Could we reenter the great age of custom coach building given a standard electric car chassis?

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Tesla dealers usually have an example chassis. It seems as though everything important is contained within it. Is it possible that we could therefore go back to the great age of coach-builders? The beautiful Duesenberg that we admire in a museum probably does not have a body made by Duesenberg.

Government regulations are much more complex these days and perhaps represent an insurmountable hurdle for non-mass-production, but if a standard chassis were available could there be at least hundreds of custom road-legal cars built under kit car regulations?

Aerial video of Boston at night

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Now that prime helicopter flying season is upon us, I will share a project that we helped with six months ago: Boston Skyline: A 4K Aerial Experience. Two of us from East Coast Aero Club flew a Robinson R-44, mostly sideways, while Sean Collins used a RED Dragon camera in a gimbal.

Teaching STEM to 2nd and 3rd graders

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One of the hazards of being known as an MIT nerd is being tapped to teach “STEM” to kids. Here’s what I have learned about teaching 2nd and 3rd graders…

Their budget of sitting quietly and producing stuff on paper has been used up by the school system. Everything extracurricular should be hands-on.

The goal of the class was for them to understand how helicopters worked. So they needed to learn about Newton’s Laws, the Bernoulli Principle, how a wing works (combination of Bernoulli and Newton’s Third Law), how spinning a wing guarantees airspeed even when the fuselage isn’t moving (hovering!), and why you need a tail rotor if there is just one main rotor (Newton’s Third Law again).

It turned out that discussion around a table, drawings, and making posters on these topics wasn’t that interesting to the young scholars. However, getting some foam gliders and learning that they stall and spin without the supplied nose weight was quite compelling, as were a couple of trips to the airport to see real aircraft and finally actually fly in a real helicopter (we waited for a day without the 30-knot gusts that typically plague Boston in the spring).

If I were doing it again I would change the class to “How airports work” because the airport is concrete and there is lots of stuff to see and understand. The aerodynamics of planes and helicopters can be learned in this context. Models can be made. The control tower and fire department can be visited (if it is a big airport).

Trump’s proposed 15 percent corporate tax rate

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What do readers think about Donald Trump’s proposed 15 percent corporate tax rate? Personally I think the Federales would end up collecting more taxes in the long run. As far as I can tell, the threshold where individuals and companies get serious about restructuring (usually in unproductive ways) to avoid taxes is a 20 percent rate. Below 20 percent and people will pay. Above 20 percent and people will devote time and attention that they could have spent growing the GDP instead toward the goal of paying less taxes.

“GE Transfers Bulk of Tax Team to PwC” (2017) is interesting because it reveals that our Boston neighbor GE had roughly 900 lawyers and certified public accountants at the end of 2016. These folks were effective at reducing GE’s tax rate to 0 percent (Boston Globe).

I think that there will be a lot more productive business activity in the U.S. if Americans don’t devote their best hours and best minds to figuring out how to keep more of what they have earned. Maybe the actual corporate tax paid will be a little lower due to the lower rate, but the extra business productivity will lead to more tax collected via payroll taxes, sales taxes, property taxes, etc.

I’m not sure if anyone has tried to measure how much the GDP has been shrunk by American enterprises setting up tax-avoidance vehicles offshore, Americans going to law school instead of engineering school, etc. (something like this aggregate analysis of the effects of U.S. family law would be nice)

Readers: What do you think? Presumably Congress won’t enact this into law (my theory is that any significant law that could be passed already has been), but what would happen if they did? (And what kind of vote is required to drop the tax rate? A simple majority? Could Republicans do this if they were unified? (which of course they aren’t!))

Thoughtful perspective on family matters

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Woman behind counter at Blick Art Supplies in Ft. Lauderdale, when I said that I needed directions to the part of the store selling items to keep a 1.5-year-old and a 3-year-old busy:

Having children is like getting a tattoo on your face. You have to really want it because you’re going to be looking at it every day.

Louis Zamperini, in Devil at My Heels:

The mayor asked, “Did anything good come out of your two and a half years as a prisoner of war?”

“Yes,” I said. “It prepared me for fifty-three years of married life.”

Readers: What’s your best quote along these lines?

Mankiw on business taxation

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Gregory Mankiw, despite being a professor of economics at Harvard, tends to be interesting. His “I Can Afford Higher Taxes. But They’ll Make Me Work Less.” (2010) may explain our lack of economic growth (the most productive workers in our society face a 90 percent marginal tax rate).

