I would hate to see us adopt the European approach to pilot training. It is only a slight exaggeration to say that airline pilots in Europe don't really learn to fly; they learn to operate the plane's computers. When something unexpected happens and the plane reverts to manual flying mode -- as with Air France flight 447 -- things can go wrong in a hurry.
You still need just 250 hours to get a Commercial Pilot Certificate (akin to a CDL). However, if you want to fly for airlines, you need up to 1,500 total flight hours logged unless you graduated w/an aviation degree from an “accredited aviation university” such as UND or ERAU (1,000 hrs - this took a lot of lobbying), or you were trained in the US military (750 hours).
Unfortunately, I think this is a job Biden is really unsuited for. This is about making a bunch of small, technocratic decisions correctly and probably Obama could have done a much better job here.
It's kind of a shame because Biden has really done a better job than most other democrats would have on the big issues he's had to deal with so far.
Keep the tariffs on China and Russia, eliminate them for everyone else. Enjoy most of the benefits of free trade while loosening our economic links to rival superpowers.
ARP may be phasing out but we still have a built in deficit on the order of a trillion a year. Accommodating all that borrowing puts the Fed into a continuous inflation vs. unemployment balancing act.
For those that remember movie “The Woman in Gold” about the family that was trying to get their art collection that had been seized by the Nazis back, one of the stumbling blocks was that in order to get initiate a civil lawsuit in Austria you needed to pay court costs which are calculated as follows:
“Court fees are calculated as a percentage of the value of the dispute and amount to 1.2% for first-instance proceedings, 1.8% for the appeals proceedings and 2.4% for appeals to the Supreme Court. Court fees are payable by the plaintiff when instituting proceedings, or the applicant when filing an appeal.”
If the art was worth $100 million you need to pay $1.2 million up front. Is that something that’s possible in the US? It would cut down on frivolous NIMBY lawsuits.
Minor correction: The FAA did *not* change the number of hours to obtain a Commercial Pilot's License. I know, because I have one. They changed the qualifications to be a first officer on a scheduled airline passenger service. Previously, the captain had to have an Airline Transport Certificate (1,500 hours experience) but you could be an F.O. with a CPL (250 hours). Now you need an ATP to be an F.O.
To mitigate the damage, the FAA introduced a "Restricted ATP" that allows you to be an F.O. (but not a captain) with less experience than the full ATP, but still a lot more than CPL.
This doesn't change the gist of your argument, but the text should be clarified.
"In a tight labor market, allowing more imported construction materials doesn’t mean fewer jobs; it means a transition of jobs out of nail-making factories into making houses with nails. And that means an overall more prosperous economy."
I agree. But, it's often hard to do politically, when the nail factory jobs are located in swing states and have well-organized unions, while the making-houses-with-nails jobs are scattered throughout the country, and much less well-organized.
I found the discussion on airline pilots weird. So I have 1500 hrs bopping around in an antique Cessna. Does that mean I am ready to pilot a 757? No it does not. Qualifying to fly a particular type of aircraft takes a lot of time in simulators and actually flying the aircraft as essentially a student. And that time in type typically includes, in commercial aircraft, a majority of the time being spent on autopilot. The reliability of modern aircraft makes this possible. But, the Boeing Max, basically just a fourth generation 737, one of the most reliable and common aircraft in commercial service, just had a few changes....
Speaking of cracking, America has insufficient cracking capacity to produce adequate supplies of gasoline. This is going to be somewhat alleviated by recent events where refiners are able to restore capacity lost due to Covid but since every refiner in North America is currently competing for the industrial services companies workers and equipment required to do this it is taking time. There are shortages of personnel and equipment required to do this. Nevertheless refinery throughput is climbing rapidly towards the 95% at which it has been hovering for decades.
The usual methodology of pundits is to attribute the drop in refinery throughput capacity to the malign oil companies and their evil executives. So, naturally, this is completely false. The thing that happened was that Covid hit. Annual shutdowns or outages as some call them, were scaled back. Not because anyone anticipated reduced demand but simply because these shutdowns require many hundreds and sometimes thousands of specialist workers to come onsite, They work out of mobile trailers used as offices, lunchrooms and some pretty impressive portapotties. And this could not be safely accomplished. So the scope of work was severely scaled back to the minimum, in some cases, that permitted continued operations at reduced capacity. This happened everywhere.
