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Two arguments

I liked this quote:

One arguments holds that the market is essential to individual freedom or to respecting people’s self-ownership. Forced redistribution of resources away from the outcome resulting from individual exchange violates people’s freedom to do what they like with what is theirs. Another, quite distinct, argument claims that the market gives people what they deserve. Talented, hardworking people deserve more than untalented feckless ones, and the market makes sure they get it. These justifications may coincide, in particular cases, but defenders of the market shouldn’t slide from one to the other without being aware that they may not.

Political Philosophy, Adam Swift, page 39.

I tend to agree.

Caribbean phone wars hit Trinidad

If you have been following the travels of former Esat BT/Esat Digifone owner Denis O’Brien you will be aware that he has been investing heavily in the Caribbean. It seems that Digicel is causing something of a problem on some of the islands:

Historically, C&W has had a virtual monopoly in Britain’s former Caribbean colonies – a monopoly that has been suffering erosion since 2001, when Irish businessman Denis O’Brien, the man behind Digicel, entered the Jamaican market with the country’s first GSM mobile phone service.

Digicel quickly became the market leader in Jamaica and now has operations in 15 countries in the region, including Barbados, Grenada, Antigua and Barbuda, St Vincent and the Grenadines, Haiti and St Lucia.

“We generally overtake the incumbents within the first 12 months or quicker,” Mr O’Brien says.

But C&W has been prepared to fight Digicel every step of the way, as the West Indies Cricket Board discovered to their cost last year.

C&W had sponsored the West Indies team until 2004, when the board signed a five-year deal worth $20m (£11.4m) with Digicel instead – a move described in some quarters as being tantamount to replacing Coke with Pepsi.

In the meantime, C&W had signed individual sponsorship deals with seven West Indies players, including Trinidad-born captain Brian Lara and big-hitting Jamaican batsman Chris Gayle.

The resulting conflict led to the seven being dropped from last year’s opening West Indies Test match against South Africa in Guyana, although the weakened home team still held the visitors to a draw.

And so desperate was the incumbent to hold on to customers that they offered a buy-one-get-one-free phone deal to customers, causing riots.

McCreevy to save Europe?

The Economist outlines Charlie ‘bundled to Brussels’ McCreevy’s plan for simplifying financial services in the EU.

The former Irish finance minister, now the EU’s internal-market commissioner, is regarded as both a sensible champion of capitalism and a bureaucrat who has slowed the march towards a single market. But he is also seen as an enforcer who roughs up member states that don’t toe his line—pity his spokesman, who says, only half in jest, that Mr McCreevy wants to make him the least popular man in Brussels.

The sensible McCreevy is likely to be on display in a new financial-services plan for the next five years, due to be laid out by the European Commission on December 5th. The “White Paper” is sparing in its new proposals—a relief to financial firms groaning under a glut of past initiatives from the Brussels rule factory. In return, McCreevy the enforcer has undertaken to see through the huge volume of reforms already on the books. Being frugal with the new rules helps him to be adamant about the old.

Simplifying things can only be a good thing, can’t it?

On Brian Crowley

After chatting with Brian Crowley briefly last week I am still puzzled and perplexed by some of the arguments in favour of the Common Agricultural Policy. This is mainly because he argued about it in a way I had not read or heard before. He mentioned the three current pillars of CAP, and I can only remember two that he mentioned, but he was emphatic about saying that CAP was not about subsidies.

Rather, CAP is about paying farmers to maintain the land as it currently is, and farmers being paid to look after their animals. It was also about food security, food standards and guaranteed supply to markets.

Yea, I was just as puzzled.

Of course I argued that subsidies, sorry payments, distort the market. That if Irish farmers produce say, sugar, and that same product can be produced cheaper by another country and exported to Ireland and sold to consumers at a cheaper price, then so be it. That is the market in action surely. And Irish sugar farmers go out of business, and start growing something else, or farming differently, growing say, rape seed oil. And it is natural that farmers adapt to market demands. And if the land goes into disuse – then let someone else buy it.

But in Crowley’s view, we should pay farmers to keep doing what their doing, regardless of whether it makes economic sense, because afterall, they are keeping the land the way it is, and looking after animals (that are there by virtue of the nature of the industry anyway).

Another example arose surrounding beef. I noted that it could be argued that if beef can be imported cheaply from say Brazil, why should money be given to farmers in the from of payments that resulted in the production of beef? Surely this amounted to distorting – aha argued Crowley, what if Foot and Mouth hit Brazil in this scenario – what then?

Price of beef goes up due to shortage of supply, people stop buying so much beef.

“So the consumer is king?” Remarked Crowley.

“Yes” I replied.

On the subject of the Constitution I thought Crowley was losing the run of himself. He argued that it would be back, probably in its current form, before it dies in late 2007. I just can’t see it, at least not its current form. But I felt a certain amount of smugness from Crowley, who argued too that no Treaty should have to be put before the people of Ireland at all, but should be passed instead by the Dail. He also dismissed any idea that having two Nice Treaty referenda was anything undemocratic, and that the Seville Declaration made the second referendum an entirely different document. (probably referring to Article 29.4.9 of the Constitution, but still allows Irish participation in Common Security and Defence)

So too was a rather strange, and to me outlandish, view that Iceland and Norway would join the European Union. Was all his time spent in Strasbourg really going to his head? Was I living on some different planet – Norway joining the EU? Not in my lifetime, and I would bet, probably never.

