When zoning laws began to proliferate in the 1920s, they were a newly imposed restriction on what homeowners could do with their properties. In those days, most people lived in long-established communities in cities. Today, after 70 years of suburbanization following World War II, the large majority of homeowners bought their homes in suburbs built in response to market demand for single-family living. Local governments (typically county governments outside the main city) responded to the kind of housing the developers wanted to create to meet the growing single-family market demand.
In effect, postwar single-family zoning represented an agreement under which homebuyers accepted restrictions on other types of uses in their neighborhood in order to be protected from negative externalities that neighbors might create, without the protection of the covenant provided by single-family zoning.
To abolish single-family zoning is a violation of the contract between a municipality and its single-family homeowners. They selected the neighborhood and the house based on the protections offered by prevailing zoning.
California recently enacted legislation* that invalidates single-family zoning, as an effort to increase housing supply. History suggests other alternatives would be wiser and more respectful of property rights.
Support for state, let alone federal, preemption of local government policy violates basic principles of limited government: that any government action should be carried out at the lowest possible level of government. And there are alternatives to conventional zoning, developed by academics in the law and economics/public choice theory field.
The first major challenge came from University of Chicago's Bernard Siegan, with his pathbreaking 1972 book, Land Use Without Zoning. As editor of Reason magazine in those years, I commissioned a lengthy interview with Siegan that appeared in the April 1973 issue. His book focused on the absence of zoning in several Texas cities, especially Houston.
Single-family neighborhoods in Houston are able to form land use agreements that define what homeowners can and cannot do with their property. They are typically of 30 years' duration, at which time they can be extended, modified, or abolished via a supermajority vote. The Houston city government enforces these neighborhood agreements. Rather than micromanaging land use, the city government follows market trends to provide the infrastructure needed to accommodate the city's growth: streets, water and sewer, etc. Houston voters have at least three times voted against ballot measures that would have implemented conventional zoning.
The Houston approach provides for the kinds of ground rules most people are happy with. But it also permits change over time. At a land use conference in Houston in 1977, I was part of a tour through various neighborhoods, with our libertarian conference director pointing out neighborhoods that had once been single-family but whose covenants had been amended to account for economic changes that made properties along what had become a major street more valuable as commercial than as residential uses.
Houston never had zoning, so many of its new subdivisions came equipped with deed-based neighborhood associations. Established neighborhoods could organize and create a comparable set of land use covenants that a supermajority was willing to be governed by. But how could existing neighborhoods in zoned communities emulate this preferable approach?
That problem is addressed at book-length and in research papers by the late Robert Nelson of the School of Public Policy at the University of Maryland. His research topics included zoning and property rights, the failure of federal public lands policies, and (in my view) his magnum opus, Private Neighborhoods and the Transformation of Local Government. As I noted in my cover blurb for the book, "Robert Nelson has written two very powerful books in one. The first documents the amazing revolution in neighborhood governance that has gone almost unnoticed over the past 40 years. The second is a bold proposal for extending this revolution to inner cities and suburban fringes, where it could do even more good."
Nelson was the leading academic researcher on the growth of what he termed private neighborhood associations. His opening chapter explains what such associations can do and their advantages compared with government zoning. He noted that at the time he was writing (the early 2000s), there were more than 250,000 neighborhood associations in the United States, "about ten times the number of general-purpose municipalities." Most of these associations are created by the developers of large new communities and offered as a benefit to potential purchasers. Long-established law enables these associations to create rules and regulations and enforce them contractually. This is analogous to condominium associations, which are small-scale versions of private neighborhood associations. These private provisions are exempt from local zoning and, hence, would be protected from laws abolishing single-family zoning.
But what about neighborhoods long governed by traditional municipal zoning? Part IV of Nelson's book discusses how existing zoned neighborhoods might "secede" from a city. Clearly, they already have the right to form a voluntary homeowners association, like what exists in the neighborhood my wife and I live in. But those associations cannot make rules that homeowners must abide by. Nelson also discusses political and legal rationales for creating deed-based private neighborhood associations in currently zoned communities. That would likely require legislation, spelling out the supermajority required to form it and at least some guidance for negotiating which services the new association would take over from the city or county in which it is located. He writes, "A neighborhood association is a form of private government, like a business corporation, and thus should perhaps have wider constitutional freedom to conduct its affairs in its own way." He also notes that in many states, a neighborhood could already secede from a local government by incorporating as a new municipality, especially if it is currently located in an unincorporated portion of a county. That new city would be in a better position to convert to a private neighborhood association, since it would start fresh with no zoning code.
The difficulty of seceding from an incorporated city played out for me in 2001, when several Reason Foundation colleagues and I helped organize and run a conference for the organization that aimed to have the San Fernando Valley secede from the City of Los Angeles. Bob Nelson was one of 11 speakers at this event. The City charter required any secession to obtain a majority vote in both the City itself and in the portion that sought to secede. The measure was defeated, despite majority support in the Valley.
In short, there is a free market alternative to conventional zoning. As for the idea that California can fix its massive shortage of affordable housing by banning single-family zoning, readers should realize what caused the shortage. As Nelson points out in his book, starting in the 1960s a strong anti-growth movement led by relatively well-off environmentalists led to aggressive "down-zoning" and preventing undeveloped land from being converted to residential or any other use except "open space."
I saw this happening in Santa Barbara shortly after moving there in 1970. By the late 1980s, Nelson reports, more than 900 growth control measures had been adopted by California municipalities. And the newly created California Coastal Commission "protected" land along the coast from anything short of mansions on multiple-acre plots. Housing prices soared. Large wealthier counties adopted de facto urban growth boundaries, preventing new, more-affordable subdivisions from being built at the fringe. California's affordable housing shortage is self-inflicted. No such shortages exist in metro areas that don't restrict suburban expansion, such as Dallas, Houston, and Phoenix.
Single-family zoning came about as a result of market demand, which continues today as millennials start families and leave cities for suburban houses with yards, pools, and safe play areas for their kids. To the extent that there's a demand for more mixed-use housing, developers will seek sites where this can be done affordably, at the urban fringe and also denser infill development in neighborhoods already zoned for multifamily housing. Minor zoning changes could allow for increased density in those areas. And developers will continue to create private neighborhood associations to protect the values that homebuyers seek to obtain and preserve.
Single-family zoning is not the problem. Growth control is.
*CORRECTION: The original version of this story incorrectly described the timing of California's single-family zoning legislation.
The post A Brief History of Single-Family Zoning appeared first on Reason.com.
]]>In the wake of the Christmas 2022 breakdown of airline service, politicians and consumer advocates are calling for tougher antitrust policy and even the re-regulation of U.S. airlines. While a once-in-a-generation blizzard encompassing about three-quarters of the continental U.S. would obviously disrupt air (and rail and highway) travel, especially over a major holiday weekend, most airlines recovered pretty well from this unprecedented storm.
But not Southwest. With outdated flight- and crew-scheduling technology, the popular lower-cost airline melted down, stranding huge numbers of holiday travelers. To get planes and crews to where they need to be to restore normal service, Southwest has temporarily canceled a large fraction of its near-term schedule.
Some critics blame Southwest's operating model, which is based on point-to-point flights rather than the hub-and-spoke model used by major carriers such as American, Delta, and United. In a major disruption like the December blizzard, hub-and-spoke yields less dispersion of aircraft and crews and does make it easier to return to normal. But point-to-point enables an airline to serve a greater number of smaller cities without transfers at hubs, which is popular with passengers and yields more daily passenger miles per plane than the hub-and-spoke approach. That's why most low-cost carriers, such as Allegiant, Frontier, JetBlue, and Spirit (plus Ryanair and EasyJet in Europe) also operate point-to-point.
Southwest's problem is that its leadership, after legendary founder Herb Kelleher retired, were financial guys, not operations specialists. Southwest's unions are right in pointing to the airline's low-tech crew-scheduling software called SkySolver as the culprit in the December breakdown. It was also at fault in a smaller but still devastating Southwest breakdown last year linked to an unexpected air traffic control (ATC) outage in the Federal Aviation Administration's (FAA) Jacksonville control center.
So what does this have to do with antitrust policy or the idea of re-regulating airlines? Nothing whatsoever. Sen. Elizabeth Warren (D–Mass.) has seized on this one-airline debacle to call for a crackdown on airline mergers. Even more ludicrously, her ally Matt Stoller of the American Economic Liberties Project has suggested going back to the federal airline regulation that was in place from the 1930s to 1978, claiming in a recent post that this "was a terrific system which saw dropping ticket prices and expanding capacity." Neither is true.
The Civil Aeronautics Board (CAB) ran an airline cartel that banned price competition and severely limited entry by new airlines. Airlines could only compete on amenities like drinks and meals. Most routes had only one or two airlines. And the regulation was cost-plus. Airline unions loved this because large increases in wages and benefits were blessed by the CAB and passed along to airline passengers.
Under this system, about half of what the airlines transported was air—i.e., empty seats. Flying was so expensive that most passengers were upper-middle-income or business travelers on expense accounts. I grew up in an airline family prior to deregulation. The only reason we took airline trips was the ready availability of employee passes; we could not have afforded tickets for five people on my father's salary. But because an average of half the seats were empty, we nearly always got on to our first-choice free flights.
Thanks to years of research by economists explaining the flaws of this system, a bipartisan Congress deregulated the airlines in 1978, allowing open entry and real price competition. In the four and a half decades since then, air travel has been democratized, to the huge benefit of most Americans.
Stoller is very misleading in his description of the industry: "Airlines are a public utility system, funded by the public on behalf of the public. Airports, air traffic control, safety inspections, bailouts—it's all public." In fact, although most U.S. airports (unlike those in Europe and Australia, which are mostly privatized) are run by government agencies, nearly all the large and medium ones are mostly self-supporting from their various revenue sources: airline charges, passenger charges, retail and parking revenues, etc. Likewise, although the FAA provides ATC services, the 80 percent of its budget that covers those costs comes from passenger ticket taxes (user taxes), not federal taxes on everyone. And in most developed countries, the former government ATC providers have been privatized or corporatized, made self-supporting from user fee revenues.
Southwest has lost tremendous goodwill from its winter debacle. It will likely lose market share and market value, and it will have to work very hard to rebuild trust by implementing long-needed technology upgrades. But changing federal airline policy isn't the solution.
The post What the Southwest Meltdown Means for Airline Policy appeared first on Reason.com.
]]>On February 6, 2018, I was sitting in the American Airlines Admirals Club at the Austin–Bergstrom International Airport, getting a snack prior to boarding a flight. CNN was playing on the club's large TV screens.
When I looked up, I happened to see blastoff video of the first SpaceX Falcon Heavy rocket, capable of putting much larger payloads into orbit than the workhorse Falcon 9. That first launch was the one that sent into a solar orbit a Tesla convertible with a dummy astronaut sitting behind the wheel.
A bit later, when I looked up again, I saw two of the three Falcon first-stage boosters come in for perfect vertical landings at Cape Canaveral. I confess I had tears in my eyes, thinking, "Robert Heinlein, you should be alive to see this today."
I grew up reading Heinlein's science fiction, starting in fifth grade and continuing through my young adulthood. One of my favorites was his 1950 novella The Man Who Sold the Moon. To the best of my knowledge, it was the first time any mainstream science fiction author had portrayed a privately financed space venture. From the 1950s onward, respectable analysts took it for granted that space was far too expensive for anyone but tax-supported governments to explore.
The successful Apollo moon landing program seemed to confirm that assumption. NASA spent $25 billion, equivalent to roughly $177 billion today, on the seven Apollo missions. Subsequent NASA endeavors reinforced the idea that space travel had to be financed by the government.
Post-Apollo, a reusable launch vehicle sounded sensible. After all, we don't build airliners for a single trip and then scrap them. So NASA created a new program to build and operate the space shuttle, intended as "the national launch vehicle" for all space missions. The agency ended up building five vehicles, of which only the orbiters were reusable. The total cost to build them was about $257 billion in current dollars. Taking into account support infrastructure and personnel, each launch cost about $2 billion in current dollars. NASA concealed that cost, charging customers a small fraction of the real amount to launch satellites.
In the last 15 years, however, an investor-financed space industry has made that exorbitant approach obsolete by slashing the cost of launching payloads to orbit. Its modus operandi is dramatically different from NASA's traditional way of doing things.
Under the old model, NASA engineers figure out the "one best way" to define a new vehicle. Then they pay aerospace contractors to meet NASA's specs. To ensure broad-based congressional support for the needed budget, NASA's prime contractors rely on an army of subcontractors across a majority of the 50 states. Because NASA is very risk averse, its engineers and bureaucrats insist on endless testing and revisions of the one-best-way concept. This operating procedure generally means repeated schedule delays and large cost overruns, as occurred with the space shuttle, the International Space Station (ISS), and the current very late and grossly over-budget Space Launch System (SLS).
An alternative began to emerge in the late 1970s, when the German startup OTRAG pioneered a modular approach to a proposed family of launch vehicles, as I described in a July 1978 Reason cover story. That effort was killed when East German propaganda spread the lie that OTRAG was developing cruise missiles. The publicity fed French fears of a threat to taxpayer-funded Arianespace, and OTRAG's funding dried up.
There were at least half a dozen serious space-launch start-ups in the 1980s and '90s, including American Rocket Company, Kistler Aerospace, Rotary Rocket, and XCOR. Some were based on innovative concepts such as new kinds of rocket motors and novel launch methods. But raising venture capital was very difficult, partly because, as a January 1985 Reason article documented, companies got negative reviews when potential investors sought validation from NASA. I knew people at three of these startups and shared their frustration as potentially good ideas were shot down and left largely unfunded.
That changed by the turn of this century. The loss of two space shuttles, which cost 14 astronauts' lives, damaged NASA's credibility, and angel investors started showing up at the annual space development conferences. Startup rocket developers began getting money to develop prototypes of small rockets to launch a new generation of small satellites. And with the space shuttles' retirement, which ended NASA's monopoly on launching crews into orbit, the United States had to rely on Russia to launch astronauts to the ISS at outrageous prices.
Billionaire Microsoft co-founder Paul Allen provided the first large-scale private investment for human spaceflight. Allen invested an estimated $25 million in aircraft designer Burt Rutan's Scaled Composites company, which was developing a rocket plane that could take passengers to the von Kármán line 100 kilometers (62 miles) from Earth's surface, which by convention marks the edge of space. Rutan, who has designed 46 aircraft during his career, conceived the idea of a two-stage spaceplane. The first stage was jet-powered to reach a normal cruising altitude, at which point it released the rocket-powered second stage to reach the von Kármán line.
I toured Rutan's company around 2000 but was not allowed to enter a hangar where a secret project was underway. It turned out to be SpaceShipOne, which won the Ansari X Prize in 2004. That prize, funded by entrepreneur Peter Diamandis, offered $10 million for the first reusable vehicle that could transport people to the edge of space several times within a month. Sadly, I missed the X Prize–winning launch due to a speaking engagement, but I did get a commemorative cap from Scaled Composites.
Meanwhile, two other billionaires had founded space launch companies. Amazon's Jeff Bezos quietly started Blue Origin in 2000, and Elon Musk began Space Exploration Technologies (SpaceX) in 2002. As wealthy individuals, neither had to rely on angel investors or venture capitalists. Both were able to attract highly skilled engineers and managers, some of whom had worked on privately funded projects that had come to naught at other companies.
Three key concepts inspired Bezos and Musk in their quest to build space launch vehicles: modularity, incremental development, and reusability. Modularity—building larger rockets from bundles of proven smaller ones—dated all the way back to OTRAG. Incremental development, exemplified especially by SpaceX, involves continually trying new materials and component concepts and revising earlier designs. NASA's one-best-way approach, by contrast, locks in a favored design early on, forcing it into existence even when it does not fully meet expectations.
The most important innovation is reusability, an area where SpaceX continues to set new records. From the outset, its Falcon 9 was largely reusable. The first-stage boosters fly back to either the launch site or an offshore recovery barge. Some Falcon 9 boosters have been reused 10 times, and the company is aiming for 15 times as it gets better and faster at refurbishing returned boosters for new missions. The company's Dragon cargo carriers, launched by Falcon 9s, are reusable and return to Earth. So do the more advanced Crew Dragons that take NASA astronauts (and, more recently, paying tourists) to the ISS and back.
Several years ago, NASA compared the cost of Falcon 9 to what the agency would have spent to develop and build equivalent launch vehicles using its traditional procurement contracts. Even assuming no cost overruns or schedule slips, NASA found, the publicly financed versions would have cost three times as much.
SpaceX will soon offer the world's largest-ever launch vehicle: Starship and its Super Heavy booster, both intended to be fully reusable. The targeted payload is 220,000 pounds to low Earth orbit, compared to 154,000 pounds for NASA's new Space Launch System.
How did NASA go from dismissing commercial space to embracing it? The first changes began during the Reagan administration.
White House speechwriter Dana Rohrabacher, later a California congressman, championed the cause of would-be space entrepreneurs. So did Reps. Robert Walker (R–Pa.), Ed Zschau (R–Calif.), and Daniel Akaka (D–Hawaii). With strong drafting assistance from space commercialization expert James Bennett and aerospace consultant Courtney Stadd, the legislators crafted what became the Commercial Space Launch Act (CSLA) of 1984.
Instead of requiring a would-be private launch company to obtain permits from more than a dozen agencies, the CSLA made the Department of Transportation the one-stop shop for such applicants. Stadd brought his space entrepreneurial experience to the department as an early director of this new customer-friendly office.
In the wake of the 1986 Challenger disaster, President Ronald Reagan and Congress decided that the space shuttles would no longer be allowed to launch commercial satellites. That opened the door to existing aerospace companies, which could offer a range of competing satellite launchers. There were not yet any commercial space companies ready to do such launches, but now there was a growing stream of customers, sometimes including NASA itself.
Subsequent amendments to the CSLA addressed the question of liability for accidents and deaths resulting from commercial space launches. By analogy with the risky early days of barnstorming aviation, the basic rule was that a launch company would be liable for damage to property and innocent bystanders on the ground, but any human passengers were presumed to have understood and accepted the risks of flying in the new launch vehicles.
The 1990s saw further progress for commercial space, egged on by another key player, Lori Garver. She was executive director of the National Space Society, created by the merger of the space-entrepreneur-friendly L5 Society and the National Space Institute. Garver, who served on the incoming Clinton administration's NASA transition team, was hired in 1996 as a special assistant to NASA Administrator Daniel Goldin. She later became NASA's associate administrator for the Office of Policy and Plans.
Goldin, who was appointed by President George H.W. Bush in 1992 and remained in that position for nearly a decade, was NASA's longest-serving administrator. Under his mantra of "faster, better, cheaper," he was determined to change NASA's approach to space launches. With Garver's assistance, NASA invited commercial science experiments on the ISS and started competitive programs for reusable launch vehicles, yielding the promising X-33 and DC-X projects.
Those projects were public-private partnerships, encouraging innovation rather than following NASA's traditional, highly centralized procurement process. Such programs were authorized by a 1985 amendment to the National Aeronautics and Space Act that encouraged NASA to enter into cooperative agreements based on performance requirements rather than detailed specifications.
There was one bureaucratic setback during the Clinton administration, which moved the space licensing office from the transportation secretary's office to the very cautious and bureaucratic Federal Aviation Administration (FAA). The commercial space community feared the worst. "Many of us in the industry," Stadd tells me, "lamented relocating the office to FAA, where our concept of 'performance-based regulation' risked being stifled by an agency used to dealing with 16 million flights per year, rather than a relative handful of commercial space launches per year." But over the years, the FAA's space office has earned a reputation of working well with the industry's entrepreneurial M.O.
Garver left NASA in 2000, and the George W. Bush administration was a mixed bag for commercial space. On the bad side, NASA traditionalists came up with a proposed replacement for the space shuttle: a huge three-stage launch vehicle, none of it reusable, named Constellation, which was aimed at supplying the ISS, returning astronauts to the moon, and eventually carrying humans to Mars.
On the good side, the administration's space policy directed NASA to "pursue commercial opportunities" to support the ISS and "exploration missions beyond low earth orbit." NASA Administrator Michael Griffin supported the idea of seeking competitive launch services to resupply cargo for the space station. Although he probably expected the competitors to be traditional aerospace companies, fledgling SpaceX threw its hat into the ring.
SpaceX had received modest funding from the Defense Advanced Research Projects Agency in 2003 to help develop its initial Falcon 1, which succeeded after three failed launches, leading the way to developing the much larger (and partially reusable) Falcon 9. When NASA held the first procurement for commercial orbital transportation services in 2004, the contract was awarded solely to Kistler Aerospace. SpaceX filed a protest, which was upheld, so NASA rescinded that noncompetitive award. Financially shaky Kistler was acquired by Rocketplane Limited. Both Rocketplane Kistler and SpaceX won cargo contracts in 2006, but Kistler was unable to deliver and subsequently went bankrupt. NASA eventually awarded contracts to SpaceX (for 12 flights to and from the ISS) and Orbital Sciences (for eight one-way flights).
Commercial space companies pushed hard for a follow-on program to transport people between Earth and the ISS, but Griffin was staunchly opposed. That breakthrough was left to the Obama administration.
In 2009, an expert review committee headed by retired aerospace executive Norman Augustine concluded that Constellation would require a huge funding increase and would not be worth busting NASA's budget. Garver, who had served on the Obama NASA transition team, became the agency's deputy administrator. Her boss as administrator was former astronaut Charles Bolden, a NASA traditionalist. The White House and its Office of Management and Budget (OMB) agreed with the Augustine committee's recommendation to scrap Constellation. But NASA's supporters in Congress went ballistic, and so did the program's aerospace contractors.
As a Plan B, the Senate commerce committee directed NASA to replace Constellation with the SLS, a supposedly less costly heavy-lift booster using leftover space shuttle engines and a new version of the Apollo capsule (Orion) to carry astronauts. Within commercial-space circles, the SLS was dubbed the Senate Launch System. Since its inception in 2011, the SLS has absorbed $12 billion in taxpayer funds, plus another $14 billion for two Orion capsules and $3.6 billion for new launch facilities at Cape Canaveral—a total of nearly $30 billion before its first test launch.
Bolden was not keen on commercial space. But Garver worked with selected staffers and outside experts to carve out room in NASA's budget for a program called Commercial Crew, which aimed to exploit the capabilities of SpaceX, Blue Origin, and a growing number of other launch companies. The White House and the OMB strongly supported Commercial Crew, while SpaceX's record of successful cargo missions (and returned and reused boosters) enhanced the industry's reputation.
Members of Congress repeatedly tried to cut or eliminate funding for Commercial Crew. It was not until 2014 that significant contracts were awarded to SpaceX ($2.6 billion) and Boeing ($4.2 billion). So far SpaceX has conducted four NASA crew missions to the ISS plus one private mission, while Boeing has not managed any. In August 2022, NASA announced that it would expand SpaceX's commercial crew missions to 14 and limit Boeing's to its original six.
The new commercial space paradigm has made much deeper inroads into NASA's way of doing business than most people realize. The new model of purchasing results has clear advantages over NASA's highly centralized cost-plus model, which depends on very expensive aerospace and defense contractors.
NASA will not replace the ISS as it reaches the end of its useful life in 2030. Instead, it will lease space for various research and testing operations from one or more competing space facilities. One of those is a joint venture of Blue Origin and Sierra Space called Orbital Reef. Aviation Week reports that at least three other teams are working on such outposts, with NASA as a potential customer or anchor tenant.
For its Artemis return-to-the-moon program, NASA still plans to use the SLS as its launch vehicle for astronauts. But it plans to contract with SpaceX to deliver astronauts from lunar orbit to the surface, using the company's huge Starship/Super Heavy launch system (assuming it is ready in time). A new lunar rover is being developed by Lockheed Martin and General Motors under a similar purchase-of-services model. Although NASA will be the initial user, the Lockheed Martin and General Motors team will own the rover and serve anyone who wants to purchase its services. The same is true of the vehicle that NASA wants to use for excursions to the lunar South Pole. As with the rover, NASA is not paying to produce the vehicle. Whoever wins the competition (for which several other teams are being formed) will own the vehicle and be paid by NASA and other customers when they use it.
Even spacesuits are no longer following the traditional NASA model. Competitors have proposed their own designs, including different ones for zero-G operations and for lunar work. NASA has selected teams led by Axiom Space and Collins Aerospace under a similar public-private partnership model.
Ironically, the current NASA administrator is former Sen. Bill Nelson (D–Fla.), a longtime champion of traditional NASA programs. Nelson opposed the CSLA as a member of the House Space Subcommittee and championed the SLS as ranking member of the Senate commerce committee while opposing NASA's Commercial Crew and Commercial Cargo programs. When President Joe Biden appointed Nelson to head NASA last year, many commercial-space supporters worried he would continue that pattern. But the evident success of the new paradigm has persuaded Nelson this is where the future lies.
Who would have predicted, several decades ago, that privatization of space transportation and development would be happening by the second decade of the 21st century, and with NASA's support? Robert Heinlein would be delighted.
The post Robert Heinlein's Dream of Private Space Travel Is Coming True appeared first on Reason.com.
]]>If you're like me, you may have had an experience like this. You're driving after dark on an Interstate highway and you need a good cup of coffee. If you're on the Florida Turnpike or the Indiana Toll Road, you could stop at the next service plaza and take your choice at an array of retail outlets. But on 95 percent of the Interstate highways, your only option is to wait for an offramp with signs pointing in either direction to gas stations and fast-food places up to several miles away. Some may be closed, and some may be hidden away in shopping plazas.
If your travels have included toll roads, you may wonder why 95 percent of all Interstate miles don't have service plazas like the turnpikes. The answer is that it's against federal law. Back in 1960, when the first Interstates were being built, gas station and restaurant owners along the old highways––like U.S. 66 and U.S. 41, which went right through towns and cities—feared bankruptcy because the Interstates bypassed all those towns. So they lobbied Congress to forbid service plazas on the new Interstates. This gave them the chance to stay in business by building new gas stations and fast-food outlets clustered around Interstate offramps. The fledgling truck stop industry allied itself with the small-town merchants, and built their truck stops as near as they could to Interstate offramps.
Today, 61 years later, a lot of things have changed. There's a huge national shortage of safe overnight truck parking spaces, due to commercial trucking growing faster than land-constrained truck stops. It's also the result of long-overdue federal enforcement of driver hours-of-service regulations, which drivers can no longer evade thanks to electronic (rather than paper) logbooks.
Second, there's a growing need for electric vehicle (E.V.) charging stations, which have been built mostly in urban areas for commuters and service trucks, but hardly exist on major long-distance highways. The most convenient location for range-anxious E.V. motorists would be at Interstate rest areas. But unless the electricity were given away, that's a commercial service and hence against the law.
A new Reason Foundation study says it's time for the federal ban to be junked. It discusses both the truck parking shortage and the need for convenient E.V. charging stations as the rationale, and it's part of the Foundation's vision of a second-generation Interstate highway system, run mostly as toll roads with first-class commercial service plazas. But before we can even get to the question of toll-financing the rebuilt Interstates, the 61-year-old ban has to go.
The study envisions a coalition of strange bedfellows to lead the way: portions of the trucking industry and the large environmental movement that seeks faster electrification of cars and trucks. Last year, the E.V. crowd managed to get into legislation an exemption from the commercial-services ban specifically for E.V. charging stations. The bill passed the House on a party-line vote but was not taken up by the Senate. The Biden administration's $2.3 trillion American Jobs Plan includes subsidies for E.V. charging, but is so far silent on whether they could be installed on the Interstates.
Fighting back will be the National Association of Truck Stop Operators (NATSO), which has successfully defeated previous bills to repeal the ban. Those bills have been desired by state transportation agencies that have no revenue source to maintain their rest areas (which provide only restrooms, vending machines, and a modest amount of parking). Historically, most of the trucking organizations have sided with NATSO, but the owners/operators are already on board for repeal.
Commercialization could actually turn out to be a win-win for truck stops, since they would be in a good position to bid for public-private partnerships offered by state departments of transportation to develop and operate new service plazas, some of which might be truck-only. And 2021 is finally the year when Congress will enact some kind of infrastructure bill. Opening the door for real service plazas on the Interstates has a fighting chance of being included.
The post Why Can't You Buy a Starbucks on the Interstate? appeared first on Reason.com.
]]>Since 2004, Reason has surveyed its staffers on how they plan to vote in national elections. We do this in a spirit of transparency. There is a pernicious idea that if journalists don't disclose their biases and preferences, then perhaps they don't have any. But we think it's better if the people who read, watch, and listen to Reason know where our contributors are coming from, even by the imperfect metric of electoral preferences.
Traditionally, this survey yields a high percentage of nonvoters and Libertarian Party voters, and 2020 is no exception on either score. Our Democratic and Republican voters typically describe themselves as reluctant backers, seeing their candidate as a lesser of two evils; Joe Biden's showing this year is similar to Barack Obama's among staffers in 2008.
As each Election Day draws near, Reason receives a bumper crop of emails, tweets, and comments. This year, each day's harvest includes notes accusing us of being in the tank for Trump and just as many accusing us of stumping for Biden.
Reason is not on anybody's side in this election or any other. This is, in part, because we are published by a 501(c)(3) nonprofit and therefore don't endorse particular candidates. But it's also because we don't think one party or person ever fully embodies the things that are important to us, including individual liberty, free markets, and the rule of law. (As our election-issue cover stories make clear, both of the major candidates fail on that front in important ways.) We continue to look outside of politics for meaning and hope.
Nothing in what follows should be construed as an official endorsement of any candidate or cause. These are the personal views of individual participants and not the institutional views of Reason or Reason Foundation. Legalese aside, we hope what follows is interesting and informative. —Katherine Mangu-Ward
Check out our past voting surveys from 2004, 2006, 2008, 2012, and 2016.
MIKE ALISSI
Publisher
Who do you plan to vote for this year? Jo Jorgensen. Some of my libertarian friends plan to vote for Biden because they view Trump to be a unique existential threat to liberty. I think that underappreciates the audacious scope of the Biden agenda, which would bring a daily onslaught of new initiatives and regulations from every corner of the federal bureaucracy aimed at controlling the personal and economic choices we make on virtually everything. These ideas aren't just rhetoric from a blowhard. Depending on what happens in the Senate, they're likely to become law, undermining economic growth and moving us backward on First and Second Amendment protections, school choice, property rights, consumer freedom, campus due process, worker freedom, energy choices, and so much more. Expect endless new opportunities for adversarial encounters between citizens and law enforcers on every level. Jo Jorgensen is the only candidate who champions liberty and reflects my views.
If you could change any vote you cast in the past, what would it be? Jimmy Carter in 1980, my first vote. That was the most important election of our lifetime, of course. My lefty friends and I viewed Reagan to be a unique existential threat to America. I should have voted for Ed Clark.
PETER BAGGE
Cartoonist
Who do you plan to vote for this year? Jo Jorgensen. I have no problem with her at all. I hope she wins!
If you could change any vote you cast in the past, what would it be? John Kerry. I'll never vote for a major party candidate ever again.
ERIC BOEHM
Reporter
Who do you plan to vote for this year? I am currently not registered to vote in Virginia, where I live. If I change that before the election, I will vote for Jo Jorgensen—unless I believe there is a chance that Joe Biden will somehow fail to win Virginia, in which case I will vote strategically and reluctantly for Biden.
If you could change any vote you cast in the past, what would it be? I can't imagine thinking a single vote is valuable enough to spend time regretting.
CHRISTIAN BRITSCHGI
Associate Editor
Who do you plan to vote for this year? No one. Both Trump and Biden are awful enough that I can't imagine voting for either. While I wish Jo Jorgensen well, the cost of figuring out which state I'm still registered in and how exactly I'm supposed to cast my ballot during COVID exceeds any benefit I'd get from supporting her doomed presidential bid.
If you could change any vote you cast in the past, what would it be? My first vote was in local Boise elections in 2011, where I recall ticking the box for a bunch of city council candidates I knew nothing about. It was an irresponsible thing to do, and I was rewarded when the council shortly thereafter passed a sweeping smoking ban. If I could do it over, I would have stayed home that election as well.
ELIZABETH NOLAN BROWN
Senior Editor
Who do you plan to vote for this year? I just registered to vote in my home state, Ohio, where I'm living for the next few months. I plan to cast a ballot for Jo Jorgensen and Spike Cohen this November. As libertarians seem to have less and less in common with either Democrats or Republicans, I've started to shed earlier apathy about Libertarian Party politics and become more convinced that we do need a viable electoral vehicle of our own.
If you could change any vote you cast in the past, what would it be? This will be my first time voting in a presidential election since 2008, when I voted for Barack Obama. I think that vote was a desperate plea for an end to the Bush era more than anything else. Obama's presidency did that in some important ways, and failed to in many more. I don't regret that vote, but the Obama era did become a good lesson in what "hope and change" looks like in practice.
C.J. CIARAMELLA
Criminal Justice Reporter
Who do you plan to vote for this year? Joe Biden. The nationalists said the libertarian-conservative consensus is dead, and I take them at their word. Also, Stephen Miller is a white nationalist.
If you could change any vote you cast in the past, what would it be? I haven't voted in a presidential election since 2004. I guess I would take that one back and not vote, because I was young and dumb instead of old and dumb.
SHIKHA DALMIA
Senior Analyst
Who do you plan to vote for this year? I will cast my ballot for Joe Biden in Michigan, a swing state, because there is no bigger libertarian cause right now than to prevent Donald J. Trump from getting re-elected. He is a proto-authoritarian who digs dictators such as the Philippines' Rodrigo Duterte and who glorifies state violence.
Trump launched his first election campaign by stoking racial hatreds, and any hope that the responsibility of governance would temper him was dashed as he dehumanized immigrants and demonized opponents. His zero-tolerance border policies have resulted in unspeakable human rights abuses, his economic nationalism is no better for the cause of free markets than Biden's supposed socialism, and his fiscal irresponsibility has been worse than his predecessors'. But his most dangerous trait by far is his open contempt for the institutions that check executive power and hold it accountable. Those institutions have contained some of his worst impulses in his first term. They may not be able to withstand another four years of continued assaults.
If you could change any vote you cast in the past, what would it be? If memory serves, I have voted in three presidential elections since I obtained naturalization: for Republican George W. Bush's re-election in 2004 (against John Kerry), for Libertarian Gary Johnson in 2012, and for Democrat Hillary Clinton in 2016 (against Donald Trump). Of those, the only one I know I'll never regret is the one for Johnson.
ZURI DAVIS
Assistant Editor
Who do you plan to vote for this year? I will be voting for the Libertarian Party's Jo Jorgensen. I will candidly admit that I spent much of my 2019 preparing to vote for certain Democratic candidates should they have won the party's nomination. In the end, Jo Jorgensen's principles and empathetic outreach during the emotional yet important Black Lives Matter moment solidified my desire to vote my conscience and not my disappointment with the current president, particularly his poor public treatment of important black figures and his failure to stand firmly on Charlottesville when his condemnations would have made the most impact.
If you could change any vote you cast in the past, what would it be? The 2016 election was the first presidential election in which I qualified to vote. Since I am satisfied with my decision to vote for Gary Johnson over some of the most-hated presidential candidates in modern history, I would probably change the vote I cast for Sen. Rand Paul in the Republican presidential primary. I was excited to vote for the Kentucky senator because of his stance on criminal justice reform, but I was extremely disappointed to see that strong legacy shelved to confirm, of all people, Jeff Sessions.
BRIAN DOHERTY
Senior Editor
Who do you plan to vote for this year? I don't vote.
If you could change any vote you cast in the past, what would it be? Never having voted, I have no regrets.
NICK GILLESPIE
Editor at Large
Who do you plan to vote for this year? I'm voting for Jo Jorgensen, the Libertarian candidate, because she comes closest to representing my political views.
If you could change any vote you cast in the past, what would it be? I would not change any of my votes. In 1984, the first presidential election in which I could vote, I voted for Walter Mondale because I admired his honesty that he would raise taxes to reduce the deficit, which was projected to be the then-massive sum of $184 billion, or about 5 percent of GDP. Since 1988, I have voted for the Libertarian candidate, even when I did not particularly care for the nominee. It's far more important to me to vote for a third-party candidate, doing whatever small thing I can to help support a wider array of voices in national politics, than to vote for a winning candidate.
KATHERINE MANGU-WARD
Editor in Chief
Who do you plan to vote for this year? I don't vote, and I won't this year, even though I am reliably informed by my Instagram and Twitter feeds that this is the most important election of my lifetime. Again.
I do, however, plan to complain, both pre- and post-election. Because that is my job as a political journalist and my duty as a citizen. It's important to hold elected officials accountable when they screw up—and no matter who wins in 2020, he's going to screw up for sure—but a trip to the ballot box every couple of years is a largely ineffective way to do that.
If you could change any vote you cast in the past, what would it be? I am not sure whether I have ever voted. If I did, it would have been because I succumbed to peer pressure in 1998, the first year I was eligible. If given the opportunity to travel back in time, I would pop into 1998 to be sure that I did not vote in that election, largely to secure my status as a gold star nonvoter. And then I would kill Hitler, I suppose.
JUSTIN MONTICELLO
Senior Producer
Who do you plan to vote for this year? I've come to think of voting as the equivalent of those fake steering wheels on tourist boats that exist to keep children busy with the illusion that they're steering the ship. Since I have no interest in wasting my time, being laughed at by those in power who are wise to the scheme, or helping legitimize a pointless and fundamentally corrupt enterprise, my mail-in ballot and I will be staying home.
If you could change any vote you cast in the past, what would it be? I regret ever having registered to vote. I did so for the first time as a teenager in my home state of New Jersey at the urging of my neighbor, who was running for reelection to our town council. I haven't lived in the state for over 15 years, and despite my best efforts to have my information removed from local voter rolls and databases, I still get several phone calls every week at 7 a.m. PST from New Jersey political campaigns. I sometimes wonder how much of the spam I have to trawl through every day can be traced back to that original sin of sharing my contact information with the government.
JOHN OSTERHOUDT
Producer
Who do you plan to vote for this year? Political representation is illegitimate in theory and a sham in practice. I don't plan to vote for anyone.
If you could change any vote you cast in the past, what would it be? In 2016, I took the time to research every candidate for every position on the ballot. What a waste of time that was.
ROBERT POOLE
Director of Transportation Policy
Who do you plan to vote for this year? Because I live in Florida, likely again to be a swing state, I am planning to vote for the lesser evil, though the Libertarian Party candidate would be far better. But our next president will be either Biden or Trump, an even worse choice than Hillary or Trump (and last time I proudly voted for Gary Johnson and William Weld).
This time around, both parties have been transformed. The Democrats are a far more collectivist party whose environmental, transportation, spending, and judicial policies would have devastating long-term effects on this country. The Republicans have become a populist, anti-trade, anti-immigrant, and big-spending party. But despite wishing the Republicans would receive a massive shock that would return them to a more free market approach, I will select GOP/Trump as the lesser evil. This is because of the need to continue with a Supreme Court that upholds the written Constitution, but also because of better environmental, regulatory, and transportation policies and staffing of the relevant agencies.
If you could change any vote you cast in the past, what would it be? I don't regret any previous presidential votes, which have been mostly for the Libertarian Party's candidates, beginning with a write-in vote for John Hospers in 1972.
MIKE RIGGS
Deputy Managing Editor
Who do you plan to vote for this year? While I would like to see a President Jo Jorgensen, I will settle for not having to live another four years under President Donald Trump. I will cast my first ever vote for president for Joe Biden in the battleground state of Pennsylvania.
I think Trump is a symptom, not the root cause, of our current dysfunction. I absolutely do not support the Democratic Party writ large. Democratic management of the city of Philadelphia, where I live, is shockingly bad.
But as much as I fear what the Democrats might be able to do tomorrow, what Trump has done the last four years concerns me more. He appears to have no ideology, no patience, and very little wisdom, and I do not get the sense that he understands or appreciates what I love about America. That may all be true of Biden too—I do not know his heart—but the fact that all the Biden voters I know are holding their nose when they punch in his name hopefully means his leash will be shorter.
If you could change any vote you cast in the past, what would it be? I voted for the first time in the 2018 midterms, and I do not regret using that opportunity to rebuke Republican xenophobia.
SCOTT SHACKFORD
Associate Editor
Who do you plan to vote for this year? I'm voting for Jo Jorgensen and Spike Cohen for president and absolutely no other human beings on the ballot whatsoever. As is typical here in California, the ballot initiatives are much more important and impactful than the candidates.
If you could change any vote you cast in the past, what would it be? I don't think I've voted for a major candidate who has actually won since Bill Clinton's second term, so I don't really have to contend with buyer's remorse.
STEPHANIE SLADE
Managing Editor
Who do you plan to vote for this year? I am a true undecided: I've been vacillating between sitting out this election, as I did in 2016, or voting for Joe Biden. The strongest argument for the latter choice is that it's an opportunity to support the repudiation of both Trumpism and the Alexandria Ocasio-Cortez wing of the Democratic Party. That's a hell of a good value for a single ballot.
If you could change any vote you cast in the past, what would it be? I have generally abstained whenever I haven't seen a clear reason to support one candidate or the other, so I can't think of a vote I would change if I could.
ROBBY SOAVE
Senior Editor
Who do you plan to vote for this year? I might have voted for Joe Biden if he chose Tulsi Gabbard as his veep, but he didn't, so I'm voting for Jo Jorgensen. I wish Justin Amash had opted to run, because I would prefer the Libertarian Party to have a candidate with political experience and name recognition. That said, Jorgensen recognizes that the government's coronavirus response "has been the biggest assault on our liberties in our lifetime," which is more than sufficient to earn my vote in these insane times.
If you could change any vote you cast in the past, what would it be? I voted for Gary Johnson in 2016, but if I could do it over I might be tempted to cast a write-in vote for David French, just as a screw-you to the Drag Queen Story Hour alarmists—and also as penance for all these tongue–in–cheek Twitter jokes.
PETER SUDERMAN
Features Editor
Who do you plan to vote for this year? I do not plan to vote for anyone, for reasons that Katherine Mangu-Ward laid out in her 2012 feature, "Your Vote Doesn't Count." But also because I regret the one presidential vote I did cast.