That throughput capacity begins to inexorably degrade the minute these plants are brought back online. Deferred maintenance made the problem now of restoring capacity even larger. But we are catching up.
There are significant opportunities to reduce supply constraints in the US by de-regulation at the state level. The dismal effectiveness of the state-level regulatory bodies in the US is still surprising to me, as an immigrant who arrived a quarter century ago. Some examples from personal experience:
- It took about two years after paying the license application fee for the state to send a licensing official to inspect my wife's start-up artisanal food business.
- The processing time for new municipal aggregation plans in Massachusetts (towns pool electricity purchasing power of residents, typically to get lower prices and/or lower carbon generation portfolio) has increased to about two years.
- For many years, the state of Massachusetts took at least a year to approve drinking water treatment equipment even if it had been approved previously by many other states.
- Massachusetts has this insane system of roadworks details in which state or town police officers do the traffic management for all roadworks, accumulating significant overtime payments for sitting in their cruisers for a whole shift in many cases. Then it turned out that the state police were even cheating on overtime claims on top of this.
I just happen to live in Massachusetts and guess that it's one of the better states judged by outcomes. But so, so inefficient. It would be interesting to see one or more of the US states (or the major cities) adopt the Singapore model for the civil service and state executive bodies -- professional, paid at market rates and very effective.
I'd like second Matt's point about inefficiencies do not have even a redistributive intent (as the subway drivers may). The additional flight training hours is a nice example, but the general principle is that the regulation does not pass a cost benefit test at any reasonable estimate of the harm avoided. This applied to nuclear power regulation or the DFA's refusal to use human challenge trials to speed up vaccine development are errors that cost trillions not billions in lost value.
"The standard comparative advantage argument is that opening up the borders to trade costs some jobs in the short term, but that labor is eventually reallocated to its best use, resulting in higher living standards for everyone."
That is the argument for allowing technological change as well. And the same conditions need to apply for technological change to be on net beneficial: a) There is adequate aggregate demand and b) the displaced workers can in fact move physically and between kind of jobs. Matt is right to point out that it is mainly the absence of the former and the diminution of the later that has led to the "discrediting" of the benevolence of freer trade and technological change.
There are however, two additional factors, I think. One is the particular way that freer trade has come about, that is, trade agreements in which we reduce barriers to imports in return for other countries reducing barriers to our exports. In practice our negotiators have put more effort in to getting other countries to reduce barriers to our exports to high-skill goods and services (paying for US patents trademarks and copyrights) than to exports of goods that are more similar to the goods being displaced by imports.
Second, becasue of fiscal deficits US interest rates have been higher than they would have needed to be otherwise and this among other things has led to chronic net capital inflows which means a stronger dollar = a shift in relative prices in favor of non-traded goods and against traded goods. The cartoon version of this is in favor of coastal elites and against Midwestern farms and factories.
That said and all the fallacies about automation and foreigners taking our jobs refuted, there is no guarantee that the workers directly affected by freer trade or technological change in the output THEY produce will not be harmful to THEM and no guarantee that they may not be geographically clustered and that the geographic clustering may not have outsized political effects.
" And the same conditions need to apply for technological change to be on net beneficial: a) There is adequate aggregate demand and b) the displaced workers can in fact move physically and between kind of jobs"
I don't think you need those conditions to be net beneficial.
If, for example, someone invented a technology tomorrow that made solar panels need 0 labor and way reduced material inputs, but nobody who worked on solar before could ever get a job again that would be _really bad_ for those workers but so good for everyone else it could be worth it.
_Politically_ this would be very tough - those workers would deservedly be complaining about what happened to them, and individually each of us wouldn't be that much better off.
I would say it's more that _in practice_ the gains from trade/technology need to outweigh the losses by a significant enough factor for the politics to work.
You _do_ cover this aspect in your post which is why this is more of a nitpick than a disagreement.
I agree. I would need a more nuanced set of conditions and your example of the solar panels is a perfect example. And on other occasions I have argued against using "jobs" either supposedly "created" or "destroyed" as a serious metric. I do think however that whatever those adequately defined conditions are will apply equally for technical as for a trade generated change.