Now he’s written another nytimes piece: “How Best to Tax Business.” Let’s look at this…

Mr. Hassett finds that corporate taxes depress wages for manufacturing workers. In a world where capital is mobile and labor is not, capital escapes from high-tax nations, leaving workers behind to bear the burden of lower productivity and reduced incomes.

Most nations aim to impose taxes on economic activity that takes place within their borders. Such a system is called territorial. By contrast, the United States has a worldwide corporate tax. If a company based in the United States produces a product abroad and then sells it abroad, our Treasury takes a cut of the profits when they are brought back home. The House tax bill would move our system toward international norms. American companies would be able to compete abroad on a level playing field with companies based in other nations. The tax incentive for corporate inversions would be eliminated.

Consumption taxes would do less to discourage saving and investment and would thus be more favorable to economic growth. In addition, consumption taxes are arguably fairer: They tax the standard of living people enjoy rather than the value of what they produce. The House plan moves toward a consumption tax by allowing businesses to deduct their investment spending immediately, rather than depreciating it slowly over time. By exempting the income that businesses reinvest, the government would essentially be taxing consumed profits.

The corporate tax system is now origin-based. It levies taxes on the profit from goods produced in the United States, regardless of where they end up. An alternative, proposed in the House bill, would be to tax all goods consumed in the United States, regardless of where they are made. This destination-based approach would tax imports and exempt exports, which is sometimes called a border adjustment. In this way, the business tax would resemble many of the value-added taxes used in Europe. … The main advantage of destination-based taxation is that it is easier to determine where a good is consumed than where it is produced. In a world where multinationals produce goods using parts from around the world, origin-based taxes invite firms to game the system with transfer pricing schemes. Destination-based taxation is less easily gamed.

Now, firms can deduct interest payments to bondholders, but they cannot deduct dividend payments to equity holders. This treatment encourages firms to rely on debt rather than equity, making them more financially fragile than they would otherwise be. The House plan fixes this asymmetric treatment of debt and equity by no longer allowing firms to deduct interest payments. A business’s taxes would be based on its cash flow: revenue minus wage payments and investment spending. How this cash flow is then paid out to equity and debt holders would be irrelevant.

There are a lot of weighty issues above, but Professor Mankiw doesn’t come down strongly on any side. The summary is even more wishy-washy:

While I like the policy choices proposed by the House bill, not all economists agree. Some view the bill as too radical, risking too many unintended consequences. Others worry that transitioning from the old system to a new one is not worth the cost, even if the new one is better. Without a doubt, the coming debate will involve immense politicking. Any large tax change creates winners and losers, and the losers are sure to make their voices heard. But what matters most is whether the changes are better for the United States over all, not for special-interest groups. The more voters understand, the better off we all will be.

Mankiw says that economists can’t agree on whether these proposed changes are good or bad, presumably because they can’t understand all of the implications. Then Mankiw pins his hopes on the average voter understanding all of the implications.

From this I infer that we are screwed.

Readers: What do you think? How does a country with $20 trillion in debt squeeze cash out of companies that have the ability to move most operations to more efficient and less indebted nations?

Tell your kids to work for the government!

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One of my Facebook friends linked to “EPA staffer leaves with a bang, blasting agency policies under Trump” (Washington Post):

When Mike Cox quit, he did so with gusto. After 25 years, he retired last week from the Environmental Protection Agency with a tough message for the boss, Administrator Scott Pruitt.

What was this guy’s job?

Cox was a climate change adviser for EPA’s Region 10, covering Alaska, Washington, Oregon and Idaho.

In other words, if watching grass grow is too much excitement for you, the federal government will pay you to watch a process that proceeds on a geological time scale!

How tough is this job?

he’s been very involved in Bainbridge, Wash., coaching youth sports and serving on local boards and commissions. For two decades, the fit 60-year-old rode his bike eight miles to the ferry, then uphill to his Seattle office.

The Bainbridge ferry takes 35 minutes to cross. If there is 10 minutes of waiting/boarding/unloading time that’s 45 minutes per trip or 90 minutes per day on the ferry. Plus he had to bike 16 miles round-trip on the Bainbridge side and also do some biking in Seattle. Assume 3 hours per day of commuting? If he started from his house at 0700 and had to be back to coach “youth sports” at 3 pm, that’s a solid 5-hour work day.

