How Immoral are Laissez Faire Ideologues? Ask about Drones.

William K. Black
December 17, 2018     Bloomington, MN

In 1983, Federal Home Loan Bank Board Chairman Richard (Dick) Pratt published his Agenda for Reform about how to deal with the savings and loan debacle.  He had just made that debacle inevitable by deregulating and desupervising the industry.  In his Agenda, he called for some protective steps (none of which he took or even proposed as rules), but overwhelmingly called for more deregulation and desupervision while promising that the raging fraud epidemic he had super-charged could not occur.

Pratt put three quotations on the front and back covers of his Agenda.  Two of the passages admitted his knowledge that deregulating and desupervising the industry at a time when it was endemically insolvent could greatly increase losses.  Both of those quotations went on to explain Pratt’s real concern about those increased losses to the public – they might discredit deregulation.  The greatly increased losses to the public did not horrify him.  The fact that that deregulation would trigger those losses did not horrify him.  The thing that horrified him was that the public might realize that deregulation and desupervision caused widespread fraud and losses and this could lead the public to block, or even roll back, dangerous deregulation and desupervision.

Pratt’s real concern for the vulnerability of laissez faire policies if the public learned that they were harmful, combined with his real unconcern for the damages he knew they could produce outraged me.  I saw how crippling laissez faire ideology was not simply to sound public policy, but also to its adherents’ morality.

Yesterday, I read a WSJ article on drones that demonstrated both points in a setting anyone can understand without knowledge of economics.  The title is “Possible Drone Collision Renews focus on Safety Systems.”  A passenger jetliner suffered damage that a drone strike – or a bird strike – might have caused.  No one was injured.  The damage to the jetliner was material but did not produce any known flight risk.  Tests are being done that may be able to determine the cause of the damage to the aircraft.  Whether or not a drone strike caused the damage is not the issue I am discussing.  I write to discuss the industry reaction to the possible strike.

Drone use is expanding rapidly.  There is virtually no effective regulation of drone usage.

The article reported:

If the culprit was a drone, it would mark the first documented collision in North America between an unmanned aircraft and a large passenger jet. A military helicopter and regional turboprop previously have been involved in drone-related accidents in the region, and there have been dozens of close calls. There also are a number of unverified reports of collisions between drones and small planes in other countries, according to air-safety experts.

The FAA receives more than 1,000 reports annually of drone sightings close to aircraft. An agency-sponsored study last year concluded that, under worst-case scenarios, collisions between airliners and drones weighing between 4 pounds and 8 pounds could result in significant damage to manned aircraft.

The obvious point is that the status quo is insane.  We have no effective protection against something that can cause mass deaths even when used accidentally, and ISIS has shown that minimal tech is required to weaponize drones.  Planes are most vulnerable to fatal damage at low altitudes and lower speeds when landing or taking off, which is the most common altitude for drone operation.

Worse, there is no imminent fix scheduled for adoption and no adequate sense of urgency to devise and implement a fix against accidental and deliberate drone collisions.  (Drones can also collide accidentally or deliberately with vehicles, structures, and pedestrians.)

More work needs to be done before there is an industry consensus, and the Federal Aviation Administration is years from finalizing regulations spelling out performance requirements.

The only question is when our luck will run out and drones will cause mass deaths.  So what do private sector manufacturers fear?

But already, there is widespread industry agreement that a fatal airliner-drone collision could instantly set back the fast-growing industry—and likely prompt knee-jerk reactions from regulators and lawmakers. “That’s always been the big fear,” according to Kenji Sugahara, a consultant and drone pilot. “If something like that happens, it’s a disaster for all of us.”

Note that the ‘disaster’ of killing several hundred people is not the drone industry’s “big fear.”  In the phrase “disaster for all of us,” the word “us” refers to the industry and drone users – not the hundreds of dead people and their thousands of loved ones.  The industry’s “big fear” is that the mass deaths would discredit laissez faire ideologies and policies.  The public would demand to know why the industry and anti-regulators stood by for over a decade while thousands of near misses occurred and never developed a sense of urgency to prevent the inevitable tragedy.  The “disaster” the industry fears is that the public will demand action – and Congress will respond with safety legislation.  The “disaster” is lost profits, not lost lives or lost loved ones.

Note that the industry derides any urgent action by Congress or regulators to prevent future mass deaths as “knee-jerk.”  The article does not condemn and directs no derisory rhetoric about the drone industry’s successful campaign to prevent the effective regulatory action that could prevent or reduce the otherwise inevitable fatal drone strikes.  Industry’s opposition to safety regulation is “knee-jerk.”  They increasingly oppose safety and environmental regulation even when it would help the industry.

Laissez faire ideology produces lethal policies and ethics.

