Wednesday, June 6, 2012

Austerity, a Set-up for Pilot Error

On February 12, 2009 Colgan Air Flight 3407 crashed into a house in suburban Buffalo, N.Y., killing 50 people. Eleven minutes after take-off from Newark the crew noticed ice buildup on the plane's wings and windscreen and turned on the de-icing system. The flight continued on autopilot until the final approach when the aircraft's "stick shaker" sounded a strong warning that the aircraft's speed had deteriorated to a dangerously slow rate. Instead of following standard procedure of adding full throttle and lowering the plane's nose, the captain added only 75% power and raised it. This caused the aircraft to pitch up 31 degrees before diving at 45 degrees into a home near Buffalo.

The pilot meant well. He did not want the plane to go down, so he turned its nose upward thinking he would prevent a crash. He was wrong -- tragically wrong. He needed to burn more fuel, expend more energy. Had he gone full throttle and pointed the plane downward, he could have gained the necessary speed to recover from his dangerous stall.

Why did the pilot fail to realize that by raising the front of the plane he would further decrease its perilously low speed? The answer is simple. He lacked competency. Regional airlines practice austerity. To cut costs, the airlines' owners hired cheaper but less knowledgeable pilots. Pilots who lack training and experience cannot fly safely.

To perform any given task, a plane needs to consume energy. Just as a commercial aircraft is a system that cannot function without consuming fuel, a nation's economy cannot remain in good health without money. A plane will no more take off from a runway with an empty gas tank than an economy will pull out of stagnation without money. As Konrad Lorenz stated, "Money is the symbol for energy." People need to get paid to make a living, and if they get paid well, they will live better. Once their standard of living increases, other members of society benefit because with a higher standard of living everyone can afford to pay for services, which in turn gives an additional boost to the economy.

So what about austerity? As with the example of the regional airline's plane that crashed because the owners did not cover the cost for proper training and maintenance, austerity is a set-up for performance failure. Austerity brings with it lack and suffering, and stifles creativity. When people are perpetually worried about how to pay their bills, they lose confidence. Money is necessary for good morale, and good morale is a pre-requisite for good work, good health, rejuvenating play and the kind of expansiveness that makes a society prosper.

Who can supply the money? Where would it come from? Only from tax revenue from sources that are not already oppressed by austerity measures. Look for money among the likes of those who put up millions and millions to bid up art works for little other purpose than to increase their own net worth.


Anonymous said...

Interesting analogy Howard. I always thought of austerity in the government context of cutting spending and increasing taxes. I suppose this could be considered taking "energy" away from the system. But, what happens when we flood the system with money and then don't pay our debts to China? Avoiding austerity seems like choosing short term gain for long term pain and then a country might end up like greece.I'm not an economist so I don't know the answers here.

Howard said...

Austerity is not bad in and of itself. An appropriate good diet combined with proper exercise will promote health.
Austerity does not make sense when dyslexics diet to the point where they starve themselves to death.

In terms of local. state and national budgets austerity makes sense if real waste, like money spent on roads going nowhere or military contracts for hardware that does not work, is cut. Austerity does not make sense when students are asked to pay tuition that will keep them from getting an education, or when services like ambulances or fire fighting are eliminated because "they cannot be afforded."

As to the role of government in terms of money supply, there is a simple rule: When there is so little money in circulation that the economy can't recover, the government has only one healthy choice: Increase the money supply. When the economy becomes so active that it begins to heat up, the simple answer is to tighten the money supply. A good primer as to how this can be done sensibly can be found in Warren Mosler's The Seven Deadly Frauds of Economic Policy, available as a downloadable PDF at

Anonymous said...

If you want to see a documentary with interesting details about events leading to the pilot error incident, check out the documetary "Flying Cheap," available streaming on Netflix.

Anonymous said...

I read it with interest!


Brigitte said...

Wonderful story and analogy. A good example of when compromise isn't good enough. Thank you for sharing your insights and expressing them so eloquently!