David R. Henderson  

Our Regulated Society

The Summer of Sharing... A Szaszian Take on Conformity ...

Last night, after a productive meeting in Indianapolis, I flew home to Monterey. Well, not quite to Monterey. That was the plan. But the plan didn't work out. And the reason it didn't work out is a tale of regulation.
I was scheduled to fly from Indy to Phoenix. That worked out well and we got in 10 minutes early. Then, after a quick cup of delicious chili at Wendy's (although I know that Sheldon on The Big Bang Theory would correct me for calling it chili when it contains beans) I went to the gate for Monterey. There I saw a local Monterey politician who once got up at a Rotary talk I gave and angrily challenged me. I've got a thick skin and there are actually things about him I like and so we got talking in a somewhat friendly way. That will matter in a few minutes, as you'll see. He also introduced me to a colleague of his, a local Monterey resident who used to be a commercial pilot.

When we boarded the flight, the airline pilot announced that the fog cover in Monterey was low (I think I've got the term right) but that we would probably be able to land in Monterey. As we got closer, we went from very clear over Salinas to very fogged in over Monterey. We made our approach. Finally, I could see some lights but we were very low. The pilot powered up and pulled out of the landing. He then came on to tell us that he couldn't even see the runway. Good call! A few minutes later, he announced that we would land in San Francisco, a 2-hour drive from Monterey.

We sat on the runway at SFO for about half an hour waiting for a gate. Finally we got one. As we stood to get off the plane, I asked this politician, who was sitting two rows behind me, a question. I would name him because I actually thinks he comes out good in this, but I don't know that he would want me to. I knew, from other information, that this politician knew a lot about the Monterey airport. I asked him why the pilot couldn't use instruments to land. He answered that there was construction going on at the airport and while it was going on, it was not possible, for some reason I don't totally understand, to have the beacons or whatever on the ground be working. (In comments, if you want to correct my understanding, please do.)

I asked what the construction was about. He told me that Congress had mandated, for safety reasons, that some runways be lengthened by 1,000 feet. That's a lot, and if you did that in Monterey, it would destroy a huge swath of the cities of Seaside and Monterey. So instead, they were installing a very expensive technology that would allow a plane that went too far to stop in a short space, kind of like those steep gravel turnouts you see for trucks in the California Sierras, except without the incline. Regulation. I suggested that there wasn't much of a case, cost/benefit wise, for this mandate in the first place. He didn't disagree, but he basically said it's the law.

Also, he explained, a local suit by someone who objected under the California Environmental Quality Act had slowed it down and raised already high costs even higher. Regulation.

So because of regulation, we had to land 2 hours away. On the way from the SFO gate to the baggage carousel, I started talking to a young corporate pilot with whom I hit it off. I suggested to him that we ask this politician and his friend if they wanted to split a rental car rather than wait some indeterminate time for a shuttle. They did.

Then we had to find the rental car place. At many airports, you go to a counter and choose the rental car company you want, and then go outside and hail a dedicated shuttle, that is, one that is marked with the logo of the company you chose. Not at SFO. Instead, they have socialized the process. You walk a long distance through the airport and then get on a government-owned monorail that takes you to the counter. So what normally would have been a 5 to 10-minute process was a 15-to-20-minute process. Regulation.

This politician and I did have a mainly pleasant conversation on the 2-hour drive though. But if I say more, then Monterey Peninsula readers of this post who pay attention to local issues will quickly figure out who he is.

Had the plane been able to land in Monterey, which it would have if the pilot had been able to use instruments, I would have been at my home by 10:00 p.m. I actually got in at 1:40 a.m. this morning. Regulation.

One note: I thought the pilot who didn't land made the right call. I asked the two corporate pilots. It was definitely the right call, they said.

Comments and Sharing

COMMENTS (38 to date)
NZ writes:

I don't know about landing during construction, but there's no rule that says real chili doesn't have beans.

However, most recipes originating in Texas don't include beans, and, Texans being how they are, might bombastically proclaim that real chili has no beans.

I don't watch the Big Bang show but on Wikipedia it says that the Sheldon character is supposed to be from Galveston, so maybe that explains that. Weird though, he doesn't strike me as the bombastic type. Does he retain any other "Texan" character traits?

