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Tuesday, November 29, 2016

Bitcoin and Venezuela

Instapundit already linked to this, but I found the article very interesting as it finds the intersection of two very, very different topics - a country (Venezuela) destroyed by inept government and the cryptocurrency Bitcoin where the currency is possibly making lives better for at least some people in Venezuela because it can be traded and kept securely at very low cost.

Bitcoin's (legitimate) use has been limited so far because the U.S. dollar is a reasonably stable currency to use even in unstable regimes. But as the U.S. (slowly) follows Venezuela's footsteps into banana republicdom (I had a banana for breakfast again!), there may not be a stable unit of account supported by any country. In which case Bitcoin might save us all by enabling efficient trade in the chaos since it doesn't rely on any government or other bureaucracy and can provide a very stable unit of account.

I hope you enjoy the article!

88 comments:

erp said...

I think I'm too old to think of something out there in the ether as having material value. I still fault Nixon above all other things for taking us off the gold standard -- well that and the 55 mph highway speed, but perhaps it is the future if we are to be one world after all. It just seem childishly simple and begs for manipulation just like the stock market which makes money for the manipulators when it goes up and even more money when it goes down again.

Bret said...

I dunno. You have money in the bank which is just bits in the ether too. You go to the bank and they give you cash and delete some of the bits. So it's really not THAT much different. The big difference is the money in your bank is tied to bits in the U.S. Federal Reserve, Bitcoin bits are decentralized and not controlled by a government. Given your anti-government views, I woulda guessed you'd rather like that!

erp said...

I like that the government isn't involved, but it's unsettling there is nothing, no premises, not even a certificate of some kind to show one's holdings.

Bret said...

There is a decentralized public ledger where your bitcoins are recorded, so yes, there sorta is a certificate.

erp said...

Do you have any?

I’ve been kinda leaning toward buying some, but my accountant/roomie has no desire to get into it.

Bret said...

I don't have any bitcoins. If places like amazon.com accepted them I probably would, and there are niche stores that accept them, but none of the places I shop uses them.

Someday I may buy some for entertainment.

On the other hand, for something like the Venezuelan crisis, they're nearly perfect.

Hey Skipper said...

There is one very fundamental problem: taxes aren't paid in Bitcoin.

Bret said...

Bitcoin can be converted as necessary, of course.

Clovis e Adri said...

Bret,

Nice link. But portraying it as a solution non-related to government is to miss a very important line of the article:

"But the main factor driving Venezuelans to take up bitcoin mining is a price control put in place by the socialist government: Electricity is virtually free."

This heavy use of Bitcoins is as connected to the dysfunctionality in Venezuela as everything else. The only places where Bitcoin makes sense are the ones you wouldn't ever want to be.

erp said...

Clovis, just as the internet started as a convenience among universities and evolved as it has, I think in the not too long distant future, if government interference can be avoided, bitcoin, or something very much like it will evolve to handle commerce. The EU will probably disappear and unlike our south*, we don't need to save our euros, because the it's unlikely to rise again.

*Funny the south as a metaphor for We, the People, not lefty elites, did finally rise again hopefully to restore states rights and stomp out prog overreach. Harry, don't even bother with your nonsensical racist shtick. This is adult talk.

Bret said...

Clovis wrote: "The only places where Bitcoin makes sense are the ones you wouldn't ever want to be."

Sure. But if the US and other key players in the developed world descend to the level of banana republic (uh-oh, I forgot to eat a banana this morning!), many of us may end up living some place where bitcoins are helpful.

Hey Skipper said...

[Bret:] Bitcoin can be converted as necessary, of course.

There's more to it than that. When looking at a previous GG topic I can't remember well enough to search for, except it had something to do with Bitcoin, I think, except that this post is the only one that shows up searching on Bitcoin.

So there's every reason to take the vagueness that follows with the arched eyebrow of practiced skepticism.

Several things I read on monetary issues seemed pretty conclusive on one point: in order to be function as a fiat currency, the fundamental requirement is that taxes must be paid with that currency, and no other. The British pound is a perfectly good currency, but since US dollars are the only acceptable means of paying taxes in the US, the British pound is worthless in the US.

The discussions go far deeper, and are much more persuasive than I can recall here, whether to sufficiently relate, or hope to search on.

[Clovis:] This heavy use of Bitcoins is as connected to the dysfunctionality in Venezuela as everything else. The only places where Bitcoin makes sense are the ones you wouldn't ever want to be.

Hit that one on the head.

[erp:] I think in the not too long distant future, if government interference can be avoided, bitcoin, or something very much like it will evolve to handle commerce.

I disagree. Rehopefullykindofremembering a bit more, paying taxes in the country's fiat currency establishes a relationship between GDP and taxes. Without that relationship between what is earned, and paid, then a fiat currency cannot exist. Which means Bitcoin will not become a fiat currency in any economy that socialists haven't destroyed.

(In case my inventive caveating wasn't sufficient ... oh, wait, google-fu to the rescue!)



Hey Skipper said...

Clovis:

My deepest sympathies on that plane crash horror.

Bret said...

Hey Skipper,

Yes, I've made statements that a fiat currency can likely only be workable (i.e. some entity such as a government can only create and borrow in said currency) if taxes are paid in said currency.

However, Bitcoin is not a fiat currency and, in some sense, is actually more like gold than dollars. The government creates fiat currency, well, by fiat (thus the name). Bitcoin is (oh-so-slowly) created by a very predictable method that is NOT by fiat.

Just like there's no reason that gold has any intrinsic value but does, there's no reason bitcoin has any intrinsic value but does. Just like gold is rare and the supply increases slowly and generally fairly predictably, bitcoin is rare and the supply increases slowly and really predictably.

And the proof is in the pudding. Bitcoin is not tied to any particular currency (again like gold) is not created by a taxing entity (again like gold) and yet exists and has existed for many years now.

erp said...

