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President Obama is asking Congress to give $50 billion of our grandchildrens’ money to America’s least efficient industries: highway construction and the FAA (nytimes). First, let’s think of the scale of the spending. As U.S. adults seem to have no intention of funding current federal spending or paying off debt, Obama’s spending plan will be paid for by the 50 million or so children who are aged 12 and under. That’s $1,000 per child.

Let’s look at the track record of the sectors of the U.S. economy to which Obama proposes to give this $50 billion. One is highway construction. This is an industry that has developed so few new efficiencies and innovations since the time of the Panama Canal that Americans can no longer afford to maintain the highways that we have, much less build new ones (see the book Traffic: Why We Drive the Way We Do). The relative cost of a highway has gone up so much compared to other things that we might purchase that it is almost insane to contemplate buying more of this product. It would be like someone learning that gold was over $1200 per ounce and saying “Now would be a great time to gold-plate the exterior of my home” or finding out about some $5000 per kilo caviar and saying “I will eat nothing else for the next 12 months”.

Much as I love aviation, as a taxpayer it pains me to see money being shoveled into the mouth of the FAA. Obama promises that some of the $50 billion will go for a “next generation air-traffic control system”. The last time the FAA tried to produce an update for some of its ATC software the result was a project that was more than a decade late when the plug was finally pulled. It cost the taxpayers $9 billion and every line of code had to be thrown out. The agency’s latest project is a change to the way aircraft are registered. For the past 80 years or so, aircraft registrations have not had to be renewed. Owner and pilots notified the FAA when an address change was required. The FAA has decided now to send out U.S. mail reminders to every aircraft owner every three years asking “Do you still live at the same address?” A paper form will be returned by the aircraft owner. (FAA’s official explanation of the process) Figure it costs $300 of owner time and FAA time to work both sides of this paper-intensive transaction, including handling a physical check for $5. There are 357,000 aircraft out there, so that’s about $36 million wasted every year.

How would a private company do this? The FAA already pays contractors about 50 cents every time a pilot connects to a weather briefing service such as DUATS. These services are limited to folks whose pilot certificates have been verified. Nearly all aircraft owners, other than airlines, are pilots who use weather briefing services periodically. If Amazon wanted to get some information out of a customer every three years it might put a note on the Web site saying “Would you mind visiting this link and updating a form?” A private business whose Web site was visited at least monthly by nearly all of its customers would only use paper as a last resort, but the FAA apparently never considered using the Web services that it is already paying for to do the job.

An MIT Civil Engineering professor and I once visited the head of Boston’s Big Dig project, an executive at Bechtel. We showed him some software. He said “Wow, this stuff could save 15 or 20 percent of the cost of the project and a lot of time also. I’m not interested in it.” Why not? “I’m getting paid cost-plus on this project. If we build this highway using the same methods used by the Romans to build their roads, that’s fine with Bechtel.” (The project ended up costing nearly $15 billion or $22 billion when interest paid on bonds is considered. Estimates of the return on the investment range from $0 to $167 million per year, i.e., an ROI of between 0% and 1.1%.)

As the U.S. population trends up to between 600 million and 1 billion (range of estimates for 2100), won’t we need more roads? We can’t afford them so we won’t have significantly more, regardless of what Obama promises. How about public transit? New York City is reducing its public transit offerings; it can’t afford to run trains and buses as well as pay pensions previously agreed to (see nytimes and this article on New York state pensions). The future for Americans may be a combination of walking and videoconferencing. It will make a lot more sense to build dense cities where folks can walk to work, shop, and see friends, rather than trying to create enough additional sprawl for 700 million more Americans. What could we private businesses and citizens do with $50 billion if the government did not take it from them and hand it over to our least efficient industries? At $100,000 per conference room, 500,000 businesses could be set up with amazingly high quality videoconferencing/telepresence systems, thus reducing the need to travel for business meetings. At $1,000 per desktop, 50 million American homes could be set up with moderately high quality videophones, thus reducing the need to travel for social meetings. Given a free choice, it seems inconceivable that private citizens would decide to give their money to highway contractors rather than Cisco, HP, and other innovative companies.

