tag: Economics



4
May 2006

Unlikely bedfellows

Throughout the 20th Century, the United States has been a profligate energy consumer. The rapid and expansive growth of the economy was based on cheap and abundant energy. Little thought and planning have been given to how to transition to the realities of the 21st Century when petroleum and natural gas resources will become depleted. The U.S. economy uses 50 percent more energy per unit of GDP than the other developed nations of the world. The fossil fuel-based, automobile-centered, throw-away economy is not a viable model for the United States or the rest of the world over the long term. It is not sustainable.

But listen, you don’t have to take my word for it. Here’s what a recent United States Army strategic planning document had to say…

Throughout the 20th Century, the United States has been a profligate energy consumer. The rapid and expansive growth of the economy was based on cheap and abundant energy. Little thought and planning have been given to how to transition to the realities of the 21st Century when petroleum and natural gas resources will become depleted. The U.S. economy uses 50 percent more energy per unit of GDP than the other developed nations of the world. The fossil fuel-based, automobile-centered, throw-away economy is not a viable model for the United States or the rest of the world over the long term. It is not sustainable.

Energy Trends and Their Implications for U.S. Army Installations | Download PDF

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11
Apr 2006

Privatising Aer Lingus

I watched the weekly political debate show, Questions & Answers, last night. It confirmed all my worst fears about the corporatisation of politics. You’ve no idea how much it annoys me that the field of debate has been so narrowed; that mainstream politics has been reduced to a few ever-so-slightly differentiated shades of capitalist grey. The politicos on the panel were a Labour TD (TD = MP) representing the left, a government minister representing the centre, and an independent Senator representing the right.

The first question asked whether or not the privatisation of Aer Lingus “represents a good deal”. Now, it’s only since I’ve returned to Dublin that I realised Aer Lingus (Ireland’s national airline) was still state-owned. Not only that, but it is currently – relative to its size – an extremely profitable airline. In the past, during downturns in air travel or during periods of mismanagement, the company has required government / taxpayer support. Now that it is doing well, the current government (plus the main opposition party) think it’s a good idea to sell it off.

Presumably the idea is to make some quick cash on the deal before peak oil wipes out the airline industry. And regular readers might think I’d be in favour of that… offload an asset soon to become damn near worthless into the hands of a bunch of market speculators. Use the money to build a few hospitals. What could be wrong with that? Well. Quite a lot actually.

Am I never happy?

Well, yes. But not when a bunch of centre-right oafs are blundering around the country, selling off any public asset that isn’t nailed down. I once wrote that I believed Britain could still be defined, loosely, as a socialist nation up until Thatcher sold off the energy and communications infrastructure. By doing that she made a bunch of money for the already wealthy and ended the ability of the British public to control their own economy.

Recently this Irish government has flogged the telecommunications system, converting its legal status from “service provider” to “profit engine”. It’s interesting to note that investors are very happy with the deal, but the Irish citizen is less so. Leastways that’s the portrait painted by the media. Thankfully it looks as though energy production will remain public at least until capitalism begins to visibly decay (and hence, indefinitely). So Ireland is – in a specific, but very real sense – still socialist to a degree. As of right now, the public still owns significant assets, significant elements of the economic infrastructure and can exercise control over those assets through their democratic representation.

Few things piss me off more than watching politicians; the peoples representatives; shake their heads and meekly (or even worse, condescendingly) state that they can’t do anything about a social problem because it’s in the hands of private enterprise. For years successive British transport ministers agreed that the rail system was deteriorating, but told the public that they had no control over the way private companies are run. It makes me want to wring some necks.

Which brings me back to Questions & Answers and the subject of privatising Aer Lingus. The very first thing that should be pointed out is that this is a godawful deal. Even if I dust off that capitalist hat I tried on for size back in the 90s, the fact is – if you were going to privatise an airline, you really wouldn’t do it this way. The government intends to retain a significant, but minority shareholding in the company. This means there’s a siginificant reduction in the amount of shares being sold, and a consequent loss of income. On top of that, by retaining an influence on the company board of directors, it makes the whole airline less attractive to private investors who will worry about “government meddling” and fear that they won’t be able to make the business as profitable as they would like if it was required to go against the policy of the government of the day in order to do so (a government that could be Green or Leftist or anything in 10 years).

So essentially; from the point of view of the taxpayer, the government is nigh guaranteeing the lowest possible price while at the same time ceding control over the asset. And from the point of view of the capitalist, the government is retaining the right to interfere with how a private company is run, and thus making the whole venture far less likely to succeed commercially. On top of all that, the newly privatised company intends to borrow at least as much as it earned from the floatation as soon as privatisation is completed. Possibly significantly more. All of which reduces the price that investors are willing to pay for those shares that are made available.