Skipper, I deliberately stated to handle "commerce" not as a fiat currency, but I failed to say between and among individuals just as the internet works although it might someday evolve as one if the one-worlders win.

We also send our sympathy about the loss of your young countrymen. Hard to think that there really could be a God in His Heaven when such things seem to happen for no reason at all. Descanse em Paz

Clovis e Adri said...

Skipper,

---
My deepest sympathies on that plane crash horror.
---

In this day and age, how come a pilot can still let his plane go down for lack of fuel?

Further analysis of previous flights show he often did it by the mark. Pressure by his company?

How far would you allow your boss to pressure you into saving fuel, Skipper?

Clovis e Adri said...

Bret,

---
But if the US and other key players in the developed world descend to the level of banana republic (uh-oh, I forgot to eat a banana this morning!), many of us may end up living some place where bitcoins are helpful.
---

A tip from someone living in a Banana Republic: apart from the more extreme levels of Banana, it is very unlikely Bitcoins will help you much.

In our fiat money Banana world (and supopsing Banana levels below Venezuela), with greater inflation comes greater interests.

I can easily get more money investing in standard applications in the bank than with Bitcoins appreciation.

As for safety - well, there are people who lost their bitcoins before due to hacking (or malfeasance) or bitcoins servers. Real estate, even in Bananaland, can still get you better protection than that, IMO.

Now, if you get to Venezuela levels, then maybe you should invest in air tickets before you invest in bitcoins.

Hey Skipper said...

[Clovis:] In this day and age, how come a pilot can still let his plane go down for lack of fuel?

That would apply to any day and age.

I could wax soporifically on required reserves, contingency fuel and alternates. But I won't.

When I read this morning that the airplane hit the ground without any fuel -- which is the only way there isn't a fire -- I was seventeen kinds of WTF!?

Every airplane type at my company has an emergency fuel amount, but they all boil down to approximately the same thing: 45 minutes flying max endurance clean configuration airspeed. For my airplane, emergency fuel is 5,000 pounds. But any flight plan that involves that fuel as a target is unacceptable, because the slightest deviation from the flight plan would require declaring an emergency.

When I review the flight plan, I look at the planned fuel at the destination, then subtract the sum of Plan B (missed approach followed by another approach) and Plan C (proceed to the alternate and land). The remainder must be at least 6,500 pounds, or I get more fuel on the plane. Consequently, if I go through my first three options, I still have about 40 minutes of flight time remaining.

How far would you allow your boss to pressure you into saving fuel, Skipper?

If the fuel I want isn't on the plane, the plane doesn't move, even if adding fuel requires removing cargo. The flight plan/release isn't valid until both the dispatcher and Captain agree that it complies with all rules and known conditions. If I don't agree, I don't sign.

There is no pressure the company can put on me.

Further analysis of previous flights show he often did it by the mark. Pressure by his company?

No idea there. Interestingly, the co-pilot was a fashion model.


[Bret:] And the proof is in the pudding. Bitcoin is not tied to any particular currency (again like gold) is not created by a taxing entity (again like gold) and yet exists and has existed for many years now.

But not as a medium of exchange.

erp said...

Skipper, it doesn't make sense for an airline to deliberately stint on fuel because of the potential for a disaster like this one and for what? Doesn't any unused fuel stay in the gas tanks for the next trip?

Could it be some sort of crazy macho chicken thing for pilots to cut the fuel to the bare minimum, especially to show-off to the pretty girl in the cockpit?

Hey Skipper said...

[erp:] Skipper, it doesn't make sense for an airline to deliberately stint on fuel because of the potential for a disaster like this one and for what? Doesn't any unused fuel stay in the gas tanks for the next trip?

It is a little more involved than that.

Yes, the fuel remaining is available for the next trip.

However, the fuel remaining is less than the additional fuel loaded, because it takes more power to carry more weight en route.

When I first started at FedEx, I was amazed at how Captains would throw thousands of pounds of extra fuel on board on account of because. After all, since it costs fuel to carry fuel, having a good reason might be nice. So [many things happened]; now we are much more disciplined about fuel loading. I almost never have to insist upon extra fuel, but there are times when GOC (Global Operations Control) will send a flight plan down the pipe where the margins aren't where I want them. If the first step in Plan B is telling ATC "We are min fuel" (that means you can't accept any delays without declaring emergency fuel), then I don't want to have anything to do with Plan B.

To be fair, when GOC serves up fuel numbers less than what I want (almost never, btw) it is under very favorable conditions -- good weather, no alternate required, multiple runways at the destination, other airfields in the vicinity -- that the likelihood of Plan C is almost nil.

But if I get fuel less than what I want, then I tell GOC to add what I want, and that is the end of the discussion.

Could it be some sort of crazy macho chicken thing for pilots to cut the fuel to the bare minimum, especially to show-off to the pretty girl in the cockpit?

Women represent about 6% of pilots. Since 2000, they have been involved in something like 40% of accidents or near accidents.

I can't imagine what the macho payback would be for disregarding ICAO fuel requirements (if they did), or for failing to take timely action when their fuel situation started to deteriorate.

In any cockpit I've been in, the moment things start diverging from Plan A, then there is a pretty continuous assessment of fuel state and options. If we go missed because of inadequate spacing on final -- one of the first items of business is deciding how much time we have before bugging out.

I suspect (a huge pallet of caveats here) that she was, other than in the looks department, minimally qualified. And that things started going wrong, but the Capt, wanting to acknowledge any mistakes to the hot FO, made decisions he would not have otherwise made if, say, I was in the right seat.

erp said...

It's bad enough when disasters happen that can't be avoided, I have no words for gross negligence like this and if it is deliberate stinting, no punishment is horrible enough for the perp(s).

Bret said...

Hey Skipper: "But not as a medium of exchange."

