Thursday, August 31, 2006
Mobile phones on Ryanair flights
"If you want a quiet flight, use another airline," said Michael O'Leary. "Ryanair is noisy, full and we are always trying to sell you something."
The airline announced a deal with OnAir to equip its fleet of Boeing 737-800s over the next two years, with the first calls being made in July next year, subject to regulatory approval.
Research has revealed that loud one-way conversations e.g on a mobile phone, are more disruptive to others than having to listen to say the hollering of the stereotypical American tourist in a two-way conversation.
Mobile phone operators will charge Ryanair passengers rates in line with those for international roaming and customers will receive the charges on their monthly bills. The rates start at £1.20 (€1.78) a minute to make a call and £1 to receive a call.
"Our research tells us that people are most likely to make voice calls on short-haul single aisle aeroplanes than on larger planes on long routes," George Cooper, chief executive of Ryanair partner OnAir said. "Many business people now fly Ryanair and a journey on a short-haul flight tends to be part of a business day. Plus the people they want to talk to are in their time zone."
It's surely going to be a right pain in the aorta having to put up with ignorant people on phones at such close proximity.
I recall last year being on Dublin DART train and a guy of about 60 got on at Connolly Station. The train was running 10 minutes late and he began shouting to someone on his mobile:
"I'm on the train...if I don't catch the flight...blah-blah-blah
He was heading to Howth Junction and was hoping to catch a bus to Dublin Airport as he apparently had a business meeting in Galway. The racket continued non-stop.
I was reminded of Queen Victoria's comment about Prime Minister Gladstone: He speaks to me as if I'm a public meeting!
I was about to tell the loud businessman to pipe down as the DART train stopped at Killester Station. He got out and I thought to myself: "Serves you right, you skinflint!"
Back to Ryanair...
Aviation journalist Gerry Byrne is reported to have said today that research in the US found many passengers use their mobiles on flights even though they are not supposed to be doing so.
Technology exists that makes it safe to use mobiles above 10,000 feet, but experts say allowing such use could lead to instances where some passengers switch on their phones before this height is reached.
Wednesday, August 30, 2006
Joseph Stiglitz - A prize for self-righteousness
In his lecture, Professor Stiglitz addressed some of the critical problems facing our rapidly integrating world. He put forward new ways of dealing with the crippling indebtedness of developing countries, a new system of global reserves to overcome international financial instability, and an economically incentivised framework for dealing with the energy pollutions which create global warming and which threaten us on a planetary scale. He argued for the reform of global institutions such as the UN, the IMF and the World Bank to make them truly capable of responding to the problems of our age and shows why treating developing countries more fairly is not only morally right, but, because it increases global public goods, is ultimately also to the advantage of the developed world.
The Geary lecture is held each year by the ESRI and honours Dr R. C. Geary (1896 –1983), the first Director of the Institute, the most eminent Irish statistician and economist of the twentieth century.
Stiglitz drew a big crowd to the Burlington Hotel and as would be expected of an American academic, he didn't miss the marketing angle. The lecture was well peppered with references to his book, which was for sale in the hotel.
Stiglitz is good at analysing issues and his longtime criticism of the structure of the IMF (International Monetary Fund) is getting attention this week with a proposal supported by the US, that China and India be given a stronger role. However, it did strike me that the likes of Taoiseach Bertie Ahern is typical of many political leaders, in that he is both for globalisation and against it.
We are good at bragging about our flexible industrial model of low taxes and low wages in one economy we operate, while in the other, the old world of farm subsidies, public service salaries rising by 38% since 2001 compared with the industrial wage by 19%; most private sector workers without occupational pensions compared with excellent ones for public servants and vested interests in the private services sector, holding sway.
EU for and against Globalisation
There was another pertinent example today in Europe of being for and against globalisation when it suits.
European Union Trade Commissioner Peter Mandelson today proposed duties on leather shoes from China and Vietnam, to be approved by the EU's 25 countries that are divided into protectionist and pro-consumer camps.
Mandelson has proposed five-year duties to replace temporary ones imposed in March, seeking to stem Chinese and Vietnamese exports at what it is claimed to be at below cost levels and accordingly damaging to European shoemakers.