[Comments on the nytimes piece seem rather negative. Apparently people aren’t excited when the government buys stuff that they themselves wouldn’t want to buy. Given that Obama and his advisors are famous for political savvy, I’m wondering why they thought that anyone other than a highway contractor employee would be happy to hear about this proposed spending.]

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Just finished The Anthologist by Nicholson Baker. Baker was born in 1957. If you consider the gestation period of a novel and the sluggish business practices of traditional publishers, that means that by the time one of Baker’s books lands in my lap the protagonist is usually about my age (born in 1963). The book concerns a moderately successful middle-aged poet who has had some poems published in New Yorker, who has done some teaching at a college, and who is broke and desperately trying to finish the introduction to an anthology of poetry. The novel is set in Portsmouth, New Hampshire. Here are samples:

[if you’ve been to the doctor and gotten some antidepressants] you might think to yourself, Oh boy, I am one of these great depressive figures. But you’re not. Just because a doctor has scribbled a half-legible prescription on a piece of paper and given you some pills, you’re not depressed. Not the way a real poet is depressed. You don’t even come close. True poet’s depression is a rigor mortis of agony. It’s a full-body inability to function. (page 54)

[after jamming a finger] I held my hand in the air, and I kept testing my finger, wondering whether the bone in it was broken. I really didn’t want to go to a doctor and have them say, Ah-hah, we’ll X-ray it and give you a bone scan and a barium enema, just to be sure. No thank you. I have no health insurance. Death is my health insurance. (page 123)

The book flows nicely and can be read in a couple of hours continuously.

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Folks:

I’ve posted a review of the Icon A5 light sport seaplane, including a derivative-but-perhaps-funny shopping video. Comments would be appreciated.

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I attended a housewarming on Sunday and met a guy who had founded and run a software company that employs nearly 1000 programmers, some here in New England and some in India. He is now retired and looking for new investments to make. How does he feel about the U.S. as a place to do business? “I think that the U.S. is going to blow up due to the expansion of government obligations. I’m not sure if the government will default on its debt, stop paying pensions, or generate hyperinflation, but I know that the current situation isn’t sustainable.” Due to fears of dollar devaluation and inflation here, this guy did not want to hold any additional dollar-denominated investments. As far as programmers went, he would prefer to hire them in India rather than take on the obligation of payroll taxes and health care expenses here. He had enjoyed a positive experience with his team of programmers in India (this is somewhat unusual in my experience; the folks I’ve talked to at multinationals have been impressed with their Chinese colleagues, but not with departments in India).

It is possible that the best minds of economics are doing exactly the right things with the U.S. economy, e.g., indulging in massive deficit spending, tossing in stimulus spending on top of the usual trillions in federal spending, having the Federal Reserve buy up Treasury bonds (i.e., print money), borrowing from our grandchildren, sweetening public employee salaries and pensions, ladling out subsidies to government-favored industries, etc. But even if these are the right things to do, if they scare business people away from investing in the U.S. the result will be economic stagnation (which actually means “decline” from an individual perspective, since the population continues to grow even as the economy does not). Maybe federal and state governments should invest education and PR to explain to folks how they are not going to default (to explain why reports such as Morgan Stanley predicting government default are wrong).

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Here’s a Boston Globe article about the opening of Newton’s new high school, after 10 years and $200 million spent. It replaces a school built in the 1970s that looks a lot more solid than most of the buildings and houses in Massachusetts. I found it interesting that the journalist did not take the time to put the cost into context. A simple calculation and Google search reveals that the Newton school cost about $500 per square foot to build against a nationwide average of about $170 during the period of major construction (source).

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An electronics/software glitch in communication with a remotely piloted Navy helicopter led the federal government to violate its own restricted airspace over Washington, D.C. (story)

John and Martha King, the world’s best-known flight instructors, were held at gunpoint by four police cruisers full of cops. Their Cessna 172 had the same tail number as a Cessna 150 that was stolen nearly a decade ago. The old tail number was still in a database at the El Paso Intelligence Center, which keeps America safe from drugs and terrorists. The police got excited when they saw the tail number pop up in an IFR flight plan and had the Santa Barbara airport staked out. The cops never asked themselves “If I had stolen an airplane, would I file IFR flight plans using the stolen plane’s actual tail number? And then go into a busy Class C airport?” Nor were they able to tell the difference between a Cessna 150 (two seater) and a Cessna 172 (four seater). Full Story: AOPA.

