Weekend readings

1. The story of Boeing and the apparent failings in the design of its flight-control software is yet another example of the limitations of outsourcing regulation. Sample this,

The FAA has let technical experts at aircraft makers act as its representatives to perform certain tests and approve some parts for decades. The FAA expanded the scope of that program in 2005 to address concerns about adequately keeping pace with its workload. Known as Organization Designation Authorization, or ODA, it let Boeing and other manufacturers choose the employees who approve design work on the agency’s behalf. Previously, the FAA approved each appointment. Under the new approach, which was fully implemented in 2009, the ODA representatives are still under U.S. legal requirements and the FAA has the authority to oversee them and request that their management be changed. In 2012, a special investigator of the Office of Inspector General at the Department of Transportation sent a memo to the FAA’s audit chief warning him of concerns voiced by agency employees about the new process. Some allegations were made in anonymous faxes sent to the inspector general’s office, and the office followed up by interviewing employees in the FAA’s Transport Airplane Directorate. “Our investigation substantiated employee allegations that TAD and FAA headquarters managers have not always supported TAD employee efforts to hold Boeing accountable and this has created a negative atmosphere within the TAD," according to the June 22, 2012, report sent to the FAA.

The employees told the investigators that managers had overturned a recommendation by staff to remove the administrator Boeing had chosen for the program and “had not adequately addressed employees’ concerns" about potential conflicts of interest, the memo said. The employees, it said, viewed this as evidence of management having “too close a relationship with Boeing officials." Despite those concerns, as well as others raised in a subsequent report by the inspector general, Congress has embraced the program as a way to improve the FAA’s efficiency. President Donald Trump signed into law a change on Oct. 5. It allows manufacturers to request that the FAA eliminate limitations on how company representatives certify “low and medium risk" items, giving them even more authority over their own products.

2. FT on the role of militias in Rio's favelas,

At first, militias offered protection to local businesses at a modest price many were willing to pay. From there to extortion was a short step, and soon militias were selling protection against themselves. They expanded into other services: informal public transport, distribution of cooking gas, pirate cable TV, the sale and rental of commercial and residential property, and more. The most lucrative line of business for the militias has been real estate. Investigators recently found documents at the residents’ association in Rio das Pedras showing that between 5 per cent and 10 per cent of the value of every property deal goes to the local militia. They were also involved in the hugely profitable business of land expropriation or grilagem — the fraudulent assignment of property and land deeds... militias dominated local politics in the areas they controlled... 

During the past 20 years, many new militias have been formed beyond Rio das Pedras. A study last year found they were present in 165 favelas and in 37 other city neighbourhoods in greater Rio, areas of the city that are home to a combined population of more than 2m people. They hand out often gruesome and lethal justice designed to set an example, sometimes for criminal behaviour, sometimes for acts of disobedience such as buying cooking gas from the wrong distributor. Their presence haunts the city

The hardline policies of the new President Jair Bolsonaro is apparently worsening the situation.

3. Talk about regulatory arbitrage - social media platforms edition. How about reaping all the benefits of a publisher without legally being a publisher? This dichotomy is fast becoming apparent as Facebook faces increasing scrutiny over the content posted on its site,

Why on earth do we tolerate technology that can be used to inflame hatred and normalise violence at lightning speed and global scale? The answer lies largely in a 26-word sentence in Section 230 of the Communications Decency Act passed by the US Congress in 1996. “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider,” it states. So the likes of Facebook, Google and Twitter can play by different rules to traditional media companies, including the FT, which are legally responsible for all the content they publish. Jeff Kosseff, author of The Twenty-Six Words That Created the Internet, argues that Section 230 has proved an “awesome benefit” for the tech platforms. It has encouraged astonishing innovation and accelerated the growth of some of the richest companies on the planet. But it has also allowed billions of people to post anything they like online with almost no constraint. Some of that content is inspirational, much of it trivial, and a small sliver grotesque and harmful.

4. Amidst the Varsity Blues scandal of university admission frauds in the US, here comes more evidence of how skewed access to elite universities has become,

at the very best schools, more students come from the top 1 per cent of income distribution than come from the entire bottom 50 per cent.

 5. The latest issue of The American Statistician makes a strong plea in favour of revisiting the interpretation of 'statistical significance',

we should never conclude there is ‘no difference’ or ‘no association’ just because a P value is larger than a threshold such as 0.05 or, equivalently, because a confidence interval includes zero. Neither should we conclude that two studies conflict because one had a statistically significant result and the other did not. These errors waste research efforts and misinform policy decisions.

6. A data journalist at The Economist delves into a few graphs from the magazine and shows how they could be misleading or confusing or failing to make the point, and suggests some alternative illustrations.

7. Finally, US exports of LNG has surged spectacularly since the opening of the Sabine Pass terminal. With another three expected to come online soon, these exports are expected to keep rising and putting a downward pressure on global gas prices.

8. The Economist has this on Chinese locomotives and rolling stock manufacturer CRRC, 

CRRC now employs 180,000 people worldwide and posts annual revenues of $30.6bn, around a tenth of which comes from outside China. Between 2013 and 2017 crrc made 44% of the world’s electric trains and a whopping 71% of its high-speed ones, estimates Maria Leenen of sci Verkehr, a railways consultancy in Hamburg.