On June 18th a submersible called Titan, operated by the private company OceanGate, was deployed ~400 nautical miles off Newfoundland, Canada, in the North Atlantic Ocean. The submersible, bound for the Titanic shipwreck some 12,500 feet deep, was carrying four tourists and a pilot. By now, just about everybody knows Titan never reached its intended destination; it imploded a few hundred feet from the sunken ship. The accidents probable cause was a catastrophic hull failure under immense deep-sea pressure.

(The deepest part of the ocean is called the Mariana Trench, located in the Pacific Ocean, a few hundred kilometers southwest of Guam. It is ~36,000 feet deep. Only three people have ever reached those depths. In 1960, Lieutenant Don Walsh of the U.S. Navy and Swiss oceanographer Jacques Piccard made the trip in a specially designed submersible called the Trieste. In 2012, explorer and filmmaker James Cameron visited solo in a 24 ft craft called the Deepsea Challenger. At those depths, the atmospheric pressure is approximately 16,000 pounds per square inch (PSI) compared to just under 15 lbs per square inch at sea level.)

The tragedy of the Titan received extensive coverage from major news organizations in America and around the world. We learned the names of the passengers, what they did for a living, and their life stories. We heard from former passengers who described the Titan submersible as shoddily built, piloted with off-the-shelf parts, including a video game console. There were reports of past structural issues and numerous former missions were aborted.

Stockton Rush, the CEO of OceanGate, piloted the Titan. Posthumously, Rush has been scrutinized for his cavalier attitude towards safety including shrugging off generally accepted maritime safety protocols. Hamish Harding was a British billionaire, explorer, and CEO of Action Aviation, an aircraft broker. Shahzada Dawood was a member of one of Pakistan’s wealthiest families and owner of a business conglomerate called Engro joined the expedition along with his 19-year-old son, Suleman. Paul-Henri Nargeolet, the former director of Michigan State University’s Center for Maritime & Underwater Resource Management, a trained professional in deep-sea salvage, Titanic expert, and the first to retrieve artifacts from the ship in 1987, was aboard.

News agencies emphasized that all the passengers were either phenomenally wealthy or related to people who were and reserving a spot on the Titan cost $250,000.

The boarding process today on all commercial airliners is completely irrational. Consider the following: in return for purchasing a first or business class ticket or being a premier rewards card holder, a customer is granted the privilege of boarding.... first? This makes little sense to me.

If an air traveler is about to give up all control of his or her well-being and board an overcrowded flying tuna can, with parts constructed by the lowest bidder, piloted by a complete stranger, with germ-tainted re-circulated air, with 1/4 inch of aluminum separating them from sudden death at over 35,000 feet, they should have no interest whatsoever in wanting to board first. Wouldn’t they want to board last? Why spend any more time on that plane than need be ?

I’ve discussed my argument with some peers. The most common pushback I get has to do with baggage. Most airlines charge for checked bags. As a result, any bag that can fit in the overhead spaces is placed there, to avoid paying a fee and having to wait to claim your luggage at one’s final destination. Boarding first guarantees you will find space for your luggage. I understand and appreciate this argument, but it doesn’t suffice, especially given how airlines price their seats today. Most basic economy tickets are situated in the rear of the aircraft. Most people place their luggage at or near the row they are assigned. Furthermore, in the business class section of a plane, only those passengers who purchased business class seats can use the overhead bins in that section. Bottom line: people who purchase premium tickets or hold a rewards card should be called to board last, not first.

At The Quintessential Centrist, we are ardent fans of social economist Steve Levitt. Mr. Levitt, who currently plies his trade at the University of Chicago, possesses an uncanny ability to seamlessly explain complicated statistical information using fun, fascinating, real-life examples that keep his students and readers alike engaged and entertained. We recommend his enjoyable books, Freakonomics and Super Freakonomics.

Like most aviation experts, airplane manufactures and operators often make the case that flying is the safest form of travel. In Super Freakonomics, Mr. Levitt makes a similarly compelling case supported by exhaustive data: that driving is safer than flying. It probably is. However, in our view, some of the analytical data comparing the safety of those two respective modes of transportation – while not flawed per se - are materially skewed in favor of driving.

The most commonly used metric to measure safety in the driving vs flying debate is the morbid statistic of fatality rate per mile traveled. Sure enough, on page 65 of Super Freakonomics, Levitt argues, "per mile, driving is much more dangerous than flying." While factually correct, a more granular analysis suggests that this is a misleading statement with limited practical application when considering which mode of transport, air or auto, is truly safer.

Why?

