Friday, 22 March 2019

Regulators and the Regulated - Boeing and the FAA

In a previous post, I wrote this:
The other (hidden) cost of a well-paid public service
In the aftermath of the US sub-prime mortgage financial crisis, one critique of the US system was that the salaries for US civil servants were so low that the brilliant "A" students were looking for jobs in the banking sector after graduation while the merely competent "B" students were getting hired by the government to regulate the banking sector. And they would be totally outclassed by the "A" students who would come up with new instruments (such as derivatives, collateralised debt obligations, etc) that the "B" students could not understand, let alone regulate, which led to the sub-prime crisis. (This is the short, highly abridged, explanation of the crisis.)
Singapore has the opposite problem.
Singapore has pursued and sought "A" students (scholars) and brought them into the ranks of the civil service. This allows for forward planning, policy development and review, and competent regulation and administration of policies and services.
Certainly we need "A" students in the Singapore civil service to develop coherent policies and regulate the private sector, but the "A" students are also needed in the private sector. We can tell if there are not enough "A" scholar graduates in the civil service  - poor regulatory oversight, private sector running circles around the regulators, etc.
How do we know if there are too many "A" students in the civil service? How can we tell if there is not enough innovation in the private sector?
We are working with a finite pool of talent. Paying for talent in the civil service may prevent a lack of talent in the civil service, but there is no way to prevent an over accumulation of talent in the civil service. 
How do we know if there is not enough talent in the private sector? Maybe the lack of innovation and entrepreneurs is an indicator?
If all the "A" students are in the government coming up with regulations, and the "B" students are in the private sector trying to work within the regulations, and unable to come up with innovative ways to succeed in spite of the regulations, perhaps that is why we have so few entrepreneurs?

And then there is the US, Federal Aviation Administration (FAA), and how they certify planes as air-worthy, and safe.

They let the plane manufacturer (in this case Boeing) self-certify. Because the FAA does not have the capacity, experience, expertise, or staff needed to certify a complex product like a Boeing aircraft as safe or air-worthy.

So they depend on Boeing's engineers to self-certify.

I think in this case, the "A" students went to Boeing and the "B" students went to the FAA.

So the "A" students went on to redesign the 737-Max 8, and then self-certify that everything was hunky-dory, and the FAA took their word for it, because those "B" students didn't know any better.

Or didn't know enough to ask the right questions.

Oh, and President Trump donated his $400,000 presidential salary to the govt. So he's working for free.

It shows.

Meanwhile in Singapore, the scholars in our civil service has out-done themselves with an impressive Skill Framework on the Industry Transformation Map.

Except that,
As Nassim Taleb notes in his book “Antifragile”, we cannot possibly teach children, and adults for that matter, skills for the 21st century when we don’t and can’t know what skills will be required. This is a world in which the “dream job” has not even been dreamt up yet.
The question then is: Why have this level of detail or, in government-speak, granularity?
Wouldn't it somehow constrain your ability to re-imagine your job, and the notions of "job adjacency"? It strikes me as rather futile, even if impressive-sounding.

I suggest that we learn from the physicist Murray Gell-Man’s exhortation to take “a crude look at the whole”, and to take a deliberately crude look at skills.
It is strange to think that "over-competence" may be as bad as incompetence.

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