Moreover, on the margin the distinction probably breaks down. I'd argue that much more of the disruption (for good or bad) arising from more trade/globalization arises from technical change in the abilities to move goods and messages over long distances than from "policy" changes like trade agreements.
Idea for a public policy that could ease supply constraints in tax advisory jobs: let the IRS build its own online tax prep software. So much of the goat rodeo of last tax season was taxpayers getting mixed up on the amount they received in EIPs and CTCs, and almost none of that would have happened if these taxpayers could have used online tax prep software that already had that information in its database.
Another idea: pass the "direct pay" tax credits in Build Back Better. If Manchin is so concerned about inflation, why is he endorsing make-work for people working in tax equity?
Third idea: replace the 179D deduction revamp in Build Back Better with something that doesn't require a small army of tax consultants to navigate. Energy efficiency as a service contracts and pay for performance programs at utilities have become more common—asking the tax code to measure performance on energy efficiency is unnecessary in those situations. Repeal section 179D and instead add a paragraph to section 168 that says a taxpayer can get 100% "bonus depreciation" on a deep energy retrofit if they make an energy efficiency improvement in the course of the trade or business of selling avoided electricity demand ("negawatts"). Achieves the same thing as old 179D with far less work for places like Alliant Group.
The IRS is currently prohibited from operating any online tax prep software, largely due to the lobbyists from the commercial tax prep companies. It is extremely unlikely that bills to change that will ever see the light of day.
Republicans seek to defund the IRS so, even if it were allowed to create its own tax software, it wouldn't have the money to do so. However, even when Democrats are in control, the law prohibiting the IRS from competing with TurboTax never changes. That's not Republicans (this is the type of thing that could be easily thrown into a larger budget reconciliation bill). That's lobbyists. And the Intuit lobbyists own both Republicans and Democrats.
I would hate to see us adopt the European approach to pilot training. It is only a slight exaggeration to say that airline pilots in Europe don't really learn to fly; they learn to operate the plane's computers. When something unexpected happens and the plane reverts to manual flying mode -- as with Air France flight 447 -- things can go wrong in a hurry.
Just to be clear on the pilot thing:
You still need just 250 hours to get a Commercial Pilot Certificate (akin to a CDL). However, if you want to fly for airlines, you need up to 1,500 total flight hours logged unless you graduated w/an aviation degree from an “accredited aviation university” such as UND or ERAU (1,000 hrs - this took a lot of lobbying), or you were trained in the US military (750 hours).
https://sterlingflight.com/what-is-the-1500-flight-hour-rule/
Unfortunately, I think this is a job Biden is really unsuited for. This is about making a bunch of small, technocratic decisions correctly and probably Obama could have done a much better job here.
It's kind of a shame because Biden has really done a better job than most other democrats would have on the big issues he's had to deal with so far.
If I may blatantly blow my own trumpet, it’s worth keeping the Jones Act in place:
https://cimsec.org/adam-smith-would-have-supported-the-jones-act/
Keep the tariffs on China and Russia, eliminate them for everyone else. Enjoy most of the benefits of free trade while loosening our economic links to rival superpowers.
ARP may be phasing out but we still have a built in deficit on the order of a trillion a year. Accommodating all that borrowing puts the Fed into a continuous inflation vs. unemployment balancing act.
For those that remember movie “The Woman in Gold” about the family that was trying to get their art collection that had been seized by the Nazis back, one of the stumbling blocks was that in order to get initiate a civil lawsuit in Austria you needed to pay court costs which are calculated as follows:
“Court fees are calculated as a percentage of the value of the dispute and amount to 1.2% for first-instance proceedings, 1.8% for the appeals proceedings and 2.4% for appeals to the Supreme Court. Court fees are payable by the plaintiff when instituting proceedings, or the applicant when filing an appeal.”
If the art was worth $100 million you need to pay $1.2 million up front. Is that something that’s possible in the US? It would cut down on frivolous NIMBY lawsuits.
That seems remarkably regressive.
Minor correction: The FAA did *not* change the number of hours to obtain a Commercial Pilot's License. I know, because I have one. They changed the qualifications to be a first officer on a scheduled airline passenger service. Previously, the captain had to have an Airline Transport Certificate (1,500 hours experience) but you could be an F.O. with a CPL (250 hours). Now you need an ATP to be an F.O.
