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The latest issue of AOPA Pilot magazine contains the following data:

• In 1967, median household income in the U.S. was $12,000 and a four-seat Piper Cherokee was $16,000.
• Today, median income is roughly $48,000 and the same airplane (they still make it!) is $230,000.

Where it took 16 months of income to buy a basic four-seat airplane in 1967, it takes 57 months now. The question is “Why?”

Airplanes are made in small quantities and have not benefited from automation and capital investment in tooling the way that automobiles have, so you wouldn’t expect their price relative to incomes to have fallen. On the other hand, there have been some efficiencies introduced such as computer-controlled machining so the number of labor hours should have been slightly reduced.

Workers in airplane factories are not paid more than average and roughly the same number of working hours are required to build an airplane.

Airplane companies are not ridiculously profitable. In fact, many struggle to survive.

People often cite litigation as a reason for aircraft being expensive and say that one third of the price of a new airplane goes to liability insurance, but that still doesn’t account for most of the increase.

It can’t be regulation because the FAA was just as bureaucratic back then and most of the designs that are being produced today were certified in the 1950s and 1960s.

[Unrelated items from the same magazine: (1) We lost 8,314 bombers during World War II, counting only B-17s and B-24s and counting only those lost in the European theater. Each B-17 carried a crew of 10; each B-24 carried 7-10 men. (2) a Formula 1 driver survived a crash in which the G forces were estimated to be 178.]

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I spend about half of my time with white collar Ivy League elitists in Cambridge and the other half with blue collar airplane mechanics at Hanscom Field in Bedford, Massachusetts. The elitists overwhelming dislike George W. Bush, consider the people who voted for him to be idiots, and consider W. himself to be an embarrassment. The elitists will talk your ear off about how it is impossible for middle class folks in the U.S. to get by anymore (though they themselves are buying new cars, vacations abroad, etc.). The airplane mechanics, who earn a bit less than auto mechanics, would seem to be precisely the folks that the elitists and the Democratic class warrior candidates are talking about. Do these guys appreciate Hillary and Barack looking out for them? At lunch today, I asked the assembled mechanics what candidates appealed to them. Ron Paul and his lower tax/smaller government pitch had some appeal. Otherwise, these guys had very little good to say about the candidates in general and nothing good to say about the Democrats.

Barack and Hillary in particular excited ridicule among these wrench-turners. They thought the idea of vastly expanded government services would result in vastly expanded taxes and a contracting economy, with fewer jobs for everyone.

I still claim that the Democrats will win, if only because they are considered less culpable for the Iraq morass, but it seems that they aren’t going to win with the votes of the people they claim to be so concerned about.

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http://news.bbc.co.uk/2/hi/business/7073131.stm

has some informative graphics explaining how sub-prime lending came to be so profitable for banks and investment banks, with some fun facts, such as Deutsche Bank is now the largest property owner in Cleveland.

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The December 17 New Yorker carries a review of a new book on IQ by Malcolm Gladwell. The book, by James Flynn, discusses the fact that IQ rises every generation, attributing this rise to the fact that IQ measures the ability to think abstractly and the world continues to get ever more abstract. Flynn reanalyzes the IQ measurements of Japanese and Chinese-Americans and finds that in fact, Chinese and Japanese do not have a higher IQ than white people. They simply work harder, requiring an IQ of only 90 to rise into the professional, managerial, and technical occupations, compared to an IQ of 97 for lazy white people.

Speaking of dumb, yesterday’s freezing rain turned the 2′ snow banks at the sides of our roads here in Boston into 2′ solid ice extruded pyramids. Sidewalks and driveways are sheets of ice. The temperature is around 20F and the winds were blowing up to 50 mph. This is still fall; winter does not officially start until next week. Could a Hollywood script have created a character dumb enough to pay $2 million to live in a draft 100-year-old single family wreck of a house here in Cambridge?

Coming from the other side of the IQ spectrum, an airplane sales guy called from Orlando, Florida. He works for a big company with an excellent reputation whose product mostly sells itself (back-ordered until 2012 right now). He pays no state income tax on his salary and bonus (probably around $350,000 per year, as I learned when budgeting for folks to sell jet time cards for our new aviation venture). He woke up to a sunny but chilly 40-degree early morning. Mid-day temperatures were more agreeable (mostly in the 70s this week).

