A couple of stories over the weekend suggest that the Murdoch empire's efforts to get a stranglehold on the UK's mass media continue unabated. Sky and the newly-minted Virgin Media are having a very public falling-out, and a couple of BBC-bashing books have been sympathetically reviewed in the Times, owned by...well, you know who.
Let's start with Sky-Virgin. (In the interests of full disclosure, I am a Virgin Media subscriber, but also pay extra for the Sky Sports package). Virgin's contract to carry the basic Sky channels is expiring, and Sky is looking for a big fee increase, allegedly as much as 100%. Virgin says it won't pay, so the channels may go dark for Virgin subscribers later this week. Virgin has taken full-page ads in the press to put its side of the story, Sky has retaliated with TV spots reminding Virgin subscribers what they will be missing (mainly Lost, which wouldn't exactly leave a big hole in my life).
It's mighty convenient for Sky to be able to pick a fight with the cable company just as the dead hand of ntl is replaced by the more astute ownership of Richard Branson. And it's clumsy of Virgin to fall into the trap. Reportedly Virgin recently agreed to extend its deal to provide content to Sky at a lower cost. How smart is that? Anyway, if Sky pulls its channels from Virgin, the latter's basic TV package (known as "medium", in the same sense that the smallest coffee at Starbucks is "tall") will contain almost no content that you can't get with a Freeview box. (More disclosure: I've got one of those too!)
This might all just be an enjoyable corporate dingdong, but for the great importance of the media in today's economy. The UK seems more willing than any other developed country to allow control of the sector to fall into private, quasi-monopoly hands. It's dangerous in the extreme to allow one company not only to control a significant and growing segment of the broadcasting system (the satellites) but also to be a major content provider. Sky isn't even a UK company -- Murdoch may have taken on US citizenship, but he certainly wouldn't be able to pull off anything like this in the States, or in Australia, his original homeland.
Sky has repeatedly demonstrated its willingness to use its corporate clout to get what it wants, and now it apparently wants to give Branson a bloody nose. If it gets away with it, what's next? Sky has already defied public opinion and feeble attempts at regulation from Brussels to get effective control of live football broadcasting in the UK, arguably ruining the game in the process. More recently it's done the same with cricket. How long before it decides to turn up the heat further on its competitors by making its sports channels available only to its satellite subscribers?
As for the BBC books, I wouldn't suggest that Murdoch has anything to do with them, but he certainly wouldn't find much in them to quibble with. The basic thesis is that the BBC is misuing public funds and the public trust by pursuing a politically-correct, left-leaning agenda. There's no doubt that the BBC "feels" different from its competitors, but I don't know if this is leftism in any ideological sense. The BBC still seems to take its commitment to quality seriously (obviously I am ignoring Tittybangbang here) and still seems unwilling to accept Margaret Thatcher's appalling view that "there is no such thing as society". To me this makes it the heir to Reith's legacy, rather than Stalin's. In any case, with ITV in disarray, Sky pursuing its own agenda and the daily papers firmly biased to the right, it hardly seems likely that the BBC can be accused of unbalancing the public debate. Someone else has already taken care of that.
Monday, 26 February 2007
Wednesday, 21 February 2007
In defence of the banks (sort of)
It's difficult to find any sympathy for the UK's High Street banks as they come under attack from the media again. Still, it's the first day of Lent, so let's give it a try.
The press (led this time by the Independent) seems to find all of the ways that banks make money distasteful at best, larcenous at worst. In no particular order:
* it's wrong for banks to maximise the spread between borrowing and deposit rates;
* it's wrong for them to charge for the operation of current accounts;
* it's especially wrong for them to charge personal customers who exceed agreed overdraft limits;
* it's wrong for them to charge people for the use of cash machines, or to sell off their unprofitable cash machines to companies that will levy charges for their use.
And so on. I'm not defending any of these particular charges (though most of them seem quite easy for consumers to avoid, with no more than a minimal effort). However, it seems that the current media frenzy reflects nothing more than distaste for the fact that the big banks are posting large profit numbers. I remember a similar bout of bank bashing in Canada, which the then-President of my own bank attempted to defuse by suggesting that bank profits were "large but not high". You can see what he meant: banks are among the biggest institutions in the economy, so if the economy has been growing steadily for many years, it only makes sense that their profits get bigger. That doesn't make them excessive.