If you could change any vote you cast in the past, what would it be? I have voted in a national election only once, in 2004, and thus I have only one possible vote to change. But I would probably change it, if I could. The reason I voted in 2004 was mostly because I failed to vote in 2000—when I was a Florida resident living out of state while attending college. You may remember there was some fuss about Florida during the 2000 presidential election, including a fair amount of concern over absentee ballots. So I felt some pressure not to allow that to happen again. I voted for George W. Bush. That didn't go so well either. If I had to do it over again, I would decline to vote.
JACOB SULLUM
Senior Editor
Who do you plan to vote for this year? Texas has stringent requirements for absentee ballots, notwithstanding COVID-19, so I may not vote at all. But assuming I do, the choice is obvious: Jo Jorgensen. Given the odds, voting is best viewed as an expressive activity rather than an attempt to influence the outcome, and I have no interest in expressing whatever horrifying message would be implied by a vote for Trump or Biden (although I am morbidly curious to see what a second term for Trump would mean).
If you could change any vote you cast in the past, what would it be? After toying with Gary Hart, I for some reason ended up voting for Walter Mondale in New York's 1984 Democratic primary (the only time I've been a registered Democrat). I was young and ignorant.
JESSE WALKER
Books Editor
Who do you plan to vote for this year? I live in Maryland, where trying to have an impact on which candidate carries the state is the ultimate act of futility. I will cast a protest vote for Jo Jorgensen, which is also futile but doesn't feel as dirty.
If you could change any vote you cast in the past, what would it be? As a high school senior, I was eligible to vote in the 1988 primaries but skipped them. Given which candidate I was rooting for at the time, this was a shame: I lost my chance to be the only Reason staffer who has cast a ballot for Jesse Jackson.
ZACH WEISSMUELLER
Senior Producer
Who do you plan to vote for this year? It makes me a little queasy, but I'll be voting for Joe Biden, primarily for three reasons: (1) A feeble president Biden seems like an opportunity to erode the power and glamour of the dangerous cult of the presidency and also push socialists, nationalists, and identitarians back to the margins, creating space for a more libertarian-friendly coalition to emerge. (2) Trump was an even more selfish and incompetent leader than I thought he'd be, he seems willing to stoke chaos to hold onto power, and I'm sick of talking and hearing about him. (3) The Libertarian Party doesn't have a clear electoral strategy or even sense of purpose and continually seems to miss golden opportunities.
If you could change any vote you cast in the past, what would it be? I've always voted for Libertarian presidential candidates and never felt bad about that. I just hope I don't regret my first lesser-of-two-evils vote this year.
MATT WELCH
Editor at Large
Who do you plan to vote for this year? Jo Jorgensen. If it was going to be close in my state, I might have considered holding my nose and voting for the person most likely to supplant the eminently fireable incumbent. But New York has chosen the Democrat by at least 16 percentage points in every presidential election since the end of the Cold War, so I prefer to add votes to the party that aligns much more with my values.
If you could change any vote you cast in the past, what would it be? In 1988, my first election, I lived in the swing state of…California? (That's how old I am.) I did not remotely like or even take seriously Michael Dukakis, but I had whipped myself up in a collegiate fever to believe that George H.W. Bush was the real CIA-fabricated Dark Lord and must be stopped at all costs. Silly in retrospect. I vowed then to never vote for candidates I actively dislike, a commitment I've mostly kept to since.
LIZ WOLFE
Staff Editor
Who do you plan to vote for this year? I live in New York City, so my vote thankfully does not matter one iota in an ocean of progressives. I will not vote this year, since Jorgensen has squandered her opportunity to win libertarianism new converts—despite this botched pandemic reminding us that politicians are incompetent, self-serving, or both. Trump has been a tremendously terrible president if you care about immigration and free trade, and Biden is just a pliant, unprincipled career politician (and former drug warrior) who will do nothing for freedom. No to everyone.
If you could change any vote you cast in the past, what would it be? I am very young and have few voting-related skeletons in the closet. I'll keep it that way by not voting!
The post How Will <i>Reason</i> Staffers Vote in 2020? appeared first on Reason.com.
]]>Employees of the American aviation industry warned this week that the government shutdown poses "unprecedented" risks for air travel in the United States. In a joint statement released Wednesday by unions representing air traffic controllers, pilots, and flight attendants, employees said that "staffing in our air traffic control facilities is already at a 30-year low and controllers are only able to maintain the system's efficiency and capacity by working overtime, including 10-hour days and 6-day workweeks at many of our nation's busiest facilities." Transportation Security Agency (TSA) employees are also working overtime without pay, and many have called in sick during the shutdown so that they can work other jobs.
Aviation unions are right to call attention to possibly increased risks to aviation safety (air traffic control) and security (checkpoint screening) due to controllers and screeners going for long periods without pay.
This is not because of any malfeasance on the part of these employees. Instead, it is a predictable consequence of increasing fatigue brought about by working excessive overtime and the stress of not getting paid. Overtime is occurring as the Federal Aviation Administration (FAA) and the Transportation Security Administration, respectively, attempt to cope with staffers calling in sick, or—in the case of some controllers—deciding to retire, rather than continuing on without paychecks or enough fellow workers.
It is unconscionable that these vital safety and security functions are at risk from the growing trend of federal government shutdowns. In the case of air traffic control, about 60 other countries have de-politicized air traffic control, removing this vital function from the government budget by setting it up as a self-supporting corporate entity—generally either a government corporation or a nonprofit, private corporation. Fees and charges paid by aircraft operators provide a reliable revenue stream; so reliable that larger air traffic control companies like those of Canada and the U.K. issue investment-grade revenue bonds to pay for modernizing their technology and facilities—something the FAA can only dream about.
Regarding airport security, Canada and most countries in Europe couple national performance standards and regulation with screening by government-vetted security companies. While those companies are paid either by the airports they serve or by the national government (as in Canada), the security companies have a strong reputational interest in keeping their service operating at 100 percent, even if government is late making payments to them. The two dozen U.S. airports, such as San Francisco International, that are allowed to use screening companies have been operating normally during the federal shutdown, with the screeners receiving normal paychecks from the companies.
In other words, we know how to insulate vital aviation safety and security functions from the vagaries of the federal budget. When is Congress going to get serious about fixing this very serious problem?
The post Air Safety Is Important. We Shouldn't Let Politics Put It at Risk appeared first on Reason.com.
]]>Max Borders
On October 13, 2008, the heads of America's largest banks sat around a table with then–Treasury Secretary Hank Paulson. The bankers were there to accept what would become the largest financial bailout in history. Take it or else, Paulson said of the Troubled Asset Relief Program.
The bankers complied.
The bailouts prompted a handful of cypherpunks to speed up work on a great technological experiment. Innovators like Nick Szabo, Wei Dai, and Hal Finney had already been playing around with ideas to challenge the existing monetary system. But on October 31, 2008, the pseudonymous Satoshi Nakamoto published "Bitcoin: A Peer-to-Peer Electronic Cash System."
That white paper was like universal acid poured over the gears of a great machine. The advent of the distributed ledger jolted many of us from our dogmas: If something as apparently core to state sovereignty as a working monetary system might be provided through a decentralized technological means, the world suddenly looked like a different place.
Up to that point, advocates of human freedom had pursued change largely through persuasion and advocacy. If you wanted to liberate people, you had to cry your teardrop in the swirling ocean of public opinion every election cycle and pray the tide would turn. If you wanted to change the law, you had to get your brilliant white paper into the hands of a congressman (who had probably just used those same hands to take a dirty campaign contribution).
Politics. Policy. Punditry. That's more or less the sum of "voice" as a strategy.
Both progressives and conservative populists are currently engaged in political trench warfare, which risks becoming less metaphorical as the tribes become more hostile. Such hostility is an inevitable byproduct of the voice theory of political change, but something better is coming: the end of politics as we know it.
Economist Albert O. Hirschman in his 1970 treatise Voice, Exit, and Loyalty explained that there are three ways to respond to any human system, be it a product, an organization, or a political regime. Voice—express yourself to persuade others to change the system. Exit—leave the system, joining another system or starting something new. Loyalty—stick by the system, even if it's less than ideal.
The 19th century was in many respects the era of loyalty (God and country). The 20th century was the era of voice (ballots over bullets). But the 21st century will be the age of exit (governance by choice).
One of the basic tests of "good" law is whether people actually want to follow it. In fact, the better the laws, the more likely people are to try to migrate to that legal system. And vice versa—just ask Venezuelans. The easier exit becomes, the less it matters what any theorist thinks is justice, much less "social justice." We're entering an era of radical social experimentation carried out on far smaller scales than the revolutions of the past. And yet successes will be scalable to the level of humanity.
Right now a million software developers are creating new social operating systems using distributed ledgers, smart contracts, and cryptocurrencies. Users will either adopt these systems or not. And if they do, they're as good as law. Coders will thus generate whole new regimes, which users can simply opt out of if they aren't satisfied. Can you say that about politics?
When it comes to the voice strategy, most people still labor under a men-as-angels theory of government: If we could just get the right people in power…
But when it comes to exit, "Lawmakers could be saints, devils or monkeys on typewriters—doesn't matter," writes philosopher and venture capitalist Michael Gibson. "The opt out-opt in system lets only good laws survive. Bad laws are driven out of production. Bad laws can only inflict harm and destroy wealth up to the cost to opt out of them. We can underthrow the state one contract at a time."
The case for exit, then, is based not on a Pollyanna fantasy of how governors might behave, but on a recognition of the burgeoning technosphere we now inhabit. In my new book The Social Singularity (Social Evolution), I argue the age of exit isn't so much a choice but an inevitability given our current technological climate. The world is becoming too complex to be organized by hierarchies of power. Nimble nodes within flexible networks will replace more and more of humanity's outmoded top-down mediating -structures. Superior collective intelligence is on the way.
Cypherpunks have already created systems of monetary self-government. Digital nomads are quietly migrating to special economic zones (SEZs) that offer healthier legal institutions. Seasteaders are tokenizing the first floating platforms off the coast of French Polynesia. Innumerable options are appearing on the horizon that promise to drive the cost of exit down. Once enough of us adopt this innovation frame, there's no turning back.
The Belgian liberal Paul Emile de Puydt foresaw this coming way back in 1860. It would be simple enough, he wrote in Panarchy, "to move from republic to monarchy, from representative government to autocracy, from oligarchy to democracy, or even to Mr. Proudhon's anarchy—without even the necessity of removing one's dressing gown or slippers." Thanks to subversive innovation, de Puydt's system is upon us.
As technology grows in power, political theory is dying. The age of exit will be a post-ideological age, as people test their ideas in the petri dishes of programmable incentive systems and porous communities.
Voice cannot be dispensed with altogether. Some variant of it will be required to draw people into the newly created systems. But for those wanting a freer, richer, more varied world, there's still too much investment in voice as a strategy, and far too little investment in exit.
Robert W. Poole Jr.
Long before I'd heard of Hirschman's famous essay, I was enthusiastic about "exit": creating freedom-respecting enclaves outside the United States. Like many young libertarians in the early 1970s, I subscribed to Mike Oliver's New Country Project newsletter. I also oversaw Reason's December 1972 special issue on the subject. From 1974 to 1976 I even served part-time as a consultant on two of Oliver's projects: Abaco in the Bahamas and Na-Griamel in the New Hebrides islands in the South Pacific.
Both were attempts to assist local movements attempting to secede from impending post-colonial regimes that seemed likely to go socialist. Unfortunately, both well-meaning efforts failed, and by the late 1970s I had become disenchanted with the idea of creating a freer country outside the United States.
What remained was an exit option within the United States: My 1980 book, Cutting Back City Hall, helped inspire many unincorporated suburbs to "secede" from county governments, incorporating as new cities with mostly privately contracted public services. And in 2000–01, Reason Foundation provided much of the policy ideas to support the proposed secession of the San Fernando Valley from the City of Los Angeles. (Valley voters supported the measure, but it failed to pass citywide.)
I continue to see great value in competition among the 50 states, in terms of taxation, regulation, and personal freedom, which is driving significant exoduses from high-tax/high-regulation states such as New York, New Jersey, Illinois, and California. My wife and I joined this trend in 2003, relocating from Los Angeles to South Florida, and never looked back. We've subsequently been joined by several Reason colleagues.
But despite all this, for decades now I have primarily been concerned with making good use of the "voice" option to advance liberty. Charles Murray's landmark 1984 book, Losing Ground, provided the intellectual underpinnings of federal welfare reform legislation during the Clinton administration. Decades of work by the Cato Institute and Reason Foundation, along with activist groups like the Marijuana Policy Project, laid a basis for the growing wave of decriminalization and legalization, first of medical and then of recreational marijuana.
During the 1990s, Reason Foundation's Privatization Center greatly expanded support for competitive contracting of state and local public services. We sought and found "customers" in the public sector—elected officials who embraced these ideas and were happy to have free hands-on advice and assistance from our expert staffers. These customers included political leaders from both major parties, such as Democratic mayors Rich Daley (Chicago) and Ed Rendell (Philadelphia) and Republican mayors Steve Goldsmith (Indianapolis) and Richard Riordan (Los Angeles). The Reason Foundation team also played a leading role in advising Orange County, California, on how to emerge from bankruptcy.
My own work in transportation policy over nearly three decades has resulted in real policy changes as well. Pioneering studies introduced the idea of airport privatization to the United States, following Margaret Thatcher's privatization of the British Airports Authority. Besides encouraging a number of cities to consider leasing or selling their airports in the 1990s, this work led to Congress enacting an Airport Privatization Pilot Program, under which the shabby San Juan Puerto Rico airport has been transformed, and other privatizations are in the works.
A 1988 Reason policy paper on privately financed solutions for congested freeways led directly to California legislation that authorized pilot projects, including the world's first express toll lanes, opened in Orange County in 1995. Today there are 41 such projects in operation around the country, and plans have been adopted for entire networks of priced express lanes in most of the largest and most congested metro areas. We often worked with state transportation departments, treating them as customers that needed some initial guidance as to what, why, and how.
Reason Foundation's voice-based approach operates on two levels, through journalism and research. The former's mission is to introduce new ideas and counter bad ideas. In the early days, there was just the print magazine, but even then we were challenging the status quo—the public school monopoly, second-class citizen status for gay people, the bankruptcy of the war on drugs, etc. Changing minds is not easy, but over the decades Reason has contributed meaningfully to pro-liberty changes in the way people think about many subjects.
The research division's goal is also to change the conventional wisdom about a wide variety of public policies. But unlike most other think tanks, our M.O. focuses considerable effort on getting policy changes implemented. Doing that requires more than just producing solid policy studies. It requires seeking out and working with customers, mostly in the public sector, as discussed above.
In attempting to shift America's troubled air traffic control system out of the hands of the federal government (as 60 other countries have already done), we helped former Michigan Gov. John Engler, then the CEO of the Business Roundtable, create an expert working group able to present a respectable reform proposal to key aviation stakeholder groups. That led to finding an enthusiastic government customer: the chairman of the House Transportation Committee, Rep. Bill Shuster (R–Pa.). Although we ended up with a large and credible coalition, we were defeated (this time) by the politicking of status-quo aviation groups.
Promising technologies might make certain aspects of modern government irrelevant or easily evadable, but in our world of enduringly powerful nation-states, voice is essential and has proven effective. Nobody ever said this would be easy. But the fact that Reason's work has led to meaningful changes in a host of areas at all levels of government convinces me that the voice approach is well worth pursuing.
The post Debate: For Political Change, Choose Exit Not Voice appeared first on Reason.com.
]]>If you hate urban sprawl, you're probably familiar with the complaints of the "smart growth" movement: Roadways blight cities. Traffic congestion is the worst. Suburbanization harms the environment. Fortunately, say these smart growthers, there is an alternative: By piling on regulations and reallocating transportation-related tax money, we can "densify" our urban communities, allowing virtually everyone to live in a downtown area and forego driving in favor of walking or biking.
Smart growth proponents have been gaining influence for decades. They've implemented urban growth boundaries (which greatly restrict the development of land outside a defined area), up-zoning (which tries to increase densities in existing neighborhoods by replacing single-family homes with apartments), and "road diets" (which take away traffic lanes to make room for wider sidewalks and bike lanes).
Alas, there are inherent flaws in the "smart growth" approach—beginning with the idea that it makes sense for everyone to live and work in the same small area. In fact, that idea flies in the face of what economists call urban agglomeration.
Urban agglomeration is why there are more jobs in and around big cities. Job seekers have access to a large number of potential employers, which increases each person's likelihood of finding one that can make the best use of her unique talents and skills. The same is true for business owners, who have a much better chance of finding people in a large populous urban area who match their needs.
Transportation turns out to be a key factor in enabling these wealth-increasing transactions. Imagine drawing a circle around the location of your residence, defined by how far you are willing to commute to get to a satisfying job. The larger the radius of that circle, the more potential work opportunities you have. Likewise, a company's prospective-employee pool is defined by the number of people whose circles contain that company's location.
Most people measure that radius in time rather than distance; studies show they are generally unwilling to spend much more than 30 minutes commuting each way on a long-term basis. That means the size of their opportunity circle is critically dependent on how quickly they can get around.
Despite urban sprawl and ever-increasing congestion levels, economists Peter Gordon and Harry Richardson of the University of Southern California have documented, using census data, that average commute times in various metro areas have hardly changed at all over several decades. More recently, Alex Anas of the University of Buffalo modeled what would happen as a result of a projected 24 percent increase in Chicago's metro area population over three decades. He estimated that auto commute times would increase only 3 percent and transit trip times hardly at all. The reason is that people tend to change where they live or work in order to keep their travel times about the same. But this happy result comes about only if the transportation system expands accordingly.
A recent empirical study from the Marron Institute of Urban Management at New York University likewise found that, on average, the labor market of an urban area (defined as the number of jobs reachable within a one-hour commute) nearly doubles when the workforce of the metro area doubles. The commute time increases by an average of only about 7 percent, however—assuming an efficient region-wide transportation network. To achieve higher economic productivity, they recommend fostering speedier rather than slower commuting; more rather than less commuting; and longer rather than shorter commutes.
These policies would expand the opportunity circles of employers and employees, enabling a more productive urban economy. But these are exactly the opposite of the policy prescriptions of smart growth, which generally seek to confine people's economic activity to a small portion of a larger metro area.
One early manifestation of this was the attempt by urban and transportation planners in the '80s and '90s to promote "jobs-housing balance," where each county of a large metro area has comparable percentages of the region's jobs and of its housing. The rationale was that this would reduce "excessive" commuting by enabling people to find work close to their homes. But urban agglomeration theory makes it clear that that is a recipe for a low-productivity urban economy. Census data show that many suburban areas are now approaching jobs-housing balance on their own, but this does not necessarily reduce commute distances—to get to the jobs they want, many people still travel across boundaries.
A fascinating example is Arlington County, Virginia. Since 2000, the number of jobs and the number of working residents in the county have been approximately equal. But it turns out that only 52 percent of those working residents have jobs in the county. Out of 582,000 resident workers, 280,000 commute to adjacent counties or the District of Columbia. And out of 574,000 jobs in the county, 272,000 are filled by workers from other places.
A less extreme version of smart growth says that we should discourage car travel and shift resources heavily toward transit. People should be encouraged to live in high-density "villages" where they can easily obtain transit service to jobs elsewhere in the metro area. The problem with this vision is the inability of transit to effectively compete with the auto highway system.
Simply put, cars work better for workers. A 2012 Brookings study analyzing data from 371 transit providers in America's largest 100 metro areas found that over three-fourths of all jobs are in neighborhoods with transit service—but only about a quarter of those jobs can be reached by transit within 90 minutes. That's more than three times the national average commute time.
Another study, by Andrew Owen and David Levinson of the University of Minnesota, looked at job access via transit in 46 of the 50 largest metro areas. Their data combined actual in-vehicle time with estimated walking time at either end of the transit trip, to approximate total door-to-door travel time. Only five of the 46 metro areas have even a few percent of their jobs accessible by transit within half an hour. All the others have 1 percent or less. Within 60 minutes door-to-door, the best cities have 15–22 percent of jobs reachable by transit.
Meanwhile, Owen and Levinson found that in 31 of the 51 largest metro areas in 2010, 100 percent of jobs could be reached by car in 30 minutes or less. Within 40 minutes, all the jobs could be reached by car in 39 of the cities. Within an hour, essentially every job in all 51 places could be reached by car. The roadway network is ubiquitous, connecting every possible origin to every destination. The contrast with access via transit—let alone walking or biking—is profound.
The post Stop Trying to Get Workers Out of Their Cars appeared first on Reason.com.
]]>In the '50s and '60s, when I was growing up, air travel was a luxury. People dressed up as if going to church. There were lots of empty seats, so on night flights you could often get a row of three together and sprawl out. There was ample legroom, and full meals were served in coach.
My family and I were able to take vacations by plane only because my dad worked for an airline, and we flew on company passes when space was available. Since planes were typically only half full, we nearly always got seats on our chosen flights. But we were some of the lucky few.
Flying was a luxury because it was expensive, and it was expensive largely because of detailed federal economic regulations governing how air carriers could operate and, importantly, what they could charge. The government treated airlines as a kind of public utility and regulated them under the rationale that dog-eat-dog competition would threaten profitability and lead to skimping on safety.
Back then, the Civil Aeronautics Board (CAB) allowed only one or two airlines to serve a given route. It also unilaterally set airfare rates, seeking to keep them high enough for the airlines to stay safely in business. No price competition was allowed, which meant no incentive for carriers to seek out greater efficiencies and pass the savings to consumers. Economists described the situation as a government-sponsored airline cartel.
The result was a huge amount of waste—and a mode of travel that was out of reach for millions of people. In 1977, the year before deregulation, only a quarter of adult Americans took a trip by air, compared with nearly half in 2017. And only 63 percent had ever flown in 1977, compared with 88 percent today.
The Airline Deregulation Act of 1978 laid the groundwork for all these restrictions to be swept away. If you've set foot on a commercial airplane in the last four decades, you probably have that law—and the many people who pushed for it—to thank.
My very first Reason article, in 1969, argued that airlines should be allowed to fly wherever they wanted and charge whatever prices they thought sensible. My dad, then a facilities engineer at Eastern Airlines, read the article, laughed, and told me that would never happen.
Nine years later, the impossible did happen. Congress moved to phase out price and entry controls and set a date—January 1, 1985—for the CAB to disband, which it did, on schedule.
Airline deregulation had many fathers. As early as the mid-1960s, economists were studying airline markets within California and Texas—since the flights didn't cross state lines, they were not subject to the same regulations—and finding that competition led to more affordable prices.
That work came to the attention of a Harvard law professor knowledgeable about regulatory policy, Stephen Breyer, who joined the staff of a congressional committee headed by Sen. Ted Kennedy (D–Mass.) in 1974. At the time, the CAB was under media scrutiny for imposing a moratorium on new airline routes, and Breyer urged Kennedy to hold hearings. They happened in 1975, helping to win support for deregulation from a diverse set of players including Ralph Nader, Common Cause, the National Association of Manufacturers, and the National Federation of Independent Businesses.
United Airlines played a uniquely important role. After repeatedly being denied access to new routes by the CAB, it broke with the other major carriers and refused to support the status quo. The company pushed for reform starting in 1974, which prevented the airline trade association from choosing sides, since its policy was to take positions on policy issues only if all member airlines agreed.
Breyer—who would later be appointed to the Supreme Court—related the whole story of how airline deregulation came about as a chapter in Instead of Regulation, a 1982 book I edited for Reason Foundation, the nonprofit that publishes this magazine. As he noted there, the 1978 law "did not mark any new beginning for the airline industry. Rather, it legitimated and extended the reform process that had begun in 1975."
President Gerald Ford's CAB chairman, John Robson, had begun allowing a degree of price competition and relaxed some other rigid rules. Jimmy Carter went further, openly advocating airline regulatory reform during his successful 1976 campaign for the presidency. He then appointed as CAB chairman economist Alfred Kahn, who expanded Robson's reforms by allowing even more price competition, including the "super-saver" fares introduced by American and widely emulated by other carriers. Kahn also exempted cargo airlines from CAB price and entry regulations.
Meanwhile, in Congress, Kennedy joined forces with Sen. Howard Cannon (D–Nev.) to sponsor the Airline Deregulation Act. As Peter Samuel reported in Reason in 1989, the sunset provision that eliminated the CAB was actually added to the bill by Rep. Elliott Levitas (R–Ga.), an opponent of reform. It was intended as a poison pill.
Levitas' provision was never debated. Fortunately, it was never deleted, either. As Samuel noted, this was "the first time in the history of federal regulation that a major agency was simply abolished by law."
The initial results of deregulation were dramatic. Some existing airlines, like Braniff, expanded recklessly and ended up in bankruptcy. Others, like Eastern and Pan American, struggled to adjust to the newly freed market, lost money for years, and ended up in bankruptcy, too.
Those that survived—including American, Delta, and United—did so by developing innovations such as the hub-and-spoke route system. (Instead of serving all cities directly, flights from smaller cities converge on large "hub" airports, where passengers can connect to numerous other destinations. This model allows an airline to serve far more locations with a given number of planes.) A few companies, like Southwest, focused on no-frills service with style. To build customer loyalty, nearly all airlines adopted frequent-flyer programs.
As legacy names such as Pan American and TWA met their demise, a new generation of startups, such as JetBlue and Virgin America, emerged. These prospered by combining competitive pricing with in-flight amenities, such as JetBlue's TV in every seat back. More recently, America has witnessed the birth of ultra-low-cost airlines such as Allegiant, Frontier, and Spirit, whose economical fares make flying an option for even the most budget-conscious travelers.
These developments have been a bonanza for regular Americans. As air travel was democratized, passenger numbers soared. Commercial airlines carried 317 million domestic passengers in 1979. That figure had doubled to 636 million by 1999. Despite a decrease following the 9/11 attacks, growth soon resumed, reaching a new high of 704 million in 2009. Last year saw a total of 849 million passengers—nearly three times the number in 1979.
Since deregulation, commercial flight prices have followed an ongoing downward trend. In 1995, economists Steve Morrison of Northeastern University and Clifford Winston of the Brookings Institution built a model to determine what fares would have been if the CAB's pricing structure had remained intact. They found that deregulation had reduced fares by 20–30 percent in real terms.
And these benefits continue to accrue. In 1979, the first year of deregulation, the average domestic fare was $616 (in 2016 dollars), or 1.2 percent of average household income that year. The most recent comparable data I can find is for 2016, when the average fare was $344—a mere 0.6 percent of average household income.
Despite the apparent success of airline deregulation, critics have persisted.
Initially, the worry was that an unleashed profit motive would lead to more accidents and deaths. John Nance's Blind Trust (1986) was a case in point. "The passenger was not told by Congress or the proponents of deregulation the ultimate truth about the enticing free-market proposal," asserted Nance, a former Braniff pilot. "If prices are cut, costs must be cut, and something more than executive salaries and union contracts will have to give. The cost of safety would be one of those affected items." When this did not actually happen, William J. McKee's Attention All Passengers (2012) argued that the trend of airlines contracting out maintenance and overhaul work posed major safety risks.
Had the critics been right, the results would surely have shown up by now in accident and fatality numbers. Yet these have all trended steadily downward. Fatalities per million miles flown is the most commonly cited airline safety statistic, but it's also somewhat misleading, since long-haul flights in large planes are safer than short flights in smaller planes. A more stringent measure is fatal accidents per million departures, which better accounts for the 49 percent of flights operated by smaller regional airlines.
According to figures from the National Transportation Safety Board, there were 2.1 fatal accidents per million departures in the 1950s, which decreased to 0.88 per million in the 1970s. During the first decade of deregulation, the 1980s, the rate fell by half to 0.46, and we've averaged just 0.12 in the 2000s. Even more impressive, from 2010 through 2017 there were zero fatal accidents in the United States on U.S. scheduled airlines.
Airline deregulation has been a bonanza for regular Americans. In 1979, the average inflation-adjusted domestic fare was $616. By 2016, it had dropped to $344.
Rather than analyzing the actual safety record, critics like McKee have mostly repeated labor union talking points. His real complaint is that deregulation has supposedly decimated airline employment, thanks to the outsourcing of various tasks. But that's also far from the truth. In 1978, on the verge of the Airline Deregulation Act, employment in the industry was 313,000. By 2000, after more than two decades of deregulation, it had climbed to 547,000.
Higher fuel prices and a drop-off in passengers after the 9/11 attacks did trigger cuts in airline employment as most airlines lost money. But they have now recovered, and employment has rebounded to 422,800 in 2017—35 percent higher than at the dawn of deregulation.
Still, the critics of today's relatively free market in air travel keep raising new concerns and proposing re-regulation as the solution. The focus is increasingly on the mergers that have reshaped the industry in the past decade: Southwest acquired AirTran, Delta acquired Northwest, United acquired Continental, and American merged with U.S. Airways.
The resulting "big four" concentrated on expanding their route networks, which led to significant passenger growth at large and medium airports but very little growth (and in some cases declines) at small airports.
Whereas early opponents of reform thought competition was the enemy, modern critics think government is needed to keep the market humming. They allege that the post-merger configuration created a new cartel—a shared monopoly—that disadvantages passengers via fewer airline choices and higher fares. But if this were true, we should be noticing two things: rising airfares and fewer airlines serving certain routes. Instead, the data reveal exactly the opposite.
In a study commissioned by the commercial airline trade association Airlines for America, economists Daniel Kasper and Darin Lee of CompassLexicon, a consulting firm, found that ticket prices are at or near historical lows. They also found that competition among airlines flying between a large array of U.S. cities has increased since 2000.
While the "big four" carriers control most of the market, smaller airlines are growing far faster in terms of available seat-miles (ASMs). American, Delta, and United saw annual ASM growth of just 3 percent in 2016. By contrast, the figure was 53 percent for JetBlue, 65 percent for Alaska/Virgin, and 111 percent for Allegiant, Frontier, and Spirit.
In 2017, researchers at the University of Virginia Darden School of Business looked into the so-called "Southwest effect"—the historical phenomenon that when Southwest Airlines joins a market, fares across carriers decline significantly. They examined 109 daily nonstop markets that Southwest entered between 2012 and 2015—after the wave of big-airline mergers—and found that prices decreased by 15 percent on average. The amount of traffic, meanwhile, increased by 28 percent on average. Even though Southwest has become one of the industry's biggest airlines, and despite the fact that it no longer offers the lowest fares, its mere presence in a market stimulates price competition.
When they take a break from worrying unnecessarily about competition, critics are keen to inject government into the relationship between airlines and their customers. For example, many carriers have divided their coach cabins into premium and regular sections, with seats placed closer together in the regular section and a higher price charged for premium coach seats. This has sparked calls for federal regulation of seat spacing. But when faced with the choice between more legroom at higher fares or less legroom at lower fares, the majority of U.S. passengers opt for the lower fares (not me, but I'm nearly 6 feet tall).
Some carriers have learned that lesson the hard way. In 2000, American Airlines increased its economy-class seat spacing, widely advertising "More Room Throughout Coach." With fewer seats than its competitors, it hoped to recover those losses by attracting more business overall. The experiment didn't work out, and after finding no real increase in passengers, American switched back to higher-density seating. A decade earlier, TWA had tried the same thing, with the same result.
We've also seen a push to regulate how airlines charge passengers for various services. Sen. Ed Markey (D–Mass.) has introduced a bill that would require the Federal Aviation Administration (FAA) to regulate change fees and cancellation fees and would direct the agency to "establish standards" for assessing whether baggage and seat-selection fees are "reasonable." The bill has been approved by the Senate Commerce Committee as an amendment to the pending FAA reauthorization bill.
There's little in the way of data to suggest that fees imposed by airlines are a problem. In 2016, according to the U.S. Department of Transportation (DOT), the average domestic passenger paid $22.70 in ancillary fees, for a total ticket price of $366.92 (not including federal taxes and fees). The total was comparable in 2010 ($370.80) but higher in 2000 ($442.00), 1990 ($529.83), and 1980 ($652.67), all in 2016 dollars. So these ancillary fares are hardly undercutting the benefits of airline deregulation.
Moreover, ancillary fees are the key to the very low fares charged by budget carriers Allegiant, Frontier, and Spirit. Their business models are based on undercutting "legacy" airlines on basic fares but generating some additional revenue by charging for certain optional items (like non-alcoholic drinks) that others provide at no charge. It's these no-frills carriers that continue the work of democratizing U.S. air travel.
In March 1978, six months before the passage of the Airline Deregulation Act, CAB Chairman Alfred Kahn warned FAA staff about the coming upheaval. He predicted the airline industry would grow more quickly after deregulation, recalls economist Dorothy Robyn in a forthcoming paper for the Transportation Research Board. Kahn recommended that the FAA push airports to change the pricing structure for using runways, in order to get more use out of a given amount of capacity. Alas, that message fell on deaf ears.
The gains from airline deregulation mostly result from the increased competition it fosters. But air travelers will continue to benefit only if the airline business remains competitive. While there's a lively market for air travel today, there are also serious constraints arising from this sector's largely unreformed airport and air traffic control (ATC) infrastructure.
The lack of competition at airports is a function of geography, which for obvious reasons often makes it difficult to add more runways as demand increases. But there are better and worse ways to allocate the finite amount of space. In a 1988 interview with Reason, Kahn argued for scrapping traditional runway charges based on aircraft weight in favor of market pricing. "When a Learjet with one or two or three passengers uses up space that would otherwise be used by 200 or 300 people on a larger plane," he said, "I do not believe in excluding them arbitrarily, but I believe in making them pay the price."
In 2008, the Department of Transportation changed federal rules on runway charging to permit congestion pricing in addition to the traditional weight-based fees. But none of America's overburdened airports have taken advantage of this more dynamic system. Privatized London Heathrow and Gatwick in the United Kingdom have done so, motivating their airlines to increase the average size of their planes and hence serving more passengers with their limited runway capacity. Stodgy U.S. airports, operating as state-owned enterprises, succumb to political pressure from legacy airlines, which benefit from limits on capacity at airports where they are already well-entrenched.
Increasing the number of airports would increase competition, but here again, political problems tend to arise. In his 1988 Reason interview, Kahn described testifying in Fulton County, Georgia, in favor of opening up the local airport to compete with giant Hartsfield Atlanta. Delta—whose largest hub is at Hartsfield—lobbied hard against the proposal, and it failed. Two subsequent efforts have met the same fate.
America's air traffic control system is in desperate need of reform as well. Outdated technology, grindingly slow bureaucracy, and a politicized funding structure continue to hobble a key part of the air travel system.
While some 60 nations now have self-funded ATC corporations (including Australia, Canada, Germany, and the U.K.), the United States still plods along with its tax-funded FAA bureaucracy. A serious corporatization bill was approved in 2017 by the House Transportation & Infrastructure Committee, and it looked for a moment like the legislation might have the needed momentum. Alas, it was withdrawn by its sponsor in February in the face of heavy opposition from business-jet and private-pilot organizations.
Despite these failures to further democratize air travel, competition in the industry is alive and well. Forty years after the historic Airline Deregulation Act of 1978, we're all better off for it. Here's hoping it doesn't take another four decades for America to go the last few miles.
The post If You Can Afford a Plane Ticket, Thank Deregulation appeared first on Reason.com.
]]>The 45th president does not tend to elicit measured evaluations. Since even before his formal entry into national politics in 2015, Trump has acted as a powerful magnet on the body politic—attracting and repelling onlookers with equal force.
A year ago, as we prepared to see a former reality television star sworn into the highest office on Earth, predictions abounded regarding the effects he was about to have on the country and the world. On one side were confident assertions that he would repeal the Affordable Care Act, bring back manufacturing jobs, and end political correctness once and for all. On the other were fears that he was a racist and a dimwit who would certainly abuse the powers of his station and might well start a nuclear war.
On the Trump presidency's first birthday, the reality is less extreme than either set of prognosticators envisioned. The Republican Party under his leadership managed one major legislative accomplishment—tax reform that cut the corporate rate and is projected to add nearly $1.5 trillion to the debt—and failed after months of wrangling to enact an Obamacare replacement. Tensions with foreign governments from Iran to Russia to North Korea continue to simmer. The stock market has followed a dramatic upward trajectory, yet anger continues to grow over perceived wealth and income inequality. With the midterm elections now 10 months away, political polarization seems to hit new highs daily, but in many ways the checks and balances of our federalist system are working to keep even the current unscrupulous White House occupant from actualizing his most ambitious plans.
As the 365-day mark approaches, have we reached a milestone worth celebrating or taken just another step in our national descent to unthinkable places? Reason asked 11 experts to weigh in on Trump's record so far. From positive signs on transportation policy and regulatory rollback to a worrying rise in nationalist sentiments and redoubled efforts to cleanse the United States of undocumented immigrants, the answers were a mixed bag, highlighting just how much uncertainty awaits the country in the year to come.
—Stephanie Slade
TAXES AND HEALTH CARE:
Peter Suderman
At the beginning of 2017, Speaker of the House Paul Ryan told GOP lawmakers that the new Congress would repeal Obamacare and pass deficit-neutral tax reform by August. At summer's end, Republicans, despite holding majorities in both chambers, had accomplished neither. But eventually they would accomplish parts of each.
In March, the House was set to hold a vote on legislation that would have repealed much of the Affordable Care Act while setting up a new system of related federal tax credits. Ryan was initially forced to pull the bill from the floor due to lack of support, but after making a series of tweaks intended to provide states with more flexibility, the body passed a health care bill in May.
GOP leaders congratulated themselves for making progress on the issue, but the plaudits were premature. The bill stalled out in the Senate. By September, the Obamacare repeal effort was dead and Republicans had moved on to more comfortable territory: rewriting the tax code.
At the center of the new effort was a significant cut to America's corporate tax rate, which at 35 percent was the highest in the developed world. Donald Trump had campaigned on slashing it to 15 percent. The GOP aimed for 20.
At first, the tax effort went much like the health care effort. There were disagreements between the House, which hoped to partially offset any revenue losses with spending cuts, and the Senate, which gave itself permission to increase the deficit by $1.5 trillion. Republican senators also disagreed among themselves: Jeff Flake (R–Ariz.) and Bob Corker (R–Tenn.) worried about sinking the country further into the red, for instance, while Marco Rubio (R–Fla.) and Mike Lee (R–Utah) wanted a potentially pricey increase in the child tax credit.
Moderates like Sen. Susan Collins (R–Maine) meanwhile reserved judgment for other reasons—such as concern over increasing the number of Americans without insurance.
That was an issue because the tax plan had become a sort of stealth health care bill. Recall that the Supreme Court in 2012 deemed Obamacare's individual mandate constitutionally permissible only if understood as a tax. So the GOP legislation offset some of the loss in revenue from its reduced tax rates by eliminating the mandate. According to the Congressional Budget Office, that repeal would save about $340 billion over a decade—by leaving 13 million fewer people with government-subsidized health coverage.
It came down to a drawn-out late-night vote, but at nearly 2 a.m. on December 2, Senate Republicans gave the plan the go-ahead. Less than three weeks later, the House passed an amended version and President Trump signed it into law.
The final bill permanently dropped the corporate tax rate to 21 percent. It also expanded the child tax credit, cut individual tax rates across all seven brackets, and doubled the standard deduction, meaning fewer people will file itemized returns. The individual cuts will expire within a decade, but for now they reduce taxes for every income group.
Although Republicans claimed the bill would pay for itself by spurring economic growth, no independent economic analysis agreed. The Committee for a Responsible Federal Budget found that it could raise the deficit by $2.2 trillion over a decade.
Obamacare's individual mandate was repealed, though its spending on subsidies and major regulations remained. By year's end, Trump's party could claim partial victory—imperfect as it might be—on both taxes and health care.
TRANSPORTATION POLICY:
Robert Poole Jr.
In its first year, the Donald Trump administration has appointed good people and enunciated market-oriented principles on transportation policy. But the acid test will come when we see how much congressional support can be won for the president's forthcoming infrastructure plan.
Since "people are policy," transportation-related appointments count as a positive. Elaine Chao as Department of Transportation (DOT) head and D.J. Gribbin as White House infrastructure sherpa are highly qualified choices with sound policy ideas. Other senior appointees also look good.
Early on, the White House endorsed an effort to "corporatize" the poorly run Federal Aviation Administration (FAA) air traffic control system, which raised that reform's priority with House GOP leadership. But this further politicized the issue for Democrats in Congress, and if the lower chamber passes the bill, there is still no Senate counterpart.
In January, the administration is expected to release a 75-page infrastructure proposal. It is likely to build on a six-page fact sheet released in May—a document that made the radical suggestion that the federal government's current role is far out of proportion to the fact that most public-serving infrastructure is owned and operated by state and local governments and doesn't touch on national interests.
Four key principles were propounded in that sheet: The administration will make only targeted federal investments into transportation projects; it will encourage self-help by state and local governments; it will align infrastructure investments with the entities that can best operate and maintain those facilities; and it will leverage the private sector.
It seems clear that $200 billion (over 10 years) is now the plan's ceiling on federal transportation infrastructure spending. For the most part, that amount will be reallocated from existing federal programs. The rest of the $1 trillion in related expenditures will have to come from state, local, and private investment—which is, of course, as it should be.
While there will be bipartisan resistance in Congress to much of Trump's transportation agenda, this is the first time any administration has undertaken a serious rethinking of the role of the federal government in infrastructure projects. The move is sorely needed.
IMMIGRATION:
David Bier
From the beginning of his political career, Donald Trump has articulated a view of immigrants that could lead only in one direction: toward policies to rid the country of them.
The president started 2017 by ordering a "travel ban" that barred nationals of six majority-Muslim countries. By November, he had substantially reduced the number of people allowed in from all Muslim-majority countries and cut Muslim refugee admissions by 94 percent. (Christian refugees have not benefited either—he slashed their admissions by two-thirds.)
Trump's promises of a "merit-based" system haven't spared skilled immigrants. Administration officials are harassing employers of H-1B workers, redefining which occupations qualify as "skilled," and challenging an unprecedented number of applications. They also rescinded a rule that authorized 100,000 spouses of H-1B holders to find jobs in the country.