Of course it's a medium of exchange. What do you think the entire darknet uses as its medium of exchange? It uses bitcoin.

erp said...

Bret, I had never heard of darknet and just looked it up. It seems like a hoax or some video game gimmick. Is it for real?

Bret said...

Darknet is very real. Did you not hear of SilkRoad? That was part of Darknet.

Hey Skipper said...

Bret: and the entire darknet amounts to? And once darknettoids do anything outside the darknet, what do they use as their medium of exchange?

erp said...

SilkRoad rings a very fall off bell and conjures up all kinds of nefarious plots. I guess the old man is right. We should leave bitcoin and such to you youngsters. Still I'd love to leave some to my grandchildren just so they'll know their old grandma was awesome at one point in time.

Bret said...

Hey Skipper,

They still often use bitcoins. Microsoft and Dell accept bitcoins, hundreds of restaurants, and more. You could live only using bitcoins as currency if you wanted to. The trend in the number of bitcoin transactions is definitely up.

For anybody who travels internationally, bitcoin is something to consider because there are no exchange fees.

Bret said...

erp,

I'm rather guessing that dealing with bitcoins is about the last things your descendants will want to do through their grief when you die.

If you're gonna do it, give them a gift while you're still alive.

erp said...

Bret, oh I do surprise them with things, now that they're high schoolers and older (except for the 2 year old), they especially like checks and Amazon gift certificates, but I'm thinking something off-the-wall unexpected to bring a smile to their faces. Grandchildren are like nothing else in the world and that's why what's happening in the world is making me so crazy, but thanks for caring.

Clovis e Adri said...
This comment has been removed by the author.
Clovis e Adri said...

Well, Bret and Erp, maybe it is a good time to invest in those bitcoins indeed.

After many years refusing to start a Facebook account, I finally did so a few months ago.

This is what the official Donal Trump Facebook page is displaying to my timeline:

---
The U.S. is going to substantialy reduce taxes and regulations on businesses, but any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. ...... without retribution or consequence, is WRONG!
There will be a tax on our soon to be strong border of 35% for these companies wanting to sell their product, cars, A.C. units etc., back across the border. This tax will make leaving financially difficult, but.....these companies are able to move between all 50 states, with no tax or tariff being charged.
Please be forewarned prior to making a very expensive mistake! THE UNITED STATES IS OPEN FOR BUSINESS!
---

It is a copy of what he posted on his twitter account a few hours ago.

16.6 million people follow him on Twitter, almost the same number on Facebook. I do wonder what those Americans are thinking when they see that in their timeline.

Do they cheer or do they mourn?

Hey Skipper said...

[Bret:] For anybody who travels internationally, bitcoin is something to consider because there are no exchange fees.

As someone who travels internationally, I have two credit cards in my wallet that do the same thing.

Microsoft and Dell accept bitcoins, hundreds of restaurants, and more. You could live only using bitcoins as currency if you wanted to.

Oh, good Lord no. A hundred times no.

The trend in the number of bitcoin transactions is definitely up.

Given the starting point, that is not a particularly high bar.

Hey Skipper said...

[erp:] I have no words for gross negligence like this and if it is deliberate stinting, no punishment is horrible enough for the perp(s).

The more I learn about this tragedy, the more epically senseless it becomes. A just and loving God would give us the power of resurrection for a day just to bring back that dumbass Capt so as to punish him right back to hell.

Hey Skipper said...

[Clovis:] Do they cheer or do they mourn?

Too soon to tell.

Clovis e Adri said...

Skipper,

Well, thank you for your informed comments on the matter. I hope most pilots are as careful as you are.

In the meantime, it came to public knowledge that the Pilot was also a co-owner of the company, which by the way was composed by that plane alone (they have another one but it is out of service).

A probe revealed also that one of the other partners in the company is a son of a pilot who had connections. His father used to be a pilot to Evo Morales, Bolivia's President (the company is located in Bolivia). Those connections look to have granted a bypass to security inspections, among other overlooked oddities in the company. It often had flight plans approved well beyond the better standards of safety.

The same company, plane and pilot flew the whole Argentinian soccer team a few weeks ago. The Chapecoense was a very small team (doing amazing games, punching way above their height), so I can get they couldn't afford better air service. But Argentina? I guess they will need to be more careful with whom they hire from now on...

---
It's bad enough when disasters happen that can't be avoided, I have no words for gross negligence like this and if it is deliberate stinting, no punishment is horrible enough for the perp(s).
---
Well, it looks like the perp got capital punishment for his stinting. A pitty he took 70 lives with him on that.

Hey Skipper said...

Clovis:

I'm not a minarchist -- I am certain there are problems that the market cannot solve, or even make worse. The trick is knowing those from the rest. (Collectivists are certain there's no problem that the market can't make worse.)

Here is a perfect example. In the US or Europe, a flight that long by an aircraft of that type would almost certainly arouse suspicion by the aviation authorities. There is a decent chance he would be ramp checked when he landed, and one of the things the inspectors would want to see is how fuel remained on board.

Followed immediately by loss of pilot certificate, removal of airline operating authority, and big fines.

It is the fear of that sort of thing -- where the government doesn't care who, but cares deeply about how -- which restrains a lot of the free rider problems to which libertarians are blind.

(doing amazing games, punching way above their height)

The sure sign of someone who has mastered another language is their ability to use its idioms. Having made almost no headway in German (in my defense, I spend less time in Germany than everywhere else, but still), I am continually in awe at how well you do in English.

Particularly considering that English spelling and pronunciation is a horror show.

That said, you meant "... punching way above their weight)"

Which, come to think about it, is very weird. Your formulation makes far more sense. If one is punching above, what else can it be, except height?

erp said...

Facebook is part of the left, so I haven't gotten involved with it. My grandchildren aren't on it that I know, so it's probably already passé with the teenage set. They think what happened five years ago is on the same level as Peloponnesian Wars, not that they ever heard of them.