Steve Brecher writes:
When we boarded the flight, the airline pilot announced that the fog cover in Monterey was low (I think I've got the term right) ...
Not bad. Fog is a cloud which extends to the ground. You may have meant that (the pilot announced that) the ceiling was low, i.e., that the bottom of the clouds near and above the airport was relatively close to the ground.

Here's the NOTAM (Notice to Airmen) that is probably relevant to your story:
!MRY 09/014 MRY NAV ILS RWY 10R OUT OF SERVICE 1409091810-1409232359
I.e., instrument landing system for landing on runway 10R out of service Sep. 9-23. Such a system typically provides vertical guidance down to 200 feet above the runway (plus lateral guidance).

Andrew_FL writes:

NZ-Sheldon very rarely displays Texan traits, or traits of any completely normal human being for that matter. The joke is just that Sheldon is kind of weird.

Very, very intelligent, but also quite weird.

Count your blessings, David. At least you have banking services.

Americans living abroad are being cut off by banks and brokerages as financial institutions seek to steer clear of a U.S. crackdown on money laundering and tax evasion.

David R. Henderson writes:

@Steve Brecher,
Thanks. Yes, that was it.

Peter Johnson writes:

delicious chilli at wendy's? where else have you been eating...

David R. Henderson writes:

@Peter Johnson,
I call ‘em as I see ‘em. I always will.

mike shupp writes:

Notices to Airmen? Regulation!

David R. Henderson writes:

@mike shupp,
You really missed the point. The notice would not have been required for instrument landers had the regulation not existed.

mike shupp writes:

David Henderson:

Ah so, my friend. My point was that posting a warning to pilots about the temporary non-operability of instrument landing capability was probably a good thing, with beneficial results -- I don't want to lose you, David! -- and the regulations that caused the airport to disclose the temporary conditions, and the regulations that caused pilots to read the warning, and so on were probably good things.

Now the background issues -- did the Monterey airport have the sort of traffic that really required lengthening? did construction actually screw up the environment in some fashion or is this simply NIMBY-related objection to the noise and confusion of such construction? -- are different matters. Possibly an ideal technocrat with access to all sorts of data could make a factual judgment.

I'm not that guy, and I don't have that data. But on balance, making my own seat-of-the-pants judgment, I think I'd go along with you -- the Monterey airport was probably fine as it originally was, and the construction unnecessary, and at most the Notices to Airmen should simply have stated that the airport was off-limits to aircraft above some weight limits or landing speed requirements. But that's an argument for BETTER regulation, not for NO regulation.

I suspect in an ideal world, there might be only 10 % of the regulation we currently have, and we'd both be happy with it. I think you're trying to nudge us in that direction by pointing to the ill effects of regulations, in hopes of swaying people who might be convinced that Utopia consists of having NO regulations. I'd like to live in Utopia also, but the contrarian in me is always going to think we need SOME regulations for practical reasons.

So. I was teasing, not making an angry refutation of your essay. Carry on, please, and God bless.

Joel Avila writes:

Hello Professor Henderson,

Your article about regulation in Monterey has prompted me to point you to a piece of desired regulation in your neck of the woods. Apparently the Monterey County Board of Supervisors wants to ban or at least significantly reduce vacation rentals that are facilitated through services like Airbnb and VRBO (http://www.montereycountyweekly.com/archives/2014/0130/airbnb-and-other-short-term-rental-unit-owners-push-county/article_17a7e420-8955-11e3-b3a8-001a4bcf6878.html).

My wife and I visited the Monterey area last December. Thanks to Airbnb, we stayed at a lovely cabin on a farm overlooking the ocean and a dense redwood forest just south of Carmel. It was an incredible and unique experience, especially considering that we paid a relatively reasonable rental rate. Our gracious hosts, who have owned the farm for 30 years and built the cabins themselves, emailed us last week and asked us to sign the petition (http://www.thepetitionsite.com/922/561/985/i-want-a-vacation-rental-ordinance-for-monterey-county/).