Unsurprisingly, the government issued fewer visas overall this year than last. Those trying to come legally faced an onslaught of new regulations that have doubled or tripled the length of required forms, forcing many to hire attorneys to help them answer opaque "extreme vetting" questions.
In January 2017, Trump stated his intention to deport "probably 2 million, could be even 3 million" immigrants. But his executive order went even further, declaring open season on virtually all unauthorized immigrants, a population of over 11 million. Though he hasn't broken records yet, arrests jumped on his watch. In September, he ended the Deferred Action for Childhood Arrivals (DACA) program, which gave work authorizations to people who were illegally brought here as children.
The year laid the foundation for the president's long-term agenda. Facing legal challenges to his travel ban, he asserted the power to prohibit any group of immigrants for any reason at all. The Supreme Court apparently agrees: In December, it allowed the ban to take effect while the justices consider a final ruling. This power could prove useful if lawmakers fail to pass a Trump-endorsed bill to cut legal immigration in half.
The president also laid some literal foundations for his favorite vanity project: a border wall. But to get far, he'll need money from Congress. As the new year dawns, he's asked for a deal: less legal immigration plus funds for his wall and mass deportation ambitions, in exchange for giving citizenship to DACA recipients. It's a bargain policy makers are unlikely to take. He'll have to find other ways to advance his anti-immigration agenda.
LGBT ISSUES:
Walter Olson
Sometimes the big stories are the ones that don't happen.
Days after his election, Donald Trump went on 60 Minutes and said of the gay marriage legal cases: "They've been settled, and I'm fine with that." I predicted at Overlawyered that of the many reasons to worry about his incoming administration, "so far as I can see, anti-gay policies aren't in the top 25."
How'd that stand up? By and large, the "assault on LGBTQ equality" predicted by the Huffington Post and many others hasn't happened. True, Trump appointees pulled back from several controversial Obama positions. They withdrew an ill-considered plan to impose a nationwide school bathroom code. They refused to back the Democrats' Equality Act, which would nationalize public-accommodations law and minimize exemptions. They dis-endorsed an ambitious theory that Title VII of the 1964 Civil Rights Act already bans sexual orientation discrimination in the private workplace, and that courts simply didn't notice that fact until recently.
In Masterpiece Cakeshop v. Colorado Civil Rights Commission, they weighed in on the Christian baker's side—but not on religious liberty grounds, let alone with any urging of the Court to reconsider the Obergefell decision that legalized same-sex marriage nationwide. Instead, they offered careful and narrow First Amendment arguments based on the need to protect against forced expression.
Remember the enormous freakout last spring about a White House executive order that would give religious sentiments precedence over discrimination law? Presidents can't actually do that, but the reality didn't forestall a whole week of anticipatory #LicenseToDiscriminate rending of social justice garments.
When the actual executive order came out in May, it included almost none of the controversial ideas and mostly kicked future decisions down to the agency level. It didn't even roll back anti-discrimination rules for federal contractors.
The exception to all this caution and conciliation was Trump's impatient, imperious decree of a flat ban on military service by transgender people, which is currently stalled in court. Whatever the order's eventual fate, it serves as a reminder that the T track can diverge from the G and L.
Organized gay and anti-gay groups keep their respective bases in a constant state of alarm with crisis talk. But the actual course being steered is centrist.
EXECUTIVE OVERREACH:
Gene Healy
Before Election Day, I found the prospect of a Donald Trump presidency almost as ridiculous and terrifying as the idea of Charlie Sheen with nukes. Things haven't gone as badly as I feared: Our political system—on the home front, at least—has been surprisingly resistant to one-man rule.
In part, that's because being a successful autocrat requires a modicum of competence and self-restraint, qualities Trump lacks. A competent authoritarian wouldn't dare "so called judge[s]" to overturn his edicts; fantasize on Twitter about silencing critics and prosecuting political foes; or confess to obstruction of justice on national TV, as Trump practically did when he told NBC News that he fired former FBI Director James Comey over "the Russia thing." Imagine Dick Nixon being dumb enough to attach the Enemies List to a press release or deliver the juiciest selections from the Watergate tapes in a series of fireside chats. Imagine anyone else turning 3 percent growth and 4 percent unemployment into a sub-40 approval rating.
And yet abroad, the Imperial Presidency remains as unconstrained and menacing as ever. Who needs "the power to persuade" when a 16-year-old congressional military authorization can be used to wage war at will, almost anywhere in the world? Our "America First" president seems unperturbed by mission creep that's led to boots on the ground in places as far-flung as Tongo Tongo; instead, Trump has deepened entanglements on every battlefield Obama left him, ramping up airstrikes, kill-or-capture missions, and civilian casualties.
Hamstrung at home, the president has every incentive to overcompensate abroad. Washington elites have lauded Trump as "presidential" only twice: in March, when he followed his teleprompter during a congressional address, and in April, when he ordered a drive-by missile attack on Syria. He seems to find issuing orders easier than sticking to a script. Asked "will you attack North Korea?" in September, he responded: "We'll see."
So far, the Trump administration has delivered more farce than tragedy. But our luck can change at any time.
PARTY POLITICS:
Patrick Ruffini
In 2015–16, Donald Trump proved he understands that politics is about tribal allegiance. By seizing control of one of the two main parties, you can rise to power. In 2017, Trump smashed the remnants of Republican opposition and cemented his role as the tribal warlord chieftain of a MAGA-ified GOP. By this standard, he's had a successful year.
Trump's weakness in elite circles has bred a narrative that the Republican Party is coming apart. But 90 percent of Republicans voted for him in 2016, and if anything, the GOP is becoming more united—not around shared philosophical beliefs, but around Trump.
Unfortunately for Republicans, he has accomplished this in part by making the party smaller. In Gallup's daily tracking surveys, the share who self-identify with the GOP has fallen from 42 percent immediately after Election Day to 37 percent today.
The decline in Republican identification post-Trump is part of a sorting phenomenon that helped Republicans during the presidential contest but is hurting them now. According to an analysis of Voter Study Group data, Republicans in 2016 benefited from party switches from older voters and non-college-educated whites—the same groups that surged to Trump. At the same time, large numbers of nonwhites and millennials switched away, a trend we've seen accelerate since he took office. Those much-scrutinized Obama-Trump and Romney-Clinton voters were not just defying their party this one time. Many were in the process of changing their partisan allegiance to match their view of the GOP nominee.
The math here is not good for Republicans. In the 2017 Virginia governor's race, 97 percent of the results at the precinct level could be explained by the results of the 2016 election. The same places that had voted for Trump, in other words, went GOP again—yet the Republican lost by 9 points, because turnout surged so much in Democratic strongholds. While congressional Republicans outperformed Trump in 2016, many would be lucky to match his numbers today. The Alabama Senate race shows what can happen when a candidate stokes cultural divides even further: Roy Moore fell an astounding 50 points short of Trump's margins in highly educated GOP precincts.
For a year filled with record low poll numbers for a president in his first year, Trump has managed to solve one pesky problem: Those Republicans most resistant to his control of the party are largely headed for the exits.
THE REGULATORY STATE:
Matt Welch
On December 14, the president held a little ceremony in the White House Roosevelt Room to highlight his administration's efforts in slowing the growth of the regulatory state. This being Trump, he illustrated the point by cutting a red ribbon with a pair of giant golden scissors and making the absurdly undeliverable promise that "when we're finished, which won't be in too long a period of time, we will be less [regulatory] than where we were in 1960." The media being the media, most coverage focused on the crude props and inflated claims.
But somewhere between the bluster and the skepticism lies a humdinger of a story: Trump's first nine months in office, the Competitive Enterprise Institute concluded in October, qualified him as "the least regulatory president," with significant enacted regulations—those costing affected industries a combined $100 million or more—down 58 percent compared to the first nine months of 2016, and significant proposed rules down 77 percent.
The president picked free marketeers to head the Food and Drug Administration, the Department of Education, the Federal Communications Commission, and many other agencies. He then appointed Neomi Rao—founder of the Center for the Study of the Administrative State at George Mason University's Antonin Scalia Law School—as head of the Office of Information and Regulatory Affairs, the top slot in the regulation bureaucracy.
Two early executive orders that were initially greeted with some eye-rolling—insisting that two old regulations be killed for every new one created, and demanding that his administration's net new regulatory costs be zero—have also turned out to have teeth.
These personnel decisions and regulatory constraints are beginning to pay off. Some 15 Obama regulations were repealed via the Congressional Review Act, or 14 more than in the previous two decades. The FCC rolled back ill-considered net neutrality rules, while the Education Department rescinded bad guidance to colleges on adjudicating sexual assault disputes. If and when the federal government's process for approving drugs is improved, the impact on human lives will be measurable.
But there is only so much the administrative state can do to deconstruct itself. Real deregulation—as opposed to mere regulatory slowdown—requires Congress to change existing law, which it has historically been loath to do. Meanwhile, Trump's promises and at least some of his actions on trade, immigration, and crime are threatening to tarnish his otherwise laudable record with massive federal intrusions on individual liberty.
THE POLITICAL CULTURE:
Jesse Walker
Donald Trump's very first campaign speech fanned fears of foreign subversion: Mexico, he suggested, was deliberately dumping its criminals on our side of the border. A year after he became president, many Democrats have found it convenient to challenge him by…fanning fears of foreign subversion. It's a sign of the Trumpian times that so much of the "resistance" can't resist the rise of paranoid nationalism.
The problem here isn't that Democrats are investigating Trump and his cronies' possible conflicts of interest in the former Soviet Union. It's always good to keep an eye on any signs of public corruption, and the president's circle has certainly done business with more than its share of sleazy operators, from Russia to Turkey to New Jersey.
What's ugly is the narrative that's grown up around the investigation, one where Vladimir Putin is an omnipotent puppetmaster, where attempts to reduce tensions with the Kremlin are innately suspicious, where Moscow's low-budget propaganda ploys are not just one more set of signals in the cacophony of American politics but an alien force ripping the U.S. apart. It's one thing to look for ways officials may have broken the law; it's quite another to encourage a new cold war or to call for controls on online speech.
The right frets over its own gallery of demonic foreign forces, from MS-13 to the Islamic Brotherhood. But at the moment, it is arguably more focused on a domestic enemy. Antifa—a loose, decentralized, and not particularly large movement—has grown in the Fox News imagination into a boogeyman of spectacular proportions, with virtually every violent protest (and not a few nonviolent ones) folded into the alleged menace.
As liberals largely react by arguing that the real domestic threat is the far right, the weak-kneed centrist position appears to be anxiety about protests in general: Many city leaders and college administrators now see any event where left and right might clash as a threat to public order. Don't be surprised if enterprising officials craft policies designed to subdue the whole spectrum, shutting down crowds of peaceful demonstrators along with anyone with violence on his mind.
FOREIGN POLICY:
William Ruger
It was not unreasonable to hope that President Donald Trump might improve on the foreign policy performance of his predecessors. Sure, the hopeful were grading on a curve that included George W. Bush and Barack Obama. But what gave a sliver of hope to those who yearned for greater realism and restraint were candidate Trump's counter-establishment pronouncements about the "big, fat mistake" of Iraq and the problems posed by our wealthy, free-riding allies.
Unfortunately, Trump's first year has been full of missed opportunities and worrying signs that this presidency won't provide the change required to make American foreign policy great again. A huge whiff came on Afghanistan, where Trump had the chance to draw down U.S. commitments or even end the longest war in American history. Against his better instincts, the president sided with the generals who wanted more troops—but who don't appear to have a strategy to significantly change the outcome. He also could have appointed more realists to the administration to balance status quo voices in the White House and throughout the bureaucracy
Trump's approach to North Korea has been dangerously confrontational. Rather than stressing deterrence and diplomacy, his rhetoric has exacerbated tensions. Meanwhile, hawks in the administration insist on unrealistic denuclearization, thereby cranking up the likelihood of unnecessary war.
Middle East policy has been similarly troubling, with Trump de-certifying the Iran nuclear deal (but wisely not killing it). Rather than aim for a more balanced approach in the region, the president has favored Saudi Arabia, including offering support for its atrocious actions in Yemen. This war has resulted in excessive civilian casualties and contributed to outbreaks of famine and cholera. And a recently released national security strategy offers too much of the same old primacist thinking that relies on active, military-heavy deep engagement abroad and extensive foreign commitments.
There were some positive signs. Trump avoided a large footprint in Iraq and Syria. He hasn't yet delivered a debacle like Bush's Iraq or Obama's Libya. He also continued to call on the U.S.'s wealthy allies to meet their spending commitments. In a rebuke to foreign policy idealists, Secretary of State Rex Tillerson emphasized American national security interests and cautioned against policies based on the promotion of values. Until recently, Trump did not seem eager to tangle with Putin. But unfortunately, those in the administration who would like to see a more confrontational approach to Russia won permission for a $41.5 million arms deal with Ukraine.
APPOINTMENTS:
Katherine Mangu-Ward
A year ago, many conservatives and some libertarians held their noses and voted for Donald Trump on the theory that even if they didn't like the man himself, he'd likely make good appointments—or at least better appointments than his rival.
For some, Trump's early Supreme Court pick of Neil Gorsuch vindicated that voting strategy, which was particularly prevalent among constitutional conservatives. So pleased were these supporters with his choice that references to the jurist became a bit of a joke in Washington: "Sure, Trump's tweets are disconcerting. But Gorsuch!"
The president doesn't just appoint Supreme Court justices, however.
Several of Trump's high-level taps, including Betsy DeVos at the Department of Education and Ajit Pai at the Federal Communications Commission, have become liberal bugaboos for their deregulatory impulses. But the appointee with the greatest opportunity to change the direction of U.S. policy in a serious way is Trump's Justice Department selection: Jeff Sessions, a former senator from Alabama who has a long history of favoring prohibition and punishment.
Attorney General Sessions is less a criminal justice reformer than a criminal justice reactionary. During his confirmation hearing, he spoke approvingly of civil asset forfeiture, a practice in which money and other property are taken from people who have not been charged, let alone convicted, of any underlying crime.
A fair-weather federalist, Sessions supports states' rights right up until the moment that states legalize recreational or medicinal marijuana, at which point he thinks Washington should take precedence. He has had a similar response to the rise of sanctuary cities (and states), or jurisdictions that aren't always willing to cooperate with immigration authorities. He also supports strengthening and lengthening sentences for violent and nonviolent offenders alike, and he is skeptical of the idea that increased police oversight is needed.
He has already removed some of the strictures that Barack Obama's administration imposed in response to Ferguson and the Black Lives Matter movement, rolling back restrictions on combat gear the Department of Defense can offer to local police departments, clarifying that federal officials are welcome to go after cannabis even in states that have legalized it, and loosening up the standards for asset forfeiture.
Where Trump is a reactive pragmatist, Sessions is an authoritarian ideologue. And if he can survive the fast-paced game of musical chairs being played in the White House, he will push immigration, drug, and law enforcement in a more illiberal direction for years to come.
THE ECONOMY:
Veronique de Rugy
In the last year, both the stock market and the bitcoin world have been powerhouses. As of press time in January, the S&P 500 had seen a 35 percent increase since election night. Over that same period, the price of a bitcoin went up by more than 1,700 percent, from $721 to $13,310.
Trump has often said the stock market's performance should be viewed as a proxy for his administration's accomplishments. Is there anything to that?
Perhaps. One possibility is that the rally is a sign of a growing economy fueled by the promise of big corporate tax reductions and the regulatory diet Trump has put the federal government on. In addition, entrepreneurs are probably breathing a sigh of relief that the anti-business climate so palpable during the Obama years is over.
Of course, the rally is not unique to the United States, and we could just be riding the coattails of global growth. It's also possible we're in a bubble created by various governments' "easy money" policies of increasing their fiat currency supplies. According to Allen Gillespie, a partner at Fintrust Investment Advisors, "We are in the midst of the greatest asset inflation via quantitative easing" since the one that caused an economic collapse in France in 1720.
But what of bitcoin, the 8-year-old cryptocurrency that is suddenly the talk of the town? A single token that traded for pennies not long ago hit $19,000 in December, a jaw-dropping price spike that has since subsided slightly. And as the blockchain technology develops, new instruments—such as the recent introduction of bitcoin futures trading on the Chicago Board Options Exchange—will allow institutional investors to take a position in the currency. This has in turn driven greater interest from retail investors. And even with the surge, only a tiny fraction of people are currently involved, which means there still could be a lot of room to grow.
Even as bitcoin is providing an alternative to traditional methods of financial speculation, other cryptocurrencies are emerging to give bitcoin a run for its money—and Trump has nothing to do with any of that. In the truly unregulated space that's opened up for techno-utopian experimentation, there's no telling what might come next. But if the history of permissionless innovation is our guide, the process itself will be a source of wealth for us all.
The post Trump Turns One appeared first on Reason.com.
]]>– Private pilots, represented by the Aircraft Owners & Pilots Association (AOPA), and the various companies and organizations that supply the "general aviation" (G.A.) community. Although many G.A. flights do not use air traffic control (ATC) services, those that do pay nothing directly. Instead, they owe a modest aviation fuel tax; the revenue from this tax makes up just 0.1 percent of the Federal Aviation Administration (FAA) budget. For decades, AOPA and the rest of the G.A. community have fought ATC corporatization out of fear that such a change would lead to the implementation of unaffordable user fees for some or all G.A. flights. Many countries do impose ATC charges on small private planes, but that is not true of Nav Canada, which is the model for American ATC reform. In Canada, small planes pay an annual fee of just 68 Canadian dollars.
– Business jet operators, represented by the National Business Aviation Association (NBAA). These craft fly in the same airspace as airliners and use 10′"12 percent of all ATC services, but their jet fuel taxes provide only 1.2 percent of the FAA's budget. Everywhere else in the developed world, business jets pay standard weight-distance ATC fees, which this constituency in America would strongly prefer to avoid. But business jets are thriving worldwide, so ATC fees are obviously not curtailing those planes' use.
– Members of Congress, who have the authority to micromanage the FAA. When it comes to air traffic control, this often means preventing the consolidation of facilities (keeping many ATC facilities open becomes "protecting jobs in my district") and specifying that the FAA must use certain technologies or systems (because politicians tend to favor established suppliers, many of whom are campaign contributors). Since a number of members of the House and Senate are also licensed private pilots, the General Aviation caucuses are disproportionately influential players on Capitol Hill.
– Most government employee unions, who assume that ATC "privatization" would entail replacing unionized civil servants in the industry with private contractors. Interestingly, NATCA, the union that represents the air traffic controllers themselves, favors the switch to a nonprofit corporation model, because (1) they experienced furloughs, threats of small-tower closings, and interruption of new-controller training for a year as a result of the 2013 budget sequester, and (2) they envy the advanced, user-friendly technologies used by their counterparts at Nav Canada and other self-funded ATC corporations. The current reform bill provides for any ATO union contracts to remain in force until their expiration dates, at which point they would be renegotiated. Any transferred employees would also retain their earned pension benefits.
– Small-city and rural interests, who are legitimately concerned about losing (or missing out on the future construction of) control towers at their airports. This, they feel, would take them off the map for access to the nation's airspace and would cost local jobs. Small airports historically get a large share of federal airport grants, especially relative to the meager fraction of aviation activity they represent. They don't seem to realize that a nonprofit corporation is more likely to implement new technologies that cost considerably less, making the system more efficient. For example, remote towers keep the control room on the ground, with only cameras and other sensors on a tall mast. Although this concept is being implemented by self-funded ATC corporations in Europe, the FAA has no program or budget for it. The 2017 reform legislation mandates that all small airports that meet a valid benefit-cost ratio requirement will retain or get qualified for a small tower.
The post Who Benefits from the Status Quo? appeared first on Reason.com.
]]>Amid the staggering number of political and policy controversies to roil Washington this year, one of the most significant has—forgive me—flown under the radar. It's a battle that will determine the future of the United States air traffic control (ATC) system. And while the particulars may seem esoteric, the consequences could be huge.
Every time you board a plane, you are putting yourself at the mercy of an inefficient system guided by 1930s radio beacons, 1950s radar surveillance, and paper ticker-tape flight tracking. Far from being the envy of the world, the U.S. system for guiding aircraft is a backward analog relic in a digital age.
America's Air Traffic Organization (ATO) is part of the Federal Aviation Administration (FAA), but for years, good-government activists and transportation policy wonks, myself among them, have argued for it to be spun off into a self-supporting nonprofit corporation. Now the House of Representatives looks poised to pass a bill that would do just that. As opponents ramp up their effort to halt that legislation, the debate, which would normally be confined to interest groups inside the Beltway, has begun to spill over.
Supporters of this much-needed reform—including airlines, the air traffic controllers' union, business groups, and many former transportation officials—argue that a tax-funded government bureaucracy has shown it is incapable of managing a high-tech 24/7 service business. The proponents also note that ATC corporatization (or privatization, if you prefer the more controversial name) is now the global best practice, having been adopted by over 60 countries.
On the other side are non-ATC public employee unions, groups representing private plane owners, and government officials from small cities and rural America. The opponents see this effort as a takeover plot by the major airlines, which they claim will charge ruinous user fees to private operators and shut down as loss-makers the control towers at small airports.
If the status quo interests get their way, Americans will be stuck with a system that rations capacity at the busiest airports, imposes delays due to antiquated equipment and procedures, and costs far more than it should. But there's still a chance for the reform legislation to make it through, clearing the runway for a high-tech system that facilitates faster and more reliable airline trips, increased safety, and lower costs for passengers and taxpayers.
Old and Busted The purpose of air traffic control is to keep aircraft safely separated while in flight—in layman's terms, to make sure planes don't collide with each other.
It does this via three basic elements: systems that provide surveillance of all planes in controlled airspace; controllers who direct pilots to carry out procedures to keep traffic organized; and hundreds of facilities, from airport control towers to radar approach control entities to high-altitude en-route centers, where it all takes place. Yet even as the United States boasts the world's largest air traffic system (and even though Americans like to think their economy is the most technologically advanced on Earth), in many ways our ATC efforts are mired in the past.
A bit of context: Most low-altitude airspace, except around airports, is uncontrolled. Private planes are free to fly where they like, with pilots expected to "see and avoid" other craft. But all higher altitudes—the airspace where airliners and business jets (as well as some private planes) fly—are considered "controlled." All planes flying there must file flight plans with ATC and carry a working transponder so the controllers can identify the radar blip that shows up on their screens.
In America in 2017, pilots are still guided by radio beacons on the ground that date to the 1930s, and by instructions delivered via shared voice radio frequencies. Surveillance of U.S. airspace still relies almost entirely on 1950s-era radar, despite widespread use of GPS by ordinary citizens.
The FAA has embarked on a modernization program called NextGen, which includes a plan to supplement radar with a GPS-based technology called ADS-B. But as the deadline of 2020 for all planes to be equipped draws closer, it looks highly unlikely the goal will be achieved. In comparison, the ATC corporations of Britain (NATS) and Canada (Nav Canada) have been using ADS-B across the North Atlantic for years.
Those ATC companies also use digital messaging between controllers and pilots, while the FAA's plan to implement this technology stretches well into the next decade. In the U.S., flight progress strips—that is, literal pieces of paper identifying the flight number, the aircraft type, and bits of information about the flight plan—are hand-carried from one controller to another within an ATC facility as the plane moves from sector to sector in the air. Nav Canada made the switch to on-screen flight progress, where one click shifts the information to the next controller, more than a decade ago. But the FAA doesn't intend to roll out this technology nationwide until 2026.
Studies by the Government Accountability Office and the U.S. Department of Transportation (DOT) Inspector General paint a consistent picture over several decades: Despite numerous reforms by Congress—of procurement, personnel, and organization—the FAA's major modernization projects nearly always go significantly over budget and are delivered years late. Meanwhile, Nav Canada's very different corporate culture does more of its "development" in-house, using skilled people paid market-based salaries—an approach that has produced considerably more bang for the buck when it comes to getting new technology into the field quickly (and making sure it works when it gets there).
The structure of the United States' air traffic control system is also outdated. Historically, ATC was an integral part of government transport agencies, and that is still the case in America today. Some 68 percent of the FAA's budget went to operating the ATC system in 2016, while the rest was divided between regulating aviation safety and providing airport grants.
Defenders of the status quo like to describe our system as the world's largest, safest, and most efficient. And that ought to be true, since we are the richest country and there are well-known economies of scale in air traffic control. The largest system should be spreading fixed costs among more users, and as a result achieving the lowest unit costs. But international data show that the cost per controlled flight hour (in domestic airspace) is $453 in the United States vs. $335 in Canada. We're paying 35 percent more than our northern neighbor, and other quantitative measures point in the same direction.
The problem isn't just the inefficiency, or that ATC sucks up a large portion of the FAA's resources. Where the money comes from puts the system at risk as well.
Aviation excise taxes (mostly on passenger tickets) pay for the vast majority of FAA activities. In 2016, more than 85 percent of the agency's revenues came from airline ticket taxes, while less than 2 percent came from business jets/turboprops and private piston planes. An additional 13 percent came from general taxpayers.
Because it is part of the federal budget, the FAA is subject to overall spending restraints, such as those imposed by the 2011 Budget Control Act. Thus, in 2013, when the so-called sequester went into effect requiring cutbacks in all "discretionary" spending, the FAA took a hit. The agency furloughed its employees one day every other week, closed the controller training academy for nearly a full year, and made plans to shut down 189 small control towers.
More than once, Congress has also let the FAA's authorization lapse. In these instances, the aviation excise taxes that fund the organization stop being collected, causing a revenue shortfall. And when there's a government shutdown, most of the agency (basically everyone except the controllers themselves) is sent home.
Needless to say, this is no way to run a vital, modern service business.
Passenger Travails Airline delays cost airlines and passengers some $33 billion per year in wasted time and excess operating costs. Between 40 and 50 percent of all air travel delays that ripple across the country can be traced to the congested airspace of the New York metro area. Status quo advocates blame this entirely on the limited number of runways at Kennedy, LaGuardia, and Newark. That's part of the problem, but new technology and procedures can do two things: increase the hourly throughput of existing runways and de-conflict the very complex airspace above that huge metro area. The FAA, for its own political or bureaucratic reasons, is leaving the New York airspace until last for modernization, somewhere off in the future, focusing instead on Dallas/Ft. Worth, Atlanta, and other easier cases.
In the United States, flight progress strips—that is, literal pieces of paper identifying the flight number, the aircraft type, and bits of information about the flight plan—are still hand-carried from one controller to another.
Another problem is the paucity of "direct" flight routes in U.S. airspace. Most flights still follow 1950s-era tracks that zig-zag from one ground-based radio beacon to another, wasting time and fuel compared with a direct great-circle route. Across the North Atlantic, the self-funded ATC corporations of Canada and the U.K. are using GPS-based surveillance to move the parallel flight tracks closer together (safely), so that more flights can fly at fuel-saving altitudes that take advantage of prevailing winds. That also means faster and more reliable trips for passengers.
Flights between the Northeast and the Caribbean must stay near the east coast to remain within range of radar coverage. Starting next year, space-based GPS surveillance will be available worldwide from a company called Aireon. That will permit radar-like separation between planes that are beyond the range of radar, enabling them to fly shorter oceanic routes to the Caribbean. And those planes and their passengers would no longer have their flights held on the ground when storms block the coastal routes, delaying their vacations. Many ATC providers in other countries have signed up for this new service—but the FAA has not.
Tried and True Luckily for the United States, there is a better option.
In all other developed nations, reforms over the past 30 years have changed this traditional model. In more than 60 countries, the ATC entity has been separated from the transportation agency. Unlike in our system, where parties pay aviation taxes to the government and legislators micromanage what it is spent on, nearly everywhere else airspace users pay fees for service directly to the ATC provider, eliminating the political interference.
In the late 1980s, New Zealand was the first to divest its ATC system from the transport ministry and reorganize it as a self-supporting corporation. Over the following decade, more than a dozen other governments did likewise, including Australia, Canada, Germany, and the United Kingdom. By 1996, a critical mass of ATC corporations existed, leading to the formation of the Civil Air Navigation Services Organization (CANSO), which today has more than 80 members. The large majority are self-supporting companies.
Corporatization may not sound like a major change, but it dramatically alters incentives and practices. With the funding coming directly from those who use ATC services, a genuine customer-provider relationship develops. In the United States, by contrast, the FAA's de facto customer is Congress. That's where it gets its money, so that's whom it has to please.
A revenue stream tied to a growing industry is also bondable. As with airports, electric utilities, and toll roads, a reliable revenue stream makes investors willing to buy revenue bonds, and those bonds enable large-scale projects to be paid for upfront. The FAA, like other government agencies, has no ability to issue bonds. That means large-scale facility and technology improvements can only be done in dribs and drabs out of the annual cash flow provided by Congress. Overseas ATC corporations such as Nav Canada and NATS have investment-grade bond ratings.
Now that there are lots of functioning ATC corporations, some with track records of two decades or longer, researchers have been able to review their performance. One of the first empirical studies was published in 2006 by the research firm MBS Ottawa in conjunction with U.S. and Canadian university scholars. It made before-and-after comparisons of 10 corporatized ATC providers on seven key performance indicators, including safety. In all cases, the measures were the same or better in the years following corporatization.
Two book-length academic works about the phenomenon have emerged as well. Both Managing the Skies (Ashgate), by Indiana University's Clinton Oster and William & Mary's John Strong, and Institutional Reform of Air Navigation Service Providers (Edward Elgar), by the Eno Center for Transportation's Rui Neiva, found that corporatization improved ATC services in an array of countries.
"From government agencies that used to serve their political overlords, they became independent service providers that serve the interests of their customers, the airspace users," Neiva concluded. "Commercialization has created leaner, more-focused organizations that are able to adapt more swiftly to rapidly changing operational and technological environments."
ATC corporatization also makes flying safer. In the 1950s and 1960s, the Atomic Energy Commission both promoted the use and regulated the safety of nuclear power. Recognizing that this was a conflict of interest, Congress divided it in 1974. But the FAA continues to regulate itself when it comes to the air traffic control system. The International Civil Aviation Organization in 2001 called for organizational separation between the two functions. The United States is one of the last holdouts.
The status quo leads to a conservative, low-innovation culture at the Air Traffic Organization. In 2014, I made the case in a peer-reviewed study that this stems largely from the ATO being inside the FAA's large safety-regulatory bureaucracy. There is plenty of innovation within the high-tech aerospace industry (Boeing, Honeywell, etc.). But innovators like these are regulated at arm's length by the FAA, not embedded within it.
To fix our broken ATC system, I suggest three remedies: First, separate the Air Traffic Organization from its safety regulator, so that it has the opportunity to develop a more innovative organizational culture.
Second, end dependence on the federal budget process, which subjects the ATC system to unstable annual appropriations, in favor of revenue-bond financing based on user charges paid directly to the revamped ATO.
And third, change the governance model. Today the FAA must somehow be responsive to 535 members of Congress, the senior staff of the Department of Transportation, the DOT Office of the Inspector General, the Government Accountability Office, and the Office of Management and Budget. Retired FAA officials say it's impossible to run a business when you have to report to that many different bodies with their disparate concerns. The alternative—which seems to be working well overseas—is a board of directors who represent the principal aviation stakeholders.
Long Time Coming Alas, these recommendations are not new. I've spent three decades arguing for reform, and countless researchers, political bodies, and aviation professionals have signed on to the calls for change.
Way back in 1975, a two-volume study by the "father of air traffic control," Glen A. Gilbert, suggested converting the current system into a U.S. Air Traffic Services Corporation. A 1985 study by the Air Transport Association suggested separating the ATC from the FAA. In 1993, then–Vice President Al Gore's National Performance Review found that the current organizational model was dysfunctional and proposed creation of a self-funded ATC corporation inspired by Airways New Zealand. And the Brookings Institution's Hamilton Project came out in favor of a self-funded ATC corporation in a 2008 report.
The Clinton administration came closest to producing organizational change. A 1995 reform bill was developed by a task force created by Transportation Secretary Federico Peña and supported by FAA Administrator David Hinson, but the bill never got out of the House Aviation Subcommittee. In 1997, the National Civil Aviation Review Commission (better known as the Mineta Commission) released a detailed report on reducing gridlock in the skies, which called for a separate ATC unit within the government. That in turn led to legislation in 2000 that created the Air Traffic Organization, pulling the various FAA branches that deal with ATC together under one chief operating officer. But Congress ignored the Mineta Commission's recommendation to implement user fees and revenue bonds.
In 2011, the CEO of the Business Roundtable, former Michigan Gov. John Engler, took an interest in this issue and asked me to create a working group to develop a new corporatization proposal. I recruited to the project a former FAA chief, top DOT officials, a former COO of the ATO, and several other experts. We spent most of 2012 developing a detailed plan, but when we presented it to the airlines, we got a cool reception. They knew the kind of reform we were talking about would take a major effort and weren't sure it would be worth it.
Things changed dramatically in spring 2013, when the federal budget sequester hit the FAA hard. The airlines were suddenly far more interested—and so were the air traffic controllers. Further discussions with relevant stakeholder groups led to agreement that the private, nonprofit corporation model exemplified by Nav Canada was the best starting point for the United States. That fall, Engler briefed Rep. Bill Shuster (R–Penn.), chairman of the House Transportation & Infrastructure Committee, about the concept. That set into motion the reform bills that were introduced over the last few years.
Major media outlets, from Air Transport World and Aviation Week to Bloomberg, The Economist, The Wall Street Journal, The Washington Post, and USA Today have published editorials in support of corporatizing the United States' ATC system. Why, then, has this been so hard to get done?
Milton Friedman used the phrase tyranny of the status quo to describe the resistance to change by those who benefit from established governmental practices. When their benefits are threatened, people and organizations react, regardless of the overall merits of the proposal. In this case, the opposition, from private pilots to public employee unions, dug in hard. Together, they form a politically influential coalition. (For more on these players, see "Who Benefits from the Status Quo?" on page 24.)
Stopping ATC reform meant creating a narrative that downplayed the opponents' interest in maintaining the status quo while painting a false picture of what corporatization would really mean. The master strategist in this effort was Ed Bolen, longtime head of the National Business Aviation Association (NBAA), a trade group representing business jet operators.
Back in 2007, as the FAA was considering replacing aviation taxes with ATC user fees, the NBAA had found itself embroiled in an epic battle with the airline trade group Air Transport Association (since renamed Airlines for America). The latter organization, which supported switching from ticket taxes to ATC fees, had launched an expensive media campaign depicting business jets as freeloaders. They are freeloaders—they pay a miniscule fuel tax to get the same services as airliners. But the airlines' rhetoric was over the top, and it created resentments that still simmer a decade later.
In response, the NBAA partnered with the Aircraft Owners & Pilots Association (AOPA) to create what Sourcewatch.org has termed an "astroturf front group" called the Alliance for Aviation Across America (AAAA). It recruited as early members the National Farmers Union and the League of Rural Voters. The National Association of State Aviation Officials, a protector of small-airport interests, came aboard later, as did a number of other "general aviation" (G.A.) organizations—that is, all those who fly or provide services to non-airline planes.
By 2015, the AAAA included over 5,500 individuals and organizations and Ed Bolen was its chairman. The talking points he developed were as follows: First, always call it "privatization," to mobilize public unions and their congressional allies against reform. Second, describe reform as a plot to turn over control of the ATC system to the major airlines. Third, portray the proposed ATC corporation as a for-profit entity motivated solely by a desire to bolster its bottom line, thus stoking fears that it would close down small control towers to save money. Fourth, claim that implementing ATC user fees would be equivalent to giving a private company the power to tax citizens. And fifth, describe the proposal as turning over U.S. airspace itself to private special interests, rather than just delegating the provision of a service within the public airspace.
AAAA paid for public opinion surveys in 2015 and 2017 that used loaded words, such as saying the proposal would "take" the system away from FAA and "privatize" it (which generally means selling it and possibly displacing current employees). They even suggested the corporation would be self-regulated. This yielded their desired answer: 62 percent of Americans opposed privatizing the ATC system as defined by the push-polling firm. AAAA then mobilized mayors and airport directors in small cities and rural states and organized letter-writing campaigns to members of Congress, strongly objecting to "the big airlines' takeover of the ATC system."
The current conflict began in 2015. Following a spate of informational hearings, Rep. Shuster introduced legislation in early 2016 that was approved by his committee on a party-line vote but went no further. A revised bill was introduced this year and has been more successful; the proposed legislation stands a good chance of coming up for a vote this fall.
In 2015, well before the 2016 bill was introduced, senior Democrats on the House Transportation & Infrastructure Committee had received briefings on the subject. They knew full well that the proposal involved converting the existing Air Traffic Organization into a nonprofit corporation similar to Nav Canada, not selling it to private industry or contracting out its operations to private companies. In fact, the bill Shuster introduced in 2016 created a 13-member stakeholder board on which airlines would have only four seats; general and business aviation would have three. It didn't matter. The opposition rhetoric warned of "domination by the big airlines" and asserted that the board would consist of "special interests"—in short, it echoed the Bolen narrative.
As it happens, quite a few members of Congress from both parties are private pilots. The House and Senate General Aviation caucuses thus have bipartisan membership, and opposition to reform from the G.A. community has disproportionate influence on Capitol Hill. Currently, there are 35 senators and over 200 House members in the G.A. caucuses; during the 2016 Transportation & Infrastructure Committee vote on Shuster's original corporatization bill, two Republican G.A. members joined the Democrats in voting no.
Miles to Go The AAAA campaign succeeded in creating fear, uncertainty, and doubt among its intended audience. So after the failure of the 2016 bill, I argued that the optics of our proposal were flawed. There was no hope of changing the NBAA's position. But if small-city and rural concerns and the fears of private pilots could be addressed, I hoped that fiscally conservative, limited-government members of the G.A. caucuses would be persuaded to change sides.
Substantive changes were needed. For example, in 2016, all four airline-nominated seats on the stakeholder board were to be from Airlines for America. But what about the regional airlines that provide virtually all the service to small airports? And what about airports themselves, another key stakeholder? Shuster and his people listened and revamped the proposed board structure: A seat for airports was added, and the major airlines would nominate only one of three airline board members, with the other two coming from the separate trade groups for regional and cargo airlines. The G.A. community would still get two seats.
The 2016 bill exempted noncommercial general aviation from paying ATC fees. In 2017, this was broadened to include all G.A., including air taxis and business jets. New provisions were also added to require that any proposed reductions in ATC services be reviewed (and potentially vetoed) by top Department of Transportation officials. Still other provisions increased federal oversight of the ATC corporation beyond arm's-length safety regulations. Additionally, the FAA would continue the federal airport grants program, to be paid for by scaled-back aviation excise taxes.
These provisions were discussed and negotiated with the co-chair of the House G.A. Caucus, Rep. Sam Graves (R–Mo.). They satisfied all his concerns, and he agreed to support the 2017 effort. Moreover, thanks in part to President Donald Trump's high-profile endorsement of ATC reform, House Republican leadership has made enacting the bill this year a high priority. The prospects look good for passage by the full body.
But even though G.A. interests got everything they'd asked for, this year's successful Transportation & Infrastructure Committee vote was greeted with a declaration of war. With its substantive arguments made irrelevant by the changes, AOPA offered a bizarre public explanation for its continuing refusal of support: "We have concluded that any structural and governance reforms that require protections for an important sector of users is fundamentally flawed," the trade association announced. Before long, AOPA and the other rural and G.A. opponents had returned to the Bolen talking points about "a nearly unified airline assault for control of the nation's air traffic control system."
The FAA's current authorization expires at the end of the fiscal year, September 30, and corporatization is a major component of the House bill to "reauthorize" the agency. But the floor vote was delayed until after Labor Day, and the Senate's FAA reauthorization does not include an ATC corporatization section at all. This is good news for the status quo interests, who understand that low-population and rural states have far more influence in the upper chamber.
If both bills pass before the end of the fiscal year, the issue of corporatization will have to be hashed out in a House-Senate conference committee, and the resulting legislation would need to pass muster in both chambers. An alternative is that the two bodies could enact a temporary extension of the current FAA authorization, providing more opportunity for lobbying and debate. Of course, a temporary reauthorization does nothing to fix the many problems with America's embarrassingly outdated ATC system in the meantime.
The case for air traffic control corporatization remains strong on the merits. But those who want to protect what they have may yet prevail. The tyranny of the status quo is strong indeed.
The post Your Flight Is Delayed appeared first on Reason.com.
]]>Every time you board a plane, you are putting yourself at the mercy of an inefficient system guided by 1930s radio beacons, 1950s radar surveillance, and paper ticker-tape flight tracking. The U.S. air traffic control (ATC) system is the world's largest, but it seriously lags behind the systems of other developed nations like Australia, the U.K., Canada, and Germany. As a result, American flights are less convenient, less efficient, and less safe.
In the cover story of this month's issue of Reason, I explain how the United States is the last major country to still fund ATC out of taxes, to embed ATC in its air-safety regulator, and to not charge aircraft operators directly for the ATC services they use.
The first time I wrote about these problems—and suggested a solution—for Reason was in 1969. The best option, then as now, is to "corporatize" our lagging ATC system and liberate it from the cautious, stodgy Federal Aviation Administration. In the last 30 years, over 60 countries have spun off ATC into self-supporting companies; these companies are introducing advanced technologies that make our air traffic controllers green with envy.
A very solid ATC corporation measure was passed by the House Transportation Committee late in June, and is now supported by all major airlines, pilots' unions, and the air traffic controllers' union. Despite a major propaganda campaign against it, the bill is expected to reach the House floor in early October. It's best to be prepared to be disappointed, yet again, by vicious interest-group politics and the powerful forces who benefit from of the status quo. But after five decades of work, real reform may be close at hand.
The post Will Congress Fix Air Traffic Control at Long Last? appeared first on Reason.com.
]]>"We live in a modern age and yet our air traffic control system is stuck painfully in the past," President Donald Trump said at a White House event announcing his plan to modernize America's aging air traffic control system. "The FAA has been trying to upgrade our nation's air traffic control system for a long period of years, but after billions and billions of tax dollars spent and many years of delays, we're still stuck with an ancient, broken, antiquated, horrible system that doesn't work."