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I just completed recommending one of my 6.171 graduates for a master’s in computer science (I guess he isn’t that smart, since he wants to go back to school instead of working for Google). It was a great tour of just how painful Web applications can be.

Harvard University rejected my recommendation because the software insisted on me figuring out what exact department the kid was applying to and what degree. The menu offered about 300 choices, the first 10 of which started with “African-“. None of the CS choices worked and I eventually tried the African- degrees but they weren’t accepted either.

Many of the schools allowed the uploading of a letter, but never in HTML, the original format of my letter. Sometimes it had to be Microsoft Word. Sometimes it had to be RTF. Sometimes it had to be PDF.

Nearly every application required at least two extra keystrokes, e.g., “sign here to confirm the recommendation” would lead to a page with a button to “proceed to the submit page” that would lead to a page with a button to “submit the recommendation”.

University of California is an interesting institution. There was no commonality among procedures or software at four U.C. CS departments. One department insisted on 100 percent paper. The others each had their own peculiar Web software.

If you didn’t know better, the experience might lead you to believe that the average Google employee knew more about building software than the average professor of Computer Science…

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At dinner last night one of the “money guys” at the airport explained why U.S. airfares have been so high recently and planes so full. “In 2000 when the airlines couldn’t pay their leases, the owners of the planes said ‘There isn’t anybody else we can lease these big jets to, so we’ll renegotiate the terms to whatever you can afford.’ Since 2005, when a U.S. airline stumbles and can’t make its lease payments, G.E. Capital yanks the plane and sends it to China or India.”

We’ve been sending all of our money overseas, presumably in the expectation that folks over there will come back and buy Treasury Bills and other U.S. financial instruments. Last year we were upset because the Chinese came over and wanted to buy stock in our companies and sometimes the whole company. Next year, maybe the big story will be how they came and bought anything that wasn’t nailed down, especially airliners.

The one thing those foreigners almost surely won’t want to buy is a $1 million wood-framed house in an ugly exurban golf course development. So the jet market should get tighter even as real estate continues its slide.

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If you asked me how often I’m able to complete a planned flight in the Cirrus, I would say “almost never”. It seems that low IMC or icing or horrible turbulence or baking heat interferes. Today, however, we managed to get four people up to Portland, Maine and back almost as quickly and easily as if we had driven. The turbulence wasn’t too bad. The visibility was superb. Both BED and PWM had cleaned up after the big snow storm and hadn’t yet been hit with tomorrow’s freezing rain and snow storm. My friend Adam was kind enough to swing by the hangar yesterday and plug the airplane’s heater in so we were able to start it in the 20-degree cold without damaging the engine (about $40,000 to replace).

We started with a sightseeing tour over downtown Boston and then up the shoreline to Cape Ann. We continued up the beach and landed with a 15-knot wind straight down runway 36 at Portland, turning off into the FBO. They handed us the keys to an SUV, which we drove to the Duck Fat sandwich/fries/beignet shop. After that, we visited the art museum (report over on photo.net) and then returned to the airport for a night flight back to BED.

Upon pulling up to the hangar and wondering how I was ever going to get the plane uphill and over a little snowbank, my friend Joris appeared with a car and a snow shovel.

One passenger had never been in a small plane before. After landing, she said “That was one of the coolest things that I’ve ever done.”

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In the great tradition of pundits, I will put forth a definite prediction for the 2008 Presidential election here. If the prediction proves true, I will publish a gloating posting in November 2008. If the prediction proves false, I will never refer to it again 🙂

The Republicans will lose the 2008 election. People are tired of war. Churchill was victorious in World War II and nonetheless his party was voted out of power in 1945 because, presumably, Churchill reminded the British of their sufferings against the Germans. The Administration and the media have characterized what we are doing in Iraq as a war and the press coverage has communicated that we are losing that war. Thus the Republicans remind Americans not only of war but of losing a war.

That leaves the Democrats. Listening to Hillary Clinton, people feel that our problems are persistent, serious, and will require vastly higher taxes to address. Listening to Barack Obama, people feel that our problems are temporary, slight, and can be fixed without raising taxes. Barack Obama will win the nomination and therefore the election.

