A Case Example of Governmental Overkill
I'm sure there are other formulations of these ideas (although a brief search didn't reveal an obvious alternative), so for the time being, let's call them my principle of resource utilization, with alternate variations:
- no matter how high your earnings, you will find some way to spend it all
- no matter how much a government taxes, it manages to spend more
- no matter how much time you have, you will find ways to fill it
- no matter how high your budget, you will find ways to use it all
My first long-term Oracle DBA job saw me administer Sun server database resources supporting our biggest account, roughly a third of our annual revenues. I had a meeting with the executive VP, whom told me that the use of storage in the account had exploded out of control (e.g., 50% over the preceding year). At the time we were using 4 GB Seagate drives, and there were limited supply issues (not to mention having to cope with a defective disk in production on a regular basis). I agreed to get the area under control but warned that there would be considerable resistance to change; he promised his full support to my efforts which made all the difference. The developers strongly objected as I implemented some internal controls; they no longer had access to administrative privileges, and they had to justify use of resources.
In a manner of speaking, we see the same type of issues going on in the Greece crisis, where public servants (one of every 4 Greek workers) were able to retire at 53 retaining a large percentage of their salary for life and were used to holiday bonuses amounting to a significant percentage of annual income. The unions, of course, are furious at the take-backs; they're not interested in the fact that the status quo is unsustainable.
I got viewed as a bureaucratic stooge, and there are the typical attempts to go over my head. For example, one developer manager claimed that he needed another 8 GB in the temporary tablespace to get his production query to run. I didn't have the two additional disks to add to the database, so I asked to look at his query. Within 5 minutes, I had developed a functionally equivalent solution which used a mere fraction of EXISTING temporary tablespace. All the extra resources would have done is to aid and abet an inefficient solution. Another example was when I cracked down on a developer whom wrote a standard table creation script automatically allocating a minimum 50 megabytes per table--even if his actual data amounted to less than a megabyte.
Now what does all of this have to do with Spirit Airlines and a recent announcement that in the near future Spirit will start charging fees for carry-on bags (with a varying fee structure, with discounts for prepayments)? Now I think most travelers are looking at it from the standpoint of being nickeled and dimed to death. The airlines have started charging for baggage, snacks or certain beverages. But charge for use of the overheads? Isn't that taking it too far? What's next--pay toilets?
Of course, there are well-known ways companies can try to cut costs; for example, if we are a hamburger franchise, the costs of pickle or tomato slices can add up. On the other hand, a limited number of standard food offerings and preparation techniques simplify training and operations, allow economies of scale and enable more scalable results (e.g., the McDonald's paradigm).
But actually I suspect what Spirit, with its carry-on strategy, is looking at is something different; I believe at the heart of the decision is the critical path of loading and unloading passengers. From an anecdotal perspective, there are at least a couple of relevant issues in boarding a plane: the sequencing of passengers and the logistics of carry-on baggage. (How many times have I had to wait to get to the back of a plane while a preferred traveler in the front of the plane spends several seconds trying to cram something into the overheads, backing up the line of passengers waiting to board?)
There are a number of passengers whom may travel light or use their second carry-on in lieu of checked baggage; for example, a business traveler may decide it's worth it to pay for the convenience of a carry-on versus waiting 40 minutes in baggage claim.
But ultimately, this plays out in the marketplace. Spirit believes that the carry-on bags are optional and the relevant issue is the overall final cost (including any optional fees for carry-on's, meals, etc.). If you want to purchase only a burger at McDonald's (e.g., no fries or drink), you can do so. If a United fare costs $100 more, but you get a free second carry-on, you're still better off paying a $50 carry-on fee at Spirit.
It may well be that Spirit may find that charging for carry-on's is more trouble than it's worth given a de facto industry practice of bundling carry-on's. A number of credit card holders, including myself, resented the fact that Exxon in the early 80's instituted a policy that charged more for credit purchases of gas. Competitors promptly tried to lure Exxon credit card customers by pointing out they charged the same.
But since when is it necessary for the senior senator from New York (Chuck Schumer) to grandstand on the issue of carry-on fees in airlines when, for example, we're looking at a projected $1.6T deficit this fiscal year? And getting a handful of competitors (charging far more than Spirit over similar routes) to commit to the status quo on bundling carry-ons? Okay, Sen. Schumer, if you want to gripe about add-on charges, let's start talking about the miscellaneous taxes at the bottom of each telephone bill...
Zuckerman and the Bleak American Fiscal Future
US News editor Mort Zuckerman recently wrote an editorial entitled "Time to Act on a Bleak Fiscal Future". I have stitched together relevant statements and statistics:
In a recent poll, 93 percent of respondents said they are concerned by the growing deficits; 59 percent are "extremely" concerned....This fiscal year, the federal deficit is expected to top 10.7 percent of gross domestic product (double the 5 percent incurred during Franklin Roosevelt's New Deal from 1933 to 1936)...Our tax revenues are adequate to cover just four budget items: military spending, health spending, Social Security, and interest on the national debt....Our cumulative national debt is estimated to climb as high as 140 percent of GDP by 2030...Both blades of the scissors -- cost savings and higher revenues -- have to be used... At age 65, Americans will live for an average of another 18 years. The government now subsidizes each person above that age by an average of roughly $25,000 a year, made up of almost $14,000 in Social Security and $11,000 in Medicare...Many forecast that GDP growth for the remainder of this decade will be slightly more than 2 percent, by far the lowest in the decades since World War II.Zuckerman points out a number of things I've discussed, including the facts that "soaking the rich" is insufficient, we are doing to need to reduce our disproportionately sized military/foreign policy budget, and we're going to have to slash or eliminate programs, perhaps in a politically unpopular way.
We already know the progressives' "answers" to entitlement reform: lift any income ceiling on payroll taxes; means-test entitlement benefits. The issues with progressive policies go far beyond moral hazard; they seem to have forgotten JFK's sudden realization that high tax rates are counterproductive when it comes to aggregate federal revenue.
We need to look at more than patching a growing house of cards; as I've explained in past posts, we need to look at more of a paradigm shift in terms of how we look at entitlements, government employment, our role and responsibilities in the world, and government budgets. We need to look at leveraging federal expenditures with individuals, businesses, and charities in a fundamentally different way. An exhaustive discussion of these very politically difficult steps is beyond the scope of this post, but I'll give a hint of the type of out-of-box thinking we need. One of the new entitlements deals with nursing home coverage. Allowing an older relative to live at a family home with a modest subsidy would be not only more compassionate but more cost-effective.
Political Cartoon
IBD cartoonist Michael Ramirez cleverly mocks the progressives (particularly in alien sanctuary locations like San Francisco) whom are attempting to institute boycotts of Arizona businesses in response to the recent Arizona Immigration Law. In fact, Arizonans would prefer if there are going to be illegal entries, they occur in other border states...
Quote of the Day
I believe that all government is evil, and that trying to improve it is largely a waste of time.
HL Mencken
Musical Interlude: More "Midnight" Songs
Kellie Pickler, "Walkin' After Midnight"
Eric Clapton, "After Midnight"
Melissa Manchester, "Midnight Blue"
Wilson Pickett, "In the Midnight Hour"
