Civilian Labor Force Participation Rate and Recessions 1950-Present

Posted by PITHOCRATES - April 9th, 2013

History 101

LBJ was able to pass JFK’s Tax Cuts resulting in a Long Period of Economic Growth

The official unemployment rate is stuck around 8%.  But if you count all the people who can’t find a full-time job the actual unemployment rate is closer to 14%.  With every jobs report we hear the positive spin from the government about another down tic in the official unemployment rate.  And the hundreds of thousands of new jobs created.  But after three years or so of hearing these reports people start questioning the numbers.  And the rosy spin.  Because despite all the good news they tell us people are disappearing from the civilian labor force.  Which is the only reason why the official unemployment rate is falling.  Because they’re not counting a lot of unemployed people.  So looking at the civilian labor force may be a better indicator of the health of the economy.  Or better yet, the civilian labor force participation rate (CLFPR).  Which is basically the percent of those who can work that are working.  So let’s do that.  Starting with the Fifties.

Labor Force Participation Rate and Recessions 1950 to 1959

After World War II veterans went to college on the G.I. Bill.  These new college graduates with degrees in science, engineering and business management entered the workforce in the Fifties.  Helping the United States to develop new technologies.  New industries.  And a lot of new jobs.  American wells were busy pumping domestic oil.  Keeping gasoline cheap.  Having escaped the damage of war the American economy exported to those countries that didn’t.  And consumer spending took off.  Thanks to the new advertising industry telling Americans about all the great things to buy.  They bought houses and cars with borrowed money.  And used the new credit card to spend even more money they didn’t have.  Changing the American economy into a consumer-based economy.  Making the Fifties one of the most prosperous times in U.S. history.  Despite the Korean War.  And the Cold War.  Which was getting underway in a big way.  There was a burst of inflation to help pay for the Korean War.  When it ended they contracted the money supply to get rid of that inflation sending the economy into recession.  But once the recession ended the economy took off with all that consumerism.  Shown by the sharp rise in the CLFPR.  To correspond with the very good economic times of the Fifties.  Another monetary contraction happened in 1957 to tamp out some price inflation.  With a corresponding fall in the CLFPR.

Labor Force Participation Rate and Recessions 1960 to 1969

The Sixties started with another recession.  After it ended, though, the CLFPR continued to fall.  The recession was officially over but the economy was not doing well.  The CLFPR fell for almost three years following the recession.  Things were different from the Fifties.  For one, a lot of those war-torn economies were up and running again.  Providing some competition.  Especially a little island nation by the name of Japan.  Which one day would build all the televisions sold in America.  It was because of this fall in economic activity that JFK started talking about tax cuts in 1963.  Congress blocked his attempt to cut tax rates.  But after his assassination LBJ was able to pass the Revenue Act of 1964.  This lowered the top marginal tax rate from 91% to 70%.  And lowered the corporate income tax from 52% to 48%.  Among other favorable business measures.  Resulting in a long period of economic growth.  And a long upward trend in the CLFPR.

The Tax Cuts and Deregulation of the Eighties created one of the Longest Periods of Economic Growth

But following the Revenue Act of 1964 came the Great Society.  The Vietnam War.  And the Apollo moon program.  All paid for with a huge surge in federal spending.  Deficits began to grow.   As the government struggled to pay for everything.  And were unwilling to cut anything.

Labor Force Participation Rate and Recessions 1969 to 1979

The economy fell into a mild recession in 1970.  The CLFPR remained relatively flat.  To meet their spending needs they started printing money.  Devaluing the dollar.  Still part of Bretton Woods the dollar was still pegged to gold at $35/ounce.  That is, the U.S. agreed to exchange gold for dollars at $35/ounce.  But as they devalued the dollar our trading partners no longer wanted to hold dollars.  Because they were losing their purchasing power.  They wanted the gold instead.  So they began exchanging their dollars for gold.  Causing a great outflow of gold from the U.S.  Causing a problem for President Nixon.  He didn’t want the U.S. to lose all of their gold reserves.  But he didn’t want to cut any spending.  Which meant he didn’t want to stop printing money.  In fact, he wanted to print more money.  And the easy way out of his dilemma was by doing the most irresponsible thing.  He slammed the gold window shut in 1971.  And refused to exchange gold for dollars anymore.  And when he did there was no restriction to the amount of money they could print.  And they printed it.  A lot.  Creating double-digit inflation before the Seventies were over.  The inflation caused prices to rise.  Which Nixon tried to prevent with wage and price controls.  Causing a shortage of available rental property as people converted them into condos to get away from the rent control.  Gasoline stations ran out of gas as people filled their tanks with below-market priced gas.  And meat disappeared from grocery stores.  Wage controls kept wages from keeping pace with inflation.  So even though people had jobs they lost more and more purchasing power.  Or simply found there was nothing to purchase.  Throwing the economy into recession in 1973.  After the recession the CLFPR grew throughout the remainder of the Seventies.  But it wasn’t good growth.  It was growth sustained with double-digit inflation.  A bubble of artificial economic activity.  That would have to crash.  As all inflationary periods must crash.

