Thursday, September 28, 2017

Deriding industrial policy when it saves jobs

In October 2016, the Financial Times wrote about French industrial policy using this example:

You can argue, as does the FT and as do many FT readers, that this is a perfect example of misguided government policy.

High-speed trains the country does not need is clear, and the point is reinforced with maximum speed is 200km an hour at best.

The FT may be right to invoke the mental background image of industrial policy we have learned to associate with old style socialist governments and backwards regimes in general.
One big problem, as the blogster sees it, is that government controlled economic activity in these systems tends is inextricably linked to corruption, laziness, and exploitation by a nomenklatura, or ruling clique.
These aspects do not seem to be in play in the example given by the FT, unless one is willing to claim that averting the shutdown of the plant signifies laziness in the face of the need for change. So, sure, you can go there, if you feel like it.

We are not told whether France needs new regional trains, or how much they would cost if not built to the "state-of-the-art TGV".

When it comes to "needs" in general, there is sometimes surprising leeway, as anyone who had the opportunity to ride the glorious old late weekend nights "hospital train" out of San Francisco will understand. The blogster nicknamed the train hospital train because the carriages were plain white on the outside with a definitely military-ish green interior.

They were old and quiet.

Unlike the newer ones, which must have been labeled "needed" at some point in order to justify their purchase.  

Yes, government money should be spent reasonably, but as long as France, or any other country for that matter, can afford the luxury of splurging billions upon billions upon producing stuff that is not meant to ever be used, buying a few new trains and keeping workers employed a little longer is not a big deal to the simple minded blogster.

Friday, September 15, 2017

German generals get themselves a seat upgrade on government planes through sheer serendipity

Note: The news reported in Frankfurter Allgemeine today can only surprise people who have never worked in large organizations where the RIP principle (Rank has Its Privileges) applies. So, enjoy.

The facts are simple enough:
1. The German government has a fleet of aircraft that members of the government, the German president, and high ranking members of the federal parliament use for official business.
2. The fleet belongs to the German defense department.
3. General officers (generals, admirals) are not entitled to using these aircraft, except when a craft conducts a training flight and a general officer happens to need to go where the plane flies.

In other words, item 3 makes German generals mere governmental hitchhikers.

For example, one of the valiant defenders of German freedom, as well as ours as part of NATO, wakes up in the morning and finds he needs to go to Afghanistan, he calls up the fleet people to find if a government plane just happens to go there.

Or to Paris, or London, or some similar remote fighting location.

If so, he can hitch a ride.

And if not?

Well, that's where "RIP" comes in.

Of course, you have already figured out what the hitchhiking provision really achieves, right? 

Say, a German general, let's call him Alert for the sake of a cheap joke, needs to fly to New York. General Alert asks his ADC to organize the flight. The ADC will send an email to fleet management to ask if they would like to schedule a training flight to New York.

Fleet management, knowing full well that any email which starts with "the General would be happy if" is really an order, will do its best to make the improbable happen.

Oh, the general needs to leave on July 3rd at 8 AM and return on July 12th at 5 PM?*


What a coincidence, we will have a training flight to New York on July 3rd at 8, with the return on July 12th at 5. Will that be convenient?

This is how German generals roll, or fly, for that matter.

Now, a pesky newspaper finds out that German general officers routinely arrange "training flights" to satisfy their airborne needs.

And also to overcome the feeling of being the underlings of civilians, who - let's face it - shouldn't get to fly for free on planes that really belong to the military anyway, right?

Will Germany's brave heroes have to revert to hitchhiking after being outed by the press?

Most certainly not. This news will be forgotten in 24 hours, and Germany's finest will get to enjoy the privileges that come with their rank.

* Please note that this is not a literal quote. Germans don't use AM and PM.

Tuesday, September 5, 2017

Data - or why birds strike military aircraft and civilian ones different ways

This is another cautionary tale about data. It is also a plea to listen to what experts say about data despite headline news that show efforts by experts to manipulate data in various areas of life.

The diesel emissions scandal that has damaged the reputation of German automaker VW is a case in point. It took experts to develop the cheat system, and it took other experts to prove the company had circumvented emissions regulations for years.

And that does not include the frequent examples that show people believing in the correctness of their data, only to be proven wrong by some new discovery or method. 

The blogster tries hard to avoid being duped, but has fallen for bad data many times - not counting the times it* has not realized having been suckered.

One aspect of events, and the data (or facts) they are based on, is whether they impact your life.

Which brings us to the exotic example of bird strikes. You may have heard of the birds that brought down a passenger aircraft in New York and made a hero of the pilot, Mr. Sullenberger.

So, birds striking a plane you are on can be life changing.

Collisions between birds and a military plane are generally considered part of the job and make few, if any, headlines.

So, it makes perfect sense that we don't know one interesting aspect of data on bird collisions with military planes.

Which is: military planes collide with birds much more frequently near the airfields than do civilian planes. The greater the distance of a fighter jet to its base, the fewer collisions are counted.

Why could that be?

There are many things that can come to mind, for example, whether military airfields are more frequently located in areas with more wildlife. Or maybe there is a correlation with the intensity of use of a base.

As the blogster learned, while this may influence the number of incidents, there was one other aspect that stood out: military pilots tended to report bird strikes close to the home base but ported fewer when they were far away.

As it turned out, protocol required pilots to find an airfield and have their bird inspected before taking to the air again. Which frequently meant the valiant fliers would not make it home for dinner.

Pilots and ground personnel felt protocols did not adequately handle bird strikes that caused no obvious serious damage to the plane. 

They found a way around it, and in the process created "incorrect" data because collection was based on the two variables "bird strike" and "plane location", ignoring a third variable "extent of damage".

Friday, September 1, 2017

When that super expensive worker costs less than the fuel for a truck

In every election cycle and with every annual report by economics think tanks, someone is bound to complain about the high cost of labor.

For German workers, this has meant various measures aimed at making the labor market more competitive and cutting costs. The traditional 50/50 split of payroll taxes and was abolished with the result of shifting costs to workers; a pre-tax regime for social security contributions was introduced concurrently with income tax on all retirement income, and companies were offered generous subsidies for hiring long term unemployed.

All of this led to a small reduction of the unemployment figures projected by economists some 40 years ago. In other words, demographics is a bitch, and automation and productivity gains are the whips.

The other day at a gas station, the blogster saw a truck driver pay just under 600 Euros for diesel.

"I use about one thousand Euros worth of fuel a week", explained one driver.

Sheepishly, the blogster said: "So, you burn more in fuel than you make in wages?"

"For sure", the driver replied.

"And your boss still complains about high labor cost?"

"No, our company owner doesn't. We have five drivers, and the government pays half of the wages for three of them."


"Yes, the boss is an expert at finding government subsidy programs", he smiled.

As the truck driver went back to his job of supporting the booming German economy, the blogster absentmindedly paid for the four-pack of butane cartridges needed for an upcoming short camping trip.

It* will carefully look at industries and sectors next time someone complains about excessive labor costs.

* Quality gender neutral reporting.