Philip Greenspun’s Weblog

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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I got a look at a benefits statement for a 40-year-old worker at a large Boston-area employer. This worker has a medical and dental plan that covers a family of two adults and one child. The deductibles are low, which makes these costs a good estimate of the total expected cost of health care for this family. Massachusetts already has a universal coverage system almost identical to the one the U.S. will adopt nationwide in 2014, so the cost in Massachusetts today is probably a good guide to what health care will cost nationally.

Here are the numbers: $19,022 for membership in an HMO, which was supposed to be the magic bullet for controlling health care costs in the U.S; $1,781 for dental; total = $20,803.

Let’s compare this to median income in the U.S. The Census Bureau estimates that median household income in 2008 was $52,029, which might include two working parents plus the kid’s lemonade stand revenues. Bureau of Labor Statistics says that the median hourly income in the U.S. was $15.95 in May 2009, which works out to $31,900 for a person working 40 hours per week, 50 weeks per year.

When you consider that local, state, and federal governments need to collect substantial tax revenues from the median worker in order to fund their near-50% share of the U.S. economy, this means that health care for a small family is likely to consume 100 percent of the after-tax income of a typical U.S. worker.

Another way to look at this is that we’ve produced a great health care system for rich people, but we forgot to make most Americans rich!

[The mismatch between income and ability to pay for health care should be widening. Median wages in the U.S. are surely falling, if only because so many Americans now have a wage of $0. Health care and health insurance costs have risen every year in both Massachusetts and nationally. Sources: A 2009 article on health care inflation outpacing salary increases; an article today comparing health costs to reported inflation]

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This Fortune magazine article compares countries according to how their debt levels relative to GDP, population, energy consumption, and land area. Japan is an outlier, with a ridiculous debt level compared to what you’d think its capacity to repay that debt would be. I wonder if this isn’t the best explanation for Japan’s slow economic growth.

Stepping back from an economy we see a group of people producing some stuff. They consume what is necessary for food, shelter, clothing, transportation, etc. What’s left over is available to pay debt, provide a return to investors, and invest in capital equipment such as factories. If debt obligations are high, most of the society’s surplus will go to pay debt. The return on existing investments will be low and there will be no incentive to make additional investments, even if there were enough surplus available to make such investments.

What do folks think of this Fortune article and its application to Japan?

[Separately, the article points out that the U.S. is a very unattractive place to invest compared to developing countries such as China and India, which have negligible debt.]

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If you’re not a regular OPR* listener, you may be interested in this link to a story on Morning Edition. I was interviewed regarding East Coast Aero Club’s experience with selling helicopter lessons on Groupon.

[They edited out my comment that “The Obama Economic Miracle has yet to arrive at East Coast Aero Club”]

* OPR = Obama Praise Radio.

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Jane Smiley, who won the Pulitzer Prize for A Thousand Acres, has a new novel, Private Life, which I recently finished. The book answers the question “What’s it like to be married to a guy with a high IQ but who is in fact a pinhead?” Probably a copy should be sent to every woman who has ever thought of dating a computer programmer.

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“Only the dead have seen the end of war,” noted George Santayana. Perhaps this should be updated to “only the broke have seen the end of war”. In “Can we afford endless war?”, Steve Chapman notes that the real dollar cost of our Afghanistan and Iraq wars now exceed Korea and Vietnam combined.

[The scale of the Vietnam War was much larger in many ways than our current wars. The 12,000 helicopters used in Vietnam (around 7,000 of them crashed, with more than 5,000 destroyed completely) revolutionized the combat experience (source).  In Iraq and Afghanistan, roughly 130 helicopters have been lost during our decade of war.]

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My MIT School of Science newsletter arrived in the mail recently (I was a math major undergrad, laboring under a mistaken teenage impression of personal intelligence). Nearly all of the news was positive, with various awards and honors received by MIT faculty and important scientific discoveries achieved. The one disappointment was in the area of recruiting professors and graduate students of desired races:

In 2004, the MIT faculty unanimously passed a resolution to double the percentage of under-represented minority (URM) faculty and triple the percentage of URM graduate students at MIT by 2014. … overall progress has been slow. One important reason for this is the very low rate of URM PhD production in some fields. In Physics, only 2 percent of the PhDs awarded in America go to URMs. Under the leadership of Ed Bertschinger [photo of a very white professor included], the Physics Department is working to change this.