When comparing the safety of air travel vs that of an automobile on a per mile basis, one fails to control for an important variable in the equation, the total number of hours of exposure. Consider the following: a commercial jetliner travels ~500 miles per hour (mph) at cruising altitude. A passenger vehicle goes ~70 mph on an open, interstate highway. As Mr. Levitt so eloquently does, let us use a real-world example to help frame our argument. A lady drives for one hour, she travels 70 miles. A week later, she decides to fly for one hour; she goes 500 miles. However, in order to travel a distance of 500 miles in a car, our lady friend would have to drive approximately 7 and 15 minutes, or 7.25 times further than a comparable trip in a plane, leaving a lot more opportunity (time) for bad things to happen. Hence, using per mile metrics when comparing the safety of various means of travel is deceptive, because that form of measurement does not control for the total amount of time spent driving a car vs flying in a plane. If our subject drove and flew for the same amount of time, the data would tell a very different story and airplanes would appear less safe. So if we are going to use fatalities per passenger mile as a default metric upon which to base our analysis, we must also control for the amount of exposure or time spent in each mode of transport; but we don’t.

This week, The Wall Street Journal reported that restaurateur Besim Kukaj, proprietor of several eateries in Manhattan, was fined $64,000 after employees of his restaurant, Limon Jungle, refused to seat a patron who was accompanied by a service dog. Mr. Kukaj was forced to pay the customer, Harvey Goldstein, $14,000 and $50,000 to the city of New York. Judge John Spooner presided over the trial. He acquiesced to the NYC Human Rights Commission by raising the initial fine from $25,000 to $50,000. His rationale: “in the absence of adequate civil penalties, there is a risk that businesses will continue to do as respondents have done here—ignore the commission and write off their discriminatory conduct as a mere cost of doing business.”

As we have already noted, Mr. Kukaj is an established businessman who owns many restaurants in New York City. He has the resources which should have been properly deployed towards appropriate staff training in accommodation of disabled patrons. Barring a few specific exceptions, services dogs should be permitted entry into any venue with their owner so long as they are on a leash and obedient.

The terms “service dog” and “emotional support animal” (ESA) are incorrectly used interchangeably. A service dog is a highly trained canine that provides a range of specific functions to people with legitimate medical disabilities. (Worth noting is that service animals are almost always dogs. On occasion, they can be miniature horses).

Service dogs typically cost tens of thousands of dollars and undergo rigorous training to efficiently and effectively accomplish one or a few super specific tasks to aid a disabled owner, often under pressure and/or in difficult situations. They can potentially save their owner’s life.

A service dog is “offered legal protections through the Americans with Disabilities Act (ADA) that emotional support animals do not get. You can take a service dog almost anywhere that you go and they legally cannot be denied access. Legal protection of an emotional support animal is (typically) limited to housing and air travel.” Some of the specific tasks service dogs perform are as follows:

• Lead a visually impaired owner
• Anticipate and alert its owner to an oncoming seizure
• Answer the door (by pulling a lever)
• Bring its owner medicine & mail
• Bring a phone to its owner (and even bark into a speaker phone)
• Bark to get the attention of others if its owner is in trouble or unable to communicate
• Bark in the case of an intruder
• Alert its owner in case of a fire
• Help its owner stand up, sit down, negotiate stairs, etc.
• Provide psychological support

“…what’s transpiring in the retail foreign exchange market is indicative of oligopolistic practices, not capitalism…” - TQC

Billions of dollars are at stake. The targets: The uninformed general public traveling overseas. The perpetrators: The monopolistic foreign exchange (FX) booths situated throughout airports and tourist hotspots & retail banks. No informed person would ever use an FX changing firm (or bank) to source foreign currencies if they had any idea how badly they are being fleeced, especially when an ATM provides far superior rates. Let us provide a window into the world of foreign currency exchange.

First, we must put the foreign exchange market into context. It’s by far the largest and most liquid market in the world. In fact, it dwarfs stock and bond trading. All major currencies trade against one another globally. Two common markets are the "spot" or current market and the "futures" market. Both markets are very liquid and offer buyers and sellers instantaneous access to foreign currency. In Friday's market for the $U.S. Dollar / Euro ($USD/EUR): One Euro could be bought for $1.1319 U.S. Dollars. Hence, the market for the $USD/EUR looked like this: Bid $1.1319 Offer $1.1320. The Euro could be bought for $1.1319 and sold for $1.1320, a difference of less than a penny. Furthermore, the amount of currency bid for and offered at these prices, just fractions of a penny wide, amounts to millions of dollars. Far more than any retail customer would ever seek to exchange at an airport kiosk or retail bank.

FX booths and bank branches sometimes offer to exchange foreign currency for "no commission." Instead, their take amounts to far more than a reasonable standard commission. This is what typically transpires: A foreign exchange booth or retail bank branch offers $U.S. Dollar / Euro but widens the market - the difference between the bid and the offer - out. The “markup” they take amounts to well in excess of any commission any broker could ever expect to make on any foreign exchange trade. For example, vs Friday's quoted current market, they might post that they would buy Euros for $1.02 and sell Euros at say $1.24 when the inside market (see above) is $1.1319 bid and $1.1320 offer. This is absurd. FX booths and banks are in essence locking in a ~10% markup from unsuspecting customers, possibly more, on a trades that should cost less than 1 penny to execute.