitalist society.
dredmorbius 7y ago
A fundamental principle of capitalism -- the pursuit of financial profits, that is, revenues in excess of recognised costs -- leads directly to multiple practices which prove hazardous at scale and over time. Financial and economic theory don't recognise ecological inputs including the time and replenishment rates associated with nonrenewable resource formation. (By definition, a "nonrenewable resource" is on whose extraction or extinction rate exceeds that of its formation.) It invokes utterly nonscientific principles such as Hotellings Rule (precisely zero geological references cited) and the Rule of Capture to justify pricing and business behaviours. Capitalism relies on and exercises externalities of pollution, risk-shifting, and cost-burden shifting to increase firm profits at a cost of larger social burden. The legal structure of incorporation is literally a risk-externalising engine, recognised by name in some cases ("limited liability corporation"), in which risk-based costs are externalised or stoplossed. This can be useful in cases, but can also be grossly overused. "Wealth, as Mr Hobbes says, is power" is among the shortest sentences in Adam Smith's Wealth of Nations, a work not given to short sentences. Financial wealth leads to political and market power, including the power to distort markets. Much of Smith's book was a criticism of such practices. That lesson is largely lost by modern boosters of the work, who instead prefer stringing together synthesised passages across hundreds of pages of multiple sections of the book to advance their own, power-centralising ideologies. Capitalism, finance, and business have a schizoid and faulty relationship with risk. "Cutting corners" is precisely a capitalistic measure, one which arbitrages a potential cost with a present realised savings. The bet is that the potential cost will never be realised. Sometimes that's not the case, but sometimes it is, and the firms which win that bet, based entirely on luck, are rewarded by the market. The market makes no distinction between profit gained by full realisation of probabalistic costs, and profit gained by ignoring those costs, in the individual case. (In the aggregate profile case, the risks balance out, but specific performance matters and is independent of the profile returns.) In market returns to various goods and services, pricing behaviours of commodities (undifferentiated bulk goods), services, labour, rents, assets, and highly differentiated specialty goods vary. In particular, the iron law of wages (tending to subsistence, or lower, levels) and the law of rents (capturing all consumer surplus value) mean that over time wealth accrues to rentiers and owners of capital, at a cost of labour. Addressing these issues would require massive changes to accounting, risk premium, and legal regimes. That same "wealth is power" dynamic means that such reforms are exceedingly unlikely, because those who benefit by false models also benefit by ensuring that those models are protected and preserved.