Labor Force Participation Rate and Recessions 1979 to 1989

In the Eighties Paul Volcker, Federal Reserve Chairman, raised interest rates to double digits to wring out the double-digit inflation from the economy.  To restore people’s purchasing power.  And return the nation to real economic growth.  The tax cuts and deregulation of the Eighties created one of the longest sustained periods of economic growth in U.S. history.  With one of the longest upward trends in the CLFPR ever.  Indicating a growing economy.  With more and more people who could work finding work.  Proving that Reaganomics worked.  And worked very well.

If JFK or Ronald Reagan were President Today we wouldn’t be seeing a Freefall of the CLFPR

But it wouldn’t last.  Thanks to the government’s interference into the banking industry.  They had set a maximum limit on interest rates S&Ls (and banks) could offer.  When inflation took off people pulled their money from their savings accounts.  Putting it in higher earning instruments.  So they didn’t lose their savings to inflation.   This bad banking policy begat more bad banking policy.  They deregulated the S&Ls and banks.  So they could do other things to make up for their lost savings business.  And that other thing was primarily real estate.  They borrowed short-term money to make long-term loans.  Helping to create a housing bubble.  And when they began to wring that inflation out of the economy interest rates rose.  When those short-term loans came due they had to refinance them at higher interest rates.  While the interest they were earning on those long-term loans remained the same.  So their interest expense soon exceeded their interest income.  Creating the savings and loan crisis.  And a severe recession that ended the economic expansion of the Eighties.  With a corresponding fall in the CLFPR.

Labor Force Participation Rate and Recessions 1990 to 2000

Once the recession ended the CLFPR resumed a general upward growth.  But not as good as it was in the Eighties.  Also, it would turn out that much of the growth in the Nineties was artificial.  Bill Clinton’s Policy Statement on Discrimination in Lending forced lenders to lower their lending requirements.  And to qualify the unqualified.  Which created a surge in subprime lending.  And the beginning of a housing bubble.  The Internet entered the economy in the Nineties.  Just as the personal computer entered the economy in the Eighties.  Making Bill Gates a very rich man.  Investors were anxious to find the next Bill Gates.  Taking advantage of those low interest rates creating that housing bubble. And poured money into dot-com start-ups.  Companies that had no revenues.  Or products to sell.  Creating a dot-com bubble.  And a surge in computer programming jobs.  Also, as the century came to a close there was the Y2K scare.  Creating another surge in computer programming jobs.  To rewrite computer code.  Changing 2-digit date codes (i.e., ’78) to 4-digit codes (i.e., 1978).

Labor Force Participation Rate and Recessions 2000 to 2013

The Y2K scare proved to be greatly overblown.  Which put a lot of computer programmers out of a job in January of 2000.  And they wouldn’t find a dot-com job for the dot-com bubble burst in the same year they lost their Y2K job.  Throwing the economy into recession in 2001.  And then making everything worse came the terrorist attacks on 9/11.  Prolonging the recession.  As can be seen by the long decline in the CLFPR.  Which leveled out after the Bush tax cuts.  But then that housing bubble peaked in 2006.  And burst in 2007 into the subprime mortgage crisis.  Thanks to all those toxic mortgages Bill Clinton’s Policy Statement on Discrimination in Lending forced lenders to make.  And because Fannie Mae and Freddie Mac bought these toxic mortgages and had Wall Street package them into collateralized debt obligations this crisis spread worldwide.  Selling what they told unsuspecting investors were high yield, low risk investments.  Because they were backed by the safest of all loans.  Mortgages.  What they failed to tell these investors was that these mortgages were not safe 30-year conventional mortgages.  But highly risky subprime mortgages.  In particular adjustable rate mortgages.  Where the monthly payment would increase with an increase in interest rates.  And that is what happened.  And when it happened the unqualified could not afford the new monthly payment.  And defaulted.  Kicking off the Great Recession.  And because President Obama was more interested in national health care than ending the Great Recession he didn’t cut taxes.  Or cut regulations.  Instead, he increased taxes and regulations.  Making the current recovery one of the worst in U.S. history.  As can be seen in the greatest decline in the CLFPR since the Great Depression.  If you look at a continuous graph from 1950 to the present you can see just how bad the Obama economic policies are.