And then there was the article Stephen Collins wrote in the Sunday Tribune on the 30th of October, something Crowley appeared to take great exception to. It all relates, I believe, to the passage into law of the Sea-Fisheries and Maritime Jurisdiction Bill 2005. It has been causing some consternation among Deputies, and long story short – the Department of the Marine screwed up in drafting the legislation. Just don’t tell Brian Crowley I told you that.

Globalization drives a wedge into EU

I like this quote from Ann Mettler of the Lisbon Council, concerning France’s economic policies:

“France has not internalized a very important transition that is happening in Europe right now, which is the shift from the industrial economy to the knowledge and services economy,” said Ann Mettler of the Lisbon Council, a market-oriented research group based in Brussels. “Its interest groups, which are very strong, are still trying to preserve the industrial age.”

Sums it up pretty nicely.

A tankful of sugar, Brazil's ethanol

I never knew that Brazil had previously gone down the road of ethanol based fuel for cars.

Prompted by the oil shocks of the 1970s, Brazilian governments used laws and subsidies to promote ethanol-only cars, which had 90% of the market by the late 1980s. But supplies of sugar-based fuel dried up suddenly when planters rushed to meet a surge in demand for sugar. Sales of ethanol-powered cars dropped to nearly zero by 1990—one taxi driver famously set his alight outside Congress.

Flex-fuel cars have persuaded Brazilians to give ethanol a second try. The initiative came from the Brazilian operations of parts suppliers such as Magneti Marelli, owned by Fiat of Italy, and Bosch, a German company. They persuaded the government to extend to flex-fuel cars the tax break previously applied to ethanol-only models. Volkswagen was first to the market, followed quickly by other big manufacturers.

Ford announced this week that flexi-fuel based cars will go on sale in Ireland in November. Ford are hoping that Brian Cowen will give tax breaks on bio-ethanol based cars. They have already proved very popular in Scandanavian countries. However flexi-fuel in Ireland will apparently be produced from the waste made during certain dairy processes, a product known as bio-ethanol. I am not sure if that produced from sugar is better or worse.

Is a Slimmer Sony Coming?

With the new guy in charge it looks like Sony are trying to get back on an even keel.

Few doubt that Sony, a much diminished force and brand, needs some shock therapy to revive itself. After all, its core electronics division, which accounts for 70% of sales, has lost money on an operating basis for the last two years.

Sony’s cost structure is bloated, and it has plenty of noncore businesses that could be sold off to raise cash for the main event at Sony: Turning out ultracool gadgets and must-have content that will wow global consumers once more.

Stringer is slated to roll out his restructuring plan on Sept. 22. In recent months, market chatter and the CEO’s comments have made pretty clear Sony has been looking into ways of streamlining its electronics product lineup, reorganizing its global plant network, and instituting some pretty painful layoffs.

Word has it that there will be huge lay-offs in the pipeline, perhaps as high as 15,000 people. And stock usually goes up after redundancy announcements, Sony currently trade at $36.55 a share.

The Future of Oil

Foreign Policy poses seven questions to Matthew Simmons, a chief proponent of the idea of peak oil. Some of the juicier ones:

FP: You’ve written that Saudi Arabia relies on old and overproduced oil fields that are likely to start declining in output. How has Riyadh responded to your analysis?

MS: They’ve said “trust me, we have no problems.â€? Petroleum Minister Ali Naimi said that they could pump up to 15 million barrels per day for as many as 100 more years. The likelihood of that is as remote as me being on the moon 10 years from now. They dismiss requests for any field-by-field data as preposterous, and simply say that they’ve been a reliable supplier of oil for 70 years. My view is that it’s just good supply chain management to ask a key vendor for details about their capacity. Plus, they are shopping the market so hard for drilling rigs right now. If they can produce 15 million barrels per day for another 50 to 100 years, why do they need new rigs?

FP: Which countries are best positioned to deal with a decline in oil production?

MS: Papua New Guinea. Unfortunately, that’s an honest answer. The countries that haven’t yet built a society that needs an exponential amount of oil are in the best shape. Around 30 years ago, around half the world didn’t really use oil. And now look, cities like Hanoi have millions of motorcycles they didn’t have five years ago. We’ve built the global economy based on the false assumptions that oil is just another commodity, that the Middle East has basically unlimited amounts of oil, technology will improve, and that the price of oil would get progressively cheaper.

The more I’ve gotten into this, the more similar it is to what we do in our own minds with ignoring people’s getting old. When do you take your parents’ car keys away? It’s so painful that you go into denial that they’re getting really old.

Asian squirrels

Interesting figures:

China has overtaken Japan: it now has the world’s largest foreign-exchange reserves. The combined reserves of the People’s Bank of China and the Hong Kong Monetary Authority stood at $833 billion at the end of June. By now, given their recent rate of growth, they could be nudging $870 billion-worth, most of this in dollars—well ahead of the $830 billion in Japan’s coffers at the end of last month. Asia as a whole now has a stash of more than $2.5 trillion, two-thirds of the world total, up from $1 trillion in 2000.

Ultimately the Economist blames Americans not saving for its current account deficit, not Asian governments.


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