Funny, there are a lot of conservative websites that have recently started using Facebook exclusively for comments. Makes no sense, unless Facebook is offering them some incentive.

One of them misquoted Palin in the headline to the article and as I had no way to comment about it, I emailed the authoress and asked for a correction or retraction and received this reply: The word smells is not quoted in the story or headline. I'm used to lying from the left, but not blatant denial of something in print on the screen in front of my eyes.

No way of knowing what anyone else thought, because you are required to sign in to Facebook to even view the comments.

erp said...

Skipper, thanks for explaining things so clearly.

A funny story about the first time we flew. It was from NYC to Washington DC in the mid 70's for a week of sightseeing. I was a nervous, but had in my mind that the pilot would be a real-life Charlton Heston (an earlier version of Hey Skipper) who would be able to handle whatever with aplomb aplenty. Imagine my horror, when the pilot showed himself, they did that in those days, and he was a sorter version of Peter Seller's Cousteau complete with accent.

Glad to say the trip was wonderful, the kids ecstatic and we had wonderful time.

Harry Eagar said...

'as the U.S. (slowly) follows Venezuela's footsteps into banana republicdom'

Funny thing about that. The Fed has been desperately trying to inflate the dollar for nearly 8 years with next to no results.

As a holder of mucho dollars I should be pleased but as someone who has studied markets I am not.

Do you know there has never, ever been a financial crash in the US during a Democratic administration?

Hey Skipper said...

[Harry:] Do you know there has never, ever been a financial crash in the US during a Democratic administration?

Okay, I'll take that as read, despite your failing to define what constitutes a financial crash, or providing any evidence.

Now, unless you are trolling around in the waters of mere correlation, how about schooling us on the cause-effect relationship.

Hey Skipper said...

[erp:] Imagine my horror, when the pilot showed himself, they did that in those days, and he was a sorter version of Peter Seller's Cousteau complete with accent.

Back when I was at Northwest I flew with a guy who, while passengers were boarding wore one of those huge black framed joke glasses with Groucho Marx eyebrows. Also, on the center pedestal he put the flight ops manual, wrapped in a mocked up book cover with "Flying for Dummies" as the title.

I was generally too busy doing my stuff to notice how many passengers went running back up the jetway.

Hey Skipper said...

[erp:] I'm used to lying from the left, but not blatant denial of something in print on the screen in front of my eyes.

They do it all the time wrt Trump -- not quoting what he actually said, but, instead, alleging what he said. It is the sort of thing Harry does all the time, and seems unique to progressives.

erp said...

IMO the correlation between a financial crash and a democratic administration is they aren't reported as such until they're tossed out and then the media notices the crash and blames it on the newbies. Very similar to the homeless. They are practically invisible when a lefty is president and reappear as if by magic as soon as a non-lefty is elected.

If Trump gets sworn in, watch the poor homeless downtrodden appear again on the front pages.

If Trump gets worn in II - he won't play the game and will continue to use social media to get his points across -- whatever you think of what he says, at least let him be damned for what he actually says, not the media's fantasies.

BTW - Harry, I forgot the biggest traitor of all: Franklin Delano Roosevelt.

Wednesday is the 75th anniversary of Frankie's day of infamy when he allowed the Japanese to bomb Pearl Harbor so we would be forced to declare war on the Axis and pull Uncle Joe's chestnuts out of the fire. I remember that day perfectly.

You must be so proud.

Harry Eagar said...

'They do it all the time wrt Trump -- not quoting what he actually said, but, instead, alleging what he said.'

It's amazing what technology is capable of these days, completely making up videos.

'how about schooling us on the cause-effect relationship'

I recall very well how you approach cause/effect in this sort of thing; endless posts and comments blaming the CRA for the 2008 crash despite the fact that the big players were never subject to the CRA.

Harry Eagar said...

" [erp:] I'm used to lying from the left, but not blatant denial of something in print on the screen in front of my eyes.

They do it all the time wrt Trump -- not quoting what he actually said, but, instead, alleging what he said. It is the sort of thing Harry does all the time, and seems unique to progressives. "

Riiiiight:

https://www.washingtonpost.com/news/local/wp/2016/12/04/d-c-police-respond-to-report-of-a-man-with-a-gun-at-comet-ping-pong-restaurant/?hpid=hp_hp-top-table-main_no-name%3Ahomepage%2Fstory&utm_term=.c8825d29c5da

and

http://winningdemocrats.com/trump-ally-we-dont-know-hillary-doesnt-sell-children-for-sex-until-someone-proves-otherwise-tweets/

This one is a four-fer.

1. Rightwing lie, check

2. Rigftwing threarts against children, check

3. Gun nut in action, check


4. Rightwing doubles down on 1., check

Clovis e Adri said...

Skipper,

----
[Clovis:] Do they cheer or do they mourn?

Too soon to tell.
----

Economics is, probably, the worst of sciences. That is, if it deserves to be called a 'science' at all.

Yes, I believe it is worse than any "social sciences", even the "white privilege studies" genre - because it is seen and promoted as greatly more important, definitive and serious than the other stuff.

With all the above caveats, I am reasonably convinced that a good part of the weaknesses of Brazilian economic policies for the last 100 years are related to populist/crony protectionism of the kind in display by my quote on Trump.

I was under the impression most people in this blog would take my point above as obvious. I am half shocked you aren't.

Harry Eagar said...

It gets better by the minute. Since Bret is soooo interested in fake news, maybe he can be roused to becoe interested in this:

https://www.washingtonpost.com/news/the-fix/wp/2016/12/05/did-michael-flynn-really-tweet-something-about-pizzagate-not-exactly/?hpid=hp_hp-top-table-main_flynn-fix-115pm%3Ahomepage%2Fstory&utm_term=.d1748e5f2c8d

Hey Skipper said...