9 Responses to How Immoral are Laissez Faire Ideologues? Ask about Drones.

  1. Andrew Anderson

    Of course, if the banks were not so privileged they would be far less a threat to the economy in the first place and need far less regulation.

    Why, for example, are citizens not allowed fiat debit/checking accounts of their own at the Central Bank or Treasury along
    side those of the banks? Thus precluding their need to use bank deposits or be limited to mere physical fiat, aka “cash”?

    And don’t say 100% private banks with 100% voluntary depositors has been tried and failed since they have never been tried before – at least not since 1694.

    Or completely de-privilege the banks AND regulate them heavily too, if you insist, Mr. Black. It should be largely redundant but where’s the harm in doing both if done responsibly?

    But the dirty little secret is Progressives LOVE government privileges for the banks? No?

  2. London’s Gatwick Airport was closed down on December 20 because of drones. The army was called in to help control crowds that caused by the cancellation of flights. Prime Minister May made a statement on the issue.

  3. I can tell you that “regulation” of the appraisal industry has moved into the realm of superstition, magic, fantasy and voodoo.

  4. Tadit Anderson

    The weaponization of ignorance, wherein the lower level of administration positions are filled primarily based upon deference, needs to be also included in the equation of “control fraud,” Likewise the deference to the control of “specialization.” I am about to step into what is very likely going require some fiscal literacy of the downstream effects of MERS and its facilitation derivative fraud. I am expecting to have to educate a law school student serving Legal Aid to comprehend the down stream institutionalization of “control” fraud under the pretense of fiscal literacy. There is the origination of the conditions of control fraud and then there the rank and file minions whose dominant concern is in these latter days of Babylon is toward preserving the safety of ignorance. It would seem that it really doesn’t take more than a gram of skepticism if it is not overwhelmed either by an impulse favoring self interests or installed ignorance installed by way of the prevailing stage “magic” of “academia, including law and business in the legacy of the Hekadamia. The edifice of the “reforms” designed control fraud to favor further control, eg the bowl of spaghetti that has resulted from the Geithner/Obama FIRE sector reforms seem to use a Oui/Ja board as its model should be transparently obvious as a source of more fiction and even more fraud.

  5. talk about non-sequitur. How exactly does this work in your mind? Ban all the drones and ISIS wont use one to blow up a plane? that does not logically follow. All that occurs is the possibility that you turn otherwise law abiding citizens into criminals. That is a step toward authoritarianism and does nothing to reduce the risk.

  6. Steven Craig Hummel

    Systems were made for Man, not Man for systems. Humanizing the monetary and economic systems with the best aspects of human character must become the first order of the political system.

  7. I do believe that commonly political responses to “poster child” incidents can be ham fisted and poorly reasoned; even counterproductive, but the test for regulation is always whether, all things considered, it is just and makes things better. In the case of drones, the potential for mischief and dangerously irresponsible use is evident, along with a host of benign applications. The same is true of automobiles. We have rules about who crosses the intersection and when because even with the best intentions, unregulated cross traffic is dangerous and potentially deadly.

    Mainstream media frequently use the term “free market” with no precise discussion of what such freedom would entail. Inasmuch as an economy is a creation of a society, one might suppose that a “free market” would be a subset of a “free society”; but note that in no known “free society” is it true that “anything goes”. Of necessity, maximized liberty requires that we respect each other’s liberty. Rape, theft and murder are obviously inimical to liberty and justice (for all) but things get complex right away when, for example, we turn the ignition switch of an automobile. What if emissions from my defective engine erode the health of an entire city, and even contribute to serious problems around the world? What if my disrespect for statutory right-of-way proves fatal for others?

    Liberty tolerates and enables private choices, and yet those choices become the concern of the public to the extent that they substantially and involuntarily impact others. I may not care that my car has no muffler, but others do, and are impacted by the din. It’s no different in a genuinely free market. Individual choice and initiative are encouraged, and yet there are rules of the road. Moreover “freedom” that is monopolized isn’t freedom at all; it’s precisely impunity for a few and arbitrary restriction and deprivation for the many that defines a tyranny. Thus far in human history, an authentically free society (and market) means equal protection under law, i.e. smart and just regulation.

  8. Please link Chairman Pratt’s “Agenda for Reform”?

  9. Yes, Steven Craig Hummel, you’ve got that exactly right. The economic system and all other systems are to serve us human beings, ALL living things, and the earth itself, not vice versa. That was the meaning of Albert Schweitzer’s elemental, universal ethic of “reverence for life,” which he believed would become the foundation of a New Enlightenment crossing all national and cultural boundaries. May his long-deferred dream come true at this time, because it has now become a matter of survival.

    https://newtonfinn.com/2017/12/18/two-rivers-one-spirit/