Given the likely direction to be taken by the airline industry in the face of peak oil, this will result in the collapse of the privatised Aer Lingus within about 10 years. Probably less given how deeply in debt they will be. And there’ll be very little the government will be able to do about it, except wait until the company runs itself into a massive mountain of debt and bail them out at an absurd cost to the exchequer. Far, far more than was gained in the sell-off.

But hey, I’ve no doubt a bunch of already-wealthy speculators will make a small fortune in the immediate aftermath of the privatisation. So that’s alright then. Once the government looks after them, the average citizen can rest easy knowing he or she only has to become a millionaire and they too will be represented by the people they vote for.

Market disengagement instead of privatisation

What should be done is obvious. Market disengagement. And what annoyed me about Questions & Answers was the fact that not a single member of the panel even hinted at having thought in these terms, let alone giving them the headspace to examine seriously. The Labour TD was opposed to privatisation, as are her party. Credit where it’s due. However her objections were all about practical issues. It’s as though the notion that there may be an ideological debate to be had was somehow quaint. Faintly embarrassing. You got the feeling that perhaps she had convictions, but wouldn’t dream of admitting that in public… so if you could demonstrate that “the deal was good” for the taxpayer that all would be well.

She even resorted to the bland buzzwords of doomed capitalism. About how “everyone wants to see” Aer Lingus compete well in the marketplace. About how “of course” we want to see the company grow and expand into new routes and markets. Sheesh… doesn’t anyone actually believe anything anymore? I mean aside from The Race For Profit Is A Race That Must Be Won.

I was reminded of Douglas Adams’ wonderful observation about the BBC…

Television companies are not in the business of delivering television programs to their audience, they’re in the business of delivering audiences to their advertisers. (This is why the BBC has such a schizophrenic time – it’s actually in a different business from all its competitors)

You see, it is my belief that a state airline should not be trying to “compete” at all. In the marketplace or anywhere else. It should be run, like any other state asset, in a manner that can best serve the Irish public. Everyone on the panel, and – it seems – everyone in the Irish media, believes that Aer Lingus needs significant new investment to buy more planes so that it can expand. But that’s complete nonsense. It is not the best way to serve the Irish public. The last thing Aer Lingus should be planning is expansion.

Small is beautiful

Look, the airline business is at its peak right now. Maybe another two years… maybe three tops. After that, it’s permanently downhill for jet-engined passenger flight. But I accept that whatever commercial flight does still exist during the next 10 or 15 years will look something like its present form. There’ll just be a lot less of it, and it’ll be much more expensive. Eventually it’ll die completely and all international flight will be done in slow solar-powered dirigibles, and the enterprise will become rather sedate and civilised, with dining rooms and cool observation decks and everything (that’s the optimist talking… I usually keep him locked in the cellar).

But until then, and while modern air travel is gasping its last, there will remain a need for scheduled flights to and from this country. It is the job of a state airline to provide that service as effectively as possible. It is not its job to compete with other airlines in the lucrative low-cost short-haul market. Nor its job to expand into another five US destinations and provide the Irish consumer with more choice. Its job is to ensure that Irish people can get to and from wherever they need to go, whenever they need to go there. That this island does not become isolated before anywhere else. Climate change activists may not like this job, but all the same, that’s what it is.

And to this end, the best strategy is to begin reducing the size of the company and securing its ability to do two things very very well. Getting people to and from Heathrow efficiently. And getting people to and from New York efficiently. From Heathrow there are connecting flights to every major city in the world. From New York, to everywhere in America.

Over a period of a couple of years, Aer Lingus should sell off its entire fleet with the exception of those aircraft required to service New York and London. This would almost certainly (bizarrely) net the government more than the sale of the company as a whole. Of course, the workforce and the unions won’t like that very much. And that’s where the traditional left is really coming from with its desire for expansion.

But look, these are well-trained professionals by-and-large and they’ll be beating the rush. The entire industry is going to be shedding jobs before too long; let the Aer Lingus staff get that particular skillset into the job market before the others. And by losing their jobs because of a deliberate scale-down and asset sale, they can get very generous redundancy cheques; unlike those who lose their jobs through bankruptcy. The rest of the money from the asset sale (planes cost a lot of money, I’m sure there’ll be some left over) can make up the current pensions deficit in the company.

Those two routes alone may not make a profitable company. I honestly don’t know. But even if it didn’t, I’m certain it could be done efficiently enough so that the shortfall in the running costs won’t cost the taxpayer too much. And in return for that small tax burden, Irish people know that they are securely connected to the rest of the world via a service they themselves own and control. At least until either Heathrow or New York cease fulfilling their function due to peak oil… but I guarantee you that a privatised Aer Lingus will go under before that happens.