Trump is largely throwing his support behind Rep. Bill Shuster's (R-PA) air traffic control reform proposal. Shuster's bill, which passed a House committee last year but didn't make it to the House floor, would convert the air traffic system from today's taxpayer-funded organization run by the Federal Aviation Administration (FAA) into a self-funded, nonprofit corporation where all aviation stakeholders — passengers, airlines, airports, controllers, and pilots — would be represented on a board of directors.
This concept has the bipartisan support of numerous former leaders of the FAA and Department of Transportation, as well as most major airlines, the air traffic controllers' union, and business groups. The Clinton administration pushed a similar plan in the 1990s.
The current version grew out of the 2013 federal budget standoff and sequester, which saw furloughs of air traffic controllers and the near shut-down of 149 smaller air traffic control towers. This highlighted several flaws in the system, as more people recognized air traffic control is a fast-moving, high-tech service business that is a poor fit for a slow-moving government regulatory agency whose funding is subject to the political whims of Congress.
The US air traffic system is the world's largest, but technologically it severely lags behind other countries that have already implemented digital messaging, GPS flight tracking, and newer alternatives to the 1960s-era systems still found in US air traffic facilities.
"At a time when every passenger has GPS technology in their pockets, our air traffic control system still runs on radar and ground-based radio systems," Trump said.
The world's second-largest air traffic system, Nav Canada, was "corporatized" 20 years ago. Over 60 countries, including the United Kingdom, Australia, New Zealand, Germany, Italy, Switzerland, and Spain, have self-supporting air traffic control corporations.
This plan would shift air traffic control funding so that it is paid for, not by taxes, but by aircraft operators paying for the services received. A stream of user payments is more reliable than tax funding. It also enables air traffic corporations to issue long-term revenue bonds to pay for modernization projects, which is why countries like Canada and the UK are far ahead of the US.
These countries already use advanced tracking and communications technology that our controllers can only dream about. Thanks to FAA's cumbersome budgeting and upgrade process, this technology will continue to be implemented in the US in dribs and drabs over the next 15 years.
The proposal would also improve air traffic safety. Since 2001, international aviation law has called for arm's length separation between air safety regulators and the providers of air traffic services. Nearly all countries have made this change, but the United States has not. The FAA both provides air traffic services and regulates them. Finding and reporting problems requires the FAA to turn itself in — a clear, built-in conflict of interest.
For pilots and passengers, better oversight and upgraded air traffic control technology would mean shorter lines for planes waiting to take off, more direct routes between cities, and fewer delays for planes waiting to land. That would result in shorter trip times, less fuel used and fewer emissions.
In short, nonprofit air traffic corporations have a global track record of delivering increased air safety and better value for passengers, airports and aircraft operators. The time for U.S. air traffic control reform has arrived.
The post Time to Get U.S. Air Traffic Control Out of the 1960s appeared first on Reason.com.
]]>On March 24, 2016, Tibor Machan, former editor of reason and co-founder of Reason Foundation, died peacefully in his sleep, surrounded by his family, after a short illness. Here, his two co-founders memorialize his life and contributions to reason.
Manny Klausner
I first came in contact with Tibor in 1969, after listening to his radio show on KPFK in Los Angeles. He had a 15-minute weekly commentary on this left-wing Pacifica-affiliated station, at a time when the left was somewhat more tolerant of diverse views. He impressed me with his coherent and insightful observations about liberty, delivered in his robust voice. I contacted Tibor, and we quickly became friends.
At the time, I was a litigation lawyer at a mid-sized Los Angeles law firm. I had become a libertarian at New York University (NYU) Law School in the early 1960s, after studying with Sylvester Petro and Ludwig von Mises (who taught at the NYU Graduate School of Business) and becoming acquainted with Murray Rothbard, who was then working on his magnum opus, Man, Economy, and State.
There was an embryonic libertarian movement, barely visible to the general public. During that period, there were several small-circulation libertarian magazines, mostly short-lived. Tibor asked me if I'd like to come to Santa Barbara to meet Bob Poole and talk about taking over a magazine called reason.
We were all young and highly motivated, and we were all libertarians. Tibor and Bob were more influenced by Ayn Rand, while Mises and Rothbard were my mentors.
Tibor gave me excerpts from Atlas Shrugged to read. Although he was a devoted admirer of her work, Tibor had been "excommunicated" by Rand in the 1960s for a letter he sent to her to clarify a question he had. But he kept in contact with Nathaniel Branden, who actively marketed Rand's work and developed an international movement for her philosophy of Objectivism.
Tibor arranged to interview Branden for reason in 1971—a significant journalistic achievement because it was Branden's first public statement after his dramatic split with Rand in 1968. We vigorously promoted the interview, and this led to a major increase in new subscribers for reason.
During that time, no one had any sense of "the libertarian moment." Rather, it wasn't unusual to be referred to as a libertine—and I was once even mistakenly introduced as a librarian.
Tibor, Bob, and I made a unique team. As a philosopher, a systems engineer, and a lawyer, we worked well together from our cross-disciplinary backgrounds.
Tibor was kind and generous of spirit, and he thoroughly enjoyed ideas. He was a prolific writer and an energetic speaker—and although English was not his native language, he was remarkably eloquent. He had an international network of friends, professional colleagues, former students, and admirers—and an exceptional family. He leaves an impressive legacy of work. Tibor's keen mind, his warmth, his passion for ideas and for life, and his friendship will be missed.
Robert W. Poole Jr.
Tibor was born in Budapest in 1939. He was such an individualist that he already loathed Communism as a young teenager. For his own safety, his mother decided to have him smuggled out of Hungary at age 14. Making his way to the United States, he joined the Air Force rather than waiting to be drafted into the Army. There he discovered the novels of Ayn Rand, which led him to attend college at Claremont McKenna College, graduate school at New York University, and finally obtain a Ph.D in philosophy at University of California, Santa Barbara (UCSB) in 1971.
reason founder Lanny Friedlander, for whom I had written an article in late 1969, told me to look up Tibor (who was also writing for reason at the time) when he learned I was about to move to Santa Barbara to take up a new job. Tibor and I became friends, and during 1970 brainstormed the idea of buying reason from Lanny and putting it out on a businesslike basis. I have fond memories of long evenings at Tibor's hillside home, discussing philosophy and imagining what kind of impact a serious libertarian magazine could have. (Yes, in those days a graduate student at UCSB could afford to buy a house in Santa Barbara!)
Tibor had a network of contacts who we hoped would put some money into our startup, and he contacted them while I drafted a business plan. Always entrepreneurial, Tibor obtained a grant to put on a political philosophy conference at the University of Southern California, and the travel budget included funds to fly Lanny from Boston to California so we could negotiate the deal. By that point, Tibor had brought young libertarian attorney Manny Klausner into our fledgling partnership, Reason Enterprises, and Manny worked out all the legal details.
From January 1971 through June 1978 we published every month, like clockwork, but by 1977 it was clear that for reason to have serious impact, we needed full-time paid staff and a serious budget for growth. Tibor, Manny, and I developed the plan for what became Reason Foundation. Thanks to an angel investor, we had enough funds to make the transition, and we opened our doors in downtown Santa Barbara in July 1978.
Tibor was amazingly prolific as a scholar and writer. Among his numerous books were The Libertarian Alternative (1974), Human Rights and Human Liberties (1975), Individuals and their Rights (1989), Capitalism and Individualism (1990), Classical Individualism (1998), and The Promise of Liberty (2009). This is in addition to numerous journal articles and hundreds of popular articles, op-ed pieces, and letters to the editor. I can still recall being at Tibor's house in Santa Barbara and seeing him—in reaction to a news item—dashing to his typewriter to produce a letter or an op-ed piece.
The last time I saw Tibor was at Reason Weekend in Santa Barbara about a year ago. For the Friday night after-dinner event, Editor in Chief Matt Welch interviewed Tibor, Manny, and me on stage, reminiscing about reason's long history. Tibor also devoted several hours to meeting with a board committee to discuss ways of enhancing the moral/philosophical perspectives in Reason Foundation's efforts. I had no idea that would be the last time we saw him. Several months ago we talked by phone, and I told him about early planning for reason's 50th anniversary celebrations in 2018. We joked about him needing to take good care of himself so that he could be part of those events. Sadly, that was not to be.
The post RIP Tibor Machan appeared first on Reason.com.
]]>On March 24, Tibor Machan—co-founder of Reason Foundation—died peacefully in his sleep, surrounded by his children, after a short illness. The libertarian community has lost one of its most prolific writers and thinkers.
Tibor was born in Budapest in 1939. He was such an individualist, that he already loathed Communism as a young teenager. For his own safety, his mother decided to have him smuggled out of Hungary at age 14. He made his way to the United States, and joined the Air Force rather than waiting to be drafted into the Army. There he discovered the novels of Ayn Rand, which led him to attend college at Claremont McKenna College, graduate school at NYU, and obtain a PhD in philosophy at UC Santa Barbara in 1971.
Reason magazine founder Lanny Friedlander, for whom I had just written an article in late 1969, told me to look up Tibor (who was also writing for Reason) when he learned I was about to move to Santa Barbara to take up a new job. Tibor and I became friends, and during 1970 brainstormed the idea of buying Reason from Lanny and putting it on a businesslike basis. I have fond memories of long evenings at Tibor's hillside home, discussing philosophy and imagining what kind of impact a serious libertarian magazine could have. (Yes, in those days a graduate student at UCSB could afford to buy a house in Santa Barbara!)
Tibor had a network of contacts whom we hoped would put some money into our start-up, and he contacted them while I drafted a business plan. Always entrepreneurial, Tibor obtained a grant to put on a political philosophy conference at USC, and the travel budget included funds to fly Lanny from Boston to California so we could negotiate the deal. By that point, Tibor had brought young libertarian attorney Manny Klausner into our fledgling partnership, Reason Enterprises, and Manny worked out all the legal details.
From January 1971 through June 1978 we published every month, like clockwork, but by 1977 it was clear that for Reason to have serious impact, we needed full-time paid staff and a serious budget for growth. Tibor, Manny, and I developed the plan for what became the Reason Foundation. Thanks to an angel investor, we had enough funds to make the transition, and we opened our doors in downtown Santa Barbara in July 1978.
Tibor remained on the board until the mid-1980s.
During the Foundation's early years, he secured funding annual summer research seminars in political philosophy, bringing a dozen or more scholars to Santa Barbara. Thereafter, he returned to a full-time academic career teaching philosophy.
He and I had conflicting views about what Reason Foundation should become: He wanted a more academic, philosophical focus, while I wanted a public policy think tank. Our growing board preferred the latter, and Tibor left the board. He held long-term faculty positions at SUNY-Fredonia, Auburn University, and until recently at Chapman University, where he was the R.C Hoiles Chair of Business Ethics & Free Enterprise in the School of Business & Economics.
Tibor was amazingly prolific as a scholar and writer. Among his numerous books were The Libertarian Alternative (1974), Human Rights and Human Liberties (1975), Individuals and their Rights (1989), Capitalism and Individualism (1990), Classical Individualism (1998), and The Promise of Liberty (2009). This is in addition to numerous journal articles and hundreds of popular articles, op-ed pieces, and letters to the editor. I can still recall being at Tibor's house in Santa Barbara and seeing him—in reaction to a news item—dashing to his typewriter to produce a letter or an op-ed piece.
The last time I saw Tibor was at Reason Weekend in Santa Barbara, March 2015.
For the Friday night after-dinner event, Matt Welch interviewed Tibor, Manny, and me on stage, reminiscing about Reason's long history. Tibor also devoted several hours to meeting with a board committee to discuss ways of enhancing the moral/philosophical perspectives in Reason Foundation's efforts. I had no idea that would be the last time we saw him. Several months ago we talked by phone, and I told him about early planning for Reason's 50th anniversary celebrations in 2018. We joked about him needing to take good care of himself so that he could be part of those events. Sadly, that was not to be.
Read Reason.com Editor in Chief Nick Gillespie's rememberance of Machan here.
The post Bob Poole Remembers Tibor Machan, A Fellow Founding Co-Editor of Reason Magazine appeared first on Reason.com.
]]>Editor's Note: On February 10, 2016, Reason Foundation Director of Transportation Policy Robert Poole testified before the House Committee on Transportation and Infrastructure's hearing "Review of Air Traffic Control Reform Proposals." Here are Poole's remarks.
Chairman Shuster, Ranking Member DeFazio, and fellow Members: my name is Robert Poole, Director of Transportation Policy at Reason Foundation, a nonprofit think tank with offices in Los Angeles and Washington, DC. I received my engineering degrees from MIT and began my career in the aerospace industry, before moving into the think tank world.
I have been following the performance of the U.S. air traffic control (ATC) system since the late 1970s, and have written many reports and journal articles on the subject, including for the Transportation Research Board's peer-reviewed journal Transportation Research Record as well as The Journal of Air Traffic Control. Over the years I have visited corporatized air navigation service providers including Airways New Zealand, NATS, and Nav Canada, and have given presentations at conferences hosted by ATC organizations such as Air Traffic Control Association (ATCA) and the Civil Air Navigation Services Organization (CANSO). I am a member of the GAO's National Aviation Studies Advisory Panel, and during the last several years served on the ATC reform working groups of both the Business Roundtable and the Eno Center.
We are here today because there is a growing consensus that the U.S. air traffic control system is not performing as well as it should. While it remains the world's largest and one of the world's safest, it "no longer has the most modern equipment, the most efficient airplane routings, or the best technology of any of the world's air traffic control providers." Those are not my words: they are the conclusion of all three former Chief Operating Officers of the FAA's Air Traffic Organization, as well as three former Secretaries of Transportation. We have lost our global leadership position in air traffic control.
The question before Congress is: What is the best approach to reform the provision of air traffic control in the United States? Before I give you my answer, let me provide some context.
The Global ATC Corporatization Trend
In 1987 the government of New Zealand shifted its ATC system out of the transport ministry and converted it into a government-owned corporation, paid directly by its aviation users. This was one of a series of government-wide reforms that included the corporatization of a number of government departments that provided direct services to various customers. The good performance of Airways New Zealand after it was corporatized inspired a wave of similar actions during the 1990s—including the creation of Airservices Australia, Nav Canada, and DFS (in Germany). Airways NZ was also the inspiration for Vice President Gore's reinventing government proposal for U.S. air traffic control, which resulted in legislation to separate our ATC system from the FAA as a government corporation dubbed USATS—U.S. Air Traffic Services. (Needless to say, that legislation was not enacted.)
In the decades that followed, more than 60 countries have corporatized their ATC systems, and some of those new air navigation services providers (ANSPs) created an international organization called CANSO—a counterpart of ACI for airports and IATA for airlines. Of the 87 full members of CANSO as of last year, 51 are commercialized, defined as being self-supporting from fees and charges paid directly to them by their customers and regulated at arm's length by the government's air safety regulator. In 2001 ICAO called for the organizational separation of air safety regulation from ATC service provision, to increase transparency and avert conflicts of interest between regulators and providers.
Reviewing the nearly three decades of ATC corporatization, three common features apply to those that are commercialized:
There are three different organizational forms among those 51 self-supporting ANSPs:
Those three alternatives are also found in various public utilities in the United States. In electricity, the for-profit/regulated model is most common, but we also have government utilities (e.g., the Los Angeles Dept. of Water & Power) and many hundreds of electric and telephone user co-ops. These three alternatives offer three different ways to deal with the monopoly status of those utilities. In the case of for-profit companies, external rate regulation is the standard model. Government utilities are presumed (not always accurately) to be operating in the public interest and have no external rate regulation. User co-ops are self-regulated, since the governing board consists of rate-payers and sometimes other stakeholders.
The very first (rudimentary) U.S. air traffic control was provided for several years by an airline user co-op called Aeronautical Radio, Inc. (ARINC). It operated that service until the government's Commerce Department took it over in 1936. ARINC remained in business providing air-ground communications for airlines and developing new avionics. After World War II, it also helped start ATC user co-ops for Cuba (RACSA) and Mexico (RAMSA), both of which were later taken over by their governments. Nav Canada is the largest and most successful ANSP organized as a stakeholder co-op (although it does not use that term).
ATC Corporations' Track Records
There have been about a dozen independent studies of the performance of corporatized ANSPs, during the past decade. The Government Accountability Office carried out a review of five corporatized ANSPs in 2005, finding that after the change, safety either improved or remained the same; that costs were reduced and efficiency increased, and that investments were made in new technology. The MBS Ottawa study, with support from three universities, compared before/after performance of ANSPs on seven key performance measures, including safety. Across the board, performance was either the same or improved. Academic researchers Oster and Strong published the first book on ATC corporatizations in 2007, generally finding them to be successful and drawing lessons for reform of the U.S. ATC system. The same authors did a report on the potential for U.S. ATC corporatization for the IBM Center for the Business of Government. More recently, the Congressional Research Service provided a good overview of issues involved in ATC corporatization, drawing on the track record from other countries. The MITRE Corporation published an assessment of arm's-length safety regulation of ANSPs in six countries and found that it worked well and that in no case would either the ANSP or the safety regulator want to return to the prior situation. And a second book-length study, which also found positive results from corporatization, was published in 2015.
The U.S. Air Traffic Control Problem
Broadly speaking, the problem facing the FAA's Air Traffic Organization is three-fold: inadequate and uncertain funding, a flawed governance model, and a status-quo-oriented organizational culture. These problems are inter-related, and in my study commissioned by the Hudson Institute, I concluded that the most serious underlying problem is the organizational culture. In that study, I compared the performance of the ATO and corporatized ANSPs in dealing with seven disruptive ATC innovations. In each case, the other ANSPs had acted far more like high-tech service businesses than our own ATO.
The question I then set out to answer was "why." Reviewing the case studies and interviewing ATC experts within and outside of the ATO, I identified five reasons for the ATO's status-quo culture:
All five factors were verified by an extensive set of peer reviewers convened by the Hudson Institute to review the draft of this report.
I concluded that the keys to fixing these problems were the following:
These three features are best represented by the user co-op model of corporatization, of which our best example is Nav Canada.
Evaluating the Reform Proposals
This committee is faced with two reform proposals. One proposal, from Chairman Shuster, is to convert the FAA's Air Traffic Organization into a federally chartered, nonprofit, self-funded ANSP with a stakeholder board. Ranking Member DeFazio's alternative would exempt the Trust Fund from sequestration and annual appropriations, as well as mandating further FAA procurement and personal reforms. While these reforms are well-intended, experience suggests they will not do the job.
The ATC Corporation proposal meets all three of the criteria outlined above, and is consistent with global ATC best practice as it has evolved over the last three decades. For reasons I have explained, it would address all three problems plaguing the Air Traffic Organization: funding, governance, and culture.
The DeFazio alternative, by contrast, would keep air traffic control and air safety regulation within the same organization. There are several problems with doing this:
A second problem concerns the funding change. The ATC Corporation would be paid for directly by its customers, like other utilities. That would create a customer/provider nexus that refocuses the organization's attention on serving its aviation customers. By contrast, the DeFazio alternative would retain funding via excise taxes paid to the government and parceled out to the ATO from the Trust Fund. Since these funds would still be federal tax money, all the existing federal oversight would remain, since the funds would still be taxpayers' money. The current set of ATC overseers includes OMB, GAO, the DOT Inspector General, the FAA Administrator, the DOT Secretary, and 535 Members of Congress. No one can manage a high-tech service business in the interest of its customers while having to report to that many overseers. Moreover, major investments in the ATC system would still have to be paid for out of annual cash flow, rather than using long- term financing via the bond market, as corporatized ANSPs (and U.S. airports) do.
Finally, I am dubious about further attempts at personnel and procurement reform, after reading two decades of GAO and Inspector General reports on the failure of previous efforts along these lines. We know that previous reforms of this kind have failed to address the underlying culture problem, while we have seen the transformation in country after country of former inwardly focused transport bureaucracies into customer-focused ATC service business. My engineering training tells me to go with what has been demonstrated to work, not with what has been demonstrated to fail.
Closing Comments
There are several factors that make the United States unique among countries when it comes to air traffic control. It has by far the largest airspace jurisdiction and the highest level of flight activity, both commercial and non-commercial. It has a larger and more diversified general aviation community than any other country, which is valuable not only for recreation but for providing transportation access to numerous rural areas and small towns not served by commercial airlines. The United States also has the world's largest aerospace and avionics industries, with potential that is likely not fully tapped on a global basis, because our ATC system has lagged behind others in modernization.
These factors all need to be taken into account in considering corporatization. In terms of scale, two points are not fully appreciated. First, the ATO's current system is already at the scale needed for our vast airspace and high levels of flight activity. Changing the funding and governance of the ATO is not creating a new ATC system from scratch; it is simply providing a better way to pay for and manage the system that already exists. Second, there are significant economies of scale in ATC, such that the airspace with the highest level of flight activity can spread fixed costs over a larger customer base, meaning lower unit costs. The current ATO's productivity level is above average, but that of Nav Canada is significantly higher, despite Nav Canada's smaller airspace and much lower overall flight activity. This suggests that better funding and management could and should lead to lower unit costs, thanks to increased productivity. Any transformation of the ATO must also take seriously the valuable roles played by business and commercial aviation. Imposing significantly higher costs on those users, or not including them as stakeholders in the governance model, would be very ill-advised.
The promise of NextGen has yet to be realized in terms of significant improvements in routings, time saving, fuel savings, better performance despite bad weather, etc. To be sure, the NextGen Advisory Committee has demonstrated that a diverse group of stakeholders can work together to set near-term priorities. But the context for NAC's activities has been the need to perform triage—to decide which few bits and pieces of NextGen can be implemented given recent years' reductions in capital investment budgets, stop-and-start funding, mismatches in the timing of ATC system investments and aircraft equipage, etc. A self-funded ANSP focused on meeting its customers' needs offers the best hope of faster implementation of all those elements of NextGen that truly have sound business cases.
My assessment is that the ATC Corporation proposal meets these tests. It provides for arm's-length safety regulation, making possible the development of an innovative corporate culture. It would free the ATO from the constraints of the federal budget, with a reliable and bondable revenue stream at a level that makes sense from both an operations and a capital modernization standpoint. It provides for a carefully balanced governing board of aviation stakeholders, enabling serious focus on serving its aviation customers. It provides strong protections for current and future employees. It would exempt—by statute—direct user fees for piston GA and non-commercial turbine aircraft. It provides an appeal process for fees that a user considers unwarranted. And it includes mandates for continued access to the national airspace system for rural areas and small communities.
What impresses me most of all is who has declared in favor of this reform—aviation professionals who know the system inside and out. That includes the controllers and it includes all three former Chief Operating Officers of the ATO. Each of them tried very hard to run the ATO like a business. And each concluded that this was simply not possible given the constraints of being trapped inside a large, tax-funded bureaucracy. I take their judgments very seriously, and I hope you will, too.
The post How to Convert the FAA's Air Traffic Control Into a Non-Profit appeared first on Reason.com.
]]>Most of us take Interstate highways for granted. If you're under 30, they have always simply been there: the long dull stretches of open road on family road trips, the clogged arteries of your daily commute. But prior to the 1960s, highways as we know them today didn't exist. There were hardly any long-distance freeways without cross traffic or with safe separation between opposing lanes. Most commuting was done on boulevards with stoplights every half mile or so. The Interstates brought faster, safer travel by car and truck to all of America. Today, these 47,000 miles of highway handle an amazing volume of traffic. A quarter of all vehicle-miles traveled take place on Interstates, even though they account for just 2.5 percent of all U.S. highway lane-miles.
Unfortunately, we can't assume the Interstates will always be there. Even well-designed and well-maintained highways eventually wear out and need to be rebuilt. The Interstates were conceived for a 50-year service life if properly maintained (and not all of them have been). Because nearly all were built between 1960 and 1990, much of the system will need rebuilding over the next few decades. What's more, many Interstate corridors, both rural and urban, are congested today and will be more congested in the future. Road pricing could help, but as the economy and population keep growing, our transportation infrastructure must grow along with it: We're going to need more lanes.
The huge problem that our politicians have not yet taken seriously is how to pay for what amounts to a second-generation Interstate system. Last year, on behalf of Reason Foundation—the nonprofit that publishes reason—I carried out a detailed study to estimate the cost of rebuilding and selectively widening the Interstate system. For each of the 50 states and the District of Columbia, I used the best available estimates of the cost per lane-mile to reconstruct existing Interstate lanes. These calculations took into account the different types of terrain in each state (flat, hilly, or mountainous) as well as construction cost differences among the states. Then I used conservative state-specific projections of the growth rates of car and truck travel to figure out which Interstates would need additional lanes, in which decade they would need them, and how many lanes they would need. This included adding truck-only lanes on selected Interstates with very high truck volumes over the next 40 years.
A project this massive turned out to cost $983 billion. That figure is the net present value of all the construction projects that would need to occur between 2020 and 2040, in 2010 dollars. In round numbers, we're talking about a trillion dollars. How on Earth are we going to pay for that?
Those with long memories assume the feds will pay. After all, they paid the first time around, didn't they? But that's a pipe dream. The current debate in Washington, D.C., is over how to bail out the federal Highway Trust Fund, which is nearly out of money, not the best way to spend an additional trillion dollars. The Trust Fund until recently was supported solely by highway user taxes—primarily, federal taxes on each gallon of gasoline and diesel fuel sold. But even if Congress had the political will to enact a large increase in those fuel taxes, powerful interest groups would insist that any revenues be divided up among scores of existing federal highway and transit programs (which include bike paths, sidewalks, and recreational trails), leaving only a fraction for a trillion-dollar Interstate makeover. If we're ever going to rebuild and modernize the Interstates, we need to come up with a new way to pay for it.
How We Got Into This Mess
From the earliest years of the United States, the role of the federal government in building highways (and making other "internal improvements") was a subject of controversy. The Constitution called for a postal system and "post roads," but such early presidents as Thomas Jefferson, James Madison, and Andrew Jackson did not interpret this as giving Congress the power to build roads or canals and vetoed bills to do such things. The one exception was Jefferson's approval of a bill to fund a "national road" (as a post road) to open up the Northwest Territories. Aside from that exception, 19th century highways were largely developed by private businesses and paid for with toll revenues.
By the 1890s, bicyclists and farmers had started working together to call for paved roads linking the countryside to cities. The resulting Good Roads Movement found an ally in the Department of Agriculture, which got money from Congress in 1893 to create an Office of Road Inquiry to research the extent of paved roadways already in existence. In 1896, the Post Office launched a new service called Rural Free Delivery so that farmers wouldn't have to travel into town to pick up their mail at a post office. There were 383 such routes in operation by 1899. Soon, the Post Office became an advocate of federal money to pave these routes. A number of states began establishing highway departments, and the now-expanded Office of Public Roads provided technical advice to these new agencies on pavement and funding.
By 1915, a joint congressional committee on federal aid for post roads proposed a new federal program, which passed the following year. It provided modest sums for paving selected post roads, to be matched 100 percent by state highway departments. With that as a carrot, state legislatures began creating highway funding programs. Oregon was the first to implement a per-gallon tax on gasoline, as a kind of user fee to pay for road building, in 1919. All 48 states had enacted motor fuel taxes by 1929, nearly all of them dedicated to highways.
But as tax revenues shrank during the Great Depression, the U.S. Treasury Department was forced to scrounge for funds. The Treasury noticed that state gas tax revenues were holding up well and pointed this out. Congress responded by using the Revenue Act of 1932 to impose a 1-cent-per-gallon tax on motor fuel, but as a general federal revenue source not tied to road building. The Bureau of Public Roads (BPR) continued to make modest grants for post roads, but complaints that many states were diverting their gas tax revenues to non-highway uses led to a law requiring the BPR to withhold post road money from states that diverted highway user taxes. After World War II, Congress increased the federal gas tax to 2 cents per gallon to help pay for the Korean War.
During the 1920s and '30s, a number of toll bridges were financed and built around the country, mostly by newly created public authorities such as the Triborough Bridge & Tunnel Authority in New York City, although some were investor-owned projects (e.g., most of the toll bridges in the San Francisco Bay Area other than the Golden Gate Bridge). The first "superhighway" of the 20th century was developed by the newly created Pennsylvania Turnpike Authority. Unlike old-fashioned highways, the Turnpike was built to much higher standards. It featured two lanes in each direction separated by a wide median; it had shallower grades, many tunnels, and banked curves enabling higher speeds; and it required no stops anywhere along its route. The first 160-mile segment, connecting Pittsburgh and Harrisburg, opened in 1940 and was a huge success. People were amazed that the trip could now be made in just two and a half hours, compared with the six hours it took on two-lane U.S. 30.
After the war, superhighway turnpikes became all the rage, with similar tolled highways built in Connecticut, Massachusetts, Maine, New Hampshire, New York, New Jersey, Ohio, Florida, Oklahoma, Kansas, and elsewhere. Those turnpikes were either in operation or under construction by the time Congress started debating a new federal superhighway program. On taking office in 1953, President Eisenhower made this a top priority. He appointed the Clay Committee, which called for a toll-financed system like the emerging state turnpikes, but the BPR and many in Congress strongly opposed tolls—partly on ideological grounds and partly because smaller populations in the South and West made them doubtful that toll revenues there would be sufficient.
The eventual result was the Federal Aid Highway Act of 1956. It authorized the creation of a 41,000-mile system funded by a 3-cent-per-gallon federal gas tax (and another on diesel fuel). The revenues would be deposited in a newly created Highway Trust Fund, to be used only for building the Interstates. For states to get the money, they would have to put up a 10 percent match from their highway budgets. The system was expected to be completed within 15 years, and the taxes would then end.
Once Congress got used to allocating large sums of dedicated revenues for state road building every year, however, the program morphed from temporary to permanent.
'Highway' Funds
It took a lot longer than expected to complete the planned Interstate system, partly because Congress had added urban Interstates to the 1956 bill to win the support of mayors and urban members of Congress. But those huge highways cutting through existing neighborhoods prompted freeway revolts in many cities, which led to some links not being constructed and much higher costs for the ones that did get built. Congress increased the federal gas tax to 4 cents per gallon in 1959 and has routinely authorized the tax's continuation each time it was set to expire.
At each reauthorization, Congress came up with additional uses for the money: state highways linked to the Interstates, maintenance as well as construction funds, and facilities to enable buses to use urban Interstates (bus lanes, park and ride lots, etc.). In 1973, Congress allowed states to veto urban Interstate projects and build mass transit systems instead, though they would have to use federal general funds (since the gas taxes were still restricted to highway use). In 1982, the floodgates opened for spending highway funds on public transit. Highway advocates and Transportation Secretary Drew Lewis wanted to double the gas tax, but President Ronald Reagan said he would veto such a bill. Once again, urban mayors came to the rescue, persuading their members to support the legislation if 20 percent of the 5-cent-per-gallon increase was dedicated to mass transit. The revised bill passed and Reagan signed it.
Each successive reauthorization of the program since 1982 has expanded it further, eviscerating the original users-pay/users-benefit principle by spending "highway user tax revenue" on a large array of other purposes: transit capital and operating costs, sidewalks (Safe Routes to School), bike lanes (Complete Streets), recreational trails, landscaping, highway safety grants, environmental mitigation, historic preservation, etc. This all-things-to-all-people approach enables members of Congress to get credit for funding things that appeal to many constituent groups. But it is also very likely part of the reason voters overwhelmingly oppose any further increases to the federal gas tax, which has remained unchanged at 18.4 cents per gallon since the 1991 reauthorization act. Voters grumble about chronic congestion and potholed roads but have very little faith that giving the feds more money will do anything meaningful to improve their travel.
Back to Tolls?
Gridlock in Congress over the Highway Trust Fund and a gas tax increase makes it urgent to consider alternative approaches to pay for the trillion-dollar Interstate reconstruction and widening program. Topping the list is reviving a version of the original Pennsylvania Turnpike model: financing the program via toll revenues.
Here the word financing has a very particular meaning. Most highways today are "funded" out of annual tax revenues. That's different from just about all other major infrastructure, including airports, electric utilities, pipelines, railroads, and seaports. Projects like those are financed with long-term revenue bonds issued up front to cover a large majority of the capital costs of new or rebuilt facilities. That means the facilities are built when they are needed, instead of decades later, with users paying back the bonds over time as they use and benefit from the improved infrastructure. It's similar to financing the purchase of a new home by taking out a mortgage.
Would this idea work for Interstates? I assessed the financial feasibility of that strategy in my 2013 Reason Foundation study. Assuming a baseline toll rate of 3.5 cents per mile for cars and 14 cents per mile for heavy trucks, I used the same state-by-state traffic projections relied on for the widening analysis to estimate toll revenues over a 35-year period. To avoid repeating a mistake made with gas taxes, I assumed annual inflation adjustments based on the Consumer Price Index. The results were surprisingly positive. Those baseline toll rates would be enough to pay for the capital, operating, and maintenance costs of a modernized Interstate system in nearly two-thirds of the states. Somewhat higher rates would be needed in high-cost states like California and New York. In the end, only six states with high construction costs due to mountainous terrain and low revenue estimates due to lighter traffic were determined not to be toll feasible, including Alaska, Montana, and Vermont.
Given these results, why the decision to reject toll financing back in 1956? The answer is that earlier studies happened before the huge population migrations to the South and West over the past 50 years. America's commercial and industrial focus is no longer just the Northeast and the Midwest. Sunbelt metro areas such as Atlanta, Dallas, Houston, Las Vegas, Los Angeles, Miami, Phoenix, San Diego, San Francisco/Silicon Valley, and Seattle are now major players, rivaling Boston, Chicago, Philadelphia, and New York. They are also where the larger share of growth is expected over the next 50 years. Those demographic and economic realities explain my much more optimistic assessment of Interstate toll feasibility. Toll financing requires heavy traffic to support it.
There is also an important political implication of these findings. All but six states could finance Interstate modernization on their own, without federal funding. Few people realize that although federal gas taxes paid for 90 percent of the initial construction costs, these highways are owned by the states and operated by state Transportation departments. Since Congress has no realistic strategy for coming up with the trillion dollars an Interstate modernization program would require, states are going to need to step up to the plate.
There's only one obstacle to states taking on this responsibility. The original 1956 legislation still prohibits tolls on "existing" highway lanes. But it's perfectly legal for states to (1) convert carpool lanes to express toll lanes, and (2) add tolled lanes to the existing free lanes on Interstates.
In 1998, Congress enacted a pilot program to test tolled Interstate reconstruction. The law permits three states to each rebuild one Interstate highway using toll financing. Missouri, North Carolina, and Virginia won the three slots, but none has been able to gather enough legislative or public support to implement its project. North Carolina, for example, decided that Interstate 95 was its most-urgent candidate for reconstruction and widening. But people who live near I-95 objected strenuously to being singled out to pay tolls when their fellow citizens in, say, Charlotte would be able to use Interstate 77 for free. Virginia, after a similar backlash, proposed charging tolls only at the border with North Carolina, which would exempt all local users of I-95 from paying tolls. However, this would reduce expected revenues to below the amount needed to reconstruct the highway.
The trucking industry has been the primary opponent of expanded use of tolling on Interstates. It has some valid reasons to be concerned. Several of the states that applied for slots in the pilot program were intending to charge tolls far in excess of what would be required to reconstruct the single Interstate authorized under the program. Pennsylvania was rejected twice because it was clear its proposed tolling of Interstate 80 was intended not just to refurbish that one highway but also to generate about half a billion dollars per year to bail out transit systems across the state. Other highway user groups, such as AAA, have also mounted opposition to Interstate tolling. AAA's New York division has litigation in the works against the Port Authority of New York and New Jersey, for example, over the agency's use of toll revenues to rebuild the World Trade Center.
Better Tolls
Over the years, highway user groups have raised a number of objections to increased use of tolling. The trucking industry's Alliance for Toll-Free Interstates (ATFI) equates tolling with long lines at toll plazas, vehicle emissions, and accidents. But any new tolling launched today would use all-electronic tolling, which doesn't require booths or plazas. As with the growing number of cashless toll roads already in use today, all tolling would take place at highway speed via overhead gantries, with most paying via dashboard transponders (like E-ZPass) and the rest being billed based on a video image of their license plates. ATFI also claims toll collection costs would consume 20 percent to 30 percent of toll revenues, which was true of old-fashioned cash tolling. But electronic systems designed from scratch could bring costs down to about 5 percent of revenues.
Opponents do have four legitimate concerns, which any feasible Interstate tolling regime would have to address:
1. There would be no value added for users if tolls were simply imposed on existing, unimproved lanes.
2. States could divert toll revenue to other purposes.
3. People would have to pay fuel taxes and tolls for the same highway, which would in effect be double taxation.
4. Traffic would be diverted to parallel roadways.
To gain political support, a toll-financed Interstate reconstruction plan must deal with all four of these concerns.
First and foremost, it must deliver real value for the new toll dollars. That means tolling of an Interstate corridor would begin only after the corridor was rebuilt and widened (if needed). Second, toll rates would only be enough to cover the capital and operating costs of the new facility. There would be no "surplus revenue" to be diverted to other uses. Third, motorists and truckers would pay only the toll on the reconstructed corridors; they would get rebates for the amount of fuel taxes they paid for any tolled miles driven. (That sounds complicated but is a rather simple software exercise for the tolling system.) And fourth, since we know that higher toll rates divert more traffic to alternative roadways, prohibiting revenue diversion would minimize traffic diversion, because the toll rates would be relatively low. I have dubbed this set of policies "Value Added Tolling."
A Step Toward Devolution
When the time comes to reauthorize the federal program next year, Congress should allow all 50 states to toll-finance the reconstruction and modernization of all their Interstates, subject to abiding by the Value Added Tolling policies. A bipartisan tolling flexibility measure along these lines (though with somewhat less stringent restrictions) nearly made it into the Senate reauthorization bill in 2012, and efforts are underway to craft a similar measure for 2015.
The initial reaction of congressional staffers is to question the need for such a measure, since none of the three states granted slots in the current pilot program has won legislative support to implement toll-financed reconstruction. But this illustrates two basic flaws with the pilot program. First, it only allows three states to try something that we all know is politically difficult. If all 50 states had this permission, the odds that one or two "pathfinder" states would put together majority support would be significantly greater. Second, it forces states to select a single Interstate for toll-financed reconstruction. A broader measure would instead encourage a responsible state department of transportation to come up with a 20-year plan to reconstruct and modernize all its Interstates, so everyone would know their turn would come—to pay tolls, but also to benefit from a greatly improved Interstate.
As of this writing, a number of forward-thinking state transportation departments are part of a coalition promoting this kind of toll flexibility, and various highway construction groups also support the idea. Informally, some AAA people have expressed interest in Value Added Tolling, though the organization has not yet taken a position on tolling flexibility. Unfortunately, the trucking industry is still taking the anti-tolling position of its front group, ATFI, despite the fact that major trucking companies are regular users of tolled Interstate and non-Interstate highways, such as Florida's Turnpike. If AAA ends up supporting tolling flexibility (conditional on something like Value Added Tolling), the trucking coalition would no longer be able to talk as if it represented highway users across the board.
This would represent a substantial move back toward the original users-pay/users-benefit principle that has largely been discarded under the current federal highway and transit program. It's also the only game in town for ensuring that these critically important highways can be modernized to continue their vital function in the 21st century, notwithstanding the liberal dream of shifting freight from truck to rail and people from cars to high-speed trains. What's more, shifting responsibility for Interstate modernization from the federal government to the states would represent a significant (and achievable) first step toward devolving the overgrown federal transportation program.
And since toll-financed Interstates are ideal projects for long-term public-private partnerships, this plan could be used to begin converting major highways from the state-socialist enterprises they are today into market-oriented utilities, like those that furnish us with everything from electricity to the Internet. For libertarians, what's not to like?
The post Who's Going to Pay for New Highways? appeared first on Reason.com.
]]>Transportation Secretary Anthony Foxx says the Highway Trust Fund is going to run out of money in August, and President Barack Obama is spending this week pushing his infrastructure plans. If Congress doesn't come up with the money to patch the shortfall, many states will likely start cutting back transportation projects, so the looming deadline is prompting an embarrassment of gimmicks and bad ideas.
House Democrats are dreaming of replacing the gas tax with a larger per-barrel tax on oil companies. House Republicans want to violate their own Budget Control Act rules to use 10 years of projected savings from a rag-bag of cuts in unrelated programs to pay for one year of highway funding. And Sens. Chris Murphy (D-Conn.) and Bob Corker (R-Tenn.) recently proposed raising the federal gas tax, which is a political non-starter in an election year.
Congress is likely to pass a short-term fix that addresses none of the structural issues. And while there are a lot of things to disagree with in the president's transportation plans, the most sensible long-term solution for the Interstate Highway System is actually coming from the Obama administration, which is calling for allowing states to use toll revenue to finance the reconstruction of aging Interstate highways.
Most conservatives claim to support principles like privatization, market pricing, and devolving functions from Washington, D.C. to the states, but apparently not in this case. Everyone from prominent law professor and Instapundit blogger Glenn Reynolds to Sen. Rand Paul (R-Ky.) to The Washington Times opposes giving states the freedom to toll Interstates, which is currently banned by federal law. They fear it will result in the federal government "tracking" drivers via "government-mandated GPS" and argue Interstate highways have "already been paid for" by gas taxes, so tolling is unnecessary. Neither of which is true.
In fact, only the initial costs of building the Interstates, plus some ongoing maintenance, have been paid for by fuel taxes. Like most major highways, the Interstates were designed for a 50-year pavement life, after which they must be reconstructed (i.e., replaced). Many Interstates are already more than 50-years-old, and nearly all will reach that age over the next two decades.
In a Reason Foundation study last year, I estimated the cost of Interstate reconstruction and selective widening in bottlenecked areas at just under $1 trillion. Some think that number is too low, and there is no identified funding source for a set of highway mega-projects with that price tag. Even if the per gallon fuel tax is raised, its revenues will keep shrinking over the next two decades thanks to federal fuel-economy standards and the growth of non-petroleum-fueled cars.