The media almost seem to imagine that the UK would be better off with a loss-making or at least a less successful banking system. Experience with financial crises caused by undercapitalised financial institutions around the world strongly suggests that this is not the case. (The banking system in China remains an accident waiting to happen; when it all goes off there, watch out). The current campaign of vilification also seems to ignore the fact that the banks' shares are a major component of most UK mutual and pension funds, so their profits are helping in some way to pay for people's retirement. (We had a term for this in Canada: pension fund socialism).
During the Canadian bank-bashing blitz that I mentioned just now, the heads of the major banks were summoned to a meeting by the publisher of the Toronto Star, the most left-wing but also the most profitable of the city's papers. He issued a demand that they offer free bank accounts to the poor. The banks refused, but I always wondered if any of the CEOs had thought to suggest that he'd go along with the request as soon as the Star started giving away the paper for nothing. I wouldn't suggest that here, though. I think the poor have quite enough problems without being saddled with a free copy of the Daily Mail each day.
The press (led this time by the Independent) seems to find all of the ways that banks make money distasteful at best, larcenous at worst. In no particular order:
* it's wrong for banks to maximise the spread between borrowing and deposit rates;
* it's wrong for them to charge for the operation of current accounts;
* it's especially wrong for them to charge personal customers who exceed agreed overdraft limits;
* it's wrong for them to charge people for the use of cash machines, or to sell off their unprofitable cash machines to companies that will levy charges for their use.
And so on. I'm not defending any of these particular charges (though most of them seem quite easy for consumers to avoid, with no more than a minimal effort). However, it seems that the current media frenzy reflects nothing more than distaste for the fact that the big banks are posting large profit numbers. I remember a similar bout of bank bashing in Canada, which the then-President of my own bank attempted to defuse by suggesting that bank profits were "large but not high". You can see what he meant: banks are among the biggest institutions in the economy, so if the economy has been growing steadily for many years, it only makes sense that their profits get bigger. That doesn't make them excessive.
The media almost seem to imagine that the UK would be better off with a loss-making or at least a less successful banking system. Experience with financial crises caused by undercapitalised financial institutions around the world strongly suggests that this is not the case. (The banking system in China remains an accident waiting to happen; when it all goes off there, watch out). The current campaign of vilification also seems to ignore the fact that the banks' shares are a major component of most UK mutual and pension funds, so their profits are helping in some way to pay for people's retirement. (We had a term for this in Canada: pension fund socialism).
During the Canadian bank-bashing blitz that I mentioned just now, the heads of the major banks were summoned to a meeting by the publisher of the Toronto Star, the most left-wing but also the most profitable of the city's papers. He issued a demand that they offer free bank accounts to the poor. The banks refused, but I always wondered if any of the CEOs had thought to suggest that he'd go along with the request as soon as the Star started giving away the paper for nothing. I wouldn't suggest that here, though. I think the poor have quite enough problems without being saddled with a free copy of the Daily Mail each day.
Sunday, 18 February 2007
Two turkeys can't make an eagle
I'm not a car guy, but I can't resist commenting on the reports that General Motors might be about to take over Chrysler. The so-called Big Three US auto makers (these two plus Ford) have been taking it in turns to flirt with oblivion for the last three decades. Until now, they have managed to survive and struggle on, one way or another. Both GM and Ford have been supported by their profitable finance arms and their non-US operations. Chrysler, which was never so big outside its home territory, went the opposite route, getting bought out by Daimler in the late 1990s in what now looks like one of the worst deals of all time, at least from the German perspective.
Nothing that has happened in the past thirty years has come close to solving the basic problems that the Big Three face. They are all saddled with a high cost structure and ruinous union contracts that make it impossible to compete with the Asian manufacturers, who have been opening plants all across the US, mainly in "right to work" (i.e. non-union) states, ever since the 1970s. These plants have achieved much higher productivity and lower costs than the Big Three's geriatric facilities could ever hope for.