Capitalists will complain of course. Blah blah blah government subsidies blah blah blah restrictive practices unfair competition blah. And yes. It’s all those things. Even the blahs. What part of “anti-capitalist” don’t you understand? But hey, just think of all the fun the other airlines will have fighting for scraps… expanding into the routes abandoned by Aer Lingus… after all, if Aer Lingus is selling the planes, someone is buying (and it’s a little known fact that there’s a shortage of commercial jet aircraft in the market at the moment… airlines are placing big orders and having to wait years for delivery… right now, it’s a sellers market).

Many on my side of the barbed wire may be looking at me a little askew also. Am I trying to put forward some kind of sustainable jet airline industry idea here? Preaching business as usual? Isn’t that precisely what I criticise the mainstream environmental movement for doing? Well yes, that is what I criticise the Greens for, but no that’s not what I’m doing.

If tomorrow I were ordained God Emperor, then it’d be solar-powered dirigibles or nothing. So get those thinking caps on over at JPL, you folks are very very smart, I’ve no doubt you can adapt to a new specification and come up with some wild new ideas. The reality is, whatever way you cut it, the airline industry – in its current form – will not survive.

However, what would I do in the unlikely event that I’m not made God Emperor, but instead merely put in charge of Aer Lingus and given a specific brief… “Turn this profitable company into a public service and ensure that Ireland is connected to the international transport network so long as that network exists”.

And well, that’s what I’d do.

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29
Mar 2006

The madness of anti-Americanism

Tony Blair has just called me “mad”. What a bastid. And talk about your pots and kettles!

Also, I notice he flew all the way to Australia to do it. Clearly decided to put some distance between us before unleashing the insults. Probably afraid I’d lamp him. And lamp him I would if I were ever within arms-length of the freakin’ psycho.

Y’know, when Orwell was asked – soon after the publication of Animal Farm, and his subsequent leap in fame – why he’d changed his name from Eric Blair, he is quoted as replying that he had “a premonition” that “one day the name Blair will be associated with infamy”, likening it to “… Hitler or Stalin. And what writer would like to see his work beneath the name Eric Hitler?”*

Many moons ago, on a blog not unlike this one, I wrote a piece entitled “Why I’m anti-American”. I shall reiterate the main points of that, as I feel they bear repeating on a day Tony Blair dismisses those who disagree with him as clinically insane (and presumably in need of sedation) rather than worthy of engaging in debate.

Firstly, let’s make it clear what being anti-American is not about. It isn’t about disliking Americans. There’s already a word for that… “bigotry”. Disliking or discriminating against someone because of their nationality or skin colour just means you’re an obnoxious tosser. It doesn’t make you “anti-American” in the sense I’m using the phrase.

And because anti-Americanism isn’t about disliking people, there’s thankfully no danger of it ever manifesting as a desire to murder a whole bunch of Americans indiscriminately. So I utterly reject the idea that anti-Americanism of itself has a logical extension in what happened on September 11th 2001. What you had there was anti-Americanism mixed up with a whole bunch of other stuff. The anti-Americanism chose the target, but it was the other stuff that chose the tactics.

Needless to say, I favour different tactics, and I’m just as opposed to the other stuff; the stuff that justified thousands of murders in the eyes of extremists; as Dubya Bush and Tony Blair are. But that “with us or agin us” crap? It doesn’t wash with me. My enemy’s enemy is not always my friend.

“Anti-American”ism / Anti-“Americanism”

Most people would agree that there is a genuine difference between being anti-Islam and being anti-Islamist. No such distinction currently exists in our language between anti-American and anti-Americanism. Though perhaps one should.

Whatever the intentions of the Founding Fathers and a succession of constitutional scholars may have been; in the eyes of much of the world the United States no longer stands for what most Americans are taught it stands for in school. Schoolchildren throughout the days of Empire in Britain were taught that colonialism was all about bringing “civilisation” to the savages. The savages saw it as rape, murder and the theft of their land and resources. These days it’s America and not Britain, and it’s “democracy” and not civilisation. The savages still use the same words though.

And that’s very much part of the problem. The whole “we confer upon you lesser people the right to rule yourselves” thing. It’s so much bullshit. And it’s transparently bullshit. There’s no moral high ground here.