Labor Force Participation Rate and Recessions 1950 to Present

The JFK and Reagan tax cuts caused the greatest economic expansions.  And the greatest rise in the CLFPR.  Also, after most recessions there was a return to a growing CLFPR.  Interestingly, the two times that didn’t happen are tied to Bill Clinton.  Who created two of the greatest bubbles.  The dot-com bubble in the Nineties.  And the subprime mortgage bubble that was built in the Nineties and the 2000s.  The growth was so artificial in building these bubbles that the CLFPR did not recover following the bursting of these bubbles.  It might have following the dot-com bubble if the subprime mortgage crisis didn’t follow so soon after.  The current recovery is so bad that it has taken the CLFPR back to levels we haven’t seen since the Seventies.  Making the current recovery far worse than the official unemployment rate suggests.  And far worse than the government is telling us.  So why are they not telling us the truth about the economy?  Because the government wants to raise taxes.  And if the economy is improving there is no need for recession-ending tax cuts.  So they say the economy is improving.  As they hate tax cuts that much.  Unlike Ronald Reagan.  Or JFK.  And if either of them were president today we wouldn’t be seeing a freefall of the CLFPR.

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Keynesian Policies are giving us Great Depression Unemployment with no Hope of Economic Recovery

Posted by PITHOCRATES - September 4th, 2011

Real Unemployment is Greater than the Unemployment Rate for about half of the Great Depression 

The unemployment numbers are bad.  But few realize just how bad they are.  The real unemployment numbers.  Not the official unemployment rate released by the government (U-3).  Because that number doesn’t count a lot of people who can’t find a full time job (see Unemployed face tough competition: underemployed by Paul Wiseman and Christopher Leonard posted 9/4/2011 on the Associated Press).

America’s 14 million unemployed aren’t competing just with each other. They must also contend with 8.8 million other people not counted as unemployed – part-timers who want full-time work…

And the unemployed will face another source of competition once the economy improves: Roughly 2.6 million people who aren’t counted as unemployed because they’ve stopped looking for work. Once they start looking again, they’ll be classified as unemployed. And the unemployment rate could rise.

Combined, the 14 million officially unemployed; the “underemployed” part-timers who want full-time work; and “discouraged” people who have stopped looking make up 16.2 percent of working-age Americans…

If you look at the unemployment rate during the Great Depression (1929 to 1941), this more real rate (16.2%) is greater than the unemployment rate for about half of those years.  From 1932 until 1936, the rate was 23.53%, 24.75%, 21.60%, 19.97% and 16.80%.  After dropping down to 14.18% in 1937, it went back up to 18.91% in 1938.  It fell to 17.05% in 1939.  It was below 16.2% for only 6 years of the 13 years of the Great Depression.  So this 16.2% is bad.  Very, very bad.  And very, very real.

In a healthy economy, this broader measure of unemployment stays below 10 percent. Since the Great Recession officially ended more than two years ago, the rate has been 15 percent or more.

Even if you don’t use Great Depression standards this 16.2% is still very, very bad.

Eventually, lots of Americans…will start looking for jobs again. If those work-force dropouts had been counted as unemployed, August’s unemployment rate would have been 10.6 percent instead of 9.1 percent.

If it wasn’t for a counting gimmick to exclude long-term unemployed who gave up looking for work, the official unemployment rate would count all the unemployed.  And it would be 10.6%.  Not the ‘official’ 9.1% reported.  Of course, throw in the underemployed and it’s back up to 16.2%.