The toll-financing approach would be feasible for all but a handful of states, with toll revenues capable of exceeding construction and maintenance costs. Tolls should replace gas taxes on Interstates, be limited to what's needed for the capital and operating costs of the rebuilt Interstates, and be implemented only after an Interstate has been rebuilt and modernized. All tolling would be done via state-of-the-art all-electronic tolling, with no toll booths needed.
This kind of project is tailor-made for private capital investment under long-term public-private partnerships. States would have companies compete for long-term contracts to finance, build, operate, and maintain specific Interstates. America already has about a dozen major toll road and bridge-replacement projects under way using this method, and its success is well proven in Europe, Australia, and Canada.
By using today's transponder-based all-electronic tolling systems like EZPass, the cost of toll collection could be kept to about 5 percent of the revenue and there would be no need for GPS boxes in vehicles.
Many conservatives are leery of this concept, especially given President Obama's endorsement, but they should support it for several reasons. First, it would be a large (and do-able) first step toward devolving the overextended federal transportation program to the states. Second, it would begin replacing a wasteful gas tax system with a true user fee, under which you pay only for the highways you drive on. Third, it would mobilize private capital for major projects that would otherwise be put off for decades, while the Interstates further deteriorate and become more congested. And, finally, it would allow using congestion pricing on urban Interstates, which would bring relief to long-suffering commuters and express buses.
The Interstate highway system is one of our most important 20th century accomplishments. It handles 25 percent of all vehicle miles of travel despite making up just 2.5 percent of physical highway lane miles. But unless we figure out a way to rebuild and modernize it soon, travel, trade, and the economy will be seriously constrained in coming decades. The status quo will not get the job done. But a customer-friendly approach via 21st century toll financing will.
The post Conservatives Should Embrace Obama's Plan For Tolls to Rebuild Interstate Highways appeared first on Reason.com.
]]>The Federal Aviation Administration has two principal functions, explained Robert Poole in Reason's January 1979 issue: "operating the air traffic control system and ensuring the safety of aircraft design, maintenance, and operation." Yet in instance after instance, Poole noted, the FAA has failed on both counts. What should be done? Poole made the case for why "the FAA should be given a decent burial and the private marketplace allowed to take over its functions."
It is generally taken for granted that unless the government looked after these aspects of aviation, there would be chaos and carnage in the skies. Yet many aviation observers maintain that we have chaos and carnage in the skies today, not in spite of the FAA's efforts, but because of its incompetence. Once we see, however, what the FAA is responsible for and how it operates, it becomes clear that there are other ways to get the job done.
The post 45 Years, 45 Days: Is This Any Way to Run an Airport? appeared first on Reason.com.
]]>On December 1,1974, TWA Flight 514 approached Dulles International Airport outside Washington. D.C. Although it was morning, stormy weather conditions required an instrument approach. At 11:01 the FAA's enroute controller cleared the flight to descend to 7,000 feet and contact Dulles approach control The captain complied, making contact with the FAA center that handles takeoff and landings. After the captain reported being level at 7,000 feet, the controller said, "TWA 514, you're cleared for VOR/DME approach to runway 12." Acknowledging the clearance, the captain let down the landing gear and told his first officer, "1,800 is the bottom." The first officer began the descent to 1,800 feet, as indicated on the approach profile chart.
Studying his charts while the 727 descended, the captain pointed out that on his plan view chart, 3,400 feet—not 1,800—was specified as the minimum altitude. But then, in response to the first officer's query, he affirmed "When he [the controller] clears you, that means you can go to your initial approach altitude," which was 1,800 feet. "Right," agreed the flight engineer.
Suddenly the altitude alert horn sounded—once, then again. A glimpse of the ground appeared through the rain. The first officer shoved the throttles forward The altimeter warning horn gave a sharp blast. "Get some power on " shouted the captain. The horn sounded again. At 11:09:22 Flight 514 plowed into 1,700-foot-high Mount Weather, 25 nautical miles northwest of Dulles. All 85 passengers and seven crew members were killed and the Boeing 727 was destroyed.
The National Transportation Safety Board's investigation of the crash raised serious questions about the adequacy of the nation's air traffic control system, operated by the Federal Aviation Administration. To begin with, the altitude restriction due to Mount Weather was shown on only one of the pilot's two charts. And the controller had cleared the pilot to descend without mentioning any altitude restriction. In defending its controller, the FAA maintained that, because the flight was not considered a "radar arrival," the controller was not required to warn the pilot of any altitude restrictions. Thus, the controller's instruction of "cleared for the approach" meant, to the controller, "Take care of yourself." Yet, as the NTSB pointed out, "It has become commonplace to clear pilots to descend below the altitudes published on the terminal area…and instrument approach charts." A pilot will therefore tend to disregard a charted minimum if he has received an approach clearance without an altitude minimum.
Further, such key terms as "cleared for approach" and "radar arrival," according to the NTSB's findings, "have no established definitions and mean different things to controllers and pilots." A number of pilots, including the chief of the AirForce instrument flight center, testified that if they had received Flight 514's clearance, they would have descended to 1,800 feet as well. (Ironically, six weeks before the TWA crash, another fight approaching the same runway had received the same clearance and had made the same response—fortunately, close enough in to have missed Mount Weather. The crew reported the incident to their airline management as a safely problem, but the FAA itself had no procedure or system for reporting such unsafe conditions or incidents.) The NTSB concluded—39 years after the federal government took over responsibility for air traffic control—that "it is essential that a lexicon of air traffic control words and phrases be developed and made available to all controllers and pilots."
Earlier in 1974, on March 3, a Turkish Airlines DC-10 operating as Flight 981 took off from Orly Airport in Paris. As it reached 13,000 feet an improperly fastened rear cargo door blew off, leading to explosive depressurization of the fuselage. The force of the rapidly exiting air caused the cabin floor to collapse, severing all control cables to the vertical and horizontal tail surfaces. Hopelessly out of control the plane dived for the ground, crashing at nearly 500 miles per hour into the pines of Ermenonville Forest, 23 miles northeast of Paris. All 334 passengers and 12 crew members lost their lives.
The McDonnell Douglas DC-10 design had been certificated as "airworthy" by the FAA on July 29, 1971. This official governmental seal of approval meant that the giant plane complied with Part 25 of the Federal Air Regulations,which imposes minimum design standards for transport category aircraft. As such, it could legally be used in commercial service—and be insured.
Yet unbeknownst to aviation insurers—or to DC-10 passengers—even before the plane was certificated, a battle over the cargo door had been raging behind the scenes. On May 29, 1970, 93 days before the DC-10's first flight, a fuselage pressure test failed when the aft cargo door blew out. The manufacturer's "fix"—a small vent door within the cargo door, designed to prevent pressurization if the door were improperly latched—was approved by the FAA.(The agency's certification board misunderstood how the vent door operated, however, erroneously believing it to be a pressure-relief mechanism, which it clearly was not.)
Once the DC-10 entered airline service, operators began experiencing trouble closing the door properly. McDonnell Douglas issued a series of Service Bulletins to all DC-10 operators recommending various modifications aimed at making sure the door would be properly closed. But the initial "fixes" were not fail-safe. The cargo door could be forced closed without being properly latched and the cabin could still be pressurized. This is what had happened to American Airlines Flight 96, a DC-10 that departed Detroit on June 12, 1972. Climbing out at 11,700 feet over Windsor, Ontario, the improperly latched cargo door blew out, collapsing the rear floor and cutting the vital control cables. Miraculously, the flight crew was able to regain control using only engine thrust and ailerons, bringing in the crippled plane into an emergency landing.
When a life threatening safety defect is discovered, the FAA has the power to issue an Airworthiness Directive (AD), an order requiring all operators to make the necessary fix. After the Windsor incident, the FAA's western regional office prepared an AD mandating design changes to make the door fail-safe. But by order of FAA Administrator John Shaffer, the AD was never issued. To spare McDonnell Douglas and the airlines bad publicity, a "gentleman's agreement" was worked out whereby the company would issue an Alert Service Bulletin recommending various fixes. Nearly two years later, the DC-10 that crashed in Paris was found to lack a key part called for by the Service Bulletin—a part that would have prevented the door from being forced closed, as it was the day of the crash.
The crashes just described—as well as the recent San Diego collision of a 727 and a private plane—illustrate serious FAA failures in carrying out its two principal functions: operating the air traffic control system and ensuring the safety of aircraft design, maintenance, and operation. How well these tasks are carried out is, literally, a matter of life and death. It is generally taken for granted that unless the government looked after these aspects of aviation, there would be chaos and carnage in the skies. Yet many aviation observers maintain that we have chaos and carnage in the skies today, not in spite of the FAA's efforts, but because of its incompetence. Once we see, however, what the FAA is responsible for and how it operates, it becomes clear that there are other ways to get the job done.
How did the federal government get the job of trying to guarantee safety and order in the skies? After World War I there was a glut of surplus biplanes, and everyone who could scrape together a few dollars and some gasoline wanted to get into aviation. The general public and the insurance industry could hardly be blamed for considering the whole field rather frivolous. Indeed, aviation's image problem was the major concern of serious enthusiasts of the 1920s and 1930s—and led ultimately to federal involvement.
Aviation's first trade group, the Aeronautical Chamber of Commerce (later to become the Aircraft Industries Association), asserted in its 1921 Aircraft Year Book the need for "proper legislation" to "assure capital that it is entering a business project instead of a romantic adventure." Further, the group noted that "rates of insurance are likely to remain unsatisfactory so long as no competent federal agency exists to determine the airworthiness of craft or the competency of pilots."
Aviation enthusiast Herbert Hoover, then secretary of Commerce, became the industry's chief advocate within the government, drafting a bill that year to set up in his department a bureau to regulate the new industry. The proposed bill made the Commerce Department responsible for designating and maintaining all public and commercial air routes, inspecting and licensing aircraft and pilots, and establishing and administering rules of the air.
But the bill languished in Congress for five years. During this time the Army Air Service set up an Airways Section that attempted to fill the vacuum. Its involvement was justified, in part, by the federal government's airmail operations—first in government planes, and from 1925 onward via private operators under contract to the Post Office. The Air Commerce Act of 1926, Hoover's long-tended bill, finally established "federal sovereignty" in the airspace of the United States, laying the basis for today's FAA.
From 1926 until 1938 the Bureau of Air Commerce established by the act laid out airways between various cities, installing lighted beacons and emergency landing fields along each one, publishing maps, and setting up radio and telegraph stations to make weather information available at airports. By the early 1930s airborne radios were being added to planes, and the first radio-based "blind landing" system was tested by the bureau in 1934-35. By 1935 several airlines had begun developing a means of traffic control at the Newark, Cleveland, and Chicago airports; the next year, this function was taken over by the bureau.
In 1938, after several years of depression-era lobbying, the federal government provided an economic bail-out for the struggling airlines: the Civil Aeronautics Act of 1938. This law converted the Bureau of Air Commerce into the Civil Aeronautics Authority, with greatly expanded powers. Besides the traffic control and safety functions, the new agency was given vast economic powers—to assign specific airlines to specific routes so as to minimize "destructive" competition, to limit entry to the industry, to regulate fares, etc.
Two years later these economic regulatory powers were split off into a separate Civil Aeronautics Board (CAB) while the air traffic and safety functions remained in what was renamed the Civil Aeronautics Administration (CAA). The CAA was kept within the Commerce Department until 1958 when, in the wake of a spectacular midair collision over the Grand Canyon, it was reorganized as the Federal Aviation Agency (FAA) and made independent. In 1967 it was incorporated into the new Department of Transportation and its name changed to the Federal Aviation Administration.
Air traffic control and air safety certification are the FAA's two main functions. Nearly half of its 60,000 employees are involved directly in air traffic control (ATC) operations. They staff some 423 airport control towers, 25 air route traffic control centers, and 347 flight service stations. Another 10,000 technicians and engineers install and maintain the various radars, instrument landing systems, and navigation aids (such as VOR radio navigation beacons).
Nearly all airline flights and some general aviation (private) flights operate under instrument flight rules (IFR) at all times. This means they must file a flight plan with the FAA and are kept track of from takeoff to landing by the ATC system—although, as the crash of TWA 514 demonstrates, this "positive control" is sometimes less positive than the FAA would have us believe. All airspace around airline airports and above 18,000 feet is under FAA control and must be flown IFR. Outside of this airspace, general aviation aircraft may fly by visual flight rules (VFR)—essentially, on a "see and be seen" basis: VFR pilots receive flight briefings and weather reports from the FAA's flight service stations but are otherwise on their own. Since many IFR flights operate below 18,000 feet, there is an obvious potential for conflict between VFR and IFR traffic—a conflict the FAA has not been able to resolve.
Besides operating the ATC system in an attempt to avoid collisions and crashes, the FAA carries out the remainder of its safety functions by means of licensing and certification. All civil aircraft operated in the United States must be certificated as airworthy by the FAA. The agency maintains several detailed books of minimum design standards—such as Part 25 for commercial transports—against which each new aircraft is measured. Theoretically, FAA inspectors are involved at all stages of aircraft design and testing; in practice, however, the major manufacturers carry out most such inspections themselves on a kind of honor system. Under the system known as delegation option authority (DOA), "the manufacturer makes a finding of compliance with the applicable regulations without full participation of the FAA." Critics charge that the DOA system builds in an unacceptable conflict of interest.
Once an aircraft is certificated, the FAA is also concerned with its safe operation. All commercial airlines must operate FAA-approved maintenance programs, in which all work must be signed off by an FAA-licensed mechanic. Everyone else involved in operating the aircraft—pilots, flight engineers, navigators, dispatchers—must also be licensed by the FAA. Various volumes of the Federal Air Regulations (FARs) set forth the requirements for different types of licenses—for example, the basic pilot categories of student, private, commercial, and airline transport. The FAA also licenses pilot and mechanic schools and instructors. Pilots must pass periodic medical exams to keep their licenses, and airline pilots must fly with an FAA check pilot once each year.
In 1970 the FAA received a new certification mandate—airports. Under the Airport and Airway Development Act of 1970, it was authorized to issue operating certificates to air carrier airports; 500 larger airports were certificated in 1973 and 400 smaller ones in 1975. Those airports receiving federal funds under the act are supposed to comply with FAA issued safety standards, but half of the 500 large airports "had to be given temporary exemptions from some of the requirements, mostly for firefighting and rescue equipment," in order that airline operations could continue past the certification deadline set by Congress. The act established a system of user taxes to build a trust fund for modernizing airports and the ATC system. The FAA now administers the trust fund, parceling out grants to airports and purchasing new air navigation equipment.
Besides these major functions, the FAA has responsibility (shared with the Environmental Protection Agency) for regulating aircraft noise and engine emissions and supervises the anti-hijacking efforts of the airlines. In addition, it operates two airports serving Washington, D.C.— Dulles International and Washington National.
Reading the FAA's brochures, one gets the impression that the ATC system is a smoothly functioning technological marvel. Talking to pilots, controllers, and others in aviation produces quite a different picture. What emerges is a description of a classic bureaucracy, unable to keep up with technological change, wasting resources, stumbling along from crisis to crisis, pressured by lobbyists, harassed by politicians, seeking protection in the bowels of the civil service system. "Even the other federal agencies look down their noses at the FAA," says one longtime air safety expert, "because it's filled with incompetents who don't know how to manage."
Apparently, this has been typical of the FAA/CAA throughout its history, and especially so since World War II. The war produced major technological advances in communications and electronics—most notably, radar. Keeping modern jet aircraft safely separated and operating in all weather conditions would be unthinkable without radar. Yet the CAA resisted the implementation of radar until the mid-1950s. Even today (as the case of Flight 514 brought out) radar is not the primary control device in the ATC system; even at jet speeds and with today's high levels of traffic, the pilot in all cases is still supposed to look out for himself.
Bureaucratic safety rhetoric aside, the agency's primary spur to action has been crashes, not a desire to take advantage of new technology as it becomes available. Radar technology in the early 1950s made it possible to keep aircraft under "positive control" in busy airspace. Yet it took the spectacular midair collision of a TWA Constellation and a United DC-7 over the Grand Canyon in 1956 to get the CM to institute positive control above 24,000 feet—and then only during restricted visibility. Several midair collisions later, in 1958, the CAA stiffened the rules to require all traffic between 17,000 and 30,000 feet, on certain routes, to file IFR flight plans, regardless of the weather. Yet gaps in the system remained. In 1960 a TWA Constellation and a United DC-8 collided over Staten Island while one was approaching La Guardia and the other Idlewild (now JFK). Inadequate communication between the airport approach controllers was blamed for the crash, leading (finally) to a system of positive radar transition between en route and approach control centers, and later to a common approach control center for all three New York area airports. It was not until a 1965 midair collision over Carmel, New York, that positive control of all airspace over 18,000 feet altitude was instituted by the FAA.
This lurching from crisis to crisis would have been quite unnecessary had the CAA/FAA followed the high-caliber technical advice made available to it by a succession of industry/government technical advisory committees. Beginning with the Radio Technical Committee for Aeronautics, in 1948, and continuing with the Huff Committee in the 1950's and the Alexander Committee in the late 1960's, these high powered bodies have laid out an evolutionary plan for making full use of the state of the art in communications and electronics to produce an ATC system adequate to the task. The CAA/FAA has paid lip service to these reports and adopted portions of their recommendations,but its overall response has been too little, too late.
In 1962 the FAA came up with a 10-year plan for automation of the ATC system. With a congressional mandate to accomplish the task within 10 years, the FAA plowed ahead, basing the system on IBM 7090 computers—which even IBM protested would be obsolete by the time they were installed and—Raytheon radar displays of a relatively unproven design. Rushed into service under severe time pressure, the system's many hair-raising failures were soon legendary. It became standard procedure to shut down the system entirely whenever the president's Air Force One was flying, relying instead on the obsolete (but more reliable) manual system.
Throughout the 1950s and 1960s air traffic volume grew by leaps and bounds.The number of airports receiving commercial service rose substantially. Yet many of them remained unequipped with such essential safety features as Instrument Landing Systems (ILS) and radar. During the decade from 1962 to 1971 there were 20 fatal accidents involving nonprecision landings (those without proper instruments) at air carrier airports; nearly 700 people died in those accidents. In some cases the airports involved did not yet meet the FAA's arbitrary criterion for the minimum amount of traffic needed to justify an ILS installation. In other cases, the criteria had been met, but FAA budget priorities meant the agency had not yet gotten around to installing an ILS. As of 1971 only 20 percent of the runways of this country's 530 airline airports had complete ILS systems, and only two-thirds of them even had control towers.
An ILS costs several hundred thousand dollars. Until the airport/airways trust fund was set up in 1971, the FAA continually cried poor-mouth as its excuse for not installing more landing aids. Yet in 1968 Rep. Fletcher Thompson of Georgia pointed out that the FAA in a three-year period had spent $3 million on renting airplanes, over and above its own 100-plane fleet. That would have bought many an ILS. In 1971 the FAA's plan to modernize and enlarge its private fleet called for spending $123.5 million—a sum that would have financed ILS installations at over half the remaining unprotected airports.
Skimping on life saving landing aids while enlarging it's private fleet is all too typical of the FAA's priorities. The agency justifies its fleet primarily on the grounds that it is needed for continually checking the performance of the of the thousands of navigation aids (primarily VOR stations) across the country. Yet aviation experts point out that most such devices either work or don't work—their performance characteristics change very little over time (unless some new terrain obstruction were to appear suddenly and and block the VOR signal pattern). Hence, their on-off status can be monitored remotely on the ground. The FAA's monitoring flights consume huge amounts of fuel ($5.6 million worth in 1974), and in many cases interfere with traffic patterns, causing increased increased risk of collisions. But what bureaucracy could resist the prestige of having it's own air force?
Today the FAA is installing a new generation of automation at its en route ATC centers. Called radar data processing (RDA), the new system utilizes narrow band radars interfaced with a sophisticated computer system. The computer generates a comprehensive set of symbols to represent each aircraft on the controller's scope—flight number, altitude, transponder code, etc. The system concept is a good one. Unfortunately, RDP has been put into operation at many centers without adequate testing and debugging—and without backup computers. Controllers' scopes go blank without warning. Symbol generators quit working.
"I wish I had a dollar for every time the radar has quit," says controller Mike Rock. "I have seen radar fail in two or three sectors at one time. This means that approximately 100 planes are in danger of colliding."During a one-month study period in 1974, 11 near-misses that resulted directly from problems with RDP were reported to the Aviation Safety Institute. "The problem for a midair accident of major magnitude will increase unless the FAA takes positive action to correct problems and decelerate implementation of of…RDP," stated ASI's John Galipault in 1975. His view remains the same four years later.
Yet the system the FAA is trying to perfect lags years behind what today's technology permits. Much of the problem of congested airways is created by the old-style navigation system still in use. It consists of thousands of VHF omnidirectional radio transmitters (VOR stations) at known locations. Instruments on board the plane permit a pilot to fly on a "radial" from one VOR to another, thereby getting from City A to City B by Zigzagging from one VOR to the next. Mathematically, knowing the distance and angle from more than one VOR makes it possible to pick any course to fly—not just a radial path from one VOR to the next. What's needed is an on-board computer to make the necessary calculations. This technique, known as area navigation (R-NAV), vastly expands the amount of airspace available to plans on a noninterfering basis. Prototypes of R-NAV equipment have existed for more than 20 years, and operational systems have been available for over a decade. Yet the FAA's ATC system—despite billions spent on automation—is still not equipped to handle large numbers of pilots setting their own courses, off the time-honoured VOR radials.
What have industry observers said of the FAA's performance as manager of the ATC system? In 1970 Robert Hotz, respected editor of Aviation Week, summed up the FAA's progress over the decade of the of the 1960s, finding that an automated ATC system "appears to be as far away as ever from its 1961 goals."Why? For one thing, there is the "technical incompetence and slothful leadership of the FAA and its predecessor agencies" and "the swarms of veteran airways employees who came into the agency in the era of of lighted beacons and low-frequency ranges and have added little technical knowledgeability since then." The FAA bureaucracy, said Hotz, "has frustrated the airlines, exasperated the Congress to the point where funding has been reluctant, virtually driven the avionics industry out of the market, and concentrated primarily on its self-serving preservation."
An investigation that same year by the House Government Activities Subcommittee noted that the "FAA as an organization has more independent empires than medieval Europe.…[it] lacks any feeling of urgency. The FAA simply does not move forward. All too often in the past, progress has been the result of tragedy." And as a political entity, the FAA can avoid accountability for its failures by blaming prior administrations. Between 1961, when the automation program began, and 1970 there were four FAA administrators, "none of whom can be held responsible for the failures of his predecessors," noted Hotz.
The FAA would have us believe that things have changed in the 1970s. Certainly the agency's PR efforts have improved. But in 1975, in the wake of the crash of TWA 514, a 10-man task force appointed by Transportation Secretary Brinegar reached many of the same conclusions Hotz did, albeit phrased in bureaucratese.The FAA's headquarters operation is "large and unwieldy and may serve as a detriment to FAA's performance of its safety mission," they concluded. The agency's rule-making process is "cumbersome and burdened with delays," and there is a "scarcity of top flight technical talent." Its advanced technology program is "relatively immediate and short-term in outlook"—that is, it fails to come to grips with fundamental long-range changes such as implementing R-NAV. And the Brinegar report pointed out that the FAA's dual role—as both operator of the ATC system and safety regulator—requires "completely different technical skills," implicitly raising the question of whether the FAA should continue with air traffic control.
Considering that the executive secretary of the task force was, the acting FAA administrator, and that its members were all from the federal government, the mild tone of its criticisms is understandable. Similar phraseology characterized a 1976 report by the General Accounting Office, which faulted the FAA for serious planning and management difficulties (for example, for not knowing whether planned improvements in the ATC system were actually worth what they would cost).
No such restraint marked the report of another group appointed by the FAA in 1975—the Special Air Safety Advisory Group (SASAG), consisting of six retired airline pilots. Its purpose was to determine what could be done to prevent further crashes like that of Flight 514, especially during the approach and landing phase. After observing 600 flights on 27 airlines and talking to controllers, pilots, and support personnel, SASAG submitted its findings in July 1975. "New hazards have developed which are a product of the very systems designed to make flying safer," they reported. "Attempts to compensate for natural deficiencies sometimes have brought on additional unrealistic rules or procedures, rather than technological improvements."
Commenting on FAA approach procedures, SASAG termed them "hopelessly complicated, impractical, and contradictory," quoting one pilot to the effect that terminal area maneuvering "is a sophisticated game of blind man's bluff, and the only real protection the crew has is common sense." Nonstandard terminology was frequently observed, as in the case of Flight 514. It was found that up-to-date information on hazardous weather was often not provided to flight crews.
But it was the ATC system itself that SASAG found most at fault. The ATC system "has created hazards, slowed traffic. restricted productive flight by all segments of the aviation industry, and used energy in frightening amounts," they found. More specifically:
• "The ATC system has loaded the cockpit with extra work to the extent that, during critical phases of flight, the air traffic function uses most of one crew member's time, removing him as a useful navigational and systems management assistant."
• "The atmosphere in an IPR room is a jumble of confusion, with demands on the human of the highest order."
• "The system is a jumble of people, radar screens, communications lines and stacks of paper strips, people communicating by voice, by radio to impersonal aircraft…while in the control room people are milling about, talking and creating distractions."
• Controllers often show disdain for pilots and evidence "lack of understanding of the pilot's job," creating a "conflict between ground and air that promotes an emotional response in an environment where it cannot be tolerated."
Summing up, SASAG concluded: "The list of Air Traffic System problems is long and detailed, but basically they reduce to these: a system too dependent on the human element; a system that has grown from old concepts with complex fixes applied to it in an attempt to accommodate its inadequacies. This, in turn, has created a monster of procedures, rules, methods, and confusing interplay between people who are separated by distance, technical knowledge, and understanding of each other's problems."
What to do? Obviously not just continue to patch up the present system. "The direction our government is taking toward future air traffic control is not commensurate with available technology. A program of top priority by an independent body is required to create a system that will reduce human error to a minimum." The question is how to go about doing that. SASAG suggested that a study be conducted "to determine whether the air traffic system would be operated more efficiently with advanced technology as an independent public company."
Could air traffic control be provided by a corporation? There is no reason why not, in principle. Air traffic control is a valuable service, as is communications or transportation. It requires the careful and efficient organization of people, equipment, and procedures to carry out the business of keeping aircraft safely separated from one another and assisting them in making safe takeoffs and landings. Removed from political control freed of the civil service mentality, adequately financed, and staffed by competent technical and managerial talent, an ATC corporation could take full advantage of today's (and tomorrow's) technology.
It isn't only pilots, such as the members of SASAG, who have suggested that ATC be transferred from the FAA to an independent corporation. The Professional Air Traffic Controllers Organization (PATCO ) has been advocating just such a change since 1969. If the controllers themselves no longer wish to work for the FAA bureaucracy, with all its civil service job security, that must tell us something!
The plan PATCO endorses was first suggested in 1968 by Glen A. Gilbert, a long-time aviation consultant. Gilbert, who was the Bureau of Air Commerce's very first controller back in 1936, proposes a COMSAT type corporation, funded 50 percent by taxes and 50 percent by user charges. It would be an "independent government corporation," operating out and responsible directly to Congress. As set forth in Gilbert's 1975 study, the U.S. Air Traffic Services Corporation would:
• operate the ATC system and perform various safety functions independent of the executive branch of the federal government;
• manage its own finances, derived from general taxes and user charges, subject only to congressional overview;
• function in a manner comparable to the best private-enterprise management and organizational concepts;
• establish its own allocations of costs to users, to meet one-half of its operating expenses;
• establish its own safety regulations and internal rules, regulations, and procedures.
Gilbert considers establishment of such a corporation essential if the ATC system is to meet the growing needs of aviation in a safe and cost-effective manner. It would also, he believes, establish and maintain a high level of morale, initiative, and productivity on the part of its personnel, be rapidly responsive to constantly changing requirements of airspace users, and provide for direct and continuing decision making participation by the users.
The idea of a COMSAT-like corporation taking over ATC functions most recently surfaced in, of all places, an official FAA document. The study, Aviation Futures to the Year 2000, was prepared for the FAA by The Futures Group, a think tank in Glastonbury, Connecticut. One of the study's five alternative scenarios features a highly automated ATC system,operated by a "COMSAT-like quasi-governmental authority" rather than by the FAA.
SASAG, PATCO, Gilbert and The Futures Group have all correctly identified the problem, and the general thrust of their proposal— put ATC on a businesslike basis cannot be faulted. But why the government involvement? It's true that Gilbert stresses the model of relatively successful COMSAT rather than the more typical quasi-government corporations—Amtrak, Conrail, and, needless to say, the US Postal Service. All three of these are responsible to Congress, and all are far from models of good management and cost-effectiveness. To involve the government in any way is to seriously risk defeating the basic purpose of the change—which is to transfer ATC from a politically controlled bureaucracy to an efficient business.
One possible argument for government involvement is that government aircraft, notably those of the military, use the the ATC system too. Another is that there is some kind of "public benefit" involved in the ATC system apart from benefits to specific users and that general taxpayer funding is therefore appropriate for at least part of the costs. These questions were addressed in depth by Department of Transportation studies during during 1972 and 1973. Economists made a detailed cost-allocation study of the ATC system and of FAA operations generally, as part of an unsuccessful administration campaign to move 100 percent user-charge funding of the existing FAA/ATC system. In brief, the studies concluded that about 50 percent of the costs of the system are occasioned by air carriers, 30 percent by general aviation, and 20 percent by military use. No general benefits for nonusers could be identified.
The DOT studies established quite clearly which users contribute which costs of the system, and a variety of methods of charging them is possible. Military and other governmental users could be charged just like any others and could participate, as customers, in the long term ATC planning process as they do now—perhaps more effectively, since they would be dealing with a far more responsive and competent organization.
The biggest obstacle to setting up a 100 percent user-financed ATC corporation would be political opposition. Whereas commercial aviation is approximately paying its share of ATC costs today (in the form of existing user charges), general aviation is paying only one-seventh of its share. Consequently, its lobby groups—the Aircraft Owners & Pilots Association, the National Business Aircraft Association, and the General Aviation Manufacturers Association—have conducted an extensive, and so far successful,campaign against efforts to increase user charges to full-cost levels. These organizations can be expected to lobby strenuously against a private ATC corporation.
Apart from such political obstacles, could it really work? Could a private corporation actually be trusted with the responsibility for thousands of planes and millions of lives? The fact is, such operations have already been demonstrated—they have worked and they are working, right now. In Berne, Switzerland, stands the headquarters of Radio-Schweiz, A/G, the nonprofit corporation that provides air traffic control services in Switzerland. Radio-Schweiz, though its start-up costs were underwritten by the Swiss government, is fully private and is 100 percent user-charge funded, for both capital and operating expenses. In Mexico in the 1940s a private, nonprofit corporation known as Radio Aeronautica de Mexico,S.A.(RAMSA) was set up jointly by the various Mexican airlines, which became its stockholders. Although the airlines were later nationalized, RAMSA continued as the ATC services company, funded entirely by user charges, until last October when it was nationalized by the Mexican government (the controllers went on strike for three weeks, in protest, but to no avail). A similar company, RACSA,was set up in Cuba after World War II and is still in operation, though Cuban airlines are also nationalized. The British firm of International Aeradio, Ltd. for many years has operated ATC services in parts of the former British empire, paid for by user charges. It currently provides most ATC services in the booming Persian Gulf area. Its I.A.R. Caribbean, Ltd. subsidiary operates in Commonwealth countries in the Caribbean.
The United States itself came close to having an ATC company and even now has a firm in a logical position to provide such services. The company is Aeronautical Radio, Inc.—ARINC. It is a not-for-profit firm owned jointly by the airlines to provide communications services between planes in flight and ground stations and between various airline ground stations. In 1977 ARINC did $85 million worth of business, up six percent over 1976. Its air-to-ground operations include some 2,100 installations, providing voice radio communications. ARINC also provides electronic switching connecting 28 computer systems. This is the system that allows a United Airlines agent, for example, to make a reservation for you on Piedmont as easily as on United. The switching system transmits some 40 million messages per month. The world's largest private-line intercity communications network, serving 135 airline users at over 1,300 locations, is also operated by ARINC. It uses 17,717 leased circuits comprising nearly 5 million voice channel miles.
ARINC actually predates the existence of air traffic control by seven years. In 1929 several airlines held experimental licenses from the Federal Radio Commission (predecessor of the FCC) to carry out air-to-ground radio communications. The licenses permitted experimental operations but granted no rights use the frequencies on a regular basis. Late in 1929 representatives of these airlines met with the FRC in Washington to ask for permanent radio frequency assignments. Unfortunately for them, the military had gotten there ahead of them. A year earlier the FRC had assigned to the military a large portion of the frequency spectrum designated for aviation purposes. As a result, the requests of the individual airlines far exceeded what was then available.
At this point the airlines' legal counsel, Louis Caldwell (himself a former secretary of the FRC) suggested a cooperative approach. Since FRC rules would not permit licensing of frequencies by an informal association, it became necessary to form a corporation. As a result, in December 1929 Aeronautical Radio, Inc. came into existence as a Delaware corporation. The original stockholders were Pacific Air Transport, Western Air Express, and Universal Airlines. The charter provided that the corporation could conduct business in all phases of aeronautical communications and navigational activities. Only airlines could become stockholders, and no one airline or affiliated group could own more than 20 percent of the stock. Users of ARINC services, including private planes, would be charged in proportion to their use at rates sufficient to cover all expenses.
In its early years ARINC was something of a skeletal organization, existing primarily as the FRC/FCC licensee and operating mostly as a coordinating body. Airline personnel installed and operated all the actual communications equipment. ARINC, however, took a leading role in developing improved radio navigation equipment during the 1930s. Operating in the interest of all the airlines, it served as the interface with companies such as Western Electric, Bendix, and RCA that pioneered in developing the hardware. It was ARINC, rather than the government, that led the way in developing such systems as airborne VHF radio, omnidirectional navigation beacons (VOR), and "blind landing" systems (ILS), often overcoming the reluctance and conservatism of the Bureau of Air Commerce and later the CAA.
From 1930 to 1934 ARINC provided the only voice communications between air and ground—en route, during approach, and at airports. When the need for controlling traffic ("fight following") became apparent in the Chicago area in 1934, it was ARINC that led the way in coordinating airline efforts. In 1935 ARINC set up interline agreements among the airlines serving Chicago and Newark to provide for a unified ATC procedure at each airport. The first Airway Traffic Control Center was set up at Newark on December 1, 1935, with costs shared among the airlines in proportion to airport use. Airline personnel trained at Newark for setting up other centers—the second one at Chicago (in April 1936) and the third at Cleveland (in June 1936). Each center controlled airline traffic within 50 miles of the airport, using the airline/ARINC radio operators at each field. The fledgling air traffic control system apparently worked quite well.
Parallel with these developments, however, pressures were building toward a greatly expanded federal role in aviation, pressures that would culminate in the Civil Aeronautics Act of 1938 with its substantial economic assistance to the depression-plagued airlines. As part of this gearing up, the Bureau of Air Commerce asserted federal responsibility to establish "a uniform and centralized system of airway traffic control…to direct and coordinate the progress of all flights, whether government, civil, or commercial, over the Federal Airways."In line with this thinking, on July 6,1936, the bureau took over the three existing traffic control centers and by the end of the year had established five more. The airlines did not protest this take-over; indeed, they welcomed it. At the height of the depression, here was one less item they had to include in their hard-pressed budgets. ARINC, as a "subsidiary" of the airlines, was in no position to object to this loss of its fledgling ATC business. Besides, it had its hands full developing new forms of communications systems.
ARINC was not out of the ATC business altogether, however. First of all, up until 1946, all CAA traffic controllers still communicated with ARINC, which transmitted their messages to the flight crews. Only in the late 1940's and early 1950s did the CAA develop its own ATC radio links, leaving the ARINC channels strictly for company messages. But while losing one ATC role, the late 1940s firmly established ARINC in another.
Until the late 1940s overseas flights still carried radio-telegraph operators, who sent and received Morse Code messages. The CAA was committed to continuation of this obsolete method and built new long-range radio-telegraph stations in San Francisco and New York. When United and Northwest received new routes from the West Coast to Hawaii in 1948, ARINC and the airlines decided the time was at hand to switch to voice communications. ARINC built four high-powered, high-frequency overseas stations—at Seattle, San Francisco, Los Angeles, and Honolulu. Needless to say, voice communications proved to be technically sound, and the change eliminated the need for a telegraph operator in the cockpit—a substantial cost savings to the airlines. Over the next few years this process was repeated in the Caribbean and then on the North Atlantic. The CAA eventually shut down its radio-telegraph stations and now contracts with ARINC for all ATC communications from the five overseas "gateways": New York, Miami, San Juan, San Francisco, and Honolulu.
ARINC also became further involved in ATC overseas during this period of time. It was ARINC that provided the advice and expertise leading to the formation of USA in Mexico and RACSA in Cuba. ARINC also worked with aviation groups in Venezuela, Colombia, Peru, and China to set up similar companies, not always with the same degree of success. Wherever an organization was successfully created (whether private or government), both communications and ATC services were provided, with funding based on user charges. Decades of interfacing with the bureaucratic CAA had taught ARINC valuable lessons about the efficiency of government versus that of the private sector.
Today, ARINC stands in marked contrast to the FAA. It is recognized as a world leader in aeronautical communications. Its specifications for standard avionics equipment are in use throughout the world. It continues to be a leader in advancing the state of the art and has set up a for-profit subsidiary, ARINC Research Corp., that does $10 million a year in applied systems engineering. ARINC, or a company modeled after it, could readily take on the task of operating and upgrading America's ATC system.
The examples of ARINC, RAMSA, Radio Schweiz, and the others demonstrate quite clearly that ATC services can be provided by a fully private company, funded entirely by user charges. The risks of creating another Amtrak or US Postal Service by insisting on government participation in or sponsorship of an ATC corporation are far too great. To ensure the highest degree of safety and cost effectiveness, a truly private-enterprise operation is clearly the only way to fly.
Given the FAA's record with the ATC system, it's not surprising to hear complaints, also, about its competence as a safety enforcer. Aside from its inherent limitations as a large government bureaucracy, what makes the agency ineffective as a safety regulator? Critics point out that the FAA is faced with a built-in conflict of interest. The Federal Aviation Act directs it to "encourage and foster the development of civil aeronautics and air commerce," in addition to promoting safety. The FAA interprets this to mean looking after the economic well-being of the aircraft and airline industries. Yet in the day-to-day businesses of designing planes and running airlines, the potential for conflict between economics and safety is, unfortunately, very real.
The FAA's safety efforts are embodied in its Federal Air Regulations (FARs). The FAA's role is to promulgate, via FARs, the minimum required safety standards, leaving it to manufacturers and operators, respectively, to decide whether and to what extent to exceed the requirements. Any such system is only as good as the adequacy of the standards themselves and the adequacy with which they are enforced. The FAA can be faulted on both counts.
The airworthiness FARs (design standards) frequently lag far behind the state of the art. For 14 years, from 1961 to 1975, the basic FARs remained unchanged, while technology proceeded apace. To patch up the gaps, the FAA issued various Special Conditions on an ad hoc basis; as manufacturers came up with new design features, the FAA thought up new Special Conditions that would accommodate them. The design of the DC-10, for example, required 30 pages of Special Conditions, covering such features as its unique three-bogie main landing gear, its emergency exits, fire-proof materials, flight controls, and propulsion system. The industry tail wags the FAA design standard dog.
As noted earlier, the FAA does not itself carry out most of the detailed work of aircraft certification. On large (transport) aircraft, about 70 percent of the inspection and compliance work is delegated to the manufacturer; for light aircraft there is up to 90 percent delegation. What this means is that certain company personnel wear one hat during regular work (for example, as test pilot) and another hat when acting as the FAA's representative (as FAA certification pilot). The potential conflict of interest is clear.
One of the first public exposures of the inadequacies of the FAA-supervised design process occurred in 1970 when two young aeronautical engineers, associates of Ralph Nader, published a report on light-aircraft crashworthiness. On the basis of their carefully researched study, James Bruce and John Draper concluded that "one-half of all general aviation fatalities…were unnecessary,…the victims of negligence in the field of crash safety engineering." Bruce and Draper noted that, although the human body can withstand loadings of up to 20 times the force of gravity (20g) vertically and 40g laterally, the FAA requires light aircraft cabin structures to be able to withstand only 3g upward, 9g forward, and 1.5g sideward. The standards, of course, are minimums, not maximums, and manufacturers are free to do better.
Indeed, some do exceed the standards. Both Beech and Helio design their planes' cabins using a tubular frame that can withstand high crash loads and configure the wings so that failure is possible only outside the fuselage. All fuel tanks are located in the wings, to minimize the danger of a cabin fire in the event of a crash. The other two major light-plane builders—Cessna and Piper—build their cabins out of sheetmetal, meeting only the minimum FAA crash-load criteria. It's not that they don't know how to build safer airplanes—both build cropdusters, in which crash survivability is an essential sales feature. But nobody mentions comparative safety levels in selling business and pleasure craft. So Cessna and Piper continue on their way, translating a lighter but less safe structure into slightly lower prices or slightly higher performance. The customer takes safety for granted because he knows all planes on the market have received a certificate from the FAA. He therefore assumes them to be equally safe. The light aircraft manufacturer's trade group, GAMA, strongly opposes higher FAA design standards.
Despite Beech's good record on crashworthy design, the company's safety consciousness leaves much to be desired. In 1961 it discovered that during certain maneuvers the fuel intake ports on its Bonanzas could become exposed, sucking in air instead of fuel and causing the engine to fail. For four years the company did nothing, meanwhile bringing to market a new luxury plane, the Baron, using the same fuel system. Finally, in April 1965 it issued a Service Letter (analogous to a Service Bulletin) describing the problem in innocuous terms and stating, "This does not create a hazard but can be disconcerting." Six month later, in October 1965, came the first of a series of Baron crashes, caused by unexpected engine failure due to unporting of the fuel intake.