[Harry:] I recall very well how you approach cause/effect in this sort of thing; endless posts and comments blaming the CRA for the 2008 crash despite the fact that the big players were never subject to the CRA.

To which you didn't once provide one sensible, on point, response.

There are plenty of causes, but failing to acknowledge the role the CRA played is a real exercise in reality avoidance.

So, standing by, wondering if there is something to your apparent blaming of all financial crashes on Republicans, or if it is just another one of your loud, but empty, pronunciamentos.

[erp:] IMO the correlation between a financial crash and a democratic administration is they aren't reported as such until they're tossed out ...

No, it is probably simpler than that. All crashes have happened during Republican or Democratic administrations, very much like tossing a coin. If crashes and presidential parties were randomly distributed, you'd expect roughly a 50-50 share.

But they aren't. Still, since the number of crashes is small, chance alone could yield outcomes far from 50-50 (just like tossing a coin five times can yield five heads.) Also, crashes are the end point of a sequence of events going back in time, so asking Do you know there has never, ever been a financial crash in the US during a Democratic administration? amounts to presuming all the conditions that caused the crash were confined to the administration in power when it happened.

I'm sure I don't need to explain to you how silly that is.


Harry Eagar said...

' If crashes and presidential parties were randomly distributed'

They are not. Up to 1929 they came about every 7 years more or less. Then there was a very long period when Democrats were in power most of the time and there were no crashes. Then the Republican ascendancy was renewed and sure enough, crashes started happening about every 7 years.

Correlation is not causation but, as Thoreau said, suspicions are aroused when you find a trout in the milk.

Clovis e Adri said...

Skipper,

-----
I'm not a minarchist -- I am certain there are problems that the market cannot solve, or even make worse. The trick is knowing those from the rest. (Collectivists are certain there's no problem that the market can't make worse.)

Here is a perfect example. In the US or Europe, a flight that long by an aircraft of that type would almost certainly arouse suspicion by the aviation authorities. [...]

It is the fear of that sort of thing -- where the government doesn't care who, but cares deeply about how -- which restrains a lot of the free rider problems to which libertarians are blind.
-----

It is quite interesting to connect this last tragedy to the greater political theater of choices.

There was no lack of people using the episode to condemn capitalist pigs who would risk dozens of lives for a few thousand dollars worth of fuel.

And now you look to directly connect this to the need of a State regulating an enforcing rules.

Looks all fine, until you read the fine letters.

In the first day of the accident, a point that probably didn't make it to international media was widely circulated in the Brazilian press: LaMia (the suicidal company) filed a request, with the Brazilian air traffic refulatory agency, asking to make the direct route Chapeco-Medellin.

It was denied. The argument, which may be obvious to people in this business like you, was unknow to most of us ignorant beings: there is supposedly a range of international agreements, starting with the Chicago Convention, that rules such flights. Under them, a team flying from Brazil to Colombia should either hire a Colombian or a Brazilian company. LaMia is from Bolivian, hence the denial, given there were many such companies fulfilling the requirement. (The team, supposedly to use money it already had spent on LaMia, decided to take commercial flights to Bolivia, where they changed airplanes for their fatal flight).


Now, I am sure not saying the accident would not happen if LaMia could flight whichever route they wanted. That reckless pilot would kill someone someday.

But look to the greater picture. Do companies have any interest in losing millions to billions in airplanes and lawsuits in order to save a few bucks in fuel?

As I see it, the same State 'enforcing' the rules of safety are also making sure that dumb, inefficient companies like LaMia may survive only due to a protected market, established through those wide international agreements (as if there were no lack of populist politicians to already push for that).

So I wonder, is the role of the State here solving the free rider problem, or making sure free riders will have their market share?

erp said...

Skipper, you are not wrong. My point is that the media decide what's important, what's a crisis, what's a crash, etc. and in their frenzy to move the narrative along, it's all that matters.

The CRA is still working its magic Harry -- wait for it if, and that's a big if, Trump gets sworn in, it'll be back in news wreaking more havoc in its wake.

Facts are fungible and there is no absolute truth and Thoreau, the world's first hippy, is the latest expert in whom we should put out faith.

... and Harry the premise of your Washington Post link was debunked.

Clovis, cronyism is a function of the left, to wit, the interwoven connections between and among the one-worlders, Obama's gang and the media, academe, etc. In recent years, it's been stepped up to include crony capitalism aka fascism whereby the state colludes with businesses to rob taxpayers and enrich themselves.

Bret said...

Clovis wrote: "I am reasonably convinced that a good part of the weaknesses of Brazilian economic policies for the last 100 years are related to populist/crony protectionism of the kind in display by my quote on Trump."

As you (I think) know, I think across-the-board tariffs (as opposed to cronyism calculated specific tariffs for specific companies and industries) would actually be beneficial (at least to the US/NAFTA) by reducing chaotic trade. Tailored regulation and taxation by country, industry and company is cronyism (or leads to cronyism). A flat tax rate on all imports is not.

We'll see what Trump ends up doing.

erp said...

Bret, We already tried that. Didn't end well.

Bret said...

erp, That was then, this is now with far more technology and capability.

Even then it's very hard to know what effect Smoot Hawley had relative to the great depression.

erp said...

Bret, we'll need to agree to disagree on this one.

Hey Skipper said...

[Harry:] Riiiiight:

What does the rest of your rant have to do with the fake news that the NYT and WaPo routinely put out? You may not read newspapers, but I read the NYT daily, so I am fully familiar with them endlessly alleging what Trump said, instead of just quoting what Trump said (in exactly the same way I mentioned above, you do whenever the chance arises, and always get it wrong.).

That's fake news, too.

Hey Skipper said...

[Harry:] They are not. Up to 1929 they came about every 7 years more or less. Then there was a very long period when Democrats were in power most of the time and there were no crashes. Then the Republican ascendancy was renewed and sure enough, crashes started happening about every 7 years.