If Taxes and Regulations were Good for the Economy, we wouldn’t have Real Unemployment of 16.2%

No doubt the employment picture is far worse than the media has reported.  And that Recovery Summer was purely political propaganda.  To put a positive spin on some really wasteful ‘stimulus’ spending.  Spending that was more pork and earmarks than stimulative.  And President Obama is going to address a joint-session of Congress to tell us how he’s going to fix the economy.  No doubt urging more of the same that hasn’t worked thus far (see Cheney dismisses Obama’s jobs speech: ‘Don’t think it will get the job done’ by Vicki Needham posted 9/4/2011 on The Hill).

Former Vice President Dick Cheney suggested Sunday that the White House should adopt Reagan-era tax and regulatory policy to spur economic growth…

“The Obama administration is doing exactly the opposite, they’re loading on more regulation on the private sector in respect to how the economy functions,” he said.

They say if it ain’t broke, don’t fix it.  But if it is broke then we should probably fix it.  And based on the real unemployment numbers, the Obama policies are broke.  And need to be fixed.  And a good place to start would be to back off on all of their regulations.  And stop with the new taxes.  We know they’re bad for the economy.  For if they were good for it, we wouldn’t have a real unemployment rate of 16.2%.

President Obama will address a joint session of Congress on Thursday to outline a jobs plan likely to include a call for more infrastructure spending along with an extension of the payroll tax cuts, unemployment benefits and tax incentives for business to pick up hiring…

The president used his weekly address to push passage of an extension of the surface transportation bill to spur highway construction, bridge repair and the improvement of mass transit systems.

Haven’t we heard this message before?  Infrastructure spending?  As in ‘shovel-ready jobs’?  That was the whole point of the stimulus bill.  And being that we’re still talking about ‘infrastructure spending’, apparently it didn’t work.  So why return to a failed policy?

Infrastructure Stimulus Projects are like a Pill that Cures the Common Cold…in only 3 Weeks

Even Obama conceded there was no such thing as a ‘shovel-ready’ job.  Not with the regulatory red tape you have to go through before breaking ground.  Which costs millions of dollars.  So it’s not likely anyone spent millions of dollars over the years just in anticipation of a stimulus program.  Something unknown then that would pay for a project started without adequate funding.  Yeah, like that would ever happen.

But infrastructure work isn’t your everyday make-work kind of employment.  It takes skill.  And experience.  It’s not picking up trash along the side of the road that any unemployed person can do without extensive training (see Did the Stimulus Create Jobs? Not Always for the Unemployed by Megan McArdle posted 91/2011 on The Atlantic).

In the construction industry, there’s another wrinkle; many of the specialties in heavy construction are, at least as I understand it, not overfull with qualified applicants; finding young people who have the math skills and other academic talents necessary to be a modern skilled construction worker, and also want to skip college and apprentice with an outfit like the operating engineers, is something that a lot of the skilled trades worry about. 

I think a lot of people assumed that doing infrastructure construction projects would be a great way to soak up excess labor from the homebuilding industry, but there’s not actually that much overlap; knowing how to install drywall or do framing work does not qualify you for a job that requires sandhogs and specialty welders.  And it can take a long time to make journeyman in many of these professions.  This is also true of certain kinds of civil engineers and so forth. 

Cleary infrastructure projects are not the panacea the Obama administration thinks they are.  They are not ‘shovel-ready’ for the unemployed.  After years of regulatory compliance expenditures, highly skilled and highly specialized workers will break ground.  Which won’t employ a single person outside these specialties.  At least, not without years of training.  And working as an apprentice.  Which will be years down the road.  Which won’t stimulate anything in the here and now. 

This is like a pill that cures the common cold.  In only 3 weeks.  They have no effect.  And their ‘cure’ is purely illusionary.

The Era of Keynesian Big Government came to an End in 1980…for Awhile 

So we know what doesn’t work.  We know what policies are wrong.  Almost 3 years of Obama policies have told us that.  But it’s easy to point to failure.  To identify problems.  It’s a little more difficult to fix problems.  But the amazing thing is we don’t have to fix them.  We just have to stop causing them (see Free The Market by Peter Boettke posted 9/2/2011 on The European).

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design”, F.A. Hayk once wrote. We would we well-served to heed his call and reinvigorate the ideology of the free market.

There are a few schools of economics.  There’s the Keynesian school.  The majority of mainstream economists adhere to this.  As well as the Obama administration.  And then there is the Austrian school.  Which is more in keeping with economists like F.A. Hayek and Adam Smith

The Keynesians want hands-on government control and spending.  The Austrian school doesn’t.  Because they don’t think they are better and smarter than the average consumer.