The whole attempt by the supervisors - and pretty much every other local official who makes the anti-Airbnb argument - is pretty lame and smells of anti-competitive status quo basis and NIMBYism. These officials hardly ever distinguish true neighborhood effects from private, voluntary exchanges. E.g., it's one thing to have a noise ordinance inside a dense city high-rise apartment building after 9 pm at night. It's another thing when a community tries to enforce an ordinance for transactions that are entirely enclosed within a space of private property. I mean, it's not as though Airbnb guests are bringing their garbage barrels to burn their trash. These guests are looking for a smaller, more unique, more "homey" lodging experience, plain and simple. Airbnb and the other "home away" services do just that: match vacationers with property owners with under-utilized lodging spaces.

This is a real win-win for owners and vacationers. Neighbors scarcely lose (if at all), unless you count the privileged psychic pain of having "tourists" staying in the house next door. The only possible losers are the hotel operators, who don't want the competition and who believe that the (albeit sometimes) onerous regulations they observe should apply to everyone who hosts an out-of-towner.

I hardly ever sign issue-oriented petitions, but I signed this one last week because I think these regulations truly suck and go well beyond actual negative externalities. These ordinances essentially handcuff property owners from doing something that is creative and valuable for forming meaningful human relationships. Maybe you and your readers should sign it too. Just a thought.

andy writes:

why is it an argument for better regulation? Let's say some free market airport screwed up. Would you say it is an argument for a better free market?
'Regulation' is an ecosystem. In a similar way a market is. Isn't preaching for better regulation in a sense as nonsensical as preaching for 'better market'?

David R. Henderson writes:

@mike shupp,
Ah so, my friend. My point was that posting a warning to pilots about the temporary non-operability of instrument landing capability was probably a good thing, with beneficial results -- I don't want to lose you, David! -- and the regulations that caused the airport to disclose the temporary conditions, and the regulations that caused pilots to read the warning, and so on were probably good things.
True. It turns out that I missed your point.
Here’s what I would add, though. Given that we have government intervention, the regulations that you refer to are almost certainly good ones. But I think we could have a private system that’s a mixture of for-profit and non-profit that would work better. It would also have similar regulations, I predict. On this one, I think Canada is way ahead of us.
Here’s my take on that sector of the economy, but I haven’t blogged about it because I don’t know enough:
General aviation and airports gets a lot of implicit and explicit subsidies from government. But it’s not a free lunch for them. The feds eat up a lot of the value that the subsidized get from the subsidies by heavy regulation. So the subsidized are still better off from the subsidies than they would be without, but not much better off. Given that a lot of the regulations are inefficient, I think there’s a huge deadweight loss.

mike davis writes:

It’s probably worse than David thinks. The current system of government controlled air traffic control and navigation depends mostly on technology from the ‘60’s. The ILS approach to 10R at Monterey is basically the same approach that aircraft would have used while David was a boy chopping cotton in Manitoba (or whatever they chop in Manitoba or wherever he was chopping it). The more modern technology-- GPS enabled LPV approaches (Google it. Very cool)--don’t rely on old, expensive gizmos installed at the airport. That means you can have more precision approaches, which means that when an airport is having a no-good, very-bad-day—runway restrictions and fog—arrivals can usually move to a different runway.

But GPS approaches are just now becoming common. It looks like Monterey, an airport that probably gets lots of fog, only has a non-precision GPS approach. This is not surprising. The FAA makes it very challenging to get the in-aircraft equipment approved and installed. I understand that there’s even more red tape in getting the approaches up and running. In a privatized environment the airlines would do a very, very good job of making sure that the GPS receivers in their aircraft worked. They would also make sure the airport they contracted with published only safe, well-tested approaches. Commercial aviation is very safe. Most of that is because the airlines want it to be very safe, but the FAA has contributed as well, a fact we should celebrate. However, commercial aviation is also very inefficient. That’s the FAA’s fault.

David, next time you get stranded at SFO, try to share a ride home with a big-government progressive. An unnecessary two-hour car ride after a long day of flight delays does concentrate the mind.

MG writes:

Pofessor Henderson:

Would love to hear your take on the issue raised by Joel Avila. Talk about a double-play: Your expertise local Monterrey politics on an issue being headlined by EconTalk's Summer of Sharing...