That is completely meaningless, unless you can point to Republican policies which created crashes, and Democratic ones that inhibited them.

Absent that, you have, at best, a factoid.

(Worse, an alternate explanation is just as persuasive. The Dems set up the conditions for crashes, which came to fruition when Republicans were in power. Of course, since I don't have any evidence for that, I have exactly the same amount of faith in it that I do yours: none.)

Hey Skipper said...

[Clovis:] It is quite interesting to connect this last tragedy to the greater political theater of choices.

There was no lack of people using the episode to condemn capitalist pigs who would risk dozens of lives for a few thousand dollars worth of fuel.


Except for the fact that wasn't at issue. Had the airplane loaded an extra 330 gallons (as a rough guess, that is the minimum additional amount of fuel they would have needed for remotely plausible fuel reserves), it would have cost about 30 gallons, or about $150 (US fuel prices) to have 300 extra gallons on arrival.

Except for one problem: there was no place to put that fuel. The maximum range of the Avro RJ85 is 1845 miles, which just happens to be the same distance from Santa Cruz to Medellin.

Maybe the Capt thought the winds aloft would give them enough extra miles to get away with it. Even so, that's still stupid beyond measure.

It was denied. The argument, which may be obvious to people in this business like you, was unknown to most of us ignorant beings: there is supposedly a range of international agreements, starting with the Chicago Convention, that rules such flights.

Those are called cabotage rules. Cabotage is the transport between two points in one country by an operator from another country. Almost all countries prohibit aviation cabotage (the EU acts like the US, for EU based operators).

It isn't clear to me how this applies here, though, since no two points were in the same country.

As I see it, the same State 'enforcing' the rules of safety are also making sure that dumb, inefficient companies like LaMia may survive only due to a protected market, established through those wide international agreements (as if there were no lack of populist politicians to already push for that).

So I wonder, is the role of the State here solving the free rider problem, or making sure free riders will have their market share?


Are you asking what it was in this case, or what it should be?

Aviation rules (like building codes) serve several functions: they encode best practices; relieve people of having to think — and we all know thinking weakens the team; and deal with free riding.

The latter is a problem because the accident you didn't have doesn't show up on the balance sheet. Therefore, there would always be a temptation to gain advantage by shaving the margins. But regardless of aviation rules, this was so close to failure from the outset I just can't fathom it.

Clovis e Adri said...

Erp,

---
Clovis, cronyism is a function of the left, to wit, the interwoven connections between and among the one-worlders, Obama's gang and the media, academe, etc. In recent years, it's been stepped up to include crony capitalism aka fascism whereby the state colludes with businesses to rob taxpayers and enrich themselves.
---

Considering you voted for Trump, cronyism is right now a function of your vote. Are you ready to declare yourself a leftie?



Clovis e Adri said...

Bret,

---
As you (I think) know, I think across-the-board tariffs (as opposed to cronyism calculated specific tariffs for specific companies and industries) would actually be beneficial (at least to the US/NAFTA) by reducing chaotic trade.
---

I do not recognize any of your thoughts on the matter in Trump's tweets.

He is clearly restricting the tariffs for the USA (not NAFTA). Their level (35%) look to be way above the small tariffs you implied in your original discussion on the matter.

And he looks to be targeting specifically industries that moved out.

I get that, by now, no one cares much about his tweets, or his word, even though he is your soon-to-be president.

Yet, contrary to many of the previous non-sense he tweeted up to now, AFAIK tariffs/protectionism is pretty much one area where the Executive has many tools to do whatever they want, so the faith in Congress oversight to tame the rube isn't particularly effective here.

I am not particularly worried for myself. Really, it makes no difference to me. But gosh, you guys are in for a ride...

Clovis e Adri said...

Skipper,

---
Except for one problem: there was no place to put that fuel. The maximum range of the Avro RJ85 is 1845 miles, which just happens to be the same distance from Santa Cruz to Medellin.
---
AFAIK, he intended to stop in Bogota, and even circled that airport twice before giving up and going on to Medellin directly. That stop was postponed by the arrival of another unrelated aircraft in emergency signal - all tragedies must have that whim of the destiny.

The media here propagated that such stop would cost him $5000. It's been conjectured he may have given up that stop in order to evade any fine and trouble due to his low fuel levels. I saw the number $25k on the fine he could have got. So that's the amount those 70 lives were exchanged for.



---
Are you asking what it was in this case, or what it should be?

Aviation rules (like building codes) serve several functions: they encode best practices; relieve people of having to think — and we all know thinking weakens the team; and deal with free riding.
---

I didn't make myself clear, sorry.

The point is entirely another. Those 'cabotage rules', IMHO, only make sense as a reservation of the market for national companies.

The Bolivian company was not allowed to make a Chapeco-Medellin route. Nor any other company. If any company could, the Chapecoense would probably have the choice among many more companies.

"No, they wouldn't, for without those protectionist measures, there would be some Imperialist company dominating our skies and they would have the monopoly to enforce whatever price they wanted!"

Maybe, but in this case they would be as restricted to demand as any other company - the Chapecoense did not have infinite money to pay whatever they were asked for. Also, any such McDonalds Of Air would probably have in place much better standards of flight safety - because otherwise they would be losing much more.

We could on with hypotheticals forever, but the point is: why the heck flight companies should have such protections?

In short, I think there is a case to make that the same regulatory State enforcing those safety rules you imply as thwarting free riders, is also protecting inefficient companies based only on their geographical location, hence producing another kind of free riders.

erp said...

Clovis, I voted for Trump as the far less horrible of my two choices and have said repeatedly that we may hope that he will rise to have greatness thrust upon him. We know as a surety that Hillary would have fallen even deeper into the mire of corruption.

As we have seen, the lunatic left which includes practically everyone in the arts, the media, academe, industry, Wall Street ... are doing their best to thwart him even before it's clear he will be sworn in.