The EU's trade deficit with China hit a record €100 billion in 2005 and China's exports of €72 billion in the first five months of 2006 made it the second biggest exporter to Europe, just under the US's €74 billion.
China supplied about half of the 2.5 billion pairs of shoes sold in Europe last year, which resulted in calls for protection by the Europe's 8,000 shoe manufacturers, mainly small manufacturers in southern Europe. An estimated four-fifths of the EU's leather shoes are made in Italy, Portugal and Spain. Imports of leather shoes from China jumped four-fold in the 2001-2005 period while imports from Vietnam doubled.
The five-year duties proposed by Mandelson, of 16.5 percent on Chinese and 10 percent on Vietnamese leather shoes, require approval in the next month by a majority of the EU's 25 countries. In a non-binding vote last month, the majority of countries rejected new duties.
It's Not all the Fault of Politicians
Electorates don't vote for pain as Germany's Chancellor Angela Merkel discovered last September. Politicians will continue to try and ride two horses simultaneously to save their hides.
Globalisation like much else in the world, could work better.
The Doha Trade Round should be saved but the self-interest of protected farmers in rich countries needs to be challenged by brave people. However, muddling through will continue to be the default option and with Northern European countries and the shoemakers in Southern Europe at loggerheads, the practical man through experience can be satisfied with half a loaf. As the famous British economist onetime remarked, in the long run, we are all dead.
New York Times Review
Stephen Kotkin in the New York Times writes: If a prize in politics were awarded for self-righteousness, Joseph E. Stiglitz, despite stiff competition, might be near the top of the list. In 2001, he shared the Nobel in economic science for seminal work in the economics of uncertainty, particularly for what happens when parties to a transaction possess unequal information, as they invariably do. Economists measure impact by citations, but many of his papers are so fundamental that the results are no longer even cited. They’re part of the ecosystem. From these brilliant heights, Dr. Stiglitz, a professor at Columbia University, has been fulminating about other people’s blind spots.
Dr. Stiglitz’s new book, “Making Globalization Work” (Norton, $26.95), is billed as a sequel to his “Globalization and Its Discontents” (2002). It reads like an unacknowledged reply to a searing review in The Economist of that previous best seller. Gone is the innuendo about colleagues in Washington doing the dirty work of Wall Street in their capacity as public servants charged with lifting up the poor. New are The Economist’s requested chapters on trade and growth, market forces and the environment, the multinational monopoly — in short, on globalization, the advertised subject.
Two notions still animate the author. The first is that neoliberal economics — derided as “market fundamentalism” or the “Washington consensus” — vandalized the developing world. This supposed reign of neoliberal economic terror (privatization, open capital markets) has become a bogeyman of political liberalism (social justice, environmentalism), in whose ranks Dr. Stiglitz enjoys cult status globally. The second is that smart people in Washington and New York with the correct ideas can help set the world right. This supposition — even when cast in terms of promoting democracy rather than proffering special expertise — is an occupational hazard, and it enthralls many conservatives, too.
Dr. Stiglitz’s vision for more equitable globalization — with caveats about the toughness of the task — entails freer trade (no more loopholes for rich countries or corporate lobbies), curtailed intellectual property rights (“monopolies”) and green accounting (factoring resource depletion and ecological damage into G.D.P.). It also means more transparency in international finance (to curb corruption), debt forgiveness (foolhardy creditors must take responsibility, too) and democracy (less secretive procedures opened to nongovernmental organizations and others).
“It seemed terribly unfair,” he writes, “that in a world of richness and plenty, so many should live in such poverty.”
Unfair it is.
Designing a new global trade regime is a snap for Dr. Stiglitz. But how might it be put into place? He is dead right that the current configuration of globalization is political. But then, a different incarnation could be brought about and sustained only by politics — and not periodic protest, however effective at times. Dr. Stiglitz identifies some “special” interests opposed to change, but he offers less sense of the powerful stakeholders who will level the field for all.
Often, he exhorts. “Rich countries,” he writes, “should simply open up their markets to poorer ones, without reciprocity.” As for global enforcement of rules, “what is needed is an international tribunal.” Would its judges be appointed or elected? Would there be some disincentives, too, for global class-action suits? Details omitted.