The CAB investigator (the CAB investigated crashes prior to creation of the NTSB in 1967) test-flew a Baron in February 1966 under minimum-fuel conditions and identified the unporting problem. In January 1957 the CAB recommended an evaluation of the Baron's fuel system design. But the FAA was not impressed. It maintained that no FARs had been violated in the Baron's design and that the unporting problem could only occur during maneuvers that the plane was never intended to perform. Meanwhile, Barons continued to crash.
Finally, in 1968 an FAA test pilot flew a Baron, repeating the earlier CAB pilot's maneuvers. His recommendation: ground the Baron until a design change could be made. But his report never saw the light of day at the FAA. By the end of 1968, after five Baron crashes, the FAA finally issued an AD: it required, not a design change, but a warning placard in the cockpit. Although Beech finally changed the design of all new Baron fuel systems in 1970, it was not until two of the crash cases were litigated—one settled out of court for $325,000 and the second resulting in a jury verdict of $21 million—that Beech in 1972 issued a modification kit to correct the problem on pre-1970 Barons. The FAA did not require the modification, nor did Beech provide it as a routine product improvement; owners who wanted it had to buy and install it at their own expense.
A similar reluctance on the FAA's part has been evident in cases involving commercial transport aircraft. In July 1970 an Air Canada DC-8 crashed on landing at Toronto, killing 109 people. The first officer had accidentally deployed the spoilers while the plane was still 60 feet off the runway, causing it to slam into the pavement. The spoilers are designed to kill the wing's lift once the the aircraft has touched down; it is extremely dangerous to deploy them in flight. Yet The DC-8 design was not fail-safe in this regard; the spoiler handle could easily be moved into the "deploy" position instead of the "arm" position, as had occurred in the Air Canada crash.
In August the manufacturer, Douglas Aircraft, sent a cable to all DC-8 operators warning that spoilers should be used only on the ground; no mention was made of the Air Canada crash. The FAA's western regional office prepared an AD calling for a warning placard to be placed beside the spoiler handle in the cockpit reading "Deployment in Flight Prohibited ." Douglas, Eastern Airlines, and the Air Transport Association protested the AD as unwarranted, but it was nevertheless issued in December 1970. In October 1971 a European DC-8 crashed due to spoiler deployment 15 feet in the air; no lives were lost, though the plane was damaged. In November 1972 a Japanese Airlines DC-8 crashed near Moscow under conditions suggesting in-flight spoiler deployment; 61 people perished. In June 1973 an Icelandic DC-8 crash landed at JFK due to inadvertent spoiler deployment at 40 feet; 38 people were injured and the plane sustained major damage.
In August 1973 the FAA's eastern region drafted a proposed AD to make spoiler activation impossible in the air and sent it to the western region to be issued. The western region rejected it, because Douglas was about to issue a Service Bulletin on its own. The SB was issued—as a routine product improvement, not a safety item—in October 1973. Finally, in January 1974, four years after the first crash, the western region gave in and issued an AD making the Douglas SB mandatory.
The pressure on FAA regional offices to cancel ADs in favor of nonpublicized SBs can be intense, as the Turkish Airlines DC-10 and the DC-8 spoiler cases demonstrate. Captain Brian Power-Waters, a 22-year veteran of airline flying, cites additional recent cases in which proposed ADs were canceled after manufacturer protests:
• Lockheed L-1011 rudder pedals were jamming, causing serious control problems.
• Lockheed L-1011 auxiliary power unit exhaust shroud seal was a potential fire hazard.
• Lockheed L-1011 passenger oxygen masks failed to deploy when needed.
• Boeing 747 escape slides failed to operate normally.
The FAA takes the economic interests of the aircraft manufacturers very seriously. Consequently, one can wonder how objective FAA certification criteria would be even in the absence of the delegation-of-authority system.
The FAA, in enforcing its design standards, gives every appearance of following the classic pattern of a regulatory agency captured by the industry it allegedly regulates. Aircraft and component manufacturers have built up longstanding relationships with FAA personnel and offices. One former FAA official notes that "the smart manufacturers shop different FAA districts to get their hardware certified because each district has a different attitude toward standards." The FAA's 1975 task force acknowledged the existence of this region-shopping problem.
In recent years the inadequacies of the FAA's certification activities have been coming to light. In 1973 the General Accounting Office released the results of its year-long investigation of certification in the light-aircraft industry. The FAA's failure to closely monitor the design process, said the GAO, "has contributed to design safety hazards in light aircraft." Not only are planes with design defects certificated, but once the weaknesses are discovered, the FAA takes inordinately long to correct them, as we have seen. The GAO cited (without naming names) the Beech Baron case as one of several prime examples. It also pointed out that because the FAA does not itself participate in the design and test phase, it cannot influence the design until problems show up in the field, after the plane is in service.
In 1974 the House Special Investigations Subcommittee, headed by Rep. Harley Staggers, issued a massive report documenting the failure of FAA safety efforts. The report cited numerous examples of what it called administrative foot-dragging by the FAA in requiring manufacturers to make changes to improve safety. Its actions to promote air safety "have been unreasonably delayed, or omitted entirely, because of an over solicitous attitude on the part of some within the agency concerning the economic well-being of the aircraft industry or the air carriers." Other members of Congress agreed. Sen. Howard Cannon noted that the handling of the DC-10 cargo door problem "calls into question the entire regulatory relationship" between the FAA and the industry. Sen. Vance Hartke concluded simply, "The FAA is a prisoner of the industry it is supposed to regulate."
After the Turkish DC-10 crash, the GAO conducted another investigation, looking into the matter of "regulatory lag." It documented the extent of the problem, finding, for example, that it took an average of 28 months from the time a safety rule was first proposed until the final version was issued and that the rule would typically have been under study for another year prior to the rule-making process actually beginning. During its one-year study GAO identified 47 NTSB recommendations "most critical to the preservation of life" that the FAA had not acted on and asked the FAA to report their status. It took the agency three months just to figure out their status and reply to the GAO!
Regulatory lag was still a live issue in 1977. After the collision of two 747s at Tenerife, Rep. Elliot Levitas reported finding 135 instances in the previous eight years in which the FAA rejected NTSB recommendations and 281 cases in which it agreed with the board but had not implemented them fully—including 95 dating back three or more years. Economic-hardship claims by the manufacturers and airlines were frequently the major factors in causing the delay, modification, or rejection of the recommendations.
The same issues that apply to aircraft design—inadequate or outmoded FARs, delegation of authority, economics versus safety—also apply to airline operations. Various FARs define minimum qualifications for operating personnel, spell out what are considered to be safe operating conditions, and specify minimum maintenance requirements.
How do these FARs measure up? To begin with, the FAA attempts to cover itself by making rules spelling out every thing possible."We are regulated to death," states Captain Power-Waters. But new FARs don't replace old ones; they're simply added on to an ever growing jumble. As a result, "Most of the regulations in use today are as ancient and useless as the landing aids that were put into operation 30 years ago. The 747s operate under the same regulations originally drafted for the DC-3," says Power-Waters. Many are absurdly deficient on their face. FAR 121.687(b), for example, requires that every flight carry a copy of the "latest available" weather report for each stop. If the weather teletype is out of service and only last week's weather is available, it is perfectly legal to use, so long as it's the latest available! And with the proliferation of regulations, "There isn't a pilot in the sky today who doesn't break at least one regulation every time he flies. It is practically impossible to comply with one regulation without infringing on another."
One indication of the inadequacy of the FARs is provided by the FAA itself. The agency's rules for operating its own fleet are far more stringent than the minimums required for commercial airlines. FAA pilots must have at least 48 hours of pilot time within the prior 12 months to legally fly a plane; there is no such air-time rule for commercial pilots. They need only have made three takeoffs and landings within 90 days; FAA pilots must have made five. All FAA pilots who fly jets over 25,000 feet must obtain physiological training—for example, simulated decompressions in a pressure chamber and other emergency procedures. No airline crews get such training.
Other FARs set forth minimum maintenance standards. These cover both routine, scheduled maintenance and procedures for dealing with in-service failures. Maintenance is carried out by airline personnel; all such work must be at least supervised and signed off by a mechanic licensed by the FAA. The agency maintains a corps of inspectors who spot-check the airlines' work, looking at log books and talking with supervisors. It is impossible, given the FAA's limited personnel, to check out everything. Each of the 300-odd maintenance inspectors is required to check only four aircraft logbooks per month, covering only the previous two weeks. Inspectors work only a regular eight-hour day, five days a week, while airline operations continue round the clock.
The system "works" (more or less) because airlines can't afford to take serious shortcuts, since this would end up costing more than it saved; the overall record-keeping and inspection system provides for tracing failures back to the responsible parties in the event a problem is discovered; and the FAA can penalize violators by fines of up to $1,000 a day. Nevertheless, many observers think the FAA is doing as sloppy job of maintenance supervision. Some airlines are more conscientious about maintenance than others, but this information never becomes public. Mechanics who observe violations of safety regulations have no means of reporting to the FAA (unlike pilots, who—at least during certain years—have been able to report near misses and other incidents to the FAA under an "immunity" program).
The conflict between safety and economics makes itself felt most strongly when it comes to keeping flights on schedule. If certain aircraft components have become inoperative, the key question becomes, Is it safe to fly without item X, or must the flight be delayed while it is repaired or replaced? The Air Transport Association and the FAA have developed for each type of commercial aircraft a Minimum Equipment List. The MEL specifies the equipment that must be operational for a flight to proceed. Obviously, trade-offs must be made in establishing such lists—dollar losses in delayed flights and angry customers must be weighed against the potential of lost lives and destroyed planes. Critics charge that the FAA yields too readily to trade-group pressure in making up MELs that keep flights operating at the expense of safety. Crashes have occurred because flights have been dispatched with equipment that was inoperative but legal according to the MEL.
Further problems occur when the MELs themselves are not strictly adhered to. The International Association of Machinists contended in recent testimony before the House Government Activities and Transportation Subcommittee that "in a lot of instances where scheduled departures (which are money) are involved, the manual and MELs go out the window.…[The FAA inspectors] are rarely, if ever, around. The check and balance system gets out of kilter when an over-eager management-level supervisor ignores or signs off an aircraft problem in order to make a scheduled departure." Captain Power-Waters cites many examples of pilots of certain airlines being disciplined for refusing to depart on schedule due to inoperative equipment.
When violations of FARs do come to light, the FAA too often responds with a mere slap on the wrist. In 1970 Mohawk Airlines received notice from the FAA that they had violated a number of FARs, covering such items as inspection of fire extinguishers, flap actuators, rudders, and navigation system components. Some of the required inspection intervals had been exceeded by hundreds of flight hours, and ILS was two and a half years overdue for inspection. Despite the seriousness of the violations and the FAA's ability to to levy fines of up to $1,000 per day for each violation, it offered to settle for only $50,000. Even then, Mohawk was able to negotiate a settlement of $20,000.
What we have, is a system whose incentives are badly out of whack. The manufacturers and the airlines have an economic incentive to cut corners—not in major, obvious ways, to be sure, but in those borderline areas where cost trade-offs must always be made. And the record makes clear that a number of these trade-offs have led to tragedy. The FAA has no clear-cut incentive to promote higher levels of safety. To begin with, it has the dual mission, by statute, of promoting both safety and aviation's economic well-being. And then, of course, it is a government bureaucracy. That its basic motivation is, for the most part, self- preservation was candidly admitted two years ago by one FAA staffer during NTSB's hearings on the crash of TWA 514. "Safety suffers when everybody is more interested in protecting their tails than trying to make air travel more safe," he said. Why this attitude? "FAA is running from millions of dollars in liability," he continued. "If changes are made, the assumption is made that the changes are an admission of responsibility. Consequently, change is resisted."
The FAA has painted itself into a comer. As the government agency supposedly taking care of air safety, it is assumed to know what it is doing. Insurance companies and the travelling public assume that all airline and aircraft are equally safe, because they all have the FAA's continuing seal of approval. Any sort of consumer consciousness of safety has been driven out of the system. All the while the FAA's outdated, contradictory, minimum standards are exceeded by some, adhered to by others and flouted by still other. The crashes keep occurring. Lives continue to be lost. TWA 514 (92 lives); Turkish Airlines Flight 981 (346 lives); Pan Am and KLM Boeing 747s at Tenerife (581 lives)—and many, many others.The conscientious manufacturers and airlines are indistinguishable from the comer-cutters, in the minds of the public and the insurers, because the FAA has blurred the distinctions and cast its deceptive blessing over them all. We all pay for it—in higher fares thanks to higher insurance premiums, and in lives. Isn't there a better way?
Agreement that the FAA is failing in its safety responsibilities is widespread outside of the agency. The FAA's deficiencies are just too glaring to be ignored. Yet suggested solutions are few, and largely unsatisfying. Activist groups like the Aviation Consumer Action Project and the staffs of various congressional committees all favor "reforming" the FAA in some manner—finding better managers, hiring more competent engineers, removing its mandate to promote commercial success, etc.
But the bottom line of all these suggestions would still leave us with a government bureaucracy. It would still suffer from a civil service mentality. It would still be subject to political control. It would still rely largely on industry personnel. Even if it started out with a clean slate—brand new FARs, completely new, well-qualified staff, a new charter, a bigger budget—it would be only a matter of time before the classic regulatory agency pattern repeated itself and we'd be faced with the same problem all over again.
The fundamental problem is that of incentives. The incentives facing an agency like the FAA ultimately turn out to be those of self-preservation. It preserves itself best by developing smooth working relationships with the industries it regulates. The industries, in turn, are motivated by self-interest—to make profits selling planes and carrying passengers.
The FAA's only motivating tool, for either its own personnel or those of industry, is fear—fear of violating regulations. Yet fear is an ineffective motivator. Modern management has come to rely effectively on participative, rather than authoritarian, means of motivation, rewarding good performance rather than punishing mistakes. The incentive structure needs to be turned around so that both industry and the external entity are motivated by positive goal attainment rather than by fear of noncompliance.
But is this possible? We are so used to thinking about forcing compliance with safety rules that the idea of motivating compliance may seem fanciful at first. But let's suppose, for the sake of argument, that there were no FAA, that government had not been given the role of enforcing air safety. What then?
Studied from this angle, the dimensions of a solution become apparent. If there were no government safety regulation, there might be lots of crashes; that would mean lots of lawsuits against airlines and aircraft producers; and then the insurance industry would be on the hook. Since aviation underwriters would be the ones ultimately accountable for the costs, it is they who would have the greatest economic incentive to make sure flying is safe.
Is there any reason to think the insurance industry would be able and willing to do so? History provides an enlightening example. In the 1860's the fire protection industry was in something of the state aviation was in during 1920s. Fire departments were relatively haphazard outfits, frequently thrown together by well-meaning but untrained volunteers or by small, undercapitalized companies. Fire insurance rates were chaotic, varying greatly from place to place and bearing no apparent relationship to actual loss potential. To bring some order to the industry, representatives of the major fire insurance companies got together in 1866 and organized the National Board of Fire Underwriters.
At its first annual meeting, in 1867, NBFU urged its local affiliates to inspect buildings, fire departments, and water supplies as factors in determining insurance rates. In 1873 the seventh annual meeting recommended that local boards appoint standing committees to examine local fire departments and water supplies "and to endeavor to have needed improvements made therein." Already, a feedback effect was taking place. In 1890 the national board appointed an inspector of fire departments, fire patrols, and water supply. The first such inspector began work on July 1,1890, inspecting 52 cities in his first 11 months on the job.
But obtaining compliance was still a problem. NBFU resolved to work on methods of inducing cities to follow through on the inspector's recommendations, noting that "until they do take measures for improvement, we are able…to take such measures as are consistent with our own safety as underwriters, whether by means of rates, or a refusal to accept certain risks." But no formal system of adjusting rates based on safety levels was put into effect at that time; the primary means of seeking compliance was the personal influence of local insurance agents on local government officials. The inspection reports were, however, distributed to rate-making associations, as well as to local officials.
In 1902 a member of NBFU's Fire Department Committee suggested that a standard "for perfect equipment and water works service" be developed, to serve as a guide for rate making. The National Fire Protection Association was asked to "formulate standards of fire protection in cities and properly guide them so as to form a basis for rating." The resulting document, "Standards for Grading Town Public Fire Protection," was published on October 29, 1903. It established seven classes of fire departments and set down standards for equipment, water supply, and other factors. Over the next 12 years the standards formed the basis for a considerable upgrading of the NBPU's inspection work, and several engineers were added to the staff. Finally, in December 1915 a Standard Schedule for Grading Cities and Towns of the United States was issued to insurance companies and rating bureaus across the country.The results of NBPU's grading of a city were then used by the rate bureaus to assign each city (or portion of a city) to a specific insurance rate class. Thus, the better a city scored, the lower its insurance rates would be.
This basic system, upgraded periodically to reflect new knowledge, technology, and procedures, continues to operate today. Responsibility for conducting the periodic grading of cities was transferred from the NBFU to the American Insurance Association in 1966. In 1971 a nonprofit service agency, the Insurance Services Office (ISO) was created, and responsibility for fire grading became one of its primary duties. Every city and county in the United States graded approximately once every seven years by an ISO engineering team, using the Grading Schedule for Municipal Fire Protection—a direct descendant of the earlier schedules. The Grading Schedule provides for a detailed technical evaluation of a city's water supply, fire department, fire service communications, and fire safety control. Within each category, deficiency points are assigned for each instance in which a particular feature falls short of the ideal set forth in the schedule, and insurance rate bureaus then set fire insurance rates accordingly.
This system provides a direct economic incentive for the city managers to invest in safety. There is no conflict between economics and safety and no need for a regulatory bureaucracy to issue edicts and threaten fines. To be sure, trade-offs are made, as they always will be. There can be no guarantee of absolute safety, under any system, and there will always be some additional safety investments judged not worth what they would cost. But the value of the ISO system is that it provides positive incentives via lower insurance rates for taking reasonable safety precautions. Cities are not forced to follow the ISO's recommendations, but they (their citizens) must pay the price, in higher rates and loss potential, if they don't.
What works for fire insurance could also work for airline property and liability insurance as well as for aircraft product liability insurance. If there were no FAA, the insurance underwriters would have a substantial incentive to follow the fire underwriters' example and get into the safety standards business in a serious way. An Aviation Underwriters Safety Organization (AUSO), similar to ISO, would very likely come into existence, developing standards for aircraft design, maintenance and operation. Airlines and manufacturers would have an incentive to work with AUSO's engineers and inspectors, since doing so would lead to lower insurance rates.
But wouldn't the AUSO in time come to resemble the FAA—a cumbersome bureaucracy that's captured by the industry? Although such an outcome is conceivable, it must be viewed as highly unlikely. To begin with, the AUSO would be free of political control and of civil service rules, so its tendency to operate as a cover-your-tail bureaucracy would be minimized. Second, as a voluntary organization, its standards would not have the force of law and would probably not be minimums—indeed, it's quite possible that several alternative levels of safety would be specified (as with the ISO), among which airlines and manufacturers could choose, with corresponding differences in insurance rates. Because of this, the perceived value in "capturing" an AUSO would be far less than in the case of the FAA. In addition, AUSO's value to the insurance industry would be only as good as its reputation for integrity—as in the case of Underwriters Laboratory. If it began compromising its safety judgments under pressure from airlines, for example, strong corrective pressures would be exerted by the underwriters.
Why hasn't the insurance industry taken on such a role already, given the FAA's deficiencies? To begin with, any direct industry-wide system for linking insurance rates to safety practices would be illegal under present US law! In the late 1960s the major aviation insurance underwriters signed an antitrust consent decree forbidding any form of "collusion" in rate setting. Since that time, the personnel of the various underwriters have bent over backwards to avoid even the appearance of discussing business together. The consent decree does not prohibit exchanging safety information per se—and some amount of information transfer does take place. (Several major underwriters recently joined with the National Safety Council to write a handbook on ground safety at airports.) What's lacking, however, is any attempt by the industry to set rates that reflect adherence to safety standards. Any joint attempt to do so would violate the consent decree.
But what about individual company efforts? Spokesmen for the underwriters say this is simply not feasible under present conditions—which include taxpayers' subsidization of safety, at several billion dollars a year. Under these conditions, insurers' rates are much lower than they would be in a free market—where the insurers would bear the cost of safety-standard setting and enforcement. In fact, according to John Lind, safety director of the US Aviation Insurance Group, rates today are at "rock bottom" levels, making it economically infeasible for any one firm to offer discounts for customers adhering to higher safety standards than the FAA mandates.
In addition to these factors, the industry structure also diminishes the underwriters' incentives to make changes. Because the possible losses in a jumbo jet disaster are so huge, underwriters make extensive use of reinsurance. In other words, a particular insurance policy with large potential risk of loss is in effect divided up among companies that insure the insurers. A reinsurer—like Lloyds of London, Swiss Reinsurance Co., and General Reinsurance Co.—shoulders part of the direct insurer's risk in exchange for a share of the premium. When the Pan Am and KLM 747s collided at Tenerife, for example, Swiss Reinsurance was responsible for 3 percent of Pan Am's loss and 1.5 percent of KLM's. Dividing the risks into such small packages makes reinsurance feasible and helps keep direct insurance premiums low. But at the same time it also reduces the incentive of underwriters to police individual airlines, manufacturers, or governments. That incentive will not exist at all until the insurance industry's subsidies are removed—by getting rid of the FAA.
There would also be other pressures promoting air safety in the absence of the FAA. As noted earlier, the existence of FAA certification casts a kind of security blanket over the entire aviation industry, destroying any real safety consciousness on the part of consumers—light-aircraft purchasers, corporate transportation departments, and individual ticket buyers. This false sense of security has removed safety entirely as a factor in the competitive marketplace, much to the delight of manufacturers and airlines, who since the 1920s and the beginning of commercial aviation have felt the need to sidestep people's fear of flying. Yet safety ought to be a vital factor in consumer decisions—at least as long as the real differences of the kind that exist today among planes and airlines.
Several existing organizations serve as illustrations of the kind of information services that would be in demand in the absence of the FAA. The Aviation Safety Institute in Worthington, Ohio, gathers information on safety-related incidents from pilots and air traffic controllers. These people can call a toll-free hot line and report, anonymously, on near-misses, inoperative instrument landing systems, radar-scope failures, etc. The ASI feeds these data into a computer for later analysis and publishes a fortnightly newsletter warning of unsafe conditions (see box). Only a handful of people subscribe to the newsletter today, but in the absence of the FAA, such a newsletter would be marketable and highly in demand, especially by private and corporate pilots.
The Aviation Consumer Action Project is one of a variety of Ralph Nader-sponsored consumer activist organizations in Washington. It conducts studies of the ways in which the government is or is not serving the interests of aviation consumers, as opposed to those of airlines and manufacturers.Needless to say, it has a very fertile field to explore. In the absence of the FAA, an organization like ACAP could do a great deal to keep public awareness focused on safety differences among various airlines, thereby providing consumer pressure aimed at improvements. Safety would become a marketing angle, much as steak dinners and flying pubs are today.
The FAA's failure, in both air traffic control and air safety, is no mere academic issue. It is literally a matter of life and death. And it's an issue of great urgency in 1979. Congress recently passed a deregulation law substantially relaxing the CAB's economic control of the airlines. Over the next decade there will be a continuing increase in both the number of planes and the number of airlines in operation. More small airfields will get scheduled service. And one thing is patently clear. The FAA cannot cope with such expansion.
In testimony before the House Government Operations Subcommittee last year, John Galipault of the Aviation Safety Institute stated: "We believe that the FAA has progressively taken itself out of the role of leader in aviation safety.…We do not have confidence in the FAA's ability to develop responsive, meaningful, and valid requirements for the new 'deregulated carrier fleet.' Not only will it bog down in this effort, but given that the new 'fleet' is defined and can function, the FAA will not have the means for performing certification, surveillance, and quality assurance that it rightly should be doing."
Congress, in short, must bite the bullet. It has finally seen fit to move toward restoring a free market in air transportation. But this new free market must not be shackled with an inadequate, out-of-date air traffic control system or a safety enforcement mechanism that doesn't work. The FAA should be given a decent burial and the private marketplace allowed to take over its functions. An ATC corporation and an Aviation Underwriters Safety Organization can do the job—if only they're allowed to come into being. The alternative is increasing chaos and carnage in the skies.
Editor Robert Poole, Jr. holds two engineering degrees from MIT and spent seven years in the aerospace/defense industry. This article was researched under a grant from the Cato Institute, but all views expressed are solely those of the author. The author also wishes to express his appreciation to Aeronautical Radio, Inc., the American Insurance Association, and the Library of the National Air Space Museum at the Smithsonian—all of which gave him access to their archives for research purposes.
Where Not to Fly If you fly a lot, your chances of being involved in a midair collision or having some sort of malfunction occur are a lot greater on some routes and at some airports than at others. But the FAA won't tell you that. They want to preserve your naive trust in government protection.
That leaves the job to small, under-funded outfits like the nonprofit Aviation Safety Institute In Worthington, Ohio. The ASI operates a 24-hour-a-day toll-free hot line by which pilots and air traffic controllers can report near-misses, safety violations, and equipment failures—anonymously, without fear of FAA or company reprisals. The ASI stores the data in its computer and sends out notices of particular hazards in its biweekly newsletter, Monitor.
REASON asked ASI president John Galipault to prepare a few computer printouts showing comparative levels of hazard. The results, tabulated here, are quite revealing. At the nine busy airports from which ASI receives regular reports, the number of near-misses in 1977 ranged from three to eight. When these numbers are adjusted for relative traffic levels, the rate of near-miss occurrence ranges from a low of 7.89 per million operations (takeoffs and landings) at Dallas–Ft. Worth Airport (DFW) to a high of 30.3 at New Orleans (MSY). These data are not comprehensive, since they are based on voluntary self-reporting by FAA and airline employees. Most likely, actual rates of near-misses are much higher. And data from some of the country's busiest airports—LAX and JFK among them—were not available, since ASI receives no regular reports from them. But travelers would do well to avoid New Orleans and Philadelphia, in comparison with the other airports listed here.
The ASI printouts also cover 10 of the FAA's air route traffic control centers, which monitor and control flights between cities. Here, too, the variation is substantial, ranging from a low of 0.56 near-misses per million IFR (Instrument flight) operations controlled by the Cleveland center (ZOB) to a high of 9.04 at Jacksonville center (ZJX)—16 times as high! Even more shocking is the rate at which "system errors"—human mistakes or equipment failures—occur at ZJX. The Jacksonville center's system error rate was a whopping 23.83, vastly higher than second-place Chicago center (ZAU) at 3.49 or third-place Oakland (ZOA) at 3.37. The Jacksonville center controls a stretch of the very busy New York–Miami route from south Georgia to north Florida. So if your winter vacation includes this route, maybe you'd be better off taking the train. Information of this kind, allowing travelers to assess their own risks, is carefully suppressed by the FAA. If air traffic control and air safety enforcement were provided privately, there would likely be quite a market for such data. What multinational corporation would route their $800,000-a-year chief executive along the Jacksonville center's route when they could find an alternative, safer routing? The ASI incident-reporting program can be seen as prototypical of the kind of information the market would supply, once safety became a marketing factor. Relative malfunction rates of Sabreliners versus Learjets versus Jetstars, engine failure rates of 747s versus DC-10s and L-1011s, radar failure rates at various traffic control centers—all would be exposed to public scrutiny rather than hidden away In the bowels of the FAA.
The post Is This Any Way to Run an Airway? appeared first on Reason.com.
]]>"How to Build Infrastructure During an Age of Sequester: Reason Foundation's Robert W. Poole" is the latest offering from Reason TV.
Watch above or click on the link below for video, full text, supporting links, downloadable versions, and more Reason TV clips.
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]]>About twice a decade someone comes along with a book denouncing airline deregulation as a threat to safety. It always turns out that what the author is really lamenting is the loss of monopoly wages and benefits for the employees of a formerly cartelized industry. This year's installment in that ongoing series is travel reporter William McGee's Attention All Passengers.
Compared to some of the previous contributors to the genre (Ralph Nader, John Nance, Mary Schiavo), McGee has done a credible job of research, interviewing aviation experts, and presenting a selection of their views, even when they conflict with his thesis. But instead of confronting their points, he simply proceeds with his own argument, untroubled.
Here is the tall tale McGee wants us to buy: Back in the 1960s and '70s, the airlines were wonderful places to work. (McGee was a dispatcher at "the world's greatest airline," Pan Am.) Flying was a pleasure for passengers: free meals, leg room, numerous empty seats, big planes going to small towns, etc. Then along came this thing called deregulation, with the ensuing dog-eat-dog competition kicking off a downward spiral that has continued to this day, worsening dramatically during the last decade.
Fares are so low now that airlines chronically lose money, forcing them to slash their work forces by outsourcing just about everything (even heavy maintenance, some of which is now done overseas!), automating the check-in process, and jamming their planes to more than 80 percent of capacity. They have abandoned small towns and cities to regional airlines with poor safety records and small, uncomfortable planes.
McGee's remedy? "Partial" reregulation, tougher antitrust enforcement, a ban on offshore maintenance, an overhaul of bankruptcy laws, and much more.
McGee's critique suffers from internal inconsistency. Generally he laments the airlines' broken business model, which can't seem to make profits. Yet he also complains that the airlines have "virtually unlimited resources" for lobbying and influencing public opinion. Even while bemoaning airlines' profitability problems, he carps throughout the book about their significant productivity gains in recent decades, thanks to technology (online booking, check-in kiosks), outsourcing of various functions to lower-cost providers, and unbundling of pricing (the separation of cost components like meals, luggage, and early check-in).
McGee also makes the mistake of treating "the airlines" (or at least those flying nationally) as a homogenous group, ignoring major differences between the legacy carriers that have merged into a handful of megacarriers and their more nimble competitors—not just Southwest and JetBlue, but Alaska, Allegiant, Hawaiian, Spirit, and Virgin America. Each of the latter has pioneered a unique business model, carving out its own market niche (or niches). Allegiant, for example, is a travel company that includes an airline focused on leisure travelers who live in secondary markets (such as Bellingham, Washington) and want to go to resorts in Florida, Hawaii, and Las Vegas. Hawaiian has evolved from a mostly inter-island carrier to a long-haul trans-Pacific airline, and as Aviation Week recently put it, this kind of "expansion pays off for Hawaiian." But in McGee's world, it's as if these airlines and their market-discovery business plans don't even exist.
When economist Alfred Kahn, with the help of Sen. Ted Kennedy (D-Mass.), brought about airline deregulation in 1978, many (myself included) warned that after 40-odd years as a heavily regulated cartel, the legacy airlines would have great difficulty adjusting to free competition. And so they did. Most of the old names—Braniff, Eastern, National, Northwest, Pan American, and TWA—went under, but commercial aviation boomed, with competition producing lower fares that saved passengers tens of billions of dollars per year. The few legacy carriers that remain standing—American, Delta, United/Continental, and US Airways—have all gone through bankruptcy proceedings.
Yet air travel and the airline industry is far bigger today than in 1978, with 3.6 times as many annual passenger miles. That is due mainly to the long-term decline in airfares brought about by deregulation. Adjusted for inflation, the average domestic round-trip ticket cost $578 in 1979, compared with $322 in 2009 (and a bit higher last year). You won't find those figures in Attention All Passengers.
McGee's most troubling claim is that air safety is at risk. He blames two factors: the shift of more than 50 percent of all departures from major airlines to regional carriers (typically operating small regional jets or turboprops) and the large-scale outsourcing of aircraft and engine maintenance.
As is typical of consumer reporters, McGee presents mostly anecdotes, not data, to suggest that much of outsourced maintenance is performed by unqualified and poorly regulated repair businesses. He says "much" of this work is done "outside the United States in developing countries, in El Salvador, in Mexico, China, Singapore." Yet according to the Department of Transportation inspector general's report that McGee cites, 661 of 907 repair stations used by U.S. airlines are in the United States, and another 69 are in Canada; a large (unspecified) number are in Europe; and fewer than 200 are in Central America or Asia. The maintenance, repair, and overhaul industry is global and generally well respected, but you'd never know this from the book's anecdotes.
McGee relays complaints from Federal Aviation Administration safety inspectors that they don't have ready access to overseas repair stations. In some cases, that may be true. But he ignores the fact that several other levels of oversight exist.
First, by law, the airlines are responsible for the airworthiness of their fleets, and proper maintenance is a precondition for airworthiness. Airlines conduct regular maintenance audits of their contractors, including on-site visits. In many cases they have on-site employees overseeing their contractors' work. Not a word about any of this appears in Attention All Passengers.
McGee also tries to frighten readers by suggesting that planes overhauled at Chinese repair stations get put back into passenger service without being tested, although the planes' cockpit crews must fly them back to the United States. Later in the book, he concedes this point by citing critical entries that Northwest pilots made in their maintenance log book on such a return flight.
Ultimately, the proof of McGee's safety allegations should show up in airline accident records. While he never provides such data, I dug into the National Transportation Safety Board's accident database and retrieved airline safety data going back to 1947, tracking fatal accidents in absolute numbers, per million miles flown, and per million aircraft departures. (Since fatal accidents were rather rare events even in the early post?World War II years, trends are more easily seen by using 10-year averages.) Both before and after deregulation, fatalities per mile and per flight have steadily declined. (See chart.) Aviation safety was improving prior to deregulation and has continued to improve since then.
Some advocates of reregulation argue that the fatal accident rate per million passenger miles disguises what's happening with regional airlines, since the major airlines fly the vast majority of all miles. That's why I included the rate based on aircraft departures, since regional carriers make a bit more than 50 percent of all departures. And during the most recent decade, when the growth of regional airlines reached its highest rate ever, safety continued improving.
Since McGee's lament about the decimation of airline employment due to outsourcing is equally data-free, I obtained numbers from the airline trade group Airlines for America on total U.S. airline employment from 1971 to the present. From 1971 to 1978, airline employment grew slowly, from 284,000 to 313,000. And then it took off, reaching 406,000 by 1988 and an all-time peak of 547,000 in 2000, 74 percent higher than in the year of deregulation. Since then, however, the twin shocks of 9/11 and much higher fuel prices have led to airline cost cutting and outsourcing, resulting in 386,000 employees as of 2011. So McGee is right about recent job shrinkage, but today's number is still 23 percent higher than when airlines were deregulated in 1978.
McGee was a guest recently on NPR's Diane Rehm Show, along with "Ask the Pilot" columnist John Cox and Air Line Pilots Association President Lee Moak. Cox and Moak dismissed McGee's safety scaremongering as groundless. As Cox put it, "Those of us that are involved in airline safety, we're looking at this data for trends all the time, and the safety has gotten better." Washington Post transportation reporter Ashley Halsey III added, "Lee's pilots would be complaining, loudly and very publicly, if they felt that they were being given substandard equipment."
Unleashing competition on an industry that had been in a regulatory straitjacket for four decades was bound to lead to "creative destruction." Tools such as outsourcing, automation, and creative pricing are all part of the discovery process as airlines seek viable business models for a sector that was badly in need of fundamental change. More evolution is likely (and necessary) in coming years, but so far three decades of deregulation have served airline customers well.
The post Reregulation Fantasy appeared first on Reason.com.
]]>This is one of three related articles, each making a specifically libertarian argument for the Democratic, Republican, or Libertarian presidential contender.
Should libertarians like me declare a pox on both major parties' houses by voting for the Libertarian Party candidate, Gary Johnson? Or should we opt for the Republican Mitt Romney, who I think would be significantly less bad than the Democratic incumbent, Barack Obama?
Over the decades since I first became eligible to vote, I have often faced this choice in presidential elections. Sometimes I voted Libertarian, and other times I voted Republican, depending on the circumstances. This year, as a resident of Florida, there is no question that I will vote for the Romney/Ryan ticket. If I lived in a different state, my choice might be different.
My prime consideration in deciding how to vote in 2012 is the future of liberty. I've considered myself a libertarian since my college days, when I was good friends with Dave Nolan, an MIT classmate and subsequent founder of the Libertarian Party in 1971. While I did not attend the first LP convention, I participated actively in the LP's first 15 years, as a delegate to state and national conventions and once or twice serving on the national platform committee. Most of my professional career has been devoted to advancing liberty, building a national magazine and a national think tank devoted to that end.
In Gary Johnson, the LP has the most credible and best-qualified candidate it has ever run. After building and running a successful business, he was elected governor of New Mexico, winning as a Republican in a traditionally Democratic state. He reduced numerous taxes and vetoed countless bills that threatened personal or economic liberty, and was re-elected to a second term in which he did likewise. In short, he has demonstrated the ability to apply libertarian principles in the executive branch of government, and he did so in a manner that led to him being re-elected in a state that seldom elects Republicans.
Unfortunately, Gary Johnson has no chance of being elected President in November. If the two major-party candidates offered the kind of Tweedledum and Tweedledee choice that libertarians rightly disdain, I would proudly vote LP this time around, hoping for a powerful vote total that would send a message that many voters are fed up with politics as usual.
But in fact—and despite Gov. Romney being a long way from libertarian—the differences between a Romney administration and another four years of Obama have major implications for liberty. They really do reflect two different conceptions of the role of the federal government, with the former focused largely on getting government out of the way of entrepreneurs and investors and the latter intent on government management of the economy. To be sure, a Romney administration might not govern consistently with its market-friendly rhetoric, but I cannot imagine it being less market-friendly than the current administration.
The most important policy issue of this election is fixing the looming insolvency of the federal government. The Obama approach would basically accept the federal role in ever-expanding entitlement spending and would increase taxation to whatever fraction of GDP it would take to eventually reach budget balance. The other approach is to ratchet down the federal government's role over time, reducing it to its historic share of peacetime GDP. The plan put forth by Romney's running mate, Wisconsin Rep. Paul Ryan, is a start on this project. The other side seems committed to making America into something like a European social-democratic welfare state. That, by itself, would be enough to determine my November choice.
Another crucially important issue is the Supreme Court. It is likely that the next president will fill one or more vacancies on the Supreme Court, if either Kennedy or Scalia steps down during the next few years. Despite many losses for liberty, recent years have seen many 5-4 decisions that would have gone the other way if one of these justices had been replaced by a liberal Democrat. Many of these decisions protected personal or economic liberty. A Supreme Court less supportive of individual liberty, property rights, and economic freedom would have far-reaching consequences for decades to come.
Yet another other critically important issue is political appointees to the numerous executive branch agencies. In my work on federal policy issues over the past 30 years, I have worked with appointees of both parties, some good and some bad. My assessment is that a Romney/Ryan administration would appoint far more market-friendly people to key agencies like the Department of Transportation, the Environmental Protection Agency, the Justice Department, the Federal Trade Commission, and more. These people's decisions have enormous consequences for the economy. It is at this level that rules and policy details are written, and the implementation of policies is often as important as the policies themselves.
I have left for last the final reason why I will vote for Romney in November. I live in Florida, which is a swing state. Depending on who's counting, there are between seven (Colorado, Florida, North Carolina, New Hampshire, Nevada, Ohio, and Virginia) and 11 (adding Iowa, New Mexico, Pennsylvania, and Wisconsin) swing states. It the votes in these places that will very likely tip the balance to either Obama or Romney. Were I still living in California (which will go solidly for Obama), my vote for Johnson would "send a message" without affecting the final outcome. But since I live in Florida, I will vote Romney.
I hope my libertarian friends in swing states do likewise.
Related Stories
"The Libertarian Case for Gary Johnson," by Nick Gillespie
"The Libertarian Case for Barack Obama," by Mike Godwin
"Who's Getting Our Votes?: Reason Writers' 2012 Presidential Picks"
The post The Libertarian Case for Mitt Romney appeared first on Reason.com.
]]>Atlanta. After several years of study, the Georgia Department of Transportation in December 2009 adopted a $16 billion plan to add express toll lanes to nearly all the metro area's freeways. The first project, built by a public-private partnership similar to those adding capacity on the Capital Beltway and in Dallas/Fort Worth, will be on the I-75 and I-575, just outside the I-285 ring road (known locally as the Perimeter). Separately, the local toll agency is converting HOV lanes into HOT lanes on a 15-mile stretch of I-85.
Miami. The Florida Department of Transportation (FDOT) added one lane each way when it converted HOV lanes into HOT lanes on I-95 in 2008. Where there was previously a single congested HOV lane in each direction, there are now two variably priced express lanes, which have brought major congestion relief (as well as faster and more reliable express bus service). FDOT has embraced a public-private partnership to rebuild I-595 in Fort Lauderdale, adding three reversible express toll lanes to this congested east-west commuter route. FDOT is also studying a complete network of such lanes for the three-county metro area.
Houston. The local toll agency financed the addition of two HOT lanes each way as part of the complete reconstruction of the Katy Freeway, which opened to traffic in 2008. Houston Metro, the local transit agency, is in the process of converting HOVs into HOTs on five freeways. Texas DOT is considering a public-private partnership for much of a planned outer beltway, the Grand Parkway.
Phoenix. The Arizona legislature passed public-private partnership legislation for transportation in 2009. The Arizona Department of Transportation and the metropolitan planning organization for greater Phoenix are developing plans for a number of HOT lanes in the region, most of which are expected to be privately financed and developed.
Los Angeles. Southern California, the longtime congestion capital of the United States, until recently had only one express toll project, the landmark 10-mile 91 Express Lanes in Orange County. But Los Angeles County is now converting HOV lanes on the Harbor and San Bernardino freeways into HOT lanes. The metropolitan planning agency is considering plans for a region-wide network of such lanes. Projects are in the planning or development stages in Orange, Riverside, and San Bernardino counties. Current plans call for using public-private partnerships to add several missing links to the region's freeway system, including a five-mile toll tunnel on I-710 (beneath South Pasadena) and the planned 63-mile High Desert Corridor in northern Los Angeles County.
San Francisco. Although no public-private partnership proposals have yet surfaced, the Bay Area has opened two HOT lanes in the East Bay and has several more under development in Silicon Valley. Its metropolitan planning organization was one of the first in the nation to include a region-wide network of HOT lanes in its long-term transportation plan.