The polar opposite would have been true should in turn out that Hillary is installed as the fox in the biggest and richest henhouse of all.

Skipper, I forgot, Hillary has signed on the recount and since Obama hasn't actually left the building yet, we don't know what further harm he will do.

Bret said...

Clovis wrote: "I do not recognize any of your thoughts on the matter in Trump's tweets."

Yeah, well, okay. I guess I was fantasizing. I was thinking this was Trump's starting position and as he moderated his position and worked with Congress he'd end up closer to what I was thinking, but you're right, probably not. Oh well, it was a nice dream while it lasted!

Harry Eagar said...

'Those 'cabotage rules', IMHO, only make sense as a reservation of the market for national companies.'

You know what happens in a free market: Well by now you should.

If any entrant can play then some will enter as 'most efficient' by using clapped out planes, skipping required maintenance, hiring unqualified pilots. But I will agree that cabotage is a first-world solution. See aviation in Indonesia.

The BAE 146 was designed to be able to operate from Arctic beaches -- a strange parameter for a 4-engine jet airliner -- so the pilot could have put down on any flat place; too bad there aren't any of those around Medellin.

Clovis e Adri said...

Harry,

---
You know what happens in a free market: Well by now you should.
---

It is hard to say, I never lived in one. I sure know what it is like living in their opposite though.

---
If any entrant can play then some will enter as 'most efficient' by using clapped out planes, skipping required maintenance, hiring unqualified pilots.
---

How come those things have just happened in Bolivia, a very non-free marketplace by the way?

In theory, in a free market such 'most efficient' players would die away. Well, one from Bolivia just did. in aviation, there is a big price to pay for recklessness, and cabotage rules make sure that price is way lower - you will hardly lose much of your market share if you are one of a few national companies protected from competition.


Bret said...

Clovis wrote: "How come those things have just happened in Bolivia, a very non-free marketplace by the way?"

Oops. You just fell into the Harry definitional trap. To him, capitalism and free-markets are any place that the government doesn't have COMPLETE control over all aspects of the enterprise. Certainly Brazil and I'm pretty sure Bolivia would qualify as free-markets in Harry's dictionary. Probably even Venezuela would be free market. And the second definition is if it's bad it's capitalism, if it's good it's socialism. A plane crash is therefore capitalism by definition in Harry's book. :-)

Hey Skipper said...

[Clovis:] The point is entirely another. Those 'cabotage rules', IMHO, only make sense as a reservation of the market for national companies.

That is a way it often makes sense, but not the only way. Training, certification, and compliance aren't cheap.

Here is a long and reasonably well informed discussion at PPRUNE (Professional Pilots Rumor Network) about that completely avoidable tragedy. I picked page 31 for a couple reasons: I don't have time to read through the entire thread, and it has some information about what went on prior to the flight taking off.

Probably the most informative stuff starts around page 31 and out.

It is completely appalling, and doesn't appear to have anything to do with whatever version of cabotage was in play here.

In short, I think there is a case to make that the same regulatory State enforcing those safety rules you imply as thwarting free riders, is also protecting inefficient companies based only on their geographical location, hence producing another kind of free riders.

Perhaps. I can only speak with any authority about US/Canada/Europe, etc airlines. The unions howl like banshees at any mention of open skies agreements. And to some extent, I can sympathize (full disclosure, I'm a member of one of those unions; however, the nature of the freight business means we would probably hugely benefit from open skies). For instance, Emirates is making huge inroads against US flag carriers.

Might have something to do with Emirates airplanes getting half their fuel for free.


[Harry:] The BAE 146 was designed to be able to operate from Arctic beaches -- a strange parameter for a 4-engine jet airliner …

A strange parameter, indeed. If it was even remotely true.

This is yet another in a very long list of examples why you should source your claims.

[Harry:] You know what happens in a free market: Well by now you should.

[Clovis:] How come those things have just happened in Bolivia, a very non-free marketplace by the way?


Harry is attacking a strawman. Or creating a false dichotomy. Hard to know which, unless it is both.

Harry Eagar said...

Clovis, I have often written about the Fireproof Hotel effect, which says that the kind of 'most efficient' risk-taker will always enter in a free market and will, because of his price advantage, tend to drive out responsible operators.

I can supply real world examples.

I am speaking of cabotage as a concept. I do not know if cabotage contributed to the Medellin crash.

As for the BAE 146 design, see here:
https://en.wikipedia.org/wiki/British_Aerospace_146

erp said...

Harry, make sure to provide examples of union organizers who deliberately locked the doors so employees couldn't get out and then started the fires. I'm sure you can supply real world examples of union organizers engaged in all kinds of sabotage.

We already went around this one Clovis. It was old when the New Deal was new. Difference is now everyone knows it's a farce.

Hey Skipper said...

[Harry:] As for the BAE 146 design, see here:

Which includes exactly nothing saying it was designed to operate from Arctic beaches.

Clovis, I have often written about the Fireproof Hotel effect, which says that the kind of 'most efficient' risk-taker will always enter in a free market and will, because of his price advantage, tend to drive out responsible operators.

It is bizarre that you somehow continue to insist that regulation means a free market doesn't exist.

Oddly, you don't twig that your continued reference to the US of a hundred (or whenever) years ago as being somehow indicative of anything today is a glaring indication that your continued reference is unfailingly beside the point.

Harry Eagar said...

'Which includes exactly nothing saying it was designed to operate from Arctic beaches.'

Gravel kit.

The Fireproof Hotel idea is a parable for the benefit of those who, eg, believe in the Laffer Curve. Or that Coolidge Prosperity was a thing.

Examples of current iterations can be found in the frozen pizza aisle of your supermarket.

Hey Skipper said...

[HS:] 'Which includes exactly nothing saying it was designed to operate from Arctic beaches.'

[Harry:] Gravel kit.