There is another catch. Developing countries, after getting their “fair share,” must “use the money well,” he writes. So they’ll need nonkleptocratic governments, uncensored media, enforced property rights, the rule of law. How to acquire them? He wants “developed country governments to provide role models,” and to inhibit the collusion in malfeasance abroad.
Intent on championing regulation over an “unfettered” market, he turns to postwar Japan and South Korea as examples of how governments can pilot an economic boom, though this view has been undermined on empirical grounds. He commends China for go-slow liberalization, without noting that the late-70’s dismantling of peasant communes was a liberalizing big bang or that critics inside China today accuse the central government of abandoning economic liberalization, under the guise of gradualism, to gorge on the spoils of office. The rigor and nuance of his economics work are not as evident in his handling of recent world history.
FAITHFUL to post-Soviet legend, Dr. Stiglitz conflates I.M.F. advice and Russian rhetoric about shock therapy with what actually took place in the 1990’s. Some prices, but far from all, were instantaneously liberalized. Much property was privatized, though often by management theft before any government program; privatization of land had to wait more than a decade. Dr. Stiglitz spotlights Ukraine’s 3,300 percent inflation, neglecting to add that Ukraine had even more fitful liberalization and limited privatization, just as he advocates. Arguing that liberalization is right, but that it must be done slowly, he fails to note that for most states, Russia and Ukraine included, rapid neoliberal reform is beyond their capacity. But never mind. The talking point that neoliberalism wrecked Russia is too valuable to yield to facts.
Attacking the idea of free-for-all markets in a superfluous debate with conservative purists only overshadows Dr. Stiglitz’s practical suggestions, like adding labor and environmental ministers to trade negotiations. Boasting that his many critics now see the light, thanks to him, is not a technique of persuasion. From a thinker of such stature, readers might appreciate more of the nimble acuity he displays in praising while devising flexible ways to supersede the Kyoto Protocol to win over the key polluter, America.
In his most intriguing chapter, Dr. Stiglitz explains how the United States benefits from other countries holding vast quantities of dollars, while those countries incur substantial costs, from depressed growth to instability — the very condition that such foreign reserves are meant to forestall. He observes that in Asia — which drives globalization more than Washington does — an alternative reserve system may be emerging. Dr. Stiglitz imparts his spin to this issuing of money substitutes, calling them “global greenbacks,” which could be used to finance global public goods like health vaccines. “This single initiative,” he suddenly concludes deep into the book, “could do more to make globalization work than any other.”
And instead of waiting for the United States to act in the interests of global humanity, he says, a coalition of Asian countries could move to this new reserve system even if America objected. Here is the new global economy already upon us.
Growing Globalisation but US Economic Health Remains Important
Bernanke said that the traditional distinction between the core and the periphery is becoming increasingly less relevant, as the mature industrial economies and the emerging-market economies become more integrated and interdependent. Notably, the nineteenth-century pattern, in which the core exported manufactures to the periphery in exchange for commodities, no longer holds, as an increasing share of world manufacturing capacity is now found in emerging markets. An even more striking aspect of the breakdown of the core-periphery paradigm is the direction of capital flows: In the nineteenth century, the country at the center of the world's economy, Great Britain, ran current account surpluses and exported financial capital to the periphery. Today, the world's largest economy, that of the United States, runs a current-account deficit, financed to a substantial extent by capital exports from emerging-market nations.
With the US economy slowing, it is striking how dependent much of the world is still on it powering ahead.
Imports by the United States currently account for about 5 percent of the entire world economy. That is only part of the story. Investors from around the globe own trillions of dollars worth of American companies and property. Millions of workers in the United States regularly send money to their friends and relatives abroad.
Ireland's top exporter is Dell and about 87% of our exports are made by foreign-owned firms.
Many of us have good reason to wish America's economy well.
Tuesday, August 29, 2006
Europe is a honeypot for VAT fraud
'Isn't there a law against demonstrations within some distance of here?' I asked the garda.
'Where you from?' the garda asked with a curious look, mistaking me for a tourist.
'Cork,' I responded and his expression instantly turned surly.
'If there is a law, what are you going to do about it?' the garda asked and resumed his trek as I momentarily rejected the notion of a citizen's arrest.
There are of course many laws; some generally observed and some not. The perceived gravity of an offence in Ireland often depends on the pedigree of citizen involved. A similar point could be made about Europe compared with the US, when it comes to white-collar crime.