The Iraqi people know that for half of Saddam Hussein’s rule he was supported by exactly the people who ousted him. And the Iraqi people, more than anyone, know just how brutal he was during that time. The Iraqi people also know that when – after the first Gulf War – they were urged to rise up against the regime, those who did were left dangling by US forces ordered not to help. And finally, after more than a decade of crippling economic sanctions causing poverty, misery and death; reducing a once-functioning nation to a “failed state”; these same erstwhile friends of Hussein decided that Shock And Awe, followed by a three year occupation – launched from corrupt and compliant dictatorships next door – was the best way to help the poor Iraqi people who can’t run their own affairs… and shepherd them towards democracy.

If I were Iraqi, I’d probably mutter something about how if you’d only left us alone 100 years ago, then maybe we wouldn’t be in this mess. And how being carpet bombed and subjected to a further period of occupation is probably NOT WHAT WE NEED RIGHT NOW! Although that said, the average Iraqi is probably too busy trying to track down enough fresh drinking water without being blown up or having his head chopped off to be thinking very much about historical context. Life in Baghdad is probably focussed very much on the next few minutes, rather than the last hundred years.

What Tony Blair is unwilling to admit or too thick to understand is that the vast majority of people who he’d describe as anti-American are actually anti-Americanist. They may have American friends and love a lot about America but they are against what America has come to stand for. Not what it says it stands for; but what its actions demonstrate.

Americanism is a kind of rapacious, aggressive capitalism willing to ignore all ethical concerns in the desire for global dominance. Americanism is a willingness to unilaterally use a military machine unrivalled in all of human history to reduce entire nations to rubble which it designates, falsely, to be a threat. Americanism is the arrogance of power… “freedom is occupation”… “democracy is compliance”. It’s all a bit You Know Who.

And speaking of Orwell, can I just cite a short passage from Politics and The English Language to better illustrate this point…

The words democracy, socialism, freedom, patriotic, realistic, justice, have each of them several different meanings which cannot be reconciled with one another. In the case of a word like democracy, not only is there no agreed definition, but the attempt to make one is resisted from all sides. It is almost universally felt that when we call a country democratic we are praising it: consequently the defenders of every kind of régime claim that it is a democracy, and fear that they might have to stop using the word if it were tied down to any one meaning. Words of this kind are often used in a consciously dishonest way. That is, the person who uses them has his own private definition, but allows his hearer to think he means something quite different.

I wonder has Tony Blair ever read that essay? I don’t imagine Dubya Bush has, but you’d think someone might have sent a copy to Blair by now. After all, it was written in 1946.

The point being that when Blair accuses anti-Americanism as being “mad”, he’s essentially saying that anti-Americanism translates as anti-freedom and anti-democracy. But the freedom being exported by America is the freedom to have US corporations make billions off the back of Iraqi misery. And the democracy is limited to electing those approved by America.

It’s Abu Ghraib and Guantanamo Bay for crying-out-loud. It’s secret “rendition flights” shipping suspects to central Asia for torture. And because these are not ‘blips on the radar’ or ‘a few bad apples’, but instead clearly represent the policies of modern America, then it is necessary for all those who believe in a world without state torture, secret police and “the military option” to label themselves anti-American.

In our time, political speech and writing are largely the defense of the indefensible. Things [… that] can indeed be defended, but only by arguments which are too brutal for most people to face, and which do not square with the professed aims of political parties. Thus political language has to consist largely of euphemism, question-begging and sheer cloudy vagueness. Defenseless villages are bombarded from the air, the inhabitants driven out into the countryside, the cattle machine-gunned, the huts set on fire with incendiary bullets: this is called pacification. Millions of peasants are robbed of their farms and sent trudging along the roads with no more than they can carry: this is called transfer of population or rectification of frontiers. People are imprisoned for years without trial, or shot in the back of the neck or sent to die of scurvy in Arctic lumber camps: this is called elimination of unreliable elements. Such phraseology is needed if one wants to name things without calling up mental pictures of them. Consider for instance some comfortable English professor defending Russian totalitarianism. He cannot say outright, “I believe in killing off your opponents when you can get good results by doing so.” Probably, therefore, he will say something like this:

While freely conceding that the Soviet regime exhibits certain features which the humanitarian may be inclined to deplore, we must, I think, agree that a certain curtailment of the right to political opposition is an unavoidable concomitant of transitional periods, and that the rigors which the Russian people have been called upon to undergo have been amply justified in the sphere of concrete achievement.

The inflated style is itself a kind of euphemism. A mass of Latin words falls upon the facts like soft snow, blurring the outlines and covering up all the details. The great enemy of clear language is insincerity. When there is a gap between one’s real and one’s declared aims, one turns, as it were instinctively, to long words and exhausted idioms, like a cuttlefish squirting out ink. In our age there is no such thing as “keeping out of politics.” All issues are political issues, and politics itself is a mass of lies, evasions, folly, hatred and schizophrenia.

* That paragraph is a lie.

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