The British Airways Boeing 747s apparently have the ability to play a recording to passengers: “This is an emergency. We may shortly need to make an emergency landing on water.” Folks on a Hong Kong to Heathrow flight did not appreciate hearing this message while over the North Sea in a perfectly functional aircraft. (more)

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A friend who works with a lot of libertarians says “most of them are weird and socially awkward”. My explanation was that when nearly 50 percent of the economy is run by the government or is government-funded, advocating libertarian ideas at a social gathering would be extremely rude.

At first glance, you’d think that most people would be okay with the core libertarian idea that they could keep 90+ percent of their income and spend it however seemed best, rather than hand over what may soon be the majority of their income to a governing elite that will ladle it out to politically powerful interest groups. Suppose, however, that in a gathering of 20 adults, one is a medical doctor, one is a schoolteacher, one is a 50-year-old retired police officer, one is an engineer at a defense contractor, one is a prison guard, and four hold administrative positions at local, state, and federal agencies. Will the doctor want to hear that young people should not be taxed to pay for a 90-year-old’s $500,000 death in the ICU? Will the schoolteacher want to hear that schools should be privatized and her $200,000 in compensation (salary, health care, pension commitment, etc.) for 9 months of work subjected to market forces? Will the 50-year-old retiree want to hear the suggestion that politicians should not be allowed to promise public employee unions pensions in exchange for votes? Or hear that taxpayers shouldn’t be on the hook to pay him an inflation-adjusted $130,000 per year until his death? Will the defense contractor want to hear that we should only have a large enough armed force to prevent Canada and Mexico from invading? Will the prison guard want to hear that drugs should be legal and that most of the people he is paid to incarcerate should be free? Will the administrators want to hear that their agencies shouldn’t exist at all?

Given the social awkwardness of this kind of encounter, which becomes ever more likely as government consumes an ever-larger percentage of GDP, I am predicting a decline in the popularity of libertarianism (not that it has ever been popular or advocated by more than a handful of elected politicians). People can live with the government taking 50 percent of their income and wasting it; that would simply set Americans back to the standard of living enjoyed in the 1950s. People cannot live with never being invited to another social gathering.

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When passing a sign explaining that a road project was “funded by the American Recovery and Reinvestment Act”, a friend always shouts out enthusiastically “Thank you, Pharaoh, for the gifts that you have bestowed upon us.”

More: official sign guidelines; article on the cost of one sign; Wikipedia article on the term “Pharaoh”

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Today was Fair Weather Flying‘s first helicopter charter operation. A customer from California needed to attend an event in Woods Hole, Massachusetts. He took a red-eye flight from California, showered at Signature Flight Support at Logan Airport ($228 in airport, security, and FBO fees), and then got into our helicopter for the 30-minute ride to the Falmouth Airpark. The weather was perfect. The controllers were helpful, though somewhat anxious due to the fact that the Falmouth airport is 2 nautical miles from the “no-fly” zone established around Barack Obama’s Martha’s Vineyard vacation (approximately 3000 square miles of airspace up to 18,000′ have been mostly shut down to accommodate Mr. Obama; the cost to area flight schools is thousands of dollars every day and the impact on sightseeing operators on the Cape and Islands has been devastating; aviation businesses here were hoping the President would choose to vacation in the stricken Gulf of Mexico, but instead he has returned to his 29-acre rental beach house (details)).

Kathleen and I served our customer a bottle of Poland Springs water, gave him a hardcopy of Travels with Samantha for in-flight reading, and watched as he departed smiling into a waiting taxi. Then we ferried the helicopter back to Hanscom Field, landing around 10:00 am.

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Folks: In shopping for a digital picture frame, I found the following:

• Vizio 19″ LCD television for $190 (native resolution 1366×768, USB port for thumb drive filled with JPEGs)
• Sony 10-Inch Digital Photo Frame for $220 (native resolution 1024×600)

Isn’t the LCD television a better value? Yet even in McMansions, where space is not an issue and sightlines to the digital picture frame could be quite long, I haven’t seen anyone use a small TV as a digital picture frame. What am I missing?

[Power consumption for the TV is higher, as you’d expect with so much more screen area; about 25 watts compared to 10-14 for a digital picture frame.]

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