A key element of the Big Three's higher costs has been the pensions burden. For many years, the main auto unions have concentrated on achieving gains in benefits, including pension rights, rather than higher wages. When each of the companies has engaged in one of its periodic bouts of labour-shedding, it has offered early retirement to large groups of workers. As a result the number of pensioners has swollen dramatically in relation to the number of people actually making cars. And the pensioners are getting younger and younger -- not long ago I recall reading in the Wall Street Journal about a former GM worker retired on a full, lifetime pension at the age of 40! No business can possibly support this kind of overhead.
But the real problem with the Big Three is more basic than any of this. As anyone who has driven one can tell you, American cars are crap. Last time I was in those parts I was unlucky enough to rent a Buick something-or-other. It was a nightmare to drive -- huge and unresponsive, with a scary habit of changing lanes on the freeway whenever it hit a bump. It was striking to note how few other people on the roads were driving these monsters, which used to be the bread and butter for the domestic industry. Most of the cars on the roads were small sedans (almost all Japanese) or SUVs, on which the Big Three had bet their future. With the rise in fuel prices over the past year, that bet is set to bring the industry to its knees.
So why is troubled GM even thinking of buying more-troubled Chrysler? Supposedly, the Jeep and Dodge brandnames have some cachet (though I've always thought that Dodge is one of the most incongruous car names ever devised). However, there is no sign of a queue of Asian carmakers lining up to take a crack at Chrysler, which would be the only thing that would make me think there is something there worth saving. I've seen many takeovers of troubled companies, in many industries, that have left the "winning" company in bad shape. Sometimes it's better just to let a failing company die, so as to remove overcapacity from the industry. This looks very much like one of those occasions. Don't do it, General!
Nothing that has happened in the past thirty years has come close to solving the basic problems that the Big Three face. They are all saddled with a high cost structure and ruinous union contracts that make it impossible to compete with the Asian manufacturers, who have been opening plants all across the US, mainly in "right to work" (i.e. non-union) states, ever since the 1970s. These plants have achieved much higher productivity and lower costs than the Big Three's geriatric facilities could ever hope for.
A key element of the Big Three's higher costs has been the pensions burden. For many years, the main auto unions have concentrated on achieving gains in benefits, including pension rights, rather than higher wages. When each of the companies has engaged in one of its periodic bouts of labour-shedding, it has offered early retirement to large groups of workers. As a result the number of pensioners has swollen dramatically in relation to the number of people actually making cars. And the pensioners are getting younger and younger -- not long ago I recall reading in the Wall Street Journal about a former GM worker retired on a full, lifetime pension at the age of 40! No business can possibly support this kind of overhead.
But the real problem with the Big Three is more basic than any of this. As anyone who has driven one can tell you, American cars are crap. Last time I was in those parts I was unlucky enough to rent a Buick something-or-other. It was a nightmare to drive -- huge and unresponsive, with a scary habit of changing lanes on the freeway whenever it hit a bump. It was striking to note how few other people on the roads were driving these monsters, which used to be the bread and butter for the domestic industry. Most of the cars on the roads were small sedans (almost all Japanese) or SUVs, on which the Big Three had bet their future. With the rise in fuel prices over the past year, that bet is set to bring the industry to its knees.
So why is troubled GM even thinking of buying more-troubled Chrysler? Supposedly, the Jeep and Dodge brandnames have some cachet (though I've always thought that Dodge is one of the most incongruous car names ever devised). However, there is no sign of a queue of Asian carmakers lining up to take a crack at Chrysler, which would be the only thing that would make me think there is something there worth saving. I've seen many takeovers of troubled companies, in many industries, that have left the "winning" company in bad shape. Sometimes it's better just to let a failing company die, so as to remove overcapacity from the industry. This looks very much like one of those occasions. Don't do it, General!
