The Division of Labor is Limited by Government
Regular EconLog reader Mark Barbieri writes:
My wife and I are looking into building an airplane. The airplane we want to build is called an AirCam. We have no experience building airplanes, so you may be wondering why we would build it instead of buying it from the manufacturer or a dealer. It’s because that is illegal.
It’s the usual story of regulatory capture. Commercially built airplanes have to go through an expensive certification process. That doesn’t make sense unless you are building a fairly mainstream airplane and plan to sell a lot of them. It also means that you don’t see much innovation in the general aviation airplane industry.
Fortunately, the FAA allows for “experimental” airplanes. These don’t have to go through the same approval processes, but there are other restrictions. The most important one is that the owner must assemble the majority of the plane. On one hand, that’s great because it allows something like the AirCam to exist. On the other hand, it seems crazy to require that amateurs like me build airplanes.
You can work around those rules. A professional can build the plane and register it and then you can buy it from them as a used plane. It’s a violation of the spirit of the rules, but my understanding is that the FAA generally looks the other way. You don’t get the certifications needed to be able to do your own maintenance or make any modifications, but you probably don’t want to anyway.
Just thought that you might find it interesting that I’ll be building an airplane because it is technically illegal for me to pay a professional to do it for me. If we ever do get it built, we’ll eventually take it out to Monterey. If you’re crazy, we’ll be happy to take you up in it and give you a view of your area from a different perspective.
I do find it interesting. It explains, in part, why 30-year-old and even 50-year-old general aviation aircraft are still flying and still often fetch substantial prices.
I think that we can be reasonably sure that one effect of this is more accidents per number of aircraft because people who are not experts will probably not, on average, do as good a job as people who are. And of course with aircraft, accidents lead to fatalities a much higher percent of the time than accidents with cars.
Adam Smith famously said that the division of labor is limited by the extent of the market. In this case it’s the government that purposely limits the division of labor.