It's inconceivable that white collar criminals in the US, would get away with billions of dollars in a well-known scam that has been ongoing for years but it is happening in Europe, with little headway being made by authorities to stem it.
The Financial Times reported on Monday, that German customs authorities are poised to make a number of arrests this week after joining forces with British investigators in a crackdown on multi-billion pound “carousel fraud”.
The scam – whereby fraudsters collect value added tax refunds while withholding payments of the tax itself – centres on mobile phones and related goods that are dispatched through complex, pan-European supply chains. The joint investigation – called Operation Sunrise – has tracked mobile phones brought into Germany by air and in vans crossing the German-Swiss border.
The collaboration is a response to escalating carousel fraud, now estimated to account for a tenth of the UK’s exports and likely to cost the public purse several billion pounds this year. Germany is also severely affected, losing an estimated 2 per cent of its VAT revenues to the fraud.
Last December, Munich's Ifo Institute estimated that Germany's annual VAT losses are €17bn ($20bn, £11.5bn) a year, or 12 per cent of total receipts, including €3.5bn lost to so-called "carousel" schemes operated by crime rings. Losses in Europe are estimated at €60bn a year, equivalent to more than half the EU's annual budget.
"VAT fraud is the Achilles' heel of public finances," said Gernot Mittler, finance minister in the German state of Rhineland Palatinate. "And with EU enlargement, it is spiralling out of control."
The current German investigation, which drew on Revenue & Customs’ pioneering use ofscanning equipment to combat fraud, follows the UK’s recent arrests of 22 people in the biggest operation of its kind.
Carousel fraud exploits the principle that, within the European Union, exporters are able to claim VAT refunds from the government while importers are obliged to collect VAT from their customers and pay it to the government. Using a complex pan-European supply chain, carousel criminals steal money every time they import and export the goods.
The checks on vans crossing the German-Swiss border at Weilam Rhein uncovered new evidence about crim-inals operating in Germany and their methods, including the location of warehouses where they store mobile phones and other goods.
UK and Irish Trade
AS far back as the late 1990s, UK revenue losses from what is termed Missing Trader VAT fraud was growing by up to three quarters of a billion pounds each year. By 2001/2002, it was costing the UK taxpayer up to £2.75 billion and it has made some Irish people very rich. In the first half of 2002, the category "Electrical Machinery (apparatus, appliances and parts)" in Irish trade statistics was inflated by more than €8 billion in respect of both import and export trade with the UK.
UK Customs & Excise detected carousel consignments of computer chips shipped to Ireland in the first half of 2002 large enough in aggregate to have supplied the entire market for that chip in Europe, Asia and Africa put together.
UK seeking "reverse charge mechanism"
The FT said today that the UK is optimistic that it will soon get the go-ahead from the EU for a "reverse charge mechanism" that will change VAT into a form of sales tax for mobile phones and other electronic goods. The danger is that fraud may migrate to other goods. A radical proposal by Germany and Austria to counter this risk was to impose a "reverse charge" on all goods and services. But the idea was a step too far for the European Commission, which ruled it out last month.
The third option - endorsed by the Commission - is changing the VAT system so that goods are taxed in the countries where they are supplied, not where they are consumed.
The fear of tax harmonisation by some EU countries including Ireland, has been a huge gift for the fraudsters.
Third Level Grants Bonanza for Some
When I went to UCC, I knew a few farmers' sons on grants who drove to college every day - isn't it great if you can get away with it!
Assets are not taken into account and a little creative accounting can engineer declared income to be below the income threshold.
Education Minister Mary Hanafin has indicated that she is happy with the existing arrangements apart from the administration of the scheme.
At present, the top income limit for grant eligibility, where there are less than four children, is €46,700. Maintenance grants range from €780 to €3,110, depending on declared income.
New figures on grants have been released to Labour Finance spokeswoman Joan Burton T.D., who said that a surprising number of well-off students still qualified for assistance - either through full or partial grants.
The figures show that almost a third of higher education grants are now going to students from managerial, professional and farming backgrounds. That is at least 8,000 out of a total of 26,000.
There are three separate grant schemes with the biggest one run by the local authorities.
The percentage of local authority grant holders coming from these groups has risen by 4% to 28.61%.