Seattle. The Washington State Department of Transportation (WSDOT) reintroduced toll financing in the Puget Sound region a decade ago for the second span of the Tacoma Narrows Bridge. Two other major projects—a toll tunnel to replace the structurally unsound Alaskan Way Viaduct and a new toll bridge to replace the SR 520 floating bridge—are under way. The legislature may allow a long-term public-private concession for WSDOT's $2 billion project to add express toll lanes to about 40 miles of I-405 in Renton, Bellevue, and Redmond.
Of the 18 most congested metro areas, whose 2009 congestion costs totaled $72 billion (out of the national total of $115 billion), the only ones thus far largely ignoring these trends are New York, Philadelphia, Boston, and Detroit.
The post Unblocking the Box appeared first on Reason.com.
]]>The Texas Transportation Institute (TTI), which has been measuring the cost of traffic congestion in wasted time and fuel for three decades, estimates that in current dollars the traffic penalty rose from $24 billion in 1982 to $115 billion in 2009 (the latest year for which complete data are available). The average urban commuter wastes 34 hours a year in rush-hour congestion today, compared with just 14 hours in 1982.
Those average figures reflect all 439 urban areas. But if you live and work in one of the 20 largest metropolitan areas, you're stuck in an even worse jam. In Los Angeles, the average commuter wastes 63 hours a year due to congestion. In Dallas/Ft. Worth, it's 48 hours a year. And in the Washington, D.C., area, it's a whopping 70—almost nine full working days that drivers could have back if only freeways and streets delivered motorists at the advertised speed.
Congestion does far more harm than simply wasting time and fuel. By reducing the area you can traverse in, say, 30 minutes, congestion shrinks your "opportunity circle" of jobs, entertainment, housing, and even dating. Economists find that reduced opportunity circles due to congestion inhibit the best matches between skilled workers and employers, reducing the economic productivity of congested urban areas. The chief economist at the U.S. Department of Transportation has estimated that the true annual economic cost of congestion is at least double the $115 billion figure noted above.
Why does congestion keep getting worse, and what can be done about it? While there is no single answer to either question, a principal reason for ever worse congestion is that the demand for road space (especially on urban freeways) greatly exceeds the supply. That's because after the initial burst of freeway building in the 1960s and '70s, additions to freeways slowed way down while population and economic growth continued apace. Some analysts liken the result to cramming 10 pounds of potatoes into a five-pound sack.
From 1984 to 2009, the TTI estimates, daily traffic on the freeway systems of America's 18 most congested metro areas increased by 142 percent while their capacity (measured in lane-miles) grew only half as much (72 percent). In most cases, that means freeways today are attempting to handle vastly more traffic than they were designed for. That also explains why "rush hour" in major metro areas today runs about three hours in the morning and another three or four hours in the evening.
Again, those are averages. A few metro areas, such as Houston, have expanded freeways much more than 72 percent. But others, such as Los Angeles, San Francisco, San Diego, and Minneapolis, have added only 25 percent to 30 percent more capacity. TTI's 2010 Urban Mobility Report cites a strong inverse correlation between capacity and congestion: In the 13 metro areas that have expanded freeway capacity nearly enough to keep pace with travel demand, congestion is only about one-third worse today than it was in 1982, while the 42 metro areas where the gap between demand and capacity was greatest ended up with congestion about 140 percent worse in 2010 than in 1982.
Building Our Way Out of Congestion
Given the enormous cost of congestion and its relentless increase during the last 25 years, why haven't more metro areas at least attempted to keep pace with the growth in traffic? There are two main reasons.
First, it has become far more costly to widen freeways and build new ones as urban areas have filled in with expensive development. The cost is political as well as economic. Unlike in the early days of freeway building, you can't just bulldoze neighborhoods wherever a new freeway would make transportation sense (on the whole, a positive development), and anything you do build must go through costly and time-consuming environmental reviews.
Second, many transportation planners and politicians believe that expanding road capacity is futile. If you build more, they say, the new lanes will simply fill up with more cars, and within a few years you'll be back where you started. This is only partly true.
Some research does suggest that if you add a small amount of capacity in a place like Los Angeles, where roadway supply and demand are massively out of whack, the latent demand for faster travel during rush hours will fill the new capacity in short order. Still, the long-term data from TTI demonstrate clearly that if a metro area can keep increasing capacity in step with demand, it will end up with far less congestion than places that don't.
Yet because the notion that "we can't build our way out of congestion" is widely accepted, the long-range transportation plans of most large metro areas these days are premised not on making it easier for commuters to engage in their demonstrated preference but rather on the vain hope of "getting people out of their cars."
Road construction receives a low priority in modern America, in favor of expanding mass transit and encouraging "active transportation" (biking and walking) by building more sidewalks and networks of bike lanes. In many of the largest metro areas during the last two decades, approved expansions of freeway capacity have been limited almost entirely to new carpool lanes. If people are going to stick with driving, the planners reason, we should at least push them to share rides by constructing preferential lanes for high-occupancy vehicles.
Congestion Pricing
When I first moved to Los Angeles from bucolic Santa Barbara in 1986, my easy five-minute commute was replaced by 30 to 45 minutes of L.A. freeway hell to go just 10 miles. Certain that there had to be a better way, I discovered the work of a small band of transportation researchers who were convinced that the missing ingredient in bringing freeway demand into sync with capacity was market pricing. Pioneered in the United States by Columbia University economist William Vickrey, who won a Nobel Prize in 1996, road pricing (later known as congestion pricing) had languished due to the lack of a workable method to charge variable prices. A New Mexico company called Amtech was in the process of addressing that gap by developing the first "toll tag" transponder.
Even with this new technology, I could not imagine tradition-bound state transportation agencies using it to charge market prices on freeways. Yet for several decades, high-quality toll roads had already been financed, built, and operated by investor-owned companies in France, Italy, and Spain. The governments there would grant a company a long-term franchise, similar to those used for investor-owned electric utilities in the United States. Based on the franchise (called a "concession"), winning bidders could raise the capital to build the toll road, repaying their investors from toll revenues. So my proposal, in a 1988 policy paper published by the Reason Foundation, the 501(c)(3) nonprofit organization that publishes this magazine, was to invite the private sector to finance, build, and operate market-priced lanes on Southern California's congested freeways.
That paper soon came to the attention of Gov. George Deukmejian and California Department of Transportation (Caltrans) Director Bob Best, and in 1989 they secured passage of legislation to permit up to four pilot projects based on the idea. The first project to be developed was the 91 Express Lanes, four new variably priced lanes in the wide median on 10 miles of the highly congested SR 91 freeway in Orange County. The lanes, built for just $130 million in 1995 dollars, opened to traffic in December 1995, allowing commuters who had purchased transponders to decide whether higher speed was worth the congestion-sensitive price listed at the entrance of the passage.
Although derided by skeptics, the tollway proved hugely popular. The demand for improved mobility was high enough that the Express Lanes have fully covered construction costs (via annual debt service payments on long-term toll revenue bonds) as well as all ongoing operation and maintenance expenses.
The 91 experiment demonstrated four important things. First, the long-term toll concession model from Europe is transferable to the United States. Second, many people are willing to pay for faster and more reliable rush-hour trips in highly congested freeway corridors. Third, transponder technology is a practical way of implementing congestion pricing. Fourth, variable, demand-based pricing is effective in keeping priced lanes flowing freely at the speed limit, even during the busiest rush-hour periods.
Challenging the Carpool-Lane Model
At first the success of the 91 Express Lanes did not stimulate much private-sector investment in congestion-relief lanes. But it did encourage the conversion of high-occupancy vehicle (HOV) lanes into something else the Reason Foundation invented: high-occupancy toll (HOT) lanes. By the early 1990s, research had found that HOV lanes make sense in only very limited conditions. Most such lanes—restricted to buses, vanpools, and carpools—were seriously underutilized. Commuters stuck in congestion in regular lanes fumed at the empty road to their left. And in a few cases in very congested metro areas, HOV lanes were jammed, to the point where they became nearly as backed up as regular lanes. The remedy for the latter problem was supposed to be increasing the required occupancy from two people to three—but that proved very difficult politically and therefore was rarely adopted. Thus, most HOV lanes were (and are) either too empty or too full.
Nearly all HOV lanes were built with federal money, making it illegal to convert them back to regular lanes despite their unpopularity. (The only known case of such a conversion, involving two HOV facilities in New Jersey, was authorized by a provision that a few of the state's representatives in Congress slipped into an unrelated 1998 bill.) So why not make lemonade out of these lemons, we proposed in 1993, by selling the excess capacity in underutilized HOV lanes to willing buyers? During the next 15 years, about a dozen HOV lane facilities were thus converted to HOT lanes in metro areas ranging from San Diego to Minneapolis to Miami, with each conversion adding to the evidence that commuters welcome having the choice between congested free lanes and uncongested pay lanes.
This evidence was not lost on those interested in investor-owned, toll-financed projects similar to the 91 Express Lanes. The second major such project, proposed to the Virginia Department of Transportation (VDOT) in 2002, was aimed at adding express toll lanes to the congestion-choked Capital Beltway in the Northern Virginia suburbs of Washington, D.C.
The Beltway is known to many locals as "the world's largest parking lot." Motorists desperately wanted relief, but the only plan VDOT had was a $3 billion project to add two old-style HOV lanes in each direction on the most congested 14-mile portion (the southwest quadrant) of the Beltway. There were two big problems with this plan: It faced enormous opposition because it required the condemnation of more than 300 homes and businesses to widen the Beltway, and VDOT didn't have anything close to $3 billion on hand.
Thinking Outside the Box
Fortunately, the Virginia legislature in 1995 had enacted the Public-Private Transportation Act, which authorized long-term toll concessions. Like California's 1989 law authorizing pilot toll-road projects, the Virginia law allowed private companies to make unsolicited proposals, rather than merely responding to VDOT requests. In 2002 one of America's leading engineering and construction firms, Fluor, submitted a proposal to fix the congestion problem on the Beltway. Rather than building tax-funded HOV lanes, Fluor proposed toll-funded HOT lanes. And rather than massively widening the Beltway, Fluor suggested an approach that would still add two lanes in each direction but would require only six takings of private property, mostly to accommodate rebuilt bridges and on/off ramps. The cost was estimated at $1 billion (one-third the cost of VDOT's plan), to be financed based on toll revenues. This was the 91 Express Lanes on steroids.
VDOT responded cautiously but positively to the proposal, beginning what ended up being several years of discussions about "design exceptions" that Fluor wanted in order to reduce the project's cost and footprint. Meanwhile, the company pitched the project to dozens of business and community groups in the Virginia suburbs. As Gary Groat, who was then Fluor's project development director, explained to me, federal rules (which had to be followed, since the Beltway is an interstate highway, I-495) forbid a state transportation department from "taking sides" on a proposed highway project while it is in the environmental evaluation phase. But no such restriction applies to the private-sector proponent. So Groat organized presentation after presentation, explaining HOT lanes and congestion pricing, the relatively low cost of the project, and the proposed financing based on toll revenue, all of which would make it possible to build the project in the near term (unlike VDOT's unaffordable HOV lanes). Most of all, Groat stressed the huge reduction in property takings entailed by Fluor's plan. These presentations, over several years, turned what had been strong opposition to the HOV lanes plan into wide support for the HOT lanes alternative.
As negotiations with VDOT progressed, the agency required many changes that would raise the project's cost; in addition, construction costs had increased significantly during the five years of review and negotiation. With the price tag now pushing $1.9 billion, it became apparent to Fluor that toll revenues alone would not pay for the project. This realization led to two key changes. First, the company teamed up with the Australian toll road company Transurban as both an investor and the planned operator. Second, the deal became a public-private partnership in which VDOT would contribute $409 million to cover most of its changes while Fluor/Transurban would finance the remaining $1.5 billion based on toll revenues. The deal was finalized in 2007, and the "financial close" took place in December of that year. It is noteworthy that investors were willing to commit to the project during the early months of the credit market crunch, which suggests the power of the financial model for toll lanes.
Construction began in spring 2008, and the project is scheduled to open to traffic by late 2012. Relief from rush-hour gridlock is finally in sight for hard-pressed Beltway commuters. Furthermore, the impending reality of the Beltway HOT lanes has stimulated serious research and planning for what could end up being a whole network of market-priced toll lanes in the D.C. metro area. Fluor/Transurban is negotiating a second project, which would convert 59 miles of the existing reversible two-lane HOV facility on I-95 approaching D.C. from the south into HOT lanes.
Commuters in the D.C. metro area waste, on average, more than $1,500 a year in time and fuel due to congestion. The overall metro-area congestion cost in 2009 was $4 billion, eight times as high as the corresponding cost in 1984 when adjusted for inflation. So it's a promising sign that the Metropolitan Washington Council of Governments is refining plans for a region-wide network of congestion-priced lanes that could become an official part of the region's long-range transportation plan within the next year or so.
Dallas and Fort Worth Join the Parade
Although policy makers in Texas have been more inclined to add highway capacity than their counterparts in many other parts of the country, the state has grown so much during the last 25 years that its highway fuel-tax funds have not kept pace. Consequently, the Dallas/Ft. Worth metro area ranks fifth in the nation in congestion cost, at $3.7 billion per year, with 66 percent of rush-hour travel occurring in congested conditions. Early last decade the Texas legislature passed a sweeping transportation public-private partnership act, aiming to tap into toll-based private capital to add needed capacity, especially on urban freeways.
The most congested part of Dallas has long been the LBJ Freeway (I-635). It constitutes the northern and eastern portions of an inner beltway (or "loop," in local lingo) around the city. When the LBJ was last expanded, the project was controversial due to the high-value properties along much of the corridor. In response, the Texas Department of Transportation (TxDOT) promised this would be the last widening of the freeway's footprint. But with continued growth in the metro area, the LBJ quickly ran out of capacity.
Because of its commitment not to expand the freeway's footprint, TxDOT approved a plan to add LBJ HOT lanes—up to three in each direction—by building tunnels beneath the existing freeway. When the agency issued a request for proposals, however, it took the open-minded approach of allowing bidders to propose alternatives. Of the two finalists, one went with the tunnels idea, at an estimated cost of $3.3 billion. But the winning bid, from Cintra/Meridiam, proposed an alternative that would cost only $2.6 billion. Via very creative engineering, the consortium proposed building most of the new toll lanes below the level of the main freeway lanes, with the main lanes cantilevered over the depressed express lanes. While in some ways more complicated to build, this approach produced significantly more roadway per dollar.
As with the Beltway project in Northern Virginia, what TxDOT required—including full reconstruction of existing lanes and maintenance of the whole project for 52 years—proved more costly than the projected toll revenues could finance. The department therefore offered up to $700 million in state highway funds up front. But the winning bidder requested only $496 million, so TxDOT got the lanes it wanted while saving more than $200 million for other projects. And since Cintra/Meridiam had to finance only $2.6 billion, what the consortium needs to recover in toll revenues is significantly less than what tunnels would have cost.
This project also was financed during the credit market crunch, in June 2008. The tax-exempt private activity bonds received an investment-grade rating. Cintra, Meridiam, and the local fire and police pension fund together invested $665 million in private equity—an indication of investor confidence in the robustness of projected toll revenues over the 52-year concession period. The project is now under construction and expected to open to traffic in 2015.
Only six months earlier, the same Cintra/Meridiam team reached financial close on a slightly less ambitious toll-lanes project on the other side of the metro area: the $2.1 billion North Tarrant Express. This project will double the capacity of a 13-mile stretch of I-820 and SH 121/183 on the northeast side of Fort Worth, providing access from there to the huge DFW Airport. On I-820, the four new toll lanes can fit into the median, between the existing regular lanes. But on SH 183, some of the new lanes will be elevated, due to much less available right of way.
Are We There Yet?
We are on the verge of a paradigm shift in transportation. The ultimate manifestation of this re-think might be that investor-owned limited-access highways become a new category of utility, analogous to America's largely investor-owned electricity, natural gas, and telecommunications sectors, and the partially investor-owned water utility sector.
Steve Lockwood, a senior policy official at the Federal Highway Administration during the George H.W. Bush administration, helped build the case for loosening federal restrictions on tolling and pricing in the 1991 reauthorization of the federal highway and transit program. In a series of talks over several years, Lockwood made the analogy between highways and other network utilities, and even suggested that in the 21st century state transportation departments might evolve into public/private "transcorps" that would operate as businesses, more like state turnpike agencies than typical departments. The concept of investor-owned highways was independently fleshed out by former World Bank transport economist Gabriel Roth in his 1996 book Roads in a Market Economy.
Despite America's 19th-century history of privately franchised toll roads, most people have trouble seeing highways as businesses. If they have been exposed to economics, they think of roads as classic examples of "public goods," which must be provided by government because there's no way to exclude those who won't pay for them. While that might be mostly true for city streets and boulevards, it is not a problem for limited-access highways, where entry can only occur at certain points and charging for use is easy thanks to 21st-century electronic tolling, which is eliminating toll booths altogether. Just as electric utilities can charge variable rates to encourage customers to not use power-hungry appliances during periods of peak demand, expressway companies can charge more during rush hour to encourage motorists to shift nonessential trips to off-peak times.
In light of ever-worsening congestion, America's urban freeways constitute a massive case of government failure. They do not give their customers reliable mobility, and their method of financing (via flat-rate fuel taxes) vastly undercharges urban users (especially during rush hours) and generally overcharges rural highway users, whose roads cost far less to build. And without market pricing, we don't know how much urban expressway capacity people would be willing to pay for.
The private sector is capable of taking on the challenge of reinventing America's freeways. In recent years, several hundred global infrastructure investment funds have been created by investment banks, fund managers, and pension funds. As of 2011, Infrastructure Investor reported, the 30 largest such funds had raised $183 billion during the previous six years. The financial firm Probitas Partners estimated that all such funds had raised $200 billion by then. That kind of money is intended as equity investment, covering perhaps 25 percent of a project's cost, with the balance financed through bonds and other forms of debt. Thus, if these funds reach a total of $250 billion, that should make possible $1 trillion of infrastructure project investment, which could help expand and modernize a whole lot of congested, aging freeways.
Another factor supporting a paradigm shift is the increasing obsolescence of the fuel tax as America's primary highway funding source. The rising price of oil has motivated both business and government to seek alternatives to gasoline- and diesel-powered vehicles. Government-mandated increases in fuel economy have already reduced the yield of per gallon fuel taxes, since people today can drive twice as far on a gallon of gas as they did 25 years ago. By 2025 average fuel economy is mandated to double again, which will produce gaping shortfalls in highway-dedicated revenue (even if politicians were to stop siphoning off highway money to pay for bike paths and streetcars).
We will have to shift to a more direct means of paying for highway use, and some form of per-mile electronic toll charge is almost certainly the best way forward. As the reality of this change sinks in, people may be able to get their minds around the concept of paying their monthly highway bill, just as they pay their monthly electricity, gas, and water bills.
Chronic freeway congestion ought to be intolerable to Americans. It's a crude form of rationing, based on time instead of money, like Soviet bread lines. The idea that everyone should be equally miserable, stuck in congestion, is similarly un-American. HOT lanes and toll concessions have given us a glimpse at a better future.
Robert W. Poole Jr. is director of transportation policy at the Reason Foundation.
The post Fixing America's Freeways appeared first on Reason.com.
]]>Toll lanes are only for the wealthy.
This is the classic "Lexus Lanes" argument that comes up whenever a high-occupancy toll (HOT) lane or express toll lane is proposed. It is foolish in the sense that we can choose from various levels of quality, for different prices, everywhere else in our lives (Starbucks vs. Maxwell House, FedEx vs. U.S. Postal Service, even first-class vs. coach seats on government-run Amtrak). It is also false: We have extensive data showing that people of all income levels use toll lanes and appreciate having the choice. On any given day, a large majority of those who choose the pay lanes are people who do so only once or twice a week, for particularly time-sensitive trips—an expense that even people of modest means can afford.
Concessions are a foreign idea that should be rejected in the land of the freeway.
While it is true that toll concessions have an established track record dating back to the 1960s in Europe, and the late 1980s and '90s in Australia and Latin America, the idea also has a long American pedigree.
As George Mason University economist Daniel Klein has documented, most 19th-century American highways were developed as toll concessions—first in the Northeast, later into the Midwest, and finally in California, Nevada, and other parts of the developing Southwest. The concept was also applied to toll bridges in the first part of the 20th century, including the Ambassador Bridge in Detroit and several of the toll bridges in the San Francisco Bay Area. What we are seeing now is the revival of a venerable American idea.
Foreign companies should not be buying up our highways.
Some critics have noted that companies based in other countries have taken the lead in most of the large toll road and toll lane projects. That's because until very recently the United States had no companies with expertise in this business.
America has world-class companies that can design and build such facilities, but financing, managing, and operating them as successful businesses is something they had never been asked to do—and hence have no experience with. So it's no surprise that toll companies from Australia, France, and Spain have become major players in the emerging U.S. toll lane and toll road marketplace. But the "foreignness" of these projects is greatly exaggerated.
First, these companies are all from countries that are longtime U.S. allies. Second, nearly all the subcontractors that actually build and maintain these projects are local firms providing local jobs. (For example, 71 of the 72 firms working on the LBJ project in Dallas are based in the U.S.) Third, many of these projects are being developed by joint ventures between a global firm (e.g., Transurban) and a U.S. firm (e.g., Fluor). Spain's Cintra partnered with the well-respected Texas-based Zachry Construction for its first large concession project in that state. Zachry subsequently formed Zachry American Infrastructure to pursue concession projects on its own or in partnership with others. Moreover, several hundred global infrastructure investment funds have been created in the last decade, and 54 percent of the capital for the 30 largest comes from North America, with another 33 percent from Australia.
The private sector is skimming off the cream.
This objection has come from some left-wing groups but more forcefully from government toll agencies in Pennsylvania and Texas. Seeing public-private partnership toll projects as unwanted competition, these agencies have used their clout with state legislators to defeat Gov. Ed Rendell's plan to lease the Pennsylvania Turnpike and to overturn a Texas Department of Transportation decision to award one Dallas-area toll project to the winning private-sector bidder. The fight over "local primacy" for Texas toll agencies led to a two-year moratorium on any additional concessions in 2008 and 2009, subsequently partially lifted.
But in other states, such as Florida, cooler heads have prevailed. The Florida Turnpike and local toll agencies in Miami, Orlando, and Tampa seem to have made their peace with public-private partnerships, recognizing that the private sector can take on greater risks in financing large projects and can therefore play a complementary role.
Setting toll rates is too difficult.
In 2003 I participated, as a consultant to the Florida Department of Transportation, in the first briefing of the Miami-Dade County metropolitan planning organization's board, on what became the I-95 Express lanes project. One of the first questions from the local elected officials on the board was how they would set the toll rates, which we had explained would have to be variable to enable traffic to flow without congestion. It took several years of presenting evidence and ultimately one-on-one briefings to persuade them that the toll rates would have to be outside politicians' control in order to work properly. The good news is that officials increasingly understand this. When the Orange County Transportation Authority purchased the successful 91 Express Lanes in 2003, it retained the variable-pricing model developed by the project's original private owner, despite considerable political pressure to abandon it.
It's not right for people to make a profit from highway users.
Both the left and the right make this argument. It's a favorite theme of the Public Interest Research Group, whose reports on the subject are full of scorn for profit-hungry corporations. But it also bubbles up from the populist right wing, as in this June 2011 complaint from Texans Uniting for Reform and Freedom (TURF): "It's piracy of the public's assets, and state lawmakers of both parties have passed these bills by huge margins, effectively selling off what doesn't even belong to them—our roads and infrastructure belong to the PEOPLE of Texas." The same group also calls tolls "taxes," apparently unable to understand the principle of users pay, users benefit.
The post Toll-road FAQs appeared first on Reason.com.
]]>These are some of the highlights of the latest Reason-Rupe public opinion survey (.pdf) of 1,200 adults via landlines and cell phones.
Public disaffection with federal transportation efforts goes beyond opposition to gas tax increases. Although the federal government has thus far spent $8 billion to fund high-speed rail, only 34% think government should do this, while 55% think high-speed rail should be limited to routes where passengers would pay fares large enough to pay for the service. In addition, while Congress devotes 20% of Highway Trust Fund spending to mass transit, 48% of Americans think that transit should receive no more of transportation funding than its share in travel (which in most places would be less than 5%). And by a margin of 62% to 30% Americans favor robust highway funding, given that most people travel mostly by car, as opposed to the idea that transportation funding should focus on getting people out of their cars by disproportionately funding transit and other non-driving alternatives.
As for alternatives to an expanded federal role, there is considerable support for tolling and public-private partnerships. Some 58% would rather see new highway capacity paid for by tolls than by increased gas taxes (28%). And 57% support converting existing HOV lanes into HOT lanes. A comparable 55% support using public-private partnerships to build critical infrastructure.
These views are considerably at odds with what many transportation planners and media pundits think about transportation policy and hopefully will prompt some serious debate about how to improve the nation's infrastructure by embracing and restoring the users-pay principle to highways and infrastructure.
For more, go to Reason's transportation research and commentary.
The post How People Think We Should Pay for Roads, Transit, High-Speed Rail and Other Infrastructure appeared first on Reason.com.
]]>"TSA quickly launched an investigation and identified the employee responsible. That individual was immediately removed from screening operations and appropriate disciplinary action has been initiated. The handwritten note was highly inappropriate and unprofessional, and TSA has zero tolerance for this type of behavior."
Doing what that screener did is an indication of bad character, which should not be tolerated in those who have access to the contents of people's luggage or the images of their naked bodies on TSA's body-scanning machines. My guess is that had this happened at one of the airports where screening is done by a TSA-certified private screening company, the screener would have been fired, not "disciplined."
Congress needs to address our aviation security system's lack of accountability by eliminating the conflict of interest that exists with TSA serving as both the regulator and provider of airport security. Someone needs to watch the watchmen. Ideally, the government would set the airport security standards and oversee private, TSA-certified screeners.
The post TSA's "Get Your Freak On" Screener Gets "Disciplined" appeared first on Reason.com.
]]>Despite all the hand-waving, guns in checked baggage are not illegal (though they are supposed to be disclosed to the airline and packed unloaded). Nor are they a threat to the safety of flights. And the idea that TSA should minutely inspect everything in checked bags would not only add costs and time to the bag-screening process. It would also make an already overly-intrusive TSA into even more of a threat to people's privacy and liberty.
We need to distinguish here between what is being looked for at passenger checkpoints and what is being looked for in checked baggage. At the passenger checkpoint, TSA is instructed to look for anything that might be used as a weapon by a passenger during the flight—knives, guns, explosive vests, underwear bombs, shoe bombs, etc. Many aviation security experts believe, correctly in my view, knives and guns are not as serious a threat as they were prior to 9/11. That's due to both strengthened and locked cockpit doors and the vigilance of passengers and cabin crews to resist any attempt to gain access to the cockpit.
Checked baggage screening is a different story. Here, the threat being guarded against is explosives. It is to detect explosives in checked bags that airports and the TSA have spent billions purchasing several thousand huge explosive detection machines. They use equipment similar to CAT scanners to check for objects with a density similar to known explosive substances. If a potential object of this type is detected by the machine, the bag is flagged for closer visual inspection.
If TSA policy were changed to require the baggage-screening system to flag any bag containing a long list of items not permitted in carry-on bags (knives, guns, etc.), the number of flagged bags would soar. Inspecting all of them by hand would require more airport security screeners, and significantly more time. That would balloon TSA's already bloated budget and could easily make flights depart late, further inconveniencing air travelers.
Even more serious, in my view, is that this would further interfere with the right to travel unmolested. TSA is not a law enforcement agency. Yet mission creep has affected the agency from the start. A good example is its Behavior Detection Officer program, which now has several thousand agents standing around observing passengers in airport terminals, taking aside for questioning any that look suspicious (based on a check-list each BDO must memorize). That program has not caught a single would-be terrorist. But TSA touts as successes its having nabbed scores of illegal aliens, people carrying small amounts of drugs, etc. There are serious civil liberties issues in giving a non-law-enforcement agency this kind of power. Pawing through people's checked luggage for things that pose no threat to aviation would only expand this threat.
The post Loaded Gun in Checked Luggage at LAX appeared first on Reason.com.
]]>Though Gov. Rick Scott killed the Tampa-to-Orlando high-speed rail line months ago, he continues to get asked about the decision when he crisscrosses the state.
He says it wasn't quite the deal everyone thought it was.
"The federal government, (they said) I'm going to give you $2.4 billion — that sounds nice, right?" Scott told Tampa's local CBS affiliate WTSP this month.
But, "You've got to put up a billion dollars to finish the project."
To evaluate the "truthfulness" of Gov. Scott's statement, PolitiFact focuses almost exclusively on Reason Foundation's January study on the costs of the proposed Florida high-speed rail line, writing:
On Jan. 6, 2011, the Reason Foundation released an analysis about Florida's rail project, which concluded that capital costs to build the line would be higher than anticipated and that ridership would fall short or projections.
Scott relied on the Reason analysis in killing the high-speed rail project a month later.
While the federal government had committed $2.4 billion and the state $280 million, "This report assumes that any cost above $2.7 billion will be borne by Florida taxpayers."
The Reason analysis goes on to cite research by European academics who looked at 258 projects in various countries over 70 years and found that cost overruns occurred in 90 percent of the projects.
"If the Tampa to Orlando high-speed rail line experiences cost escalation typical of international high-speed rail projects, it will cost between $.54 billion and $2.7 billion more than projected," the Reason report states. "Based on averages, most likely the overrun would be about $1.2 billion, all of which would be the responsibility of Florida taxpayers."
The analysis is right to point out that many other rail projects experienced cost overruns. But there are reasons to question its methodology and objectiveness are suspect.
Here are PolitiFact's criticisms of the Reason study:
PolitiFact says: The author of the study, Wendell Cox, is a known rail skeptic, and Robert Poole, a Reason Foundation director whose name was on the report, served on Scott's transition team for transportation issues.
It is interesting that PolitiFact is basically suggesting that you can't be right about high-speed rail's costs if you are in anyway skeptical of the government's rosy predictions. Does advising the governor or preferring cost-effective transportation investments over boondoggles prevent one from being correct in PolitiFact's world? Apparently.
PolitiFact: Much of the expectation [in the Reason study] of cost overruns is based on a list of 258 projects studied by European academics. But those projects are not just rail projects. The study includes bridges, tunnels and highways. In fact, of the 258 projects, only 58 (or 22 percent) are actually rail projects.
PolitiFact's "European academics" point refers to research led by Bent Flyvbjerg, professor of major program management at the University of Oxford's Said Business School. Here is what Flyvbjerg's report (.pdf) found about rail:
"Rail projects incur the highest difference between actual and estimated costs with an average of no less than 44.7%, followed by fixed links averaging 33.8% and roads with 20.4%…. if we subdivide rail projects into high-speed rail, urban rail and conventional rail, we find that high-speed rail tops the list of cost escalation with an average of 52% , followed by urban rail with 45% and conventional rail with 30%…We conclude that the question of whether there are significant differences in cost escalation for rail, fixed links and roads, respectively, must be answered in the affirmative. Average cost escalation for rail projects is substantially and signicantly higher than that of roads, with fixed links in a statistically non-significant middle position between rail and road. Cost escalation for rail is more than twice that of roads. For all three project types, the evidence shows that it is sound advice for policy and decision-makers as well as investors, bankers, media and the public to take any estimate of construction costs with a grain of salt, and especially for rail projects and fixed links."
If PolitiFact is just going to ignore the Flyvbjerg study's findings and suggest that Florida's fantasy cost estimates are correct, shouldn't they point us to a high-speed rail project that came in at, or under, budget, recouped its capital costs, and is currently financially supporting itself? They can't do that because no such high-speed rail project exists.
When Amtrak decided to study how those European trains make money, they instead found out European trains don't make money. Amtrak's Inspector General concluded: "European Passenger Train Operations operate at a financial loss and consequently require significant Public Subsidies."
But again that doesn't fit the PolitiFact narrative.
PolitiFact says: The $1.2 billion overrun estimate [in the Reason study] is created simply by assuming the Florida rail project will cost 45 percent more than anticipated. How is that assumption made? By calculating the average overrun in 258 transportation projects considered. There is no analysis to suggest Florida will experience an "average" cost overrun compared with the other projects.
Actually, there is quite a bit of evidence that Florida could expect at least average overruns. The Reason Foundation projections were based in part on a detailed 11-point comparison between the Tampa-to-Orlando line's claimed construction costs and a segment of the proposed California rail line on similar flat and level terrain. And Florida appeared to be underestimating its costs significantly. Just last week, the California High-Speed Rail Authority revised its own cost projections for the first segment upwards by between approximately 40 and 100 percent. The AP reports:
Building tracks for the first section of California's proposed high-speed rail line will cost $2.9 billion to $6.8 billion more than originally estimated, raising questions about the affordability of the nation's most ambitious rail project at a time when its planning and finances are under fire.
A 2009 business plan developed for the California High-Speed Authority, the entity overseeing the project, estimated costs at about $7.1 billion for the equivalent stretch of tracks. Officials say those estimates were made before detailed engineering work and feedback from communities along the proposed route.
Had this updated cost information about California been available at the time of our Florida analysis, an even higher top range dollar figure for the Tampa-to-Orlando line's likely cost overruns would have been appropriate. PolitiFact might want to look at Reason's 2008 study of California's proposed high-speed rail system. Three years later, basically every point in that report challenging the High-Speed Rail Authority's low-ball cost estimates and outlandish ridership projections has been proven true.
Reason's Florida study also compared Amtrak's ridership levels to Florida's ridership projections, as well as Orlando-to-Tampa travel times to see how the rail line would have competed against driving by car or flying. The study evaluated trip times from residential areas, from downtown areas, from airports and more. It concluded that driving would usually be faster, which calls into serious question the state's very high ridership projections.
How unlikely were the off-the-chart ridership projections in Florida? When potential high-speed rail routes were ranked by the pro-rail group America 2050, the Tampa-to-Orlando rail line scored at the bottom of America's high-speed rail possibilities in terms of ridership potential and economic viability.
PolitiFact says: The [Reason] study fails to account for the current low price of construction and materials given the problems in Florida's economy.
PolitiFact is right that construction costs on infrastructure projects have fallen because of the recession and slow recovery. But the recession wasn't going to save the state hundreds of millions of dollars on this project. Additionally, the state and taxpayers didn't, and don't, have any guarantees that current cost levels would remain the same for the four-year duration of the project's construction.
PolitiFact says: And, most important, the [Reason] study assumed Florida taxpayers would assume the cost of all construction overruns, when that likely wasn't true…the study assumes that the state would pay for cost overruns. But it ignores that both the state official in charge of the rail project and the U.S. Department of Transportation secretary said that the state wouldn't be liable for overruns.
High-speed rail supporters believe the private sector would have agreed to a deal making it responsible for all cost overruns and ongoing operating subsidies. Taxpayers would be completely protected in this dream. If a company agreed to that deal, a huge if, and then the rail system experienced high levels of construction cost overruns and suffered operating losses into the tens or hundreds of millions of dollars, the private company running the train system would have gone bankrupt. Private companies do not stay in business by taking big financial losses on every train ticket they sell.
So then what? Even if the state government has a contract that promises the private company will pick up the tab, what does the state do when that company goes out of business?
When Gov. Scott was making his rail decision, he knew that if Florida had taken federal money for the Tampa-to-Orlando high-speed rail system, one of the federal government's rules clearly says that a state government can't take the construction money and then stop operating the project it has accepted the money for. Under long-standing federal rules, the state would have to repay the federal grant money—in this case, $2.4 billion. If it didn't repay the $2.4 billion, Florida's taxpayers would be forced to keep the train running —at a loss— and be on the hook for the future operating subsidies. The U.S. Department of Transportation did send notice that it would negotiate over its repayment rule, but only after Gov. Scott had already announced his decision to turn down the federal money. By offering to perhaps waive the rule, US DOT was saying they would be fine with risking, and losing, $2.4 billion in federal taxpayer money if it turned out that way. Gov. Scott was not so eager to gamble away taxpayers' money nor did he want to get stuck operating a system that would continually drain large amounts of taxpayer money.
The international and California experiences make it clear: substantial cost overruns have been the rule in rail projects, not the exception. Private companies are in business to make money, not to take losses just because politicians want high-speed rail. It is simply not credible to believe that a private builder-operator would be willing, much less able, to absorb huge construction cost overruns and tens or hundreds of millions in operating subsidies to operate a Tampa-to-Orlando rail line. The bills and debt would have been left to the taxpayers of Florida.
The post PolitiFact Gets High-Speed Rail Facts in Florida Wrong appeared first on Reason.com.
]]>Edward Wyatt at The New York Times writes:
The F.A.A. is not some esoteric financial concept like the debt ceiling — an issue that has some lawmakers proclaiming the end is nigh while others bluster that it does not really matter. The aviation agency holds the lives of hundreds of thousands of travelers in its hands every day, overseeing the nation's airports and the air traffic controllers who make sure that tens of thousands of flights a day take off and land safely.
"It's amazingly aberrant behavior on the part of our lawmakers that they haven't been able to get a bill approved since 2007," said Marion C. Blakey, president of the Aerospace Industries Association, who from 2002-7 was the F.A.A. administrator, the agency's top official.
The issue is not merely a question of whether the F.A.A. might have to delay some spending on little-used airports in the districts of powerful legislators. Their dependence on a stream of short-term F.A.A. allocations has led airports to have to bid out projects one small chunk at a time, raising costs and inconveniencing travelers.
What this means is that modernization of the air traffic control system is still largely on hold. This is a $20 billion or more program that FAA must fund in dribs and drabs, as Congress gradually appropriates annual funding. But repeated extensions of the old authorization make realistic long-term planning for air traffic control modernization nearly impossible.
The situation is absurd.
Not a single one of the numerous issues holding up the FAA bill concerns air traffic control. The latest stumbling block was over how small the cutback would be in the subsidy program for airline service to small towns. Another major sticking point is the House's effort to overturn a recent change in policy on airline unionization by the National Mediation Board. There have been battles over foreign aircraft repair stations, FedEx workers, slots at Reagan National Airport, and many other issues. Yet not one of those contentious issues has anything to do with air traffic control, which is about 80 percent of FAA's budget.
Isn't there a better way to fund air traffic control modernization? Any business faced with a $20 billion modernization agenda would finance the investment, probably issuing long-term bonds to be paid off from future sales revenue. But as a government agency, the FAA is stuck with annual appropriations, of uncertain timing—and now, a hiatus in the whole program.
Among all serious developed countries, the United States is the only one left that funds air traffic control this way. Australia, New Zealand, Canada, Germany, the U.K., Switzerland, and dozens of other countries have all de-politicized their air traffic control systems, by "commercializing" their air traffic control providers—turning them into separate corporate entities that are self-funding, getting paid by their aviation customers. That revenue stream is predictable enough that the company can issue revenue bonds to fund capital investments in facilities and equipment.
Nav Canada was commercialized in 1996, after Canada passed legislation authorizing the change from a government department to a self-supporting not-for-profit corporation. Since the transition, Nav Canada has developed into one of the world's best air traffic control providers. It has won the Eagle Award as 'number one' in air traffic control from the International Air Transport Association three different times, including last year. Like many of its European counterparts, Nav Canada has an investment-grade bond rating.
De-politicizing the air traffic control system is such a good idea that it was recommended by Vice President Al Gore's reinventing government shop, the National Performance Review, back in 1994, and the Clinton administration introduced a bill to create a self-supporting air traffic control corporation in 1995. Congress, however, refused to let go, and the bill died.
I hope the current shutdown of FAA's NextGen modernization program serves as a wake-up call to airlines and the traveling public. We desperately need to modernize our 1960s-era air traffic control system. But if we cling to the government-as-usual status quo, this is increasingly unlikely to happen.
The post Air Traffic Control Modernization Held Hostage by FAA Shutdown appeared first on Reason.com.
]]>Controller fatigue is obviously a major factor. The FAA has known about the problem for decades but has repeatedly swept it under the rug. Finally, on April 17, the FAA implemented changes to scheduling practices that will allow controllers more time for rest between shifts. But the changes only address part of the fatigue problem. And they don't face up to the reason for the FAA's repeated failures to deal with the issue.
For decades, even predating the 1981 air traffic controller strike, controllers themselves have had the last word on the schedules they work. One of the most popular is called 2-2-1: Controllers work two swing shifts, two day shifts, and one midnight shift. The second day shifts ends at 2 p.m. and the subsequent midnight shift begins at 10 p.m., just eight hours later. Such a schedule disrupts circadian rhythms, creating fatigue on the midnight shift.
Within air traffic circles, this problem is so well-known that 2-2-1 has long been called "the rattler," since it can come back and bite the controller, degrading his performance. But controllers and their union have fought to keep 2-2-1 because it gives them a three-day weekend afterwards.
The National Transportation Safety Board called for abolishing 2-2-1 in an April 2007 report, and the inspector general for the Department of Transportation has called for a 10-hour minimum between shifts in general, and 16 hours after a midnight shift. It's not clear if the new FAA rules eliminate 2-2-1. And they only increase the minimum time between shifts to nine hours, not the recommended 10.
The other cause of fatigue on midnight shifts is black backgrounds on controller display screens, which require dark rooms for best visibility. But dark rooms tend to induce drowsiness, especially on a midnight shift. It is now common international practice to have light gray background screen displays that can be used in high-light environments, but in the U.S. we've all but ignored this advancement.
The FAA would not tolerate such threats to air safety from airlines, or from mechanics, or from aircraft producers. It regulates all such entities at arm's length—and it has cracked down on airline scheduling practices conducive to pilot fatigue. But the FAA has tolerated 2-2-1 schedules and dark control rooms for decades. Why? Because the Air Traffic Organization, whose job is to "move air traffic safely and efficiently," is within the FAA, which in effect means the agency is regulating itself.
The remedy for this is to separate air safety regulation from the provision of air traffic control services, so as to bring about true arm's-length safety regulation of air traffic control. That may sound like a radical change, but over the past 15 years nearly every developed country (except the U.S.) has made this change, consistent with policy set forth by the International Civil Aviation Organization.