Item 1 in Mr. Cox’s  speaking truth to power is a complaint that the Trumpenfuhrer is “denying fundamental climate science.” What kind of educational background is necessary to start a debate regarding atmospheric physics on a planetary scale? Mr. Cox “holds a BS from Huxley College at Western Washington University” (source).

After 25 years of work, he’s retiring with a full pension at age 60. Having done at most 5 hours of desk-work per day (sitting is the new smoking!) and biked 100 miles per week, let’s assume Mr. Cox lives to be 100. So the taxpayers will be paying him for 40 years.

America’s greatest minds on display

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“What ‘Snowflakes’ Get Right About Free Speech” (nytimes) is interesting because it shows how one of America’s greatest minds (a professor of comparative literature at NYU who has been selected by peers to be “vice provost for faculty, arts, humanities, and diversity”) restates the sentence “Everyone who disagrees with me is wrong and I don’t want to hear from them.”

[The sheer length of the piece is fascinating, as though the professor had entered a contest for who could use the most words to restate “Everyone who disagrees with me is wrong and I don’t want to hear from them.”]

Home-schooling efficiency explained by an 8-year-old

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Two second-graders were discussing home-schooling, which one child had recently started.

  • Home-schooled girl: “I study from 9 to 11:30. It’s a half day every day, basically. After that, I read or sometimes watch a show.”
  • Public school girl: “How can you learn everything?”
  • Home-schooled girl: “You have boys in your class, right? And you know how they delay everything. In home school there are no boys.”

[The parents’ explanation is a little different. Their daughter is a full grade level ahead in a rich suburban school district that has a good reputation. “Massachusetts has zero funding for gifted and talented,” said the mother. “They figure that if you’re smart you can go to private school.” The schedule is actually a bit longer than 9-11:30, especially on those days when art and music are taught. Things do go fast: “It took us about 1.5 months to finish the first half of 3rd grade Singapore math.” In the parents’ opinion, the bureaucracy required to take a child out of public school was minimal. It seems that the main obstacle to home-schooling in Massachusetts is parents who would rather be doing something else, not red tape. Will these parents keep it up? Perhaps not. Their daughter is “motivated by competition in the classroom.”]

Related:

 

 

FAA punches a hole in the U.S. economy today

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Today is the day that FAR 135.160 goes into effect. This requires a radar altimeter (“radio altimeter” in the FAA’s parlance or “radalt”) for most U.S. helicopters. The device will display the number of feet the aircraft is above the ground. Every airliner that was ever crashed into a mountain had one of these. What stopped the crashes was the terrain awareness and warning system (TAWS).

Radalt was useful in the old days because it could ring a bell for the pilots when the aircraft was, e.g., 200′ above the ground on an instrument landing system approach. If neither the runway lights nor approach lights were in sight at that point it was time to add power and fly back up into the air (“missed approach”).

Even in 2014 when this rule went into effect it was unclear why it would be a good idea to stuff a radalt (cost range: $17,000 to $100,000 depending on aircraft and whether installed new or retrofitted) into a helicopter rather than GPS+database TAWS system that can say “There is a big radio tower ahead!” or “Climb because you are about to crash into the ground.”

The new rule applies even to helicopter operations that are limited to visual flight. The chance that the pilot is looking down at the instrument panel is small (10-20 percent) because the aircraft is being controlled by reference to the natural horizon. Combine that with the chance that the pilot would be looking at the radalt number and I would say that there is a near-zero chance that a pilot in a dangerous situation would ever become aware of the radalt value.

The measured GDP may not have declined too much as a result of this rule, but we’ll have spent a bit slice of it on something that has no value and may actually reduce safety (the extra weight of the radalt reduces the safety margin of reserve power for maneuvering out of bad situations).

[Note that a kind of successor and cousin to TAWS is the flight simulator view of the world presented to pilots in a synthetic vision system. This has been standard on cheap airplanes (home-builts, four-seaters, etc.) since 2010 and maybe it will be common on commercial airliners by the year 2025 or 2030 (see this Aviation Week article from 2015). I wrote about this in 2005 with the subhead “How a 10-Year-Old Will Outfly You in 2010”]

When all of this is done, of course, the typical $10 million Sikorsky or Airbus helicopter will still have less collision-avoidance capability than an $800 drone from DJI.

Related:

  • the FAA’s 2014 rule, in which they estimated $311 million in total costs for a range of changes, with $21 million devoted to radalts
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