The past thirty years proved the validity of Adam Smith’s assertion, “The natural effort of every individual to better his own condition…is so powerful, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations.”

During “the age of Milton Friedman”, as Andrei Shleifer dubed it, key developments in economic freedom—deregulation in the US and UK, the collapse of communism in East and Central Europe, and the opening up of the economies of China and India—allowed individuals to surmount government meddling in the economy. From 1980 to 2005, there were marked, world-wide improvements in life expectancy, education, democracy, and living standards as integration into a world economy delivered billions of individuals from poverty, ignorance and squalor.

From 1980?  You know what happened at that time?  The era of Keynesian Big Government came to an end.  For awhile.  With the rise of Margaret Thatcher in the UK.  And the rise of Ronald Reagan in the USA.  Both were adherents to the Austrian school.  And because of that their nations exploded with prosperity.  Thanks to tax cuts.  And deregulation. 

Unfortunately, this began to reverse course around 2005.  Big Government began to return.  And it’s becoming bigger than it ever was.  We see this in declining Western economies.  And financial crises in these same Western economies (in Europe and the United States).  As they are imploding under excessive government spending.  And debt.

A setting of private property rights, free pricing, and accurate profit and loss accounting aligns incentives and communicates information so that individuals realize the mutual gains from trade with one another. Efficient markets are an outcome of a process of discovery, learning, and adjustment, not an assumption going into the analysis. That process, however, operates within political, legal, and social institutions. Those institutions can promulgate policies that block discovery, inhibit learning, and prevent adjustment, causing the market to operate poorly.

So rather than free market ideology being obsolete, what is needed is a reinvigorated ideological vision of the free market economy: a society of free and responsible individuals who have the opportunity to prosper in a market economy based on profit and loss and to live in caring communities. Yes, caring communities. The Adam Smith that wrote The Wealth of Nations also wrote The Theory of Moral Sentiments, and the F. A. Hayek that wrote Individualism and Economic Order also wrote about the corruption of morals in The Fatal Conceit. Our challenge today is to embrace the full scope of free market ideology so as to understand the preconditions under which we can live better together in a world of peace, prosperity, and progress.

Get government out of the private sector.  Let the private sector respond freely to market forces.  Be responsible.  And be kind to others.  Like they told us in kindergarten.

Keynesians don’t like the Masses, they just want to Rule over Them

Anyone looking objectively at the economy can see where the problem lies.  With government.  Their policies didn’t work in the Seventies.  And they’re not working now.  So why are they returning to failed policies of the past?  Because Keynesian policies grow government.  And those in government want to grow government.  For the money and the power.  And to stroke their egos. 

Keynesians are academics.  They have little real-life experience.  They didn’t run businesses.  Make payrolls.  They didn’t sell.  Or live on the other side of regulatory compliance.  Why?  Because they aren’t entrepreneurs.  They don’t have the ability to be creative.  So they elevate themselves above those who are.  To compensate for their inadequacies. 

They prefer privilege.  Entitlement.  Like the aristocracy in the Old World.  Where a good last name was all you needed for wealth and power. 

Just listen to them talk.  Their very words drip with condescension.  They don’t like the masses.  They don’t live with them.  They don’t vacation with them.  They don’t want to have anything to do with them.  Except to rule over them.  The way it should be.  In their world of privilege.

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LESSONS LEARNED #56: “It’s competition in the private sector that makes life better. Not government regulation.” -Old Pithy

Posted by PITHOCRATES - March 10th, 2011

Deregulation makes Air Travel Cheaper and Safer

A lot of people bitched about the deregulation of the airlines.  Mostly union people.  Because before they were deregulated it was very expensive to fly.  Ticket prices were out of the reach of most of middle class America.  But, with those high prices, the airlines made a lot of money.  And the unions got a lot of that money.  Union members warned about safety with deregulation.  If they lowered ticket prices so anyone could fly there wouldn’t be enough money to maintain the highly skilled personnel to fly and maintain the airplanes.  If you put profits before safety planes could start falling out of the sky.