There's another important reason for doing this now. The FAA is in the early stages of the biggest change in air traffic management since the introduction of radar in the 1950s. It's called the NextGen system. Using new technologies and process automation, NextGen will permit planes to fly closer together safely, adding much-needed capacity to airports and airspace. But this will require careful assessment of the trade-offs involved. The safety regulator making those assessments will have far more credibility if it is independent.
The current controller-fatigue flap is actually a wake-up call. For NextGen to succeed, we need an independent aviation safety regulator. And that means we must separate the Air Traffic Organization from the FAA.
Langhorne Bond was FAA administrator from 1977 to 1981. Robert W. Poole Jr. is director of transportation policy at the Reason Foundation. This article originally appeared in The Wall Street Journal.
[Watch "Your Flight Has Been Delayed—and it's Washington's Fault," which calls for air-traffic-control reform and features Robert W. Poole]
The post Why Air Traffic Controllers Fall Asleep on the Job appeared first on Reason.com.
]]>Until last year, none of us at Reason Foundation knew whether Lanny Friedlander, the creator of Reason magazine, was even still alive. He had dropped out of sight in the mid-1970s, and none of us had ever heard from him as the magazine grew into a serious publication, initially under the auspices of Reason Enterprises and, since 1978, as the flagship publication of the Reason Foundation. But last year a former Foundation board member used various online search tools to find out that Lanny was still alive, but in a naval hospital on the East Coast.
I met Lanny in autumn 1969, when I went to Boston for Ayn Rand's annual lecture at the Ford Hall Forum. During the previous year I'd been a subscriber to the mimeographed Reason magazine he'd begun publishing in May 1968 as a student at Boston University. Via phone and letter, he'd persuaded me to research and write an article for it. The piece (calling for airline deregulation) appeared in the September 1969 issue, the first one to be typeset and offset-printed (and with my article as the cover story). The graphic design was fresh and clean, and the overall look was very professional. I was blown away and decided to visit Lanny while in Boston, with the idea of getting involved in publishing the magazine. Alas, my notes from that initial visit reflect dismay at this bright and creative but very disorganized young man. In my journal I wrote, "He doesn't have much interest in business details, and I'm not too impressed with his ability to make a financial success of it." I did not pursue the idea of getting involved in the business.
My assessment was borne out in 1970, when the magazine began appearing irregularly, and Lanny would call periodically to ask for money to keep it going. Rather than send money, my new friend Tibor Machan and I began brainstorming the idea of buying Lanny out, creating some sort of business to turn Reason into a serious national publication. Along with Manny Klausner and several others, we created Reason Enterprises as a publishing partnership for this purpose. Tibor, a philosophy PhD candidate, had a grant to organize a political philosophy conference, and that provided funds to fly Lanny to California, where we negotiated the acquisition. The deal included an initial six-month contract under which Lanny would continue as editor while the rest of us handled both marketing and production. Unfortunately, the working relationship with Lanny was very difficult, and the initial contract was not renewed.
Over the next year or two, libertarian friends back East reported that Lanny had moved to New York and gotten a job with a graphic design firm. He showed up occasionally at libertarian gatherings. Once in awhile we got a note from him, mostly related to things he'd seen in the magazine, but after awhile they stopped coming. Only recently did we learn that he'd subsequently joined the Navy, apparently after having broken up with a girlfriend. His obituary reports that he served on board the USS Forrestal "during the Vietnam War," which must have been during its closing years.
During all the years of Reason magazine's growth, I was dismayed that we never again heard from Lanny, and we all wondered whether he had met an untimely demise. Only yesterday (March 25) did I learn that Lanny had recently written (by hand) a short note to Reason science correspondent Ron Bailey commenting on one of his recent articles. Ron shared a photocopy of it, and it had the familiar look of hand-written notes from Lanny 30-odd years ago.
I'm filled with both gratitude and sadness at the news of Lanny's death. There would be no Reason magazine without Lanny's original work in creating it, so we are all very much in his debt. I'm glad that he lived to see it become the kind of national magazine he'd originally envisaged back in his student days at Boston University. But I'm sad that he apparently was never able to make full use of his design, writing, and editing talents.
Robert Poole is director of transportation at the Reason Foundation. He is a former editor of Reason magazine and a trustee of Reason Foundation, the nonprofit that publishes this website. He lives in Florida.
For more memories of Lanny Friedlander from Bob Poole, Tibor Machan, Manny Klausner, and others, read "40 Years of Free Minds and Free Markets: An Oral History of Reason," which appeared in our December 2008 issue.
Lanny Friedlander's burial service will take place in Massachusetts on Monday, March 28. The service is being arranged by the Blake Funeral Home, whose site includes an online guest book.
The post Bob Poole Remembers Reason's Creator, Lanny Friedlander appeared first on Reason.com.
]]>The bad news: It doesn't look like Transportation Secretary Ray LaHood is learning anything. He's promising to simply divert the $2.4 billion in taxpayer money to other states' rail projects. If the Obama administration is serious about rebuilding the nation's infrastructure they should stop pushing shiny, medium-speed trains and shift the funding to cost-effective transportation projects that will move goods and people—as Gov. Scott requested. The nation needs plenty of infrastructure upgrades. And the most needed infrastructure projects will all demonstrate high benefit-cost ratios that will either interest the private sector in building them or make them self-supporting via user fees. High-speed trains aren't needed and aren't cost-effective. A serious Transportation Secretary would focus on getting people and goods moving, not ribbon-cutting ceremonies for medium-speed trains.
The post Florida Rejects High-Speed Rail Money—Again, So LaHood Will Just Spend Elsewhere appeared first on Reason.com.
]]>Last Friday, Secretary LaHood announced he's giving Florida Gov. Rick Scott yet another week to accept $2.4 billion in federal funding for the Orlando-to-Tampa high-speed rail line. Yes, that is the same $2.4 billion that Scott already turned down twice. The Miami Herald reports:
The saga began more than a week ago when Scott said he was rejecting $2.4 billion the federal government was providing for the 84-mile line connecting Orlando and Tampa.
Last Sunday he opened the door a crack, or so it seemed, by saying he'd look at an alternative proposal to take it out of state hands. On Thursday, a day before a federal deadline to come up with a deal, Scott rejected the plan, which called for the cities of Orlando, Tampa, Lakeland and Miami to form a coalition to put the project out to bid.
Then came Friday's shocker. At 2 p.m., U.S. Transportation Secretary Ray LaHood issued a statement saying he had given Florida one more week to work out the deal.
"This morning I met with Governor Rick Scott to discuss the high speed rail project that will create jobs and economic development for the entire state of Florida," LaHood said. "He asked me for additional information about the state's role in this project, the responsibilities of the Florida Department of Transportation, as well as how the state would be protected from liability…."He has committed to making a final decision by the end of next week. I feel we owe it to the people of Florida, who have been working to bring high speed rail to their state for the last 20 years, to go the extra mile."
Scott said he did not ask for additional time.
Still, in an interview with the Herald/Times, he said he would meet with local leaders to hear their plan. He was reminded the proposal was shared with his office Wednesday.
"Yeah," Scott conceded, "and the state is still taking risk." Asked if anything had changed, he replied, "No, nothing's changed."
Yesterday on CNN, Scott reiterated he doesn't plan to take the money, saying:
What I have said all along is our taxpayers aren't going to take the risk of the cost overrun in building it. It could be $3 billion, the operating costs.
The Orlando Sentinel suggests LaHood's offer may be part of a lawsuit strategy:
The sudden shift may have been triggered by a possible lawsuit against Scott contending he has overstepped his authority by killing the train. The suit, which could be filed as soon as Monday, is expected to argue that a law passed by the Legislature during a special session in 2009 compels Scott to pursue the train.
Two sources close to the situation said the suit likely would be filed with the state Supreme Court in Tallahassee. It was unclear who would sign on to it.
Meanwhile Andy Kunz, who promotes trains for the U.S. High Speed Rail Association, has taken to the Sentinel to try to smear Reason Foundation's analysis of the Orlando-to-Tampa rail plan.
The Reason study, authored by Wendell Cox, found Florida taxpayers could be on the hook for as much as $3 billion in construction cost overruns plus operating subsidies if the Orlando to Tampa medium-speed rail system is built. But Kunz complains that our study shouldn't dare compare Florida's train plan to California's first rail segment. His reasoning is that the two segments "are hardly comparable because the California project has difficult right-of-way, land-use and terrain issues."
If Kunz had actually read the Reason report, he would know that right-of-way and terrain differences were factored into the comparison all along. As Cox wrote : "The Tampa-to-Orlando line has two things going in its favor in the comparison to California: Right-of-way has largely already been obtained, and there will be less construction on viaducts." The Reason report compared the cost per mile for the flat, rural, 64-mile starter segment of the California with the cost per mile of the flat, suburban 84-mile Florida project. But Kunz tried to mislead readers into thinking the Reason report compared the per-mile cost of the entire California project with that of Tampa-to-Orlando.
Kunz also laughably tries to massively inflate the potential ridership numbers of the Orlando-Tampa train by claiming that Orlando's tourist attractions make Fantasyland ridership numbers possible. He suggests ridership estimates based on Amtrak's Acela Express—the only medium-speed train in the United States—are far too low and absurdly claims that the Orlando-Tampa ridership estimates should instead be based on the number of riders on all Amtrak trains in and around New York City, Boston, Philadelphia, Baltimore and Washington, DC—combined.
Even the pro-rail group America 2050 knows this ridership dream is ludicrous. They ranked potential high-speed rail corridors and found that out of 100 potential U.S. corridors, Orlando to Tampa ranked at the bottom of suggested routes. Their study promoting high-speed rail concluded that "the high number of jobs in tourism and accommodations [in Orlando] alone is not enough to lift their overall scores to compete with corridors in the Northwest, Midwest, and California."
And yet Orlando-to-Tampa is the rail project that the feds are literally begging to pour billions of taxpayer dollars into.
It is clear at this point that many rail advocates just want to get a semi-high-speed train system, any system, under construction. They figure once it starts it will be hard to stop. So they'll worry about deficits, cost overruns, and ridership numbers later.
The two routes being pursued right now—Orlando-to-Tampa and Fresno-to-Corcoran– are two of the absolute worst options for potential high-speed rail ridership. Fresno, Corcoran, Tampa and Orlando aren't huge population centers and don't possess central business districts that account for large percentages of their metropolitan area's employment. As a result, both of those segments are likely to be unmitigated ridership failures that could really sour the general public on high-speed trains.
As Secretary LaHood pleads with Gov. Scott to take taxpayers' money for the train, he and other high-speed rail advocates are making it increasingly clear that they value ribbon cutting ceremonies and construction starts more than useful infrastructure that moves as many people and goods as possible, as cost-effectively as possible. Hopefully, Gov. Scott will continue to protect his state's taxpayer's from this bad investment.
The post Federal Government Begging Florida to Take High-Speed Rail Money appeared first on Reason.com.
]]>The Tampa Tribune's Ted Jackovics reports:
Gov. Rick Scott's decision to turn down nearly $2.4 billion in federal money for a high-speed rail project that would link Tampa and Orlando has been met with criticism from members of both parties.
Scott this morning justified his decision saying "the truth is that this project would be far too costly to taxpayers, and I believe the risk far outweighs the benefits."
U.S. Transportation Secretary Ray LaHood said in a statement that Florida's money will go to other states "that are enthusiastic to receive Florida's funding."
Scott did not wait for Florida's Department of Transportation study on expected ridership and revenues.
Instead, he said he made his decision on three points: The price to build the project could cost Florida taxpayers up to $3 billion; ridership and revenue projections could be overly optimistic and if the federal government decides to shut down the project, the state would have to return the money.
Those claims came from a January report from the Reason Foundation, a Libertarian think tank.
"President Obama's high-speed rail program is not the answer to Florida's economic recovery," Scott said.
"Rather than investing in a high-risk rail project, we should be focusing on improving our ports, rail and highway infrastructure to be in a position to attract the increased shipping that will result when the Panama Canal is expanded when the free trade agreements with Colombia and Panama are ratified and with the expansion of the economies of central and south America," Scott said.
The Orlando Sentinel's Aaron Deslatte and Dan Tracy add:
Scott's decision likely means those dollars will be rerouted to California and other states investing in a high-speed rail network that Obama has likened to the national highway system. Washington state, in fact, sent out a press release asking for the money.
Scott had previously said he didn't want the state spending any money on the rail line, which required $280 million in matching funds. But backers of the project have said that the consortiums of companies set to bid on the line had indicated a willingness to put up their own money in return for a contract.
News of Scott's decision quickly rippled through Washington and Tallahassee, where lawmakers had approved the project during a special session in late 2009. Some lawmakers grumbled that Scott couldn't unilaterally overturn their decision.
Critics are bad-mouthing Scott's decision, arguing that the least he could have done was wait to see if any of the private-sector firms wanting to make proposals would have guaranteed to absorb any and all cost overruns and to sign a long-term agreement guaranteeing no operating subsidies. That has to be a pipedream.
On cost overruns, the state capital has been overrun with high-speed rail lobbyists the last few months, and I'm sure the Governor's office and the Florida Department of Transportation have a pretty good idea, by now, how much (and how little) actual risk the private sector would be willing to take on.
And no matter what an overly-optimistic company might agree to, if its special-purpose entity for Florida high-speed rail got in seriously over its head and walked away from the project after spending, say $3 billion (including the feds' $2.4 billion), what options would the state then have? With no way of repaying the feds' money—now turned into concrete and steel—it would have no choice but to spend state tax money finishing the project and then subsidizing its operations.
And on operating subsidies, the much larger California high-speed rail project has been testing that premise for the past two years. The ballot measure the voters approved in November 2008 to authorize $9 billion in general-obligation bonds for that project spelled out in black and white that voter approval was conditional on there being zero operating subsidies. But the private firms interested in building and operating the high-speed rail project are telling the California High-Speed Rail Authority that they cannot get financing unless the state provides them with "revenue guarantees." And what, precisely, is that? If the traffic and revenue on the rail line are below the forecasts on which the financing was based, the state would agree to make up the difference. In other words, operating subsidies. If the private sector required that protection in order to fund the California project, whose ridership potential is far higher than that in Florida, there is no way they would go unprotected in Florida.
So Gov. Rick Scott was on firm ground in judging that the risks to Florida taxpayers were simply too great if this project went forward. He made the right decision.
The post Florida Gov. Scott Rejects Flawed Orlando to Tampa High-Speed Rail Plan appeared first on Reason.com.
]]>"Shortly after beginning as TSA Administrator, I directed a full review of TSA policies with the goal of helping the agency evolve into a more agile, high-performing organization that can meet the security threats of today and the future," Pistole said. "As part of that review, I examined the contractor screening program and decided not to expand the program beyond the current 16 airports as I do not see any clear or substantial advantage to do so at this time."
This decision is bad news for airports, air travelers, and for effective airport security.
In fact, the opt-out program should be expanded, not frozen, for at least five good reasons.
First, privatized screening is at least as effective as TSA-provided screening. A detailed assessment commissioned by TSA in 2007 (but never released) compared screening performance at six outsourced airports and six comparable TSA-screened airports, using four years worth of data, and four measures of screener effectiveness. Performance results of the certified security firms were "equal to or better than those delivered" by the TSA screeners. The only reason we know this study even exists is because the Government Accountability Office blew the whistle on TSA in a 2009 report (GAO-09-27R).
Second, the security firms have much greater flexibility to ensure that the right number of screeners are on the job at each hour of the day, day of the week, and month of the year. Airlines are a very dynamic business, continually adding and dropping flights, adjusting schedules, and (sometimes) going out of business. TSA is constrained by its own bureaucracy, civil service rules, and (probably soon) union work rules. So all too often it has either too many or too few screeners on duty at each specific airport. Too many means wasting taxpayer money; too few means lines longer than they should be, needlessly wasting travelers' time.
Third, wider use of certified security firms might produce budgetary savings. The 2007 comparative study found that based on the way TSA keeps the books, outsourced screening appears to be 9% more costly than TSA-provided screening. But the GAO points out that TSA's cost accounting leaves out things like workers' compensation, general liability insurance, and some retirement costs which are still paid for by federal taxpayers but are not included in TSA's budget. In addition, current federal law requires certified security firms to pay exactly the same salary and benefits to their screeners as TSA pays, even in parts of the country where the cost of living is low and qualified people would be willing to work for less.
Fourth, airports that operate with certified security firms (like San Francisco and Kansas City) are full of praise for the quality of service provided by their motivated employees and managers. This probably stems from the companies' understanding that if they don't provide good service, their contracts can be terminated or not renewed. And individual screeners know that if they have a bad attitude toward passengers or perform poorly on screening tests, they can be terminated—something much harder to do today at TSA and likely to be even harder in the near future if screeners are unionized.
Finally, screening should be outsourced to remove TSA's egregious conflict of interest. This single agency is both the aviation security regulator and the provider of the largest portion of airport security (in terms of staff and budget): passenger and baggage screening. Consequently, when TSA reviews the security performance of airlines, airports, freight forwarders, etc., it is dealing with them objectively, at arm's length. But when TSA reviews the performance of passenger and baggage screeners, it is reviewing the work of its own staff. And its incentive there, like any other bureaucracy, is to make its own people look good. Case in point: the 2007 comparative study which TSA commissioned from Catapult Consultants and then suppressed because it did not like its results.
No major European country handles airport security this way. Each makes and enforces aviation security policy at the national level, with individual airports responsible for providing functions such as passenger screening. Those airports either hire their own screening staff or contract with certified security firms. Canada created a new agency for airport security after 9/11, but the agency contracts with certified security companies for all airport screening.
This year is the 10th anniversary of 9/11, and also the 10th anniversary of the ill-advised bipartisan law that created the TSA. It is past time for Congress to revisit and reform its creation. High on the agenda of TSA reform should be removing the conflict of interest that makes TSA both the aviation security regulator and the operator of airport screening.
The post TSA Blocks Private Screeners Despite Success and Good Reasons to Outsource appeared first on Reason.com.
]]>An attack on my long-standing advocacy of risk-based screening by two writers from The Nation included a three-paragraph excerpt from my recent blog post on the subject, followed immediately by a reference to "high-profile charlatans pushing racial profiling as the alternative to TSA pat-downs and body scans."
And it's not only pundits on the left playing this game. Gabriel Schoenfeld of the conservative Hudson Institute attacked the strawman of "religious profiling" as an unacceptable alternative to body scans in an op-ed defending the TSA in The Wall Street Journal.
So I guess it's time for a careful defense of real profiling—not the caricature that numerous opponents and some inexact supporters portray it as.
Many security professionals separate "profiling" into two categories. The first, positive profiling, means using techniques such as detailed background checks and other factors to assign certain people to the "low-risk" category and treat them accordingly.
The TSA itself recently (and rightly) conceded that airline flight crews—both cockpit and cabin—fit into this category, and will no longer have to undergo the demeaning security theater procedures the rest of us must face. Security resources, and taxpayer dollars, are not unlimited. Since we have already decided these pilots are trustworthy enough to fly planes with hundreds of passengers, it isn't a good use of resources to pat them down or measure their shampoo bottles.
RAND Corporation has advocated positive profiling for many years, and the concept is the basis for a true Trusted Traveler program, in which frequent fliers who volunteer for and pass a stringent background check get a biometric ID card and can thereafter bypass some or all of the regular screening, just like flight crews will soon be able to do. I would also extend the Trusted Traveler concept to those holding federal security clearances. If we can trust someone with nuclear weapons secrets, shouldn't we trust them to not blow up airliners?
Positive profiling is already in use by Customs & Border Protection (TSA's sister agency) for people who are frequent border crossers, via at least three voluntary background-check programs: Global Entry for air travelers returning from abroad; Nexus, for frequent visitors to and from Canada; and Sentri, for frequent visitors to and from Mexico. If applied to airport screening, it would allow the TSA to shift resources from people who are not a threat to those who are more likely to be (and not just those trying to board planes, but also those loading baggage and cargo, visitors seeking targets in crowded ticket lobbies, etc.).
It would also spare a large fraction of air travelers (primarily frequent fliers who voluntarily opt-in) from the wasted time and indignity of current screening practices. This can be an important safety tool because frequent business travelers do an estimated 50% or more of the nation's flying. Recognizing that not everyone presents an equal threat allows security to focus resources on those that may present more danger.
There are some, including the ACLU, who argue against a Registered Traveler system because they say it will create a new vulnerability as terrorists learn to beat the background checks. Is this possible? Of, course. Anything is possible. We cannot eliminate all risks from flying or driving or anything else in life. But if terrorists are volunteering for FBI-quality background checks, undergoing interviews and credit checks, and ultimately obtaining trusted status then we have dramatically bigger security failures and problems than we imagined. It's far more likely the terrorists would turn their attention to different, softer targets.
With positive profiling reducing the number of travelers the TSA has to expend time and money on, the attention then shifts to negative profiling. When most people hear the term profiling they envision people being grouped or targeted solely based on race or religion. When security professionals use the term negative profiling they mean deciding that a small subset of travelers deserves closer scrutiny due to some combination of background factors, previous travel behavior, and suspicious behavior at the airport itself.
The TSA already does this type of profiling in a minor way: that's what the selectee and no-fly lists are all about. We learned of some of these factors in the days after the 9/11 attacks. Buying a one-way ticket at the counter with cash was, and probably still is, something that would get you more attention from security.
Previous travel history would have flagged the underwear bomber last Christmas since he paid for his ticket in cash, had recently flown out of terrorist haven Yemen, and his suspicious behavior at the airport (that you'd like a trained security guard to catch) reportedly included not having a jacket or any checked luggage despite flying from Amsterdam to Detroit during winter.
It is also important to note that negative profiling is already mandated—by the TSA—for those flying to the United States from the overseas airports it has defined as "extraordinary locations." While I have not seen a list of those specific airports, both times I've flown back to this country from Madrid in recent years, I've been interviewed in some detail by employees of a private security company, under contract to the airline in question, as required by TSA's Aircraft Operator Standard Security Program (AOSSP).
In short, profiling is a legitimate technique for deciding how to allocate security resources. Catching terrorists is tough. Making the TSA pat-down or body-scan every single person on every single U.S. flight (which the current policy calls for by the end of 2011) does not increase the chances they'll find a terrorist (TSA has never found one).
Pretending that everyone is equally likely to attack us wastes precious resources on low-risk travelers, which just makes us more vulnerable. Unless, and until, we adopt a risk-based airport screening system (i.e., forms of profiling), the TSA will continue to treat everyone as a potential suicide bomber and Americans will continue to be harassed and groped by TSA's out-of-control screeners.
The post The Case for Profiling Air Travelers appeared first on Reason.com.
]]>Although some civil rights groups allege that they represent an unconstitutional invasion of privacy, Americans overwhelmingly agree that airports should use the digital x-ray machines to electronically screen passengers in airport security lines, according to the new poll. Eighty-one percent think airports should use these new machines—including a majority of both men and women, Americans of all age groups, and Democrats, Republicans, and independents alike. Fifteen percent said airports should not use them.
That number seemed completely out of whack with the widespread opposition we've been seeing. First of all, there are only 400 body scan machines in place and operating at U.S. airports. There are 2,200 screening lanes at 450 airports, and unless Congress forces a change in policy, all of those lanes will get body-scanners—but not until the end of next year. So even if every adult citizen in the CBS poll had taken one flight recently, he or she would have had an 82 percent chance of going through a lane without a body-scan machine. It's easy to tell a pollster the politically correct answer if you've never actually encountered the new screening procedure. But as more scanners are installed and people are forced to choose between body scans and pat-downs, the public is likely to become more infuriated with the TSA.
This may already be happening anyway. Two other surveys came out this week that countered the CBS findings. Zogby International, polling likely voters, found:
The implementation of full body scans and pat downs by the Transportation Security Administration (TSA) as part of security enhancements at our nation's airports will cause 48% of Americans and 42% of more frequent fliers to choose a different mode of transportation when possible, a recent Zogby International Poll finds.
Overall, 61% of the 2,032 likely voters polled from Nov. 19 to Nov. 22, oppose the use of full body scans and TSA pat downs. Republicans (69%) and Independents (65%) oppose in greater numbers than Democrats (50%).
And a USA Today/Gallup poll of adult fliers (people who have flown at least twice in the past year) found nearly the same percentage—57%–bothered or angered by the new procedures. Asked more specifically about just the body scanners, only 42% are angry or bothered by them, which suggests that the aggressive pat-downs are the greatest source of upset, as might be expected.
Polling guru Nate Silver looked at an ABC News poll and concluded "that the public scrutiny of the new screening procedures is significantly increasing." Silver wrote:
It is perhaps foolish to predict how the T.S.A. will respond this time — when they have relaxed rules in the past, they have done so quietly, rather than in response to some acute public backlash. But caution aside, I would be surprised if the new procedures survived much past the New Year without significant modification.
Hopefully, what we've been seeing the past week or so is that Americans are not willing to continue to give up more personal liberty for what amounts to enhanced security theater at the airport.
The post Only 400 of 2,200 Body Scanners Are In Place at Airports So Outrage at TSA Likely to Grow as More Are Installed appeared first on Reason.com.
]]>Dave and I came to libertarianism by similar paths, growing up reading Robert Heinlein's individualist-oriented science fiction and then discovering Ayn Rand's writings. It was many discussions and debates with my MIT YAF friends that persuaded me to finally read Atlas Shrugged in the summer of '64, a summer during which I spent many evenings distributing Goldwater literature door-to-door in the Miami area where I grew up.
Dave was also active in student politics at MIT, running unsuccessfully for UAP—Undergraduate Activities President—and also bringing outside speakers to lecture on campus. One such speaker was Willis Stone, head of the Liberty Amendment Committee (which sought an amendment to the U.S. Constitution to repeal the income tax). While I never shared Dave's enthusiasm for the viability of this cause, it was Stone's MIT lecture that planted in me the seed of privatization (since that was part of Stone's idea for downsizing the federal government).
After graduation, Dave went into the advertising business in Denver, and it was in Denver that he introduced what will be his two legacy contributions to the cause of liberty: the Nolan Chart and the Libertarian Party.
Dave introduced the former in a January 1971 article in The Individualist, the magazine of the Society for Individual Liberty (and an early competitor of Reason magazine). The basic idea was to discredit the typical left-to-right political spectrum as leaving no room for the libertarian position. Instead of a straight line, engineer Dave introduced a two-dimensional chart, with economic freedom on one axis and individual liberty on the other. The chart made it easy to see how liberals, conservatives, populists, and libertarians compared, and was a true breakthrough that reshaped political analysis, polling, and news reporting, helping to introduce "libertarian" as a distinct political position.
As is generally well-known, Dave and some friends created the Libertarian Party in his Denver living room in 1971, in disgusted reaction to President Richard Nixon's imposition of wage and price controls. I was sufficiently skeptical of the viability of a third party that I declined to attend the subsequent founding convention in Denver, which nominated USC philosophy professor John Hospers as its 1972 presidential candidate. After the miniscule Hospers candidacy made history by getting one electoral vote (cast by renegade Virginia elector Roger MacBride), I joined up, and actively participated in LP conventions, even serving one year on the national platform committee.
By the mid-1980s, however, I had pretty much given up on the third-party model as a viable approach toward bringing about a freer America. I remained good friends with Dave, despite our ongoing disagreement about the Libertarian Party. He stayed with my wife, Lou Villadsen, and me in Los Angeles in the late 1980s while checking out Southern California as a place to live, and once he and Elizabeth were settled in Orange County, we enjoyed visiting, talking politics and philosophy just as we had during our student days.
Dave and Elizabeth bailed out of Southern California around the same time Lou and I did, early this decade. We'd hoped to visit them in Tucson, a place I'd only stopped in overnight on my original move to California in 1970. Alas, that visit cannot happen.
Robert Poole is director of transportation at the Reason Foundation. He is a former editor of Reason magazine and a trustee of Reason Foundation, the nonprofit that publishes this website. He lives in Florida.
The post Dave Nolan, R.I.P. appeared first on Reason.com.
]]>This type of risk-based screening would focus TSA resources on the travelers that should receive the most scrutiny by reducing the use of resources on low-risk travelers. It would also save considerable sums of taxpayer dollars, reducing screener payroll and equipment costs—no more body scanners would be purchased since TSA already owns enough to use only for the secondary screening needed for the above program.
As for TSA claims that Trusted Traveler would be too risky, they cannot make that claim with a straight face, for two reasons. First, their parent agency DHS operates the three border-crossing programs noted above (Global Entry, Sentri, and Nexus) which operate on exactly the same principle. Second, TSA itself applies this principle for the hundreds of thousands of people who work at airports and need access to secure areas to do their jobs. Those people must pass an FBI criminal history background check, which entitles them to an ID card giving them unescorted access to secure airport areas. Some of these people have access to planes on the tarmac, which means they could do damaging things to those planes. Yet TSA accepts this risk trade-off.
The post TSA Needs a Risk-Based Approach to Airport Security appeared first on Reason.com.
]]>Burton was a longtime supporter of the Reason Foundation and for the past six years served as one of its trustees. In many ways, he was an ideal trustee. He possessed a deep interest in and understanding of the philosophy of liberty. But he also had extensive business and financial experience and years of experience on nonprofit boards. So he was able to offer advice and counsel on every aspect of the foundation's operations, as well as faithful financial support.
If anyone met the definition of a Renaissance man, it was Burton. A Yale graduate (class of '62), he did graduate work in economics at the University of Chicago. But he was eternally fascinated by mathematics and philosophy, financial markets and technology.
He was a founder and chief financial officer of Scientific Time Sharing, one of the first computer time-sharing firms. He was the first person I knew to travel with a transportable PC—and the first to have software to do fractal geometry.
His reading was voracious and wide-ranging. Among his favorites were Gödel, Escher, Bach; the science fiction of Robert A. Heinlein; and the works of economist F.A. Hayek and political philosopher Michael Oakeshott.
One of Burton's proudest achievements was serving on the staff of the Gates Commission, which made the case for abolishing the draft. That was his only direct involvement with public policy-making, though he was in regular contact with many of those involved in this arena. His father, Gordon Gray, served as Truman's secretary of the army, and his brother Boyden is White House counsel.
As a lifelong advocate of liberty, Burton was excited by recent developments in Eastern Europe. He visited Poland last year, and he was deeply involved in the efforts of the Sabre Foundation (of which he was president) to arrange large-scale donations of books and farm equipment to people and organizations in Poland.
His family has suggested that memorial gifts may be made to the Reason Foundation or the Sabre Foundation. We are setting up a special Burton Gray memorial fund at the Reason Foundation to foster long-term programs, as he would have wanted.
He will be sorely missed.
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]]>Creating the massive bureaucracy was a mistake. Even though the quality of airport screening was low before Sept. 11, it was not a failure of the "rent-a-guard" screeners that let those 19 terrorists board planes "armed" with box cutters. Those "weapons" were perfectly legal at the time. The real failure was one of policy, which didn't make use of passenger history and law enforcement information that should have flagged most of the terrorists as suspicious characters who warranted enhanced scrutiny.
Even with today's bloated TSA, that problem still exists. Consider that our various intelligence agencies failed to share vital information, and a suspected terrorist, the underwear bomber, was allowed to board—and tried to blow up—an international flight bound for Detroit on Christmas. Thankfully, the Obama administration last week took some needed steps to help fix this problem.
Following Sept. 11, most other countries increased their standards for airport security by letting each airport implement its own procedures under government supervision. In Europe, that led to nearly all major airports hiring certified private security firms to do their screening. Canada created a new federal agency to implement better screening but outsourced the actual screening. This kind of high-performance contracting permits better training and airport-specific flexibility (e.g., higher pay scales in Canada's jobs-rich oil patch) and it better matches screener numbers to changing travel patterns and airport passenger levels.
In contrast, the system Congress and the George W. Bush administration created came with a massive conflict of interest: TSA serves as both the aviation-security regulator and the provider of key security. Who's watching the watchmen? When it comes to baggage and passenger screening, TSA is regulating itself. As with any bureaucracy, its natural incentive is to hide errors and make itself look good. In addition to the obvious conflict of interest, this also makes for fragmented airport security.
Consider that airport perimeters, air cargo and other aspects of security are not operated and managed by TSA, but by airports. This lack of cohesion can create security gaps. In Europe, each airport is directly responsible for every aspect of its security, under strict government oversight.
The other mistake of the Bush administration and Congress was to let general taxpayers get stuck with well more than half the cost of airport security. Canada's security ticket tax pays for 100 percent of airport security. In most European countries, a combination of airport charges to airlines and security taxes on tickets covers the complete cost of airport security.
Those who object to making airlines and passengers pay the full cost will argue that protecting against terrorism is like national defense, for which everyone properly pays via general taxes. However, many taxpayers never fly, and numerous others rarely fly. Airlines and frequent travelers like me get far more benefits from aviation security, and we should be paying the costs.
So now what?
First, TSA should be divested of its airport screening duties. TSA should regulate and oversee security, but each airport should be responsible for all aspects of its security (passenger and baggage screening, perimeter security, etc). Airports would be free to hire their own security forces or contract with TSA-certified firms.
Second, the cost of airport security should be paid for by those who use airports: a combination of airlines and passengers. This change would cut billions from the federal budget, eliminating the large portion of airport security costs not covered by current airport or airline security taxes. It also would make the costs of airport security more visible to airlines and travelers.
If these two changes are made, they will put much-needed scrutiny on the expensive, one-size-fits-all airport screening procedures in place now. Giving airports control over their security and moving to a more risk-based approach to passenger screening might well cut the cost of airport screening in half. It also would focus more attention on high-risk passengers like those we should have spotted on Sept. 11.
Robert Poole is director of transportation at the Reason Foundation. He advised members of Congress and the White House on airport security following the Sept. 11 attacks. This article originally appeared in The Washington Times.
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]]>We invented the federal Highway Trust Fund in 1956, promising motorists and truckers that all proceeds from a new federal gas tax would be spent on building the interstate system. They aren't. Congress has expanded federal highway spending beyond interstates to all types of roadways. And ever since 1982, a portion of those "highway user taxes" have been diverted to urban transit. Today, the federal role in transportation includes mandating sidewalks, funding bike paths, and creating scenic trails.
As a result, spending exceeds gas-tax revenues and the Highway Trust Fund is broke. Some claim this is because the 18.3-cents-per-gallon federal gas tax needs to be raised. But drivers can fairly put the blame on the fact that 25 percent of gas-tax funds are diverted to non-highway uses.
A key to fixing the problem is to identify what should be federal and what should be state and local responsibilities. In principle, only the interstate highways—our key arteries for interstate commerce—should rise to the level of the federal government. Other highways, streets, sidewalks, bike paths, local transit lines, etc., are more properly state and local concerns.
Reserving the federal Highway Trust Fund just for highway improvements would mean a 25 percent boost in federal highway investment—about $11 billion per year, a good start toward repairing our aging infrastructure.
But what would happen to urban transit if gas taxes went back to being spent solely on highways? Proper federalist principles would make transit a matter for metro areas and local governments to fund themselves, but realistically, that's not going to happen anytime soon—this Congress will continue to fund local transit projects. But a good case can be made that if the federal government is going to support transit, bikeways and sidewalks, it should do so out of general revenues, not highway-user gas taxes.
Under the Obama administration, the Federal Transit Administration is increasingly partnering with the Department of Housing and Urban Development (HUD) and Environmental Protection Agency to promote "livable and sustainable communities." In fact, they are evaluating transit and streetcar proposals on this "livable" basis rather than on their transportation cost-effectiveness. If transit is primarily for community development and not for moving large numbers of people from point to point, Congress should fund it like community development. After all, today's Federal Transit Administration started as the Urban Mass Transit Administration and was located within HUD.
With the Highway Trust Fund drowning in red ink, taxpayers have twice bailed it out using general-fund monies—$8 billion in 2008 and $7 billion in 2009. Congress is likely to shore up the deficit in the same way this year. Those sums are roughly equal to what the transit administration gets from the Highway Trust Fund each year, so it would be more straightforward simply to shift them to general-fund support. Highway money then goes to highways. Congress sends money to its preferred "livable" transit projects from the general fund.
The bottom line is that our interstate system is deteriorating, which could be devastating to our economy. Trucks haul 66 percent, by value, of all goods moved in America on these highways, and projections show that this volume will increase 2.5-fold by 2035. We can't continue to siphon money away from them.
President Obama frequently talks about how government needs to regain the trust of taxpayers. Congress can reclaim some trust by spending highway taxes on what they said they would: highways.
Robert W. Poole Jr., an MIT-trained engineer, is director of transportation studies at Reason Foundation. This article originally appeared in The Washington Times.
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]]>Two egregious security failures allowed this to happen. First, despite an explicit warning from the terrorist's father, his name did not get added to either of the TSA's lists—the 4,000-name no-fly list or the 14,000-name selectee list. Had he been on the latter list, he would have been subjected to secondary screening at Amsterdam Schiphol airport, where a routine swabbing of his hands and/or carry-ons would likely have revealed traces of the PETN explosive.
But even if this trace-detection had not been carried out, the PETN which the terrorist concealed in his underwear would have been detected had he been required to pass through one of the 15 of millimeter-wave body-scanners now in use at Schiphol. But airport officials there maintain that they are not permitted to use these machines for U.S.-bound passengers (though TSA has disputed that).
Both failures reflect the flawed philosophy that underlies U.S. aviation security policy. For the most part, it continues to be fixated on keeping bad things—as opposed to bad people—off of airplanes. It also implicitly assumes every passenger is equally likely to be a terrorist, so every passenger must get equal treatment, except in extreme cases. That's why it's so hard to shift potential bad guys from the Department of Homeland Security's much larger databases to TSA's selectee and no-fly lists. As a libertarian, I agree that we should be very leery of forbidding people to fly without good reason. But requiring potentially high-risk travelers to undergo secondary screening (especially since we do some of this randomly, in any case) is hardly the end of the world.
In fact, shifting to a risk-based approach to aviation security would likely mean increased security and lower costs, both for the TSA and especially lower wasted-time costs for most travelers. Under a risk-based approach, air travelers would be divided into three groups: lower-risk, ordinary, and higher-risk. The three groups would be treated differently, for very good reason.
Lower-risk people would be those with active government-issued security clearances and anyone who joined a risk-based "trusted traveler" program by passing an FBI background check and getting a biometric ID card. These people would get streamlined processing at airports, similar to what existed pre-9/11. (Note that TSA's sister agency within the Department of Homeland Security, Customs & Border Protection, operates a number of similar programs for U.S. citizens returning to this country, such as the recently expanded Global Entry program.)?? Higher-risk people would be those placed on an expanded selectee list and would be subjected to mandated secondary screening, including a body scan, backed up (if necessary) by a full body search. Now that terrorists have started hiding explosives in their underwear and body cavities, we have no alternative to these intrusive measures.
This risk-based approach would be significantly more effective than current practice in dealing with the increasingly serious threat of airborne suicide bombers. It should be supplemented by beefed-up control of access to planes and their cargo holds on the tarmac at airports, to thwart those who would place bombs on board without getting on board as passengers.
Fortunately, the Flight 253 bomber failed, due largely to his own incompetence. But unless we shift to a risk-based security policy, the next such attempt could well succeed.
Robert Poole is director of transportation policy at Reason Foundation. He advised the White House and members of Congress on airport security issues following the September 11, 2001 attacks. Poole's aviation security research and newsletters are archived here.
The post Will We Get Serious About Aviation Security? appeared first on Reason.com.
]]>The Texas Transportation Institute says these delays cost each metro driver $1,200 a year. Several projects are underway to alleviate this gridlock, but one—the plan to convert the I-95/395 carpool lanes into high-occupancy toll (HOT) lanes—is catching a lot of misdirected grief.
The region's carpool lanes are already clogged and can only get worse. In 10 years, 64,000 new jobs are expected to arrive thanks to the Base Realignment and Closure plan in which Andrews Air Force Base and Fort Meade will add new personnel and more missions. The number of agitated drivers will increase as well.
The toll lanes would reduce congestion in regular lanes and improve bus service. Meanwhile, tolls would generate enough money to pay for an additional lane and to extend the HOT lanes 28 miles to Spotsylvania County.
Cities across the country—Los Angeles, Miami, Houston, Denver, Minneapolis, and San Diego—are converting carpool lanes to HOT lanes to cut congestion and generate funding for transportation projects that otherwise couldn't be afforded.
In San Diego and Houston, where HOT lanes have been in operation for over a decade, they are very popular. Commuters of all income levels use the lanes.
Most people use them occasionally, like when they have to get to the airport or an important appointment. Parents often choose HOT lanes because the tolls are less than daycare late-fees. The free-flowing toll lanes also make bus service more reliable and let emergency vehicles reduce response times and save lives.
Today, you can forget it if you need to get somewhere quickly during rush hour. Which is why toll lanes provide a valuable service.
Toll lanes offer "congestion insurance." They ensure you can get somewhere on time when it really matters.
You won't need it every day, but you're glad it's there when you do. And you only pay when you use the lanes.
Claims that the lanes will cost drivers $32,000 a year are ridiculous. Who will drive 64 miles in the toll lanes every day? The typical driver's trip is expected to cost $7 to $9. That's expensive enough that most people won't use them every day.
But that's the point. When you need to be somewhere on time and $7 will land you a better job, a new client, or get you to your kid's soccer game, it's worth it.
There are also worries that when the I-95/395 HOV lanes are expanded to three lanes, they won't be safe. The lanes will be 11 feet wide, just like lanes in Los Angeles. There will be a 12-foot shoulder and emergency pull-off areas. Transportation engineers are quite comfortable with this.
Then there are concerns about a foreign company managing the project. Bottom line: The project will create jobs in DC-Virginia. Foreign companies can't pick up the pavement and move it to Australia.
The project is self-supporting and the additional toll lane will add 50 percent more capacity without taking any homes via eminent domain. In this time of massive deficits, the region should embrace a transportation project that pays for itself.
Robert Poole is director of transportation at Reason Foundation, where he has advised the previous four presidential administrations. Shirley Ybarra is senior policy analyst at Reason Foundation and former Secretary of Transportation for Virginia. This article originally appeared in the Washington Examiner. Reason Foundation's transportation research and commentary is here.
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