NZ writes:

@Joel Avilla:

Neighbors scarcely lose (if at all), unless you count the privileged psychic pain of having "tourists" staying in the house next door.
Maybe you're selling the neighbors short. I can easily imagine that it's more than just "privileged psychic pain" to see your neighborhood turn into a tourist trap.

Besides, what if there's a reason that native residents don't like having tourists around? I can easily imagine tourists littering more, clogging up the infrastructure, and generally changing the culture towards the commercialized and generic. That seems to be a common complaint about tourists anyway, so there's likely some truth to it.

Don't get me wrong, I think there are a few places where a service like AirBnB truly does facilitate a win-win-win (that third win being for neighbors) and maybe Monterey CA is one, but I don't think these places are anywhere near as common as the people behind/on board with AirBnB might wish it to be.

So, to restrict stuff like AirBnB out of hand doesn't seem like such an unreasonable precaution.

AS writes:

" I'd like to live in Utopia also, but the contrarian in me is always going to think we need SOME regulations for practical reasons."

We already have bottom-up regulation in the sense that if a firm fails to satisfy customers, the firm dies. Markets self-regulate. What is unnecessary and destructive is top-down regulation, where a bureacrat mandates something just because he believes from his own hubris it to be good. Rarely do these good intentions map to good results.

Tom DeMeo writes:

Yes markets self regulate. And in the case of air travel, the result would be that no one would fly. The liabilities could not be resolved. The only conceivable way to allow 700,000 lbs of steel, plastic and human bodies to hurtle over cities and towns would be if there was a regulatory accommodation agreed to via the democratic process. No private party has a right to take such a risk.

NZ writes:

PS. I should have clarified about restrictions on AirBnB, it's more than just not wanting tourists around. People in any desirable location are usually tolerant of some level of tourism.

Rather, it's the spillover into residential areas, and the different lifestyle that comes from a neighborhood in which there is a constant flow of strangers. It changes the feel of one's day to day. Indeed, it affects the trajectory of the community in ways that are reflected in property values but also in other ways that you can't put a dollar sign on.

Mike Davis writes:

Tom, privatized and self-regulating are two different things. I don’t know anybody who wants an air transportation system that is unregulated. There may be some people who want the system regulated by tort law rather than the crazy mixture of tort law and FAA regs we have today (although even that view is rare). But a lot of people, including me, think we’d be much better off if the airports and the ATC system were controlled by the private sector. In a world where the dimensions of a typical airline seat are discussed more often than celebrity selfies, airlines have a huge incentive to make flying very, very safe.

db writes:


I am a pilot (private, not commercial), and I hope I can shed some light on this for you. Landing "on instruments" is not really a thing, considering that instrument approaches still require the pilot to make visual contact with the runway environment before reaching a minimum altitude. Landing on a fog-obscured runway is simply not safe, regardless of what instruments are used to guide the aircraft to the runway, and regardless of whether the restrictions are created by bureaucratic fiat or by common sense.

Once the pilot determined he had reached his minimum altitude on the approach, he was obligated (generally by regulation as well as company policy) to execute a go-around. He would have had the option to request an additional attempt at the approach from the approach controller, but in some cases, company policies would prevent that and require him to fly to his alternate airport. Pilots are required when flying on instrument flight plans (which he certainly was) to file an alternate airport, which has to meet certain minimum stats for that airport.

So, in reality, it would have been neither safe nor wise to land at Monterey, given the fog obscured ground conditions and current technology. While some airliners have been equipped with "autoland" capability, these are still, as far as I know, not capable of safely landing an airplane on a completely obscured runway. There are simply too many things that could go wrong (think of a deer running out on the runway as your plane rolls out at 150 knots).

Tom DeMeo writes:

Mike- I don't understand your point. We aren't talking about privatization. We are talking about regulation. Incentives don't matter here. Consent does. No one can do activities like fly enormous planes with market style consent. It simply isn't possible for everyone placed at risk to agree to terms. You have no right to risk my life that way, no matter how strong your incentives are. It requires democratic consent on a national level, or it doesn't happen. The regulations are the terms of the agreement.