How close will the election be? Both parties have sophisticated methods of making their candidates appeal to voters. In the absence of spin doctors, Obama would win by a landslide, but the days of landslide victories are probably past. Obama’s basic message, that the federal government can guarantee everything to everybody without a round of tax increases that would cripple the economy, violates basic laws of economics and common sense. He will therefore be vulnerable to negative advertising, which will reduce his lead to 5 percentage points over whoever is unfortunate enough to win the Republican nomination.

What will be the net result of this change in government? In December 2009 we will suffer a massive nationwide psychological depression. People assume that all of their problems can be blamed on George W. Bush personally. When the hated King Bush II has been back to Texas for a year and the beloved Obama has been in office for a year, people will look around for a quick status check. They will still be stuck in horrific traffic. They will still be paying insane prices for crummy housing in bleak, lonely communities. Their children will be getting a terrible education at the local public school, perhaps developing to about 15 percent of their potential. If in a hip urban area, criminals will still be smashing their car windows and taking their GPS. They will realize that virtually none of the things that are unpleasant about their life have anything to do with the federal government, except for the war in Iraq, which a quick check of the headlines will reveal that we are still losing.

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My friend Arnold called me up today inviting me to fly up to Nashua, New Hampshire (KASH) for lunch in his Piper Meridian. Taking a jet-powered airplane 20 nautical miles for lunch doesn’t sound like the world’s most efficient plan, but Jet-A fuel is so much cheaper at ASH compared to BED that it makes excellent financial sense. The flight was a good chance to compare a modern turboprop to the turbojets that I had been flying.

Starting the PT-6 is easy, but nowhere near as easy as starting the FADEC (computer-controlled) engines in the Cessna Citations. The turboprop has “beta” and “reverse”, which are useful for slowing down on the ground but perhaps no better than the powerful antiskid brakes on the Mustang. The downside of beta and reverse is that, as Arnold pointed out in flight, “If you pull the throttle back into beta, you’ll kill us both”. You have to pull the throttle over a detent to get it into beta, but it is not idiot-proof. Adjusting the power for takeoff requires great care. The throttle is a stiff mechanical linkage to a fuel controller. If you push a little too hard you’ll overtorque the engine by 200 ft-lbs. Otherwise take off was pretty quick, helped by the fact that the wind was blowing 20 gusting 30 knots down the runway.

New England seems to present perennially miserable flying conditions and today was no exception. Even in an aircraft with a gross weight of 4800 lbs., the bumps were significant. The Malibu/Mirage/Meridian cabin is not famous for having extra space. I’m exactly 6′ tall, the seat was all the way down, and my headset was almost brushing the ceiling. Each bump would whack my head against the hard plastic ceiling, painfully dislodging the headset. Interior noise was loud, but bearable with noise-canceling headsets. Another challenge was the fact that the airplane has three airspeed indicators, all indicating different airspeeds. This is a feature of the Meggitt Magic glass panel that I’ve seen before. The airspeed tape in front of me was reading about 10 knots slower than the other two, which was unnerving because I always thought that I was flying too slowly.

The Meridian offers much better short-field utility than the Mustang, but otherwise it is hard not to get spoiled by flying a turbojet. [The Mustang could be operated easily from short fields except that the owner’s manual demands using runways long enough to accelerate to rotation speed, lose one engine, hit the brakes, and stop before the end of the runway. This does give a comfortable safety margin, but if you were satisfied with the safety of taking off from a short runway in a Piper Malibu you’d be a lot safer depending on both engines in the Mustang continuing to run.]

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In 1998, I wrote a little article advocating that MIT abolish tuition, on the grounds that Harvard would eventually become so rich that they would have to abolish tuition or fight the IRS and explain why they weren’t simply an investment fund that ran a profit-making university on the side as a way to escape paying tax on investment returns. The consequence of Harvard eliminating tuition would be that M.I.T. would only be able to attract those students who had been rejected by Harvard and the rest of the Ivies. By eliminating tuition early, M.I.T. would capture the attention of super rich dot-commers and get enough donations to eliminate tuition.

What happened? M.I.T. raised tuition, Harvard and the Ivies did too, and the rich techies gave their money to Africans. Then Harvard began to eliminate fees for poor families. Harvard’s new definition of poor extends up to $180,000/year in income. A poor family won’t have to pay more than 10 percent of its income to send a proto-snob to Harvard. Home equity won’t be counted toward family wealth anymore either.

Full story: http://www.nytimes.com/2007/12/11/education/11harvard.html

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