Monday, 12 February 2007
"Jab a kid, save a granny"
Up until the last few days, I had believed (or at least hoped) that bird flu might be the biological equivalent of the millenium bug: a lot of expensive fuss and elaborate preparation that ultimately turns out to be a damp squib. We had better hope and pray that I am right about this, because the performance of all the key players in this month's UK outbreak of the H5N1 virus has been pretty disheartening. Consider:
* the Bernard Matthews company has made every effort to avoid any responsibility for the outbreak. At the outset it asserted that it had been caused by wild birds, even though there had been no signs of any infection in the UK before it was discovered at the processing plant. It imported poultry meat from Hungary, a known area of bird flu infection, after the outbreak was discovered -- and, we learn today, has exported some from the UK infected area back to Hungary, exploiting a loophole in the regulations. Media reports suggest that it only agreed to desist from this when it was threatened with the withdrawal of all of its products from UK stores. The UN apparently believes that the main mechanism for transmission of the H5N1 virus is the transportation of live birds, rather than the migration of wild ones. Having seen Bernard Matthews' performance in the past two weeks, I'm not surprised. Still, I imagine that market forces will ensure that the company pays the price. Bernard Matthews (the man) must be wishing that he had not decided to blazon his own name on all his company's products.
* the Government has in effect colluded with the company by sanctioning its trade with Hungary even after this was identified as the most probable source of the outbreak. Apparently it feared that halting the imports could invite retaliation against UK poultry exports -- oh yeah, like allowing bird flu to take hold here won't do that. The Government has also said that it is "seriously considering" ordering masks to protect the populace in the event of a human outbreak of the disease. Take your time guys: no hurry.
* the medical profession has been relatively quiet for the moment, but one expert chose the past weekend to deliver a speech warning that the NHS would be overwhelmed if there was an epidemic. He went so far as to suggest that what doctors would need most in that event was a gun, to fend off all of the people demanding treatment. There's a useful role for the medical profession in preparing the country for a possible outbreak, and this isn't it. I think some advance education would be more helpful. For example, turning up looking for Tamiflu at a doctors' waiting room full of flu sufferers might not be the best way of avoiding getting infected. Even more important, it would be good to get people used to the idea that the best use of anti-flu injections would almost certainly be to give them to kids -- who have lower natural immunity and spend their days in each other's company at school, and hence are potential spreaders of the disease -- rather than to seniors who are less likely to come in contact with others. With this in mind I offer the NHS at no charge my bird flu slogan, "Jab a kid, save a granny".
* the media have done their usual job of stoking the flames. The broadcasters have been relatively restrained, but the papers have alternated between slagging off Bernard Matthews and proclaiming the onset of doom. My favourite: the dear old Daily Mail, with "Bird flu may be in our stores". I suppose it may, and with that in mind, I urge any of our feathered friends who may be reading this not to venture into their local Asda for a while.
*Last but not least, the public has shown some signs of reacting to all this hype. Sainsbury's reports a fall in poultry sales, which seems completely unwarranted (I will not be buying any of Mr Matthews products in future, but only because I don't like the way the firm has behaved, not because I think I am going to contract the dreaded lurgi). One couple told the TV news that they had bought a turkey joint the week before the outbreak was confirmed, but just to be safe, they had decided to bin it. Look, there is an infinitesimal chance that the joint had H5N1, but if it did, leaving it uncooked where Fido and the neighbourhood rats can get at it would be an excellent way of propagating the virus.
* the Bernard Matthews company has made every effort to avoid any responsibility for the outbreak. At the outset it asserted that it had been caused by wild birds, even though there had been no signs of any infection in the UK before it was discovered at the processing plant. It imported poultry meat from Hungary, a known area of bird flu infection, after the outbreak was discovered -- and, we learn today, has exported some from the UK infected area back to Hungary, exploiting a loophole in the regulations. Media reports suggest that it only agreed to desist from this when it was threatened with the withdrawal of all of its products from UK stores. The UN apparently believes that the main mechanism for transmission of the H5N1 virus is the transportation of live birds, rather than the migration of wild ones. Having seen Bernard Matthews' performance in the past two weeks, I'm not surprised. Still, I imagine that market forces will ensure that the company pays the price. Bernard Matthews (the man) must be wishing that he had not decided to blazon his own name on all his company's products.
* the Government has in effect colluded with the company by sanctioning its trade with Hungary even after this was identified as the most probable source of the outbreak. Apparently it feared that halting the imports could invite retaliation against UK poultry exports -- oh yeah, like allowing bird flu to take hold here won't do that. The Government has also said that it is "seriously considering" ordering masks to protect the populace in the event of a human outbreak of the disease. Take your time guys: no hurry.
