Friday, December 29, 2006

How to paint yourself into a corner

This post is part of a series called "a crisis is something just too valuable to waste".

This is a blog about science. All sciences related to decision-making welcome. Science, not politics. Having said that, we cannot refrain from that occasional indulgence...

The Economist just ran a piece (subscription required) over Brazil's civil aviation collapse:

The underlying problems are that the air force runs air-traffic control and it and the government have failed to keep up with booming traffic. This has grown at 15% a year or more since 2004, notes Andre Castellini of Bain, a consultancy. The government ignored repeated calls for more air-traffic controllers and investment. While control towers lacked essential equipment, airports received expensive facelifts.

After a bumbling beginning, the government of President Luiz Inácio Lula da Silva is now taking steps to avoid chaos during the peak holiday season. Air-traffic controllers are being drafted out of retirement and backup equipment is being installed. Some responsibility is to be decentralised from the overburdened control centre in Brasília. If that is not enough to ensure a trouble-free Christmas and Carnival, the defence minister offered another solution: prayer.

Of course, more panic, crimes, and general confusion ensued during the holiday season (and it's not even over yet, so, ladies and gentleman, please hold your breath). Airlines are either deceiving customers or totally unaware of what's going on. And the consequences are severely bitter: A kid needing an organ transfer just took too long at the airports to make it.

The fault is not due to the airlines. It is due to a collapsing air-control system. Of course credit goes up all the way to the presidential team, which held back resources needed to keep up with the surge in civil aviation. The government's position, of course, is to deny all accusations and to please the public with their amusing internal fights.

There is no solution to this problem, because the solution has been thrown away during our recent elections. Lula, the Messiah turned president (he is called by the foreign policy minister as "our guide"), accused his challenger, Alckmin, a former Governor of São Paulo state, of planning to privatize large state-owned companies, "destroying the Brazilian people's hard-earned assets". He won the election, but painted himself into a corner.

This whole thing comes to me as an "I told you so" moment of relief. A couple or so of years ago I was asked to review the state of Brazilian logistics("Por uma nova logística nacional"), and I obviously argued the obvious: money is needed, and the government has none; so the time has come to privatize Brazil's airports and aviation infrastructure (such as prosperous countries have done). This was published in a 2-book series from the Getulio Vargas Foundation. That option, however, is now a closed avenue, for the re-elected president decided to close it in his election accusations.

This administration is a textbook example of biases departing from rationality. From overconfidence to groupthink, it's all in there. Historians of Brazil had better start studying their social psychology and behavioural economics.

In another context, Nobel prize winner Thomas Schelling argues that sometimes it is to your advantage to close some decision avenues with his 'strategic commitment' concept... perhaps that's what Lula the Messiah is reading. If only he could read it while sober we might have somewhere to go during vacation time.

Disclaimer: I have briefly met Mr. Alckmin for activities of the Club of Rome. Yet, the paper was written long before such collaborations ever took place.