Joel Avila writes:


First, your responses miss the key thing that I tried to highlight: that there's scarcely any concrete or meaningful definition for the neighborhood effects that these ordinances are targeting. I used very clear examples of noise and pollution as negative externalities. It's not adequate for anyone involved to create regulations based on amorphous terms like "tourist trap," "clogging up infrastructure," and "spillover into residential neighborhoods." If there's a clear, empirically verifiable effect, then by all means create a rule against it. Some municipalities are creating rules of the latter type, but I think the tendency is toward the former.

Second, your argument about clogging infrastructure and creating tourist traps arguably apply more to existing and new concentrations of hospitality lodging than individual homeowners. No one complains when a W Hotel is built, but heaven help us that some folks want to put their spare bedrooms to use. The answer to all of these issues, of course, is taxing consumption and the negative externalities (wow, what a thought!). Yet so far many localities would rather create fake solutions (i.e., banning these rentals) instead of making the existing, effective solutions easier for compliance for everyone. Once again, dumb regulations on building (particulary against anti-density construction), business licensure, and fee processing make people's lives harder (but not for incumbents, of course).

My point is that without these particulars, all you can really point to is neighbors' emotional discomfort. And honestly, I might have (and probably do have) a plethora of socioeconomic disagreements/qualms/problems with my neighbors, but how are those my problems if they are not actually interfering with me in any way, either at my doorstep or in my everyday activity?

Third, you misspelled my last name.

Conclusion: there are very good arguments for regulating and taxing clear, specific neighborhood effects for services like Airbnb. You just haven't made them yet.

Thomas Boyle writes:


Some folks at Reason Foundation have been very keen on the Canadian/Australian model of regulation, which involves a privatized monopoly that aviators are required, by law, to use.

If there is one thing that has greater potential for abuse than government, it is a private monopoly that people are legally required to use.

Abuse is supposedly minimized by having the entity be a) a non-profit and b) overseen by a board with representatives from the airlines, government, and general aviation.

Of course, in practice, the airline representatives control the board (they outnumber the GA representatives, and capture the government representatives). And, to be precise, they are the representatives of current incumbent airlines - you can't be a representative of an airline that doesn't yet exist.

The non-profit aspect hardly matters. If, handed the reins of the regulatory system, representatives of incumbent airlines cannot figure out how to a) raise barriers to entry and b) curtail general aviation, they lack all imagination.

I therefore do not share the Reason Foundation's enthusiasm. Indeed, I think the solution it advocates is actually worse than government. The reason private markets work is that they offer competition and customer switching options, neither of which affects Transport Canada. If we must have a mandated monopolist, let's at least not explicitly hand it over to an interest group to run! And, if we must privatize FAA functions, let's make sure it's done in a way that creates real service provider competition.

Phil writes:

It is true the airport work was delayed (and subsequently the costs increased) because of a lawsuit filed under the California Environmental Quality Act (CEQA). But you should understand that the provisions of CEQA are designed to ensure a more democratic and thorough decision-making process. Without a regulation like CEQA that mandates community involvement in the decision process for major projects like the MRY runway extension, we might have projects done faster and less expensively (in terms of outlays), but they would come at the cost of reduced civic involvement and other externalities. For example, the original airport plan did not adequately consider the impacts on vehicular traffic on the already overly-congested Hwy 68 until the residents of the area forced the airport commission to consider it. For those who use that stretch of highway every day, the added cost was probably worth it. For those who appreciate good decision-making, CEQA helps ensure public officials consider all the relevant costs and benefits.

NZ writes:

@Joel Avila (with one "l", sorry)

Sometimes the negative externality is hard to articulate even though it's recognized and agreed upon by the people affected.

This means it's difficult or impossible to create a tax or restriction on any specific thing that might solve the problem.