To mitigate the damage, the FAA introduced a "Restricted ATP" that allows you to be an F.O. (but not a captain) with less experience than the full ATP, but still a lot more than CPL.
This doesn't change the gist of your argument, but the text should be clarified.
"In a tight labor market, allowing more imported construction materials doesn’t mean fewer jobs; it means a transition of jobs out of nail-making factories into making houses with nails. And that means an overall more prosperous economy."
I agree. But, it's often hard to do politically, when the nail factory jobs are located in swing states and have well-organized unions, while the making-houses-with-nails jobs are scattered throughout the country, and much less well-organized.
I found the discussion on airline pilots weird. So I have 1500 hrs bopping around in an antique Cessna. Does that mean I am ready to pilot a 757? No it does not. Qualifying to fly a particular type of aircraft takes a lot of time in simulators and actually flying the aircraft as essentially a student. And that time in type typically includes, in commercial aircraft, a majority of the time being spent on autopilot. The reliability of modern aircraft makes this possible. But, the Boeing Max, basically just a fourth generation 737, one of the most reliable and common aircraft in commercial service, just had a few changes....
Speaking of cracking, America has insufficient cracking capacity to produce adequate supplies of gasoline. This is going to be somewhat alleviated by recent events where refiners are able to restore capacity lost due to Covid but since every refiner in North America is currently competing for the industrial services companies workers and equipment required to do this it is taking time. There are shortages of personnel and equipment required to do this. Nevertheless refinery throughput is climbing rapidly towards the 95% at which it has been hovering for decades.
The usual methodology of pundits is to attribute the drop in refinery throughput capacity to the malign oil companies and their evil executives. So, naturally, this is completely false. The thing that happened was that Covid hit. Annual shutdowns or outages as some call them, were scaled back. Not because anyone anticipated reduced demand but simply because these shutdowns require many hundreds and sometimes thousands of specialist workers to come onsite, They work out of mobile trailers used as offices, lunchrooms and some pretty impressive portapotties. And this could not be safely accomplished. So the scope of work was severely scaled back to the minimum, in some cases, that permitted continued operations at reduced capacity. This happened everywhere.
That throughput capacity begins to inexorably degrade the minute these plants are brought back online. Deferred maintenance made the problem now of restoring capacity even larger. But we are catching up.
There are significant opportunities to reduce supply constraints in the US by de-regulation at the state level. The dismal effectiveness of the state-level regulatory bodies in the US is still surprising to me, as an immigrant who arrived a quarter century ago. Some examples from personal experience:
- It took about two years after paying the license application fee for the state to send a licensing official to inspect my wife's start-up artisanal food business.
- The processing time for new municipal aggregation plans in Massachusetts (towns pool electricity purchasing power of residents, typically to get lower prices and/or lower carbon generation portfolio) has increased to about two years.
- For many years, the state of Massachusetts took at least a year to approve drinking water treatment equipment even if it had been approved previously by many other states.
- Massachusetts has this insane system of roadworks details in which state or town police officers do the traffic management for all roadworks, accumulating significant overtime payments for sitting in their cruisers for a whole shift in many cases. Then it turned out that the state police were even cheating on overtime claims on top of this.
I just happen to live in Massachusetts and guess that it's one of the better states judged by outcomes. But so, so inefficient. It would be interesting to see one or more of the US states (or the major cities) adopt the Singapore model for the civil service and state executive bodies -- professional, paid at market rates and very effective.
I'd like second Matt's point about inefficiencies do not have even a redistributive intent (as the subway drivers may). The additional flight training hours is a nice example, but the general principle is that the regulation does not pass a cost benefit test at any reasonable estimate of the harm avoided. This applied to nuclear power regulation or the DFA's refusal to use human challenge trials to speed up vaccine development are errors that cost trillions not billions in lost value.
"The standard comparative advantage argument is that opening up the borders to trade costs some jobs in the short term, but that labor is eventually reallocated to its best use, resulting in higher living standards for everyone."
That is the argument for allowing technological change as well. And the same conditions need to apply for technological change to be on net beneficial: a) There is adequate aggregate demand and b) the displaced workers can in fact move physically and between kind of jobs. Matt is right to point out that it is mainly the absence of the former and the diminution of the later that has led to the "discrediting" of the benevolence of freer trade and technological change.