* the medical profession has been relatively quiet for the moment, but one expert chose the past weekend to deliver a speech warning that the NHS would be overwhelmed if there was an epidemic. He went so far as to suggest that what doctors would need most in that event was a gun, to fend off all of the people demanding treatment. There's a useful role for the medical profession in preparing the country for a possible outbreak, and this isn't it. I think some advance education would be more helpful. For example, turning up looking for Tamiflu at a doctors' waiting room full of flu sufferers might not be the best way of avoiding getting infected. Even more important, it would be good to get people used to the idea that the best use of anti-flu injections would almost certainly be to give them to kids -- who have lower natural immunity and spend their days in each other's company at school, and hence are potential spreaders of the disease -- rather than to seniors who are less likely to come in contact with others. With this in mind I offer the NHS at no charge my bird flu slogan, "Jab a kid, save a granny".
* the media have done their usual job of stoking the flames. The broadcasters have been relatively restrained, but the papers have alternated between slagging off Bernard Matthews and proclaiming the onset of doom. My favourite: the dear old Daily Mail, with "Bird flu may be in our stores". I suppose it may, and with that in mind, I urge any of our feathered friends who may be reading this not to venture into their local Asda for a while.
*Last but not least, the public has shown some signs of reacting to all this hype. Sainsbury's reports a fall in poultry sales, which seems completely unwarranted (I will not be buying any of Mr Matthews products in future, but only because I don't like the way the firm has behaved, not because I think I am going to contract the dreaded lurgi). One couple told the TV news that they had bought a turkey joint the week before the outbreak was confirmed, but just to be safe, they had decided to bin it. Look, there is an infinitesimal chance that the joint had H5N1, but if it did, leaving it uncooked where Fido and the neighbourhood rats can get at it would be an excellent way of propagating the virus.
Thursday, 8 February 2007
Snow job
A spokesperson from the British Chamber of Commerce (BCC) was on the BBC lunchtime news just now, complaining that the overnight snowfall had cost the economy "£100 million" because so many London workers had not been able to make it into work. Needless to say, it's all the fault of the transport system.
It's good to know that the trained monkeys the BCC employs to come up with this kind of entirely spurious statistic were dedicated enough to get in to the office today. These estimates of "losses" always appear when there's bad weather, a strike, a big sporting event etc. They should always be ignored (unless you have a blog to write). As the BCC knows perfectly well, the work that today's absentees would have done today was either done by their colleagues, or left for the absentees to catch up when they finally struggle back to the workplace. Even much more serious events such as hurricanes (or terrorist attacks) rarely cause even a blip in overall output statistics.
The BCC's real aim, of course, is to plead for more investment and better planning for public transport, so that disruption can be lessened the next time it snows. The interviewer helped out by asking the spokesperson what message business would like to convey to "the transport bosses". But hang on a second here. This used to be a useful stick for beating faceless public sector bureaucrats. But most of London's transport is now provided by private companies -- many of whom are presumably members of the BCC. So if the Chamber wants to call for better planning, it can just send an e-mail out to its own membership, rather than pitching up on the lunchtime news. Everybody wins: the BCC spokesperson and "statisticians" don't have to brave the storm in order to bring us their words of wisdom; members of the Metronet consortium don't get embarrassed in public by their own trade body; and the BBC News can devote more of its broadcast to viewers' pictures of their kids making snow angels.
It's good to know that the trained monkeys the BCC employs to come up with this kind of entirely spurious statistic were dedicated enough to get in to the office today. These estimates of "losses" always appear when there's bad weather, a strike, a big sporting event etc. They should always be ignored (unless you have a blog to write). As the BCC knows perfectly well, the work that today's absentees would have done today was either done by their colleagues, or left for the absentees to catch up when they finally struggle back to the workplace. Even much more serious events such as hurricanes (or terrorist attacks) rarely cause even a blip in overall output statistics.