Another thing to consider is that simply having a regulation sends a message. I've said before (though maybe not on here) that one critical but unstated function of the law is to send messages that would be awkward or unpleasant to send interpersonally. A law says something about the character of the place that created it.

mike davis writes:

Tom, Thanks for the comment. I was talking about privatization and my point was that the need for regulation should not preclude privatization. But since we’re both thinking about the issue, I’m confused by your response. By consent, I assume you mean the consent of those who live under the flight path and not the consent of the passengers. Obviously the airlines and the passengers can and do engage in market style negotiations. Unless you think that there are some really serious information asymmetries, passengers will find the optimal level of safety as long as the government enforces contracts and protects property rights. (And if you’re a real radical, you might argue that we don’t even need a government for that since reputation will do most of the work.) True, the people who live under a flight path can’t negotiate with the airline, but that’s why we’ve got tort law. As a practical matter the odds of someone on the ground being hurt by an airliner are vanishingly small (even including the chances of terrorism). An airliner safe enough for the people in it is plenty safe for the people under it

Thomas Boyle writes:

David Henderson wrote:

General aviation and airports gets a lot of implicit and explicit subsidies from government. But it’s not a free lunch for them. The feds eat up a lot of the value that the subsidized get from the subsidies by heavy regulation. So the subsidized are still better off from the subsidies than they would be without, but not much better off. Given that a lot of the regulations are inefficient, I think there’s a huge deadweight loss.

Breaking that down a bit...

There are certainly explicit federal subsidies to regional airports.

The airlines like to claim that general aviation gets a lot of implicit subsidies for air traffic control (ATC), because it takes the same amount of ATC to handle a Cessna as an airliner. That's simply not true, even if the Cessna uses ATC - which it is much less likely to do at all. In fact, as far as many Cessna operators are concerned, ATC must be tolerated because it is mandated by... the needs of the airlines.

Indeed, small-plane pilots routinely - extensively - bypass the FAA's services, flying around areas that require heavy use of ATC (because those are airline-use areas), and paying for market-provided services for weather information and flight planning (even though the FAA services are "free", or, in fact, paid through aviation gas taxes).

On the other hand, business jets DO operate much more like airliners, in their use of ATC.

There's no question that FAA regulation has been a deadweight loss to general aviation at the small-plane end. Small planes are mostly stuck in the 1950s, because improvements - whether for speed, safety, convenience or functionality - are cripplingly expensive to get through FAA certification. Introducing a competitor to an old design is not economic. Consequently, today, the flying equivalent of a '57 Chevy is still one of the most popular small planes sold, but now costs $350,000, and sells about 100 a year, worldwide.

David R. Henderson writes:

@Thomas Boyle,
Thanks for your clarifications. See why I didn't want to claim expertise? :-)
They're very interesting by the way.
I hadn't known about the FAA certification part being cripplingly expensive. I had always thought that the story behind the high price of small planes was mainly liability. Is that not true?
By the way, one of the implications of my view (liability) and your view (FAA regs) is that as the U.S. GDP accounts for a smaller percent of world GDP, some innovation should break out somewhere in the world. Any idea whether it has?

Tim writes:

Regarding Airbnb, there are plenty of ways for people to keep tourists from living near them without any regulation. Condos, co-ops, homeowners' associations, and rental properties all can forbid them, so residents who want to avoid being near short-term renters can always choose to live in a place that bans Airbnb and similar services.

I'm having trouble thinking of a good reason for the government to step in, other than regulatory capture by the hotel industry or people trying to force their no-tourist preferences on their neighbors when both those people and their neighbors have intentionally avoided arrangements that could provide that same end without government interference.

Tom DeMeo writes:

Mike- You are correct in assuming that I was not talking about the consent of the passengers. I was talking about everyone else. And yes, the odds are really tiny, but the risks are existentially high. You can't give anyone the freedom to build airlines, or power plants, or chemical refineries and then just say that it will all be sorted out in the courts if something goes bad. Society has a right to set the terms for big risky massively impactful actions in advance.

These things are larger social risks and need the legitimate democratic consent of the larger society. Sorry if that is clumsy and inefficient, but there is no other legitimate form of social consent.

David R. Henderson writes:

@Thomas Boyle,
If there is one thing that has greater potential for abuse than government, it is a private monopoly that people are legally required to use.
I'm not sure that's true. It could be true; I just don't know. What I'll grant is that there's lots of potential for abuse.
Of course, in practice, the airline representatives control the board (they outnumber the GA representatives, and capture the government representatives). And, to be precise, they are the representatives of current incumbent airlines - you can't be a representative of an airline that doesn't yet exist.
Good point, but notice that that means that the consumers of the services are on the board, which would presumably limit the power of the private monopoly to exploit them.
It's an empirical issue: any data on this?
if we must privatize FAA functions, let's make sure it's done in a way that creates real service provider competition.
I agree with you there.