This is a parable for the benefit of those, e.g., you, Harry, who think some isolated fact, which you misconstrue, leads to a general conclusion.

A gravel kit consists of motorcycle-like fenders that deflect gravel the tires throw up so that the underside of the fuselage and wings does not get trashed. That absolutely does not even remotely suggest the airplane was designed to operate from gravel strips, whether in the Arctic, or elsewhere.

What's the matter with Laffer Curve?

Harry Eagar said...

When Discovery Airlines flew the Bae146 in Hawaii, its president, in ex[laining to me why it was suitable for our small airstrips, told me about the Arctic beaches. That's why Wikileaks thought it relevant to mention the gravel kits.

I am going to bet that in all the Wiki articles on other 4-engine jets, gravel kits are not mentioned.

Hey Skipper said...

And I am going to bet that by using the metric "4-engine jet", that there is another parable for you about misconstruing an isolated fact that, no matter how true it may be, is the wrong one.

Can you guess what the, correct, useful metric might be?

Harry Eagar said...

No.

Damn those isolated facts! They're so . . . I dunno . . . factual?

Hey Skipper said...

No.

There's your problem, right there. Just like here, you take one fact, and without even a glimmer of a clue as to how any facts you don't know, you leap to a foolish conclusion.

Compare gross weights between the Bae146 and other four engine jets, for a start. Now, consider fuselage length, wing placement, and landing gear design. Now, think about gross weight and engine size, and air volume going through the engine, and how far off of a gravel strip the cowling as to be to keep from hoovering up gravel and processing it through the turbine section.

And think -- if you can -- that the 146 is in the same weight class as a large, two engine, high wing turboprop. So it will have the same potential for operating off of gravel runways. Hence the gravel kit.

Oh, by the way ... in explaining to me why it was suitable for our small airstrips, told me about the Arctic beaches. That's why Wikileaks thought it relevant to mention the gravel kits. is two non sequiturs jammed into fewer than 30 words.

Typical for a journalist.

erp said...

Skipper, it's so hard for the fact challenged to accept it when someone has actual boots-on-the-ground knowledge of something rather than the word of someone with whom one chats with at a coffee shop in Maui.

Harry Eagar said...

Actually, erp, unlike Skipper, I often discuss airline strategy with airline presidents, from some of the biggest down through medium ones to quite small ones. Or I did before I retired.


http://blog.tomw.net.au/2012/07/bae146-aircraft-with-gravel-kits-for.html

http://www.aviationpros.com/press_release/10390413/remote-and-unpaved-airfield-operations-growing-using-bae-systems-suv-bae-146-avro-rj

http://www.pprune.org/tech-log/print-369367-operate-jet-prop-gravel-runway.html

http://www.airliners.net/forum/viewtopic.php?f=5&t=762133

erp said...

There are few things I know less about than airplanes, so I'll pass to our resident expert.

Hey Skipper said...

Here is what you said:

[Harry:] The BAE 146 was designed to be able to operate from Arctic beaches -- a strange parameter for a 4-engine jet airliner …


The 146 can operate from gravel strips, but that doesn't mean it was anything like a primary design consideration. Which were: quiet, jet speeds, short to medium range. To put jet engines on an airplane that size requires a high wing, regardless of where you intend to land it. With a high wing, and the relatively low weight (max is around half that of a 737), it has the potential for use on unpaved surfaces. However, in as much as practically none of them actually do that -- I got tired of browsing Bae146 images looking for even one with a gravel kit -- it is a singularly odd claim that was a goal of the design, rather than a consequence.

You may have discussed airline strategy, but there is no sign you talked about airplane design.

Harry Eagar said...

I was right and you are wrong.

Hey Skipper said...

Harry, you have absolutely no idea what you are talking about.

The only difference between a garden variety 146, and one that lands on gravel strips is something added to the plane after it is built.

The airplane was not designed to land on gravel runways; rather, the ability to land on gravel runways was a side effect of its design.

Let me put it differently: since you are so wise in the ways of aircraft design, what would be different about the 146 if it hadn't been designed to land on gravel runways? (and, no, the gravel kit doesn't count)

Harry Eagar said...

It wouldn't matter if I didn't but perhaps a bit worrisome of the guy running an airline doesn't; and he and I are equally knowledgible here

Hey Skipper said...

Harry, it matters a great deal: when you say you are right, and I'm wrong, then you must have a reason. You don't.

And some guy running an airline doesn't count. After all, why would you expect Mr. Some Airline Running Guy to know more about airplane design than a professional pilot? After all, despite having been an airline pilot for 17 years, I would never claim to know even a small fraction of what it takes to run an airline as Mr. Some Airline Running Guy.

... he and I are equally knowledgible [sic] here.

He can't possibly be that ignorant, or arrogant.

erp said...

Good one, Skipper. They say it's best to start off each with a smile and that last one made me laugh out loud.

Harry Eagar said...

Why would I expect some guy spending millions of dollars on airplanes to know about them? Gee, hard one. Let me think.

Although, that's reality-based thinking, so I cannot expect rightwingers to get on board

Hey Skipper said...

Why would I expect some guy spending millions of dollars on airplanes to know about them?

The very first thing you should ask yourself is what you know. Which is, just as I expected, precisely nothing. You are completely unable to identify a single element of the 146 design driven by the requirement to land on Arctic beaches.

Drawing a conclusion from no facts -- par for the journalism course.

Of course, I would expect a Mr. Some Airline Guy to know a great deal about some elements of aircraft capabilities: pax, rwy required, fuel burn in pounds per revenue seat mile, speed, range, etc.

Whether it is designed to land on beaches? Bollocks, Harry. Pure, stinking bollocks.

How many dirt strips does Mr. Some Airline Guy land Some Hawaiian Airlines 146's on?

erp said...

Harry, friendly reminder: Still no definition of a right winger from you, so I will fall back on the generally accepted one of fascist.