The BCC's real aim, of course, is to plead for more investment and better planning for public transport, so that disruption can be lessened the next time it snows. The interviewer helped out by asking the spokesperson what message business would like to convey to "the transport bosses". But hang on a second here. This used to be a useful stick for beating faceless public sector bureaucrats. But most of London's transport is now provided by private companies -- many of whom are presumably members of the BCC. So if the Chamber wants to call for better planning, it can just send an e-mail out to its own membership, rather than pitching up on the lunchtime news. Everybody wins: the BCC spokesperson and "statisticians" don't have to brave the storm in order to bring us their words of wisdom; members of the Metronet consortium don't get embarrassed in public by their own trade body; and the BBC News can devote more of its broadcast to viewers' pictures of their kids making snow angels.
Tuesday, 6 February 2007
English, muh fuh, do you speak it?
Interviewing people for jobs over the past few years, I never actually had to use Samuel L. Jackson's memorable question, but there were times when it seemed appropriate. Not with the foreign candidates -- with the British ones. So it's mildly encouraging to learn that the Government's planned changes to the curriculum will involve teaching people better grammar and the use of a spell checker (or "dictionary", as we used to call it). They will also be taught that in formal settings, they should use standard English (or "English", as we used to call it).
I view with greater trepidation the plan to encourage the teaching of more languages in schools -- Mandarin, Urdu and Arabic have been mentioned. Back in my Diplomatic Service days these were among the "difficult" languages that got you extra pay if you could speak them. The idea that a country that has not been able to impart basic levels of competence in easy languages like French and Spanish would even think of introducing these much harder tongues is risible, at least until we get the teaching of English right. People who have a sound grasp of English grammar and syntax inevitably find it easier to get to grips with foreign languages, once they make the effort.
When I started going to Germany on business, I asked a German client whether it would help if I learned to speak German. His response was "no, you will never speak German as well as we speak English". Arrogant? Yes, but given our appalling track-record with languages, not unjustified. In the near term, I think the priority should not be on trying to make the British speak German as well as the Germans, or Mandarin as well as the Chinese, but on ensuring that at least we speak and write English as well as they do.
I view with greater trepidation the plan to encourage the teaching of more languages in schools -- Mandarin, Urdu and Arabic have been mentioned. Back in my Diplomatic Service days these were among the "difficult" languages that got you extra pay if you could speak them. The idea that a country that has not been able to impart basic levels of competence in easy languages like French and Spanish would even think of introducing these much harder tongues is risible, at least until we get the teaching of English right. People who have a sound grasp of English grammar and syntax inevitably find it easier to get to grips with foreign languages, once they make the effort.
When I started going to Germany on business, I asked a German client whether it would help if I learned to speak German. His response was "no, you will never speak German as well as we speak English". Arrogant? Yes, but given our appalling track-record with languages, not unjustified. In the near term, I think the priority should not be on trying to make the British speak German as well as the Germans, or Mandarin as well as the Chinese, but on ensuring that at least we speak and write English as well as they do.
....what's that all about?
Just a couple of random rants.
Rugby....what's that all about? If it's such a good game, why do they keep changing the rules? (And they're about to do it again). I am proud of my record as one of the only two people in England who have never seen Jonny Wilkinson's winning kick at the World Cup, whenever that was. The other person who's never seen it: Jonny Wilkinson himself.
Mika....what's that all about? Everybody in the know in the music biz has decided he's the breakthrough act of 2007. The guy makes Leo Sayer sound like Barry White. You want to hear the anti-Mika, try Seasick Steve on for size. There's a great video on youTube, if you're a member. (Advance warning: you have to put up with 10 seconds of Jools Holland before the music starts).
Rugby....what's that all about? If it's such a good game, why do they keep changing the rules? (And they're about to do it again). I am proud of my record as one of the only two people in England who have never seen Jonny Wilkinson's winning kick at the World Cup, whenever that was. The other person who's never seen it: Jonny Wilkinson himself.
Mika....what's that all about? Everybody in the know in the music biz has decided he's the breakthrough act of 2007. The guy makes Leo Sayer sound like Barry White. You want to hear the anti-Mika, try Seasick Steve on for size. There's a great video on youTube, if you're a member. (Advance warning: you have to put up with 10 seconds of Jools Holland before the music starts).
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