David R. Henderson writes:

Thanks for the information about the traffic issues.
One thing I disagree with, though. You write:
but they would come at the cost of reduced civic involvement and other externalities.
Reduced civic involvement is NOT an externality. It might lead to externalities. But it's not an externality. Civic involvement is simply a means. Indeed, reduced civic involvement could reduce externalities. I live in a city, Pacific Grove, with an unusually high number of busybodies around. People will actually object, and have the power to make their objections felt, if you want to cut down a tree that's threatening your house. Keeping them out of civic involvement on that issue could easily reduce externalities.

Joel Avila writes:


I heartily agree with the point that laws reflect character. I also agree that negative externalities (NEs) can be sometimes difficult to articulate. The real question at hand is when to use the law to address an actual or perceived negative externality. In a society that values (at least in principle) "innocent until proven guilty," we can't convict people unless the evidence is clear. If the NE is hard to articulate, how do we - or local authorities or anyone else - know people are actually being affected and agree that they are affected? What we're left with are tastes and preferences. And so it should be no surprise that a solution (taxation or what have you) is hard to difficult when it's demonstrably *not* clear that there's a real problem.

While I recognize that the spectrum of NEs can sometimes be gray, I shudder to think that tastes and preferences should be the primary driver of legislation (history is littered with figurative and real corpses of such a model). Rather I think a law is appropriate when the externality is very much on the black-and-white side of the spectrum. We should create rules when others' lives, liberties, and properties are clearly at risk, and use other mechanisms when not (e.g., moral and social norms, voluntary associations/activism, public awareness, etc.) Otherwise you're diminishing private property, innovation, growth, diversity, and, in the case of Airbnb, a historic and genuine practice of hospitality. Broad rules against vague neighborhood effects inhibit human flourishing, both in general and in particular.

I'll use a personal example of a negative externality that isn't hard to articulate. I like going to the beaches along the Gulf of Mexico in northwest Florida. In cases like the BP oil spill, I want the EPA to force negligent firms to pay big-time for violations, since neither I nor anyone else along the beach wants to get cancer or destroy the livelihoods of people who depend on the local environment. BP knows this (or so one would think), so they do (or should do) whatever they can to pollute less.

We are probably going to agree to disagree on the point at which we pass a law to address a NE. That said, if laws are limited to clear NEs, they're actually *helping* to increase freedom for *everyone.* The well-aimed rule protects neighbors and creates opportunity for the agent of the NE to become "freer" of the noxious thing he is doing.

Once again, all of this doesn't repudiate the need or desire for a well-targeted set of rules for services like Airbnb. I and the petition drafters I mentioned very much share the desire for such rules to address the obvious neighborhood effects of the type I've described. I think such rules should evolve so that as other externalities become more obvious, they get addressed too. Sadly, I think tastes, preferences, and vague, hard-to-articulate notions of neighborhood effects might prevail in Monterey County and other similarly-minded places. Even reasonable people can be prone to prefer the status quo than to dare greatly.

NZ writes:

@Joel Avila,

I wouldn't put such a low value on tastes and preferences in this situation. The tastes and preferences of people who have a lasting connection to a place and call it home are worth honoring. These tastes and preferences are, in large part, what have shaped that place and made it such that its residents choose to stay there and raise their offspring there.

Further, in a practical sense all the laws and regulations a place has are but a reflection of the tastes and preferences of its citizens. This is as true for neighborhoods as it is for regions or whole countries.

Like I said earlier, I'm sure there are places where services like AirBnB really do facilitate win-win-win scenarios, I just don't think those places are anywhere near as common as you might think.

Roger McKinney writes:

By Oklahoma standards, Wendy's Chili is actually chili flavored soup. But it's OK.

I work for an HMO that does a lot of Medicare work. You haven't seen ridiculous regulations until you deal with the federal government on medical issues. A tiny example: CMS (Center for Medicare and Medicaid Services) frequently require reporting long before they have the computer infrastructure to accept the reports. Regulations are so complicated and conflicting that few know what to do. It's so bad that our staff finds it more humorous than irritating.

