FAA, DHS, DOJ and understanding the difference between people and organizations

Last night, I had the pleasure of speaking with an old friend of mine. He is a fairly experienced executive with M&A, so naturally we discussed the DOJ and FCC attempts to torpedo the AT&T/T-Mobile tie-up, as well as the general difficulty of getting an acquisition done, especially when there are interested lawyers on multiple sides.

I have always been a big believer in the power of words. For example, "economics" is defined as the "allocation of scarce resources." When dealing with an economy, and understanding that every allocation you make is a choice at the expense of something else, you understand the need to make trade-offs and try to make the best choices. On the other hand, in some languages, e.g. Hebrew, the word for "economics" sometimes means, "to provide." In that context, a normal person's mind, especially if they do not understand the intricacies of how various elements of macro-economics tie together and influence each other, will tend towards, "why shouldn't everyone have everything?" I believe this difference in meaning has had a pernicious impact on Israeli economics for decades, and goes a long way to explaining the uphill battle modern liberal economists have had in Israel. They are winning, but slowly.

Society, and especially media reports, often refer to "the government" or "the DOJ" or "the FCC" as being against or for a particular result. For example, "the DOJ is against the AT&T/T-Mobile merger," or "the FCC is concerned," or "DHS objects to using electronic devices on flights." However, there is no such thing as an independent mind known as "DOJ" or "FCC" or "FAA." The reality is that people make these decisions. And these people, like every other person, have their own biases, political viewpoints, cultures, and, most importantly of all, incentives.

An attorney at the FCC, whether Genachowski or someone underneath him, has decided to object to the deal. Whether this is due to real concerns about competition, or someone who needs another notch on his/her belt to advance in government employment or private sector... (a) these incentives matter and (b) this is a person, who has been invested with a certain amount of power, who is making the decision, not an agency. This person is no more or less fallible, and no more or less honest, than anyone else. It is just a person responding to incentives.

A similar thought comes to mind with respect to the ban on electronic devices during taxi, takeoff and landing on flights. There is no, absolutely no, zero, nada, zilch, rien, klum, you name it, evidence that such devices are dangerous to the flight. Period. There has not been a single documented incident of damage caused, nor is there an engineering-driven reason to suspect it. Yet, the "FAA", i.e. a real person with real incentives, has decided to continue to ban them.

I am glad to see the absurdity of this policy finally get some attention, in the New York Times, no less - Bits column, available here - but I find the most interesting part to be the FAA's response, about halfway through the article, where the FAA's spokesman admits that there is no evidence, but "would rather err on the side of caution." If he really wanted to be safe, he would just ground every flight indefinitely; that would certainly be safe... and useless.

I do not know who at the FAA has the power to make these "safety" decision, just as I do not know who at DHS has the right to make the decision that 3 ozs of toothpaste is fine, but 3.5 ozs of cream cheese (seriously, I tried to take it through DCA once) is life threatening. But whoever is "erring on the side of caution" is not the "FAA", but a real person with real incentives. These incentives, whatever they are, currently push towards being frightened unnecessarily. Find the incentives, you find the reason for the policy.