Well, they deregulated the airlines in 1974.  Government no longer controlled the price of tickets, air traffic routes or the number of airlines allowed to operate.  Ticket prices fell.  More airlines began operations.  More cities built airports.  More people were flying than ever before.  All people.  Not just the rich.  Deregulation was a huge success.  Except for unions.  For them it wasn’t quite the gravy train it was before deregulation.  So did safety suffer?  No.  Quite the contrary.

In 1959 there were 40 fatal accidents per million departures (at the beginning of the jet age).  That number fell to about 10 in 1960.  During the Sixties it was at or below 5.  The number fell by approximately half during the Seventies.  It fell to about 1 after the Seventies with a spike of about 1.5 in 1988.

At the beginning of the jet age, few in the government bureaucracy knew anything about jets.  So it was mostly the manufacturers and the airlines policing themselves as they developed jetliner travel.  And they did a pretty good job.  After deregulation air travel exploded with the new jets.  They were safe enough that people weren’t afraid to fly on them.  And they did.

Boeing and Douglas lead the way in the Jet Age

Competition drove early jet travel.  Air travel was growing and the airlines needed planes that could carry more people, fly farther and faster.  If they had the planes they could fly the people.  Two of America’s manufacturers stood up in a big way.  Boeing built the 707.  And Douglas built the DC-8.  This competition produced two jetliners that were safe to fly and they moved more people farther than any propeller plane.  There were some accidents in the beginning but they were less compared to the propeller planes they replaced. 

Air travel continued to grow.  There was a demand for bigger airplanes.  A bigger plane could move more people at a lower cost per person.  This meant even lower ticket prices.  And made air travel more affordable to the less rich.  Boeing rolled out the 747.  McDonnell Douglas (the merger of Douglas with McDonnell Aircraft Corporation) rolled out the DC-10.  The first of the wide-bodies.  The Boeing 747 went on to become a huge success with an incredible safety record.  It still flies today.  Few airplanes make people feel safer.  The DC-10, on the other hand, did not make people feel as safe.  For a period of time.  And that marked the beginning of the end of McDonnell Douglas.

McDonnell Douglas was a very successful company.  They built thousands of DC-9s and MD-80/90s.  Over 2,000.  These are very reliable and safe aircrafts.  The DC-9 had only 0.76 fatal accidents per million departures (PMD).  The MD-80/90s had only 0.31 fatal accidents PMD.  You’ll still see a lot of these flying today.  It has proven to be a very reliable airframe.  The DC-10, though, had a bumpier road with less than 500 built.  It, too, was a good airplane.  But it was involved with some very high-profile accidents.  And it got a reputation as an unsafe design.

A Close Call with the Cargo Hold Door of a DC-10

The cargo hold door on the DC-10 opened outward.  This allowed room for more cargo.  Doors that open in take up cargo space.  Which reduces revenue.  The more cargo you can carry, the more revenue you make and the lower ticket prices can be.  It’s just one in many ways to reduce the cost of air travel.  And it was yet another thing that made the DC-10 profitable to fly.

Airlines bought the DC-10 and put it into service.  It performed well.  But that cargo door would become an issue.  Doors on an airplane typically open inward.  For a good reason.  Once a plane reaches an altitude of 10,000 feet, it has to be pressurized so people can breathe normally.  That places a lot of pressure inside the passenger and cargo compartments.  The only ‘holes’ in the aircraft have doors that seal tighter at these higher interior pressures.  Because they open inward.  The cargo door on the DC-10, though, needed a special latching mechanism to withstand those pressures without opening in flight.  Because it opened outward.

Closed properly there was no problem.  But sometimes it wasn’t.  In 1972, a DC-10 departing from Detroit suffered an explosive decompression as it climbed above 10,000 feet.  The cargo door failed.  The sudden decompression collapsed the passenger floor and damaged the aircraft’s control cables and hydraulics.  The rudder was deflected full left.  The engines throttle levels slammed back to idle.  The tail-mounted engine control cables were severed completely.  The elevator provided little control.  The pilots varied the thrust on the wing-mounted engines to maneuver the aircraft back to the airport.  They compensated for the deflected rudder with asymmetric thrust on the wing engines.  Without a functioning elevator the nose dropped at lower speeds.  So they landed at a higher speed than normal.  As they slowed the force of the rudder declined and the asymmetric thrust took over, pulling the aircraft off the runway.  It was a tremendous piece of flying by the crew that brought that plane back without loss of life.