J Scheppers writes:

Dr. Henderson,

Sorry for the lateness of the reply, but I thought I would weigh in. I am a Texas civil engineer, so my knowledge lies more on your roadway safety than your airline safety, but just the same I will try to make a comparison.

According to the Table 2-18 of the BTS National Transportation Statistics averaging the urban interstate and the rural interstate highway fatality rates you would get 0.6 fatalities per 100 million vehicle miles traveled(1) for a similar trip from SFO to MRY. With an average occupancy rate of 2 people per car and the 115 mile trip from SFO to Monterey that puts the odds of fatality of driving at 34 out of 100 million trips.

According the FAA 2013 Air Traffic Organization Safety Report. Only 1.1 fatality per 100 million passenger boardings occurred for commercial airlines, more than 5 times lower than the FAA goal for 2018(2).

While I concede that I don't know the specific weather in Monterey on that day, consider this comparison: if the fatality danger tripled for the commercial flight due to the weather, it would still have been 10 times safer than driving to from SFO to MRY.

My point is simply that the governments great concern over aircraft fatalities likely increase overall fatalities by increasing the time and costs to fly.

Your own statements and those echoed by several pilots in the comments say it probably was safer to land in SFO. I suggest this answer is based on their training not on the actuarial comparison of fatalities not to mention injury accidents.

I was going to add one final piece from the Reason Foundation (3) that shows what we are missing, but I am unable to locate its link. The report documents all the outstanding things that NextGen air traffic control could bring us. But NextGen is stalled just like the Affordable Care Act Programming. The FAA is too scared to have the fatality rate jump from 1.1 to 1.5 per 100 million boardings in one year that it cannot find a way to implement the needed reforms that are almost certain to improve the long term safety of flying.

In my profession we have a saying, if you touch it you own it; therefore much of the old infrastructure stays in place longer because of the uncertainty and risk.

And while I share your concern about government regulation slowing down improvements, much of the slowness comes from the public perception of trial and error with peoples lives. In my work I can try to address aging problems, but the "you touch it, you own" must still be made paramount in how safety is implemented in our infrastructure. This certainly slows safety improvements but does assign accountability so it is a trade-off similar to all other economics.


(2)http://www.faa.gov/about/office_org/headquarters_offices/ato/service_units/safety/media/ato_2013_safety_report.pdf, Page 15

(3) http://reason.org/

michael pettengill writes:

Just listened to a story on reduced service to regional airports because labor costs are going up too fast and business is improving too fast at the larger passenger and cargo airlines.

Which reminded me of this article.

The reason you have schedule air service at this small regional government owned and run airport is because strong government regulation by Congress until Carter signed deregulation ensured MRY was served by scheduled air service, building runways, terminal, and a market, often at the expense of more private transit services, like bus and rail.

MRY is a feeder airport for the now limited number of large airlines served by regional airlines with code sharing agreements. The regional airlines have been screwed in the past few decades by the contract terms jammed down their throats as the major airlines went through bankruptcy (even as they got Federal bailouts from Congress). The USAF is training far fewer pilots and will train fewer as drones eliminate the role of pilots.

According to AMBAG reports, MRY is the only one of 14 regional public airports with scheduled service. AMBAG budgeting forecasts Federal funding for airports at $140 million vs $100 million for aging bridge replacement, based on the 2008-2011 Federal funding. Revenue from the airports was $80 million in contrast to the $140 million Federal funds. AMBAG places a priority of "improvements" for the Monterey Regional, Salinas Municipal, King City, Municipal (Mesa del Rey), Marina Municipal, Watsonville Municipal, Hollister Municipal. Following the politics of the regional public airports in NH, "improvements" generally means getting airlines to provide scheduled air service.

If MRY had remained privately owned or was allowed to become private, I'm sure it would be closed, and turned into a resort for rich people. Using the land for an airport just can't generate enough revenue to pay for the costs its operation, much less offset the opportunity costs of failing to use it for private purposes.

Without government regulation, you would never had any occasion to have a scheduled flight diverted.

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