There are however, two additional factors, I think. One is the particular way that freer trade has come about, that is, trade agreements in which we reduce barriers to imports in return for other countries reducing barriers to our exports. In practice our negotiators have put more effort in to getting other countries to reduce barriers to our exports to high-skill goods and services (paying for US patents trademarks and copyrights) than to exports of goods that are more similar to the goods being displaced by imports.
Second, becasue of fiscal deficits US interest rates have been higher than they would have needed to be otherwise and this among other things has led to chronic net capital inflows which means a stronger dollar = a shift in relative prices in favor of non-traded goods and against traded goods. The cartoon version of this is in favor of coastal elites and against Midwestern farms and factories.
That said and all the fallacies about automation and foreigners taking our jobs refuted, there is no guarantee that the workers directly affected by freer trade or technological change in the output THEY produce will not be harmful to THEM and no guarantee that they may not be geographically clustered and that the geographic clustering may not have outsized political effects.
Nitpicking a bit:
" And the same conditions need to apply for technological change to be on net beneficial: a) There is adequate aggregate demand and b) the displaced workers can in fact move physically and between kind of jobs"
I don't think you need those conditions to be net beneficial.
If, for example, someone invented a technology tomorrow that made solar panels need 0 labor and way reduced material inputs, but nobody who worked on solar before could ever get a job again that would be _really bad_ for those workers but so good for everyone else it could be worth it.
_Politically_ this would be very tough - those workers would deservedly be complaining about what happened to them, and individually each of us wouldn't be that much better off.
I would say it's more that _in practice_ the gains from trade/technology need to outweigh the losses by a significant enough factor for the politics to work.
You _do_ cover this aspect in your post which is why this is more of a nitpick than a disagreement.
I agree. I would need a more nuanced set of conditions and your example of the solar panels is a perfect example. And on other occasions I have argued against using "jobs" either supposedly "created" or "destroyed" as a serious metric. I do think however that whatever those adequately defined conditions are will apply equally for technical as for a trade generated change.
Moreover, on the margin the distinction probably breaks down. I'd argue that much more of the disruption (for good or bad) arising from more trade/globalization arises from technical change in the abilities to move goods and messages over long distances than from "policy" changes like trade agreements.
Idea for a public policy that could ease supply constraints in tax advisory jobs: let the IRS build its own online tax prep software. So much of the goat rodeo of last tax season was taxpayers getting mixed up on the amount they received in EIPs and CTCs, and almost none of that would have happened if these taxpayers could have used online tax prep software that already had that information in its database.
Another idea: pass the "direct pay" tax credits in Build Back Better. If Manchin is so concerned about inflation, why is he endorsing make-work for people working in tax equity?
Third idea: replace the 179D deduction revamp in Build Back Better with something that doesn't require a small army of tax consultants to navigate. Energy efficiency as a service contracts and pay for performance programs at utilities have become more common—asking the tax code to measure performance on energy efficiency is unnecessary in those situations. Repeal section 179D and instead add a paragraph to section 168 that says a taxpayer can get 100% "bonus depreciation" on a deep energy retrofit if they make an energy efficiency improvement in the course of the trade or business of selling avoided electricity demand ("negawatts"). Achieves the same thing as old 179D with far less work for places like Alliant Group.
The IRS is currently prohibited from operating any online tax prep software, largely due to the lobbyists from the commercial tax prep companies. It is extremely unlikely that bills to change that will ever see the light of day.
I think you put blame on the tax prep companies, and not enough on "Republicans wanting people to hate taxes".
Republicans seek to defund the IRS so, even if it were allowed to create its own tax software, it wouldn't have the money to do so. However, even when Democrats are in control, the law prohibiting the IRS from competing with TurboTax never changes. That's not Republicans (this is the type of thing that could be easily thrown into a larger budget reconciliation bill). That's lobbyists. And the Intuit lobbyists own both Republicans and Democrats.
I completely agree; mostly I just want to draw attention to the fact that were Congress to change that law, it would help.
To be honest all of these ideas are probably not easy politics—that's why they're still problems.
How about a pause on DBE and Davis Bacon requirements on all federally funded projects? These policies take up time and bandwidth.