[under the headline Empowerment] … the Physics Department invited [some black and Hispanic physicists] to attend a one-day “Physics Diversity Summit” workshop at MIT. … “In learning about MIT’s student efforts in Africa and the diversity efforts initiated by the University of Washington graduate students,” Bertschinger says, “I felt reinvigorated in my own efforts to champion diversity and inclusion at MIT.”

No mention was made of my 2006 proposal in “Women in Science” (Appendix C) that salaries be raised for members of desired groups, e.g., women or blacks. If a professor of a particular sex or race has more value to the school, why shouldn’t he or she be paid more than a white or Asian male? After six years of failure, on top of decades of failure of earlier programs to change the skin color balance at MIT, why not try a more direct approach to recruiting and retaining desired employees?

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I spent today in Montreal. On almost every block I was asked for money by a beggar. When stopped at traffic lights in the Starlink crew car (an unprepossessing white compact), I was asked for money by a beggar standing in between lanes. It was a remarkable density of beggars for a city that freezes over in the winter and all of the guys with hats in hand looked pretty healthy.

How can we explain the greater number of beggars in Montreal compared to Boston? Here are some theories:

• the Canadian health care system is superior to that of the U.S. and it keeps jobless people alive and vigorous so that they can beg on the streets of even the coldest city; the U.S. counterparts of these panhandlers are dead due to our callous and ineffective health are system
• the average Montrealer is more generous than the average Bostonian, which makes begging a more attractive career choice (and perhaps a good enough one that they can afford to take the winters off)
• the higher minimum wage in Quebec ($9.50) compared to Massachusetts ($8.00) means that those with poor skills are unable to find work other than begging

Other ideas?

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Last week I talked to a 25-year-old who is passionate about gay rights. She was very pleased with the recent federal district court ruling that the U.S. Constitution’s anti-slavery amendments guarantee a right to gay marriage. Was she now satisfied with the legal status of homosexuals? “Absolutely not,” she replied. “Lesbian, gay, bisexual, and transgender people can be fired by their employers.” Apparently the next peak to scale for gay rights activists is a statutory right for fired workers to sue companies.

I asked her how it would work. “If I fire a helicopter instructor and he sues me, how is the jury going to sort out whether I fired him because he crashed a helicopter or because I saw him using an iPhone?” She didn’t have an answer. “What if my employer has been unhappy with my performance and I’m afraid of being fired. Though I have no girlfriend or boyfriend, I show up every day driving a Miata and carrying a MacBook. Can I sue the company for firing me because they thought I was gay?”  Finally I asked how I was supposed to know if my workers were gay. After all, sexual activity is conventionally conducted in private. Was it okay for me to ask them with whom they were having sex and what specifically they did with those partners? “They might bring their partner to a company social event.” I explained that helicopter flight schools did not typically host lavish social functions.

Some work in Congress has been done on this (link), but not successfully so far. A fatal flaw in the campaign seems to be the fact that there will not be any quotas for gay employees or other specific requirements for employers to hire gay workers. In the absence of quotas, a company would be better off hiring straight workers (assuming it could identify them) because such workers, unless they invested in Miatas and Apple products, would not have a statistical chance of imposing this new litigation cost on the company. Typically where the government has added new legal rights for a particular class of worker it has also imposed hiring quotas on employers, at least government employers and government contractors (i.e., on nearly 50 percent of the economy).

Separately she noted that gay workers were underpaid compared to equally skilled and hardworking straight employees, part of a theory that “companies always exploit vulnerable workers”. Thus there is an opportunity for a company with an all-gay workforce to make supranormal profits due to its low labor costs. She herself will not be taking advantage of this no-risk approach to making millions as she intends to spend her life working for the government or in non-profit organizations.

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