A Pair of Crashes Threaten the DC-10 and McDonnell Douglas

The rear cargo door was studied and some changes were made.  Issues with floor strength in the new wide-bodies were questioned.  They just started flying.  This was new territory for everyone.   No significant change was made.  Other DC-10s were flying safely.  This may have just been an isolated incident of human error (closing the cargo door incorrectly).  Then, in 1974, it happened again.  In a series of human errors that doomed a Turkish Airlines plane leaving Paris for London.  A different seat configuration put more people over the floor that collapsed on the Detroit flight.  The explosive decompression tore through the cabin floor, causing greater damage to the control cables and hydraulics than on the Detroit flight.  There was nothing the flight crew could do.  The plane was uncontrollable.  It crashed, killing all 346 aboard.  The largest loss of life to date.  And the first crash of a new wide body.

The subsequent investigation painted the DC-10 as unsafe.  Then in 1979 another catastrophic accident at Chicago’s O’Hare airport.  During takeoff.  After passing V1 (the speed the aircraft could no longer abort and stop safely on the runway) the left wing-mounted engine and pylon tore away from the wing.  The pilots had no idea what had happened other that an engine had lost all thrust.  They couldn’t see the wing from the flight deck.  So they followed procedures for a two-engine takeoff.  But the damage to the leading edge of the left wing was severe.  The leading edge slats retracted with the severing of the hydraulic lines.  The left wing now had a slower stall speed than the right wing.  But they didn’t know.  And they had no indication in the cockpit.  The plane was flying.  They climbed out per procedure.  They powered back from take-off power.  And when they did, the left wing started to dip.  In the few seconds they had to understand what was happening it was too late.  The wing stalled.  The plane rolled left and pitched down.  And crashed.  Killing all 271 aboard.

Was this a design flaw?  No.  Again, it was human error.  The maintenance crew did not follow published maintenance procedures.  The left engine and pylon was replaced after routine maintenance.  The maintenance manual called for the engine removal first.  Then the engine pylon.  Some airlines were replacing the engine and pylon as an assembly.  This saved maintenance hours (and cut costs).  And was safer because it reduced the number of fuel, hydraulic and electrical wiring that had to be disconnected and reconnected.  Or so they thought.  Lifting the engine and pylon assembly to the underside of the wing attachment point was a delicate procedure, though.  That’s a lot of mass pressed against the mounting flange.  And in this case, they pushed the assembly up too high into the flange, deforming it and causing a fracture.  No one knew this as they accelerated down that O’Hare runway.  As they approached take off speed the flange broke completely, sending that engine up and over the wing.

Plane Crashes don’t help Sell Planes or Tickets

With these high-profile accidents the DC-10 got a reputation for being unsafe.  Orders fell.  While orders for the Boeing 747 remained strong.  Even though they had similar safety records.  The early 747s had 1.41 fatal accidents per PMD (the later 747-400 had 0.19 fatal accidents per PMD).  The DC-10 had 1.36 fatal accidents per PMD.  It was as safe if not safer as the 747s that were flying during the same time.  But the public relations damage was done.  Boeing sales grew.  McDonnell Douglas sales fell.  The business founded by Donald Douglas in 1921 is no more.  Unable to compete with Boeing (or Airbus) any longer, McDonnell Douglas merged with Boeing.

McDonnell Douglas had a very successful run.  But the Boeing 747 went on to dominate the wide-body market.  And one wide-body paid a lot more bills than a bunch of narrow-bodies.  Commercial planes have only gotten bigger.  The Airbus 380 is a double decker that can carry over 800 passengers.  And is giving the Boeing 747 a run for its money.  Who knows what might have happened if not for these high-profile accidents.  McDonnell Douglas had even floated the idea of a double decker airplane.  By that time, though, it was too late.

Competition between Boeing and Douglas introduced the jet age.  Their continued competition gave us wide-body jetliners.  Average people could fly anywhere in the world.  And air travel got safer through the years.  Government regulation didn’t make this happen.  Yes, the government made some planes safer.  But not until after a crash.  And they were few and far between.  The vast majority of commercial aviation flew safely.  Because manufacturers and airlines have a vested interest in being safe.  For a very good reason.  Plane crashes don’t help you sell planes.  Or tickets.  But they can put you out of business.  Even if they aren’t your fault.  Something McDonnell Douglas knows only too well.

www.PITHOCRATES.com

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