The changes recorded from 2002/03 to 2003/04 are as follows:
- Children of employers and managers - up from 633 to 1,036
- Children of professionals - up from 1,155 to 1,535
- Farmers' children - up from 1,669 to 2,067
The real figure could be even higher as the authorities are unable to socially categorise about a third of all grant holders.
PAYE workers who find themselves just above the margin to be ineligible for the higher education grants, are the biggest losers.
Monday, August 28, 2006
Don't overfeed the Auditor!
In the workplace, there are various jobs which evoke a similar response. There's a story about a female patient at the doctor's surgery after undergoing some tests. The doctor says:, "I have some very bad news for you...you've only six months to live." The patient is understandably upset and when she recovers asks: "Oh doctor, what should I do?" The doctor says: "Marry an actuary and go and live in the country."
"Will that make me live longer?" the patient eagerly asks. "No," says the doctor, "but it will be the longest six months of your life."
It's said that an accountant is someone who wanted to be an actuary, but didn't have the personality for it. (I used be one!)
Whatever can be said about numbercruching, it would be hard to conjure up credible spin for auditing but it's more exciting in China, unless you overindulge.
It has been recently reported that China's audit authority has instituted a new code of conduct to maintain integrity and discipline after confirming the "irregular practices" of a local auditor who died after being entertained by government officials.
Zhang Hongtao, 25, who reportedly died from "excessive drinking and eating", attended a series of banquets hosted by the electricity bureau being audited by his team in the northern province of Hebei, China's National Audit Office (NAO) said.
The team, which was assigned to audit a power grid construction and transformation project of the Yanshan County Electricity Bureau also participated in expenses-paid trips organized by the bureau, the NAO said.
According to the Beijing News, Zhang's colleagues carried on a planned trip with officials of the electronic bureau to the southern tourist city of Yangzhou, shortly after his death.
"It is sad for Zhang. I deeply pity him," said an anonymous Internet user on the Sina website. "Zhang sacrificed himself for China's crooked government working style in which drinking and dining are inevitable in everyday life."
Sunday, August 27, 2006
Tom Cruise's Public Firing from Paramount's Lot
Before the launch, Snakes on a Plane got a lot of attention because of Internet buzz , but the movie failed to live up to expectations. Starring Samuel L. Jackson as a federal agent battling killer snakes on a redeye (late evening) flight, the movie had taken in $26.5 million in 10 days.
Too many of today's' movies are rubbish and studios are hurting. That was the principal reason that Tom Cruise was ejected from the Paramount Pictures' lot last Tuesday, rather than because he had made an ass of himself in PR terms in the past year, in particular in his avid evangelism of Scientology that was founded by a science-fiction writer. In an interview with the German magazine Der Spiegel last year, Cruise lashed out after the reporter suggested that Scientology was a pseudoscience.
Cruise had a production company based at Paramount for a cost of $10 a year. Even so, he made an estimated $80 million from Mission Impossible III, through a cut of gross revenues of more than 20% and 40% on all DVD sales.
Sumner Redstone, the 83-year-old head of Paramount’s parent company, said that Cruise’s falling popularity cost Paramount up to $150 million on Mission: Impossible III. As Redstone saw it, Cruise overplayed his hand, both financially and personally.
In firing Cruise, Redstone issued a warning to other puffed-up stars with inflated salaries and demands.
It often appears that producers and directors ignore the reality that the video gaming generation are not as impressed with special effects as assumed. So movies like King Kong and Star Wars III failed to match the hype because the story lines were predictable and banal. The Da Vinci Code was another bore.
Viral marketing via recommendations from friends is key to a movies success and rather than having a small number grab so much of the pie, often for indifferent performances, investing time and money in quality scripting would do wonders for the industry.
More movies like Speed and The Sixth Sense, please!!
Henry Ford and Cork, Ireland
Ford today is an unusual large US public company, that was established in 1903, as the Ford family control 40% of the voting shares of the company, held in a trust, and voted in a block.
Henry Ford's pivotal association with the south of Ireland city and county of Cork, is striking for two reasons.
Here was an Irish-American Protestant who was drawn back to his family roots in Cork and as the tractors were begining to roll off the line at the plant he decided to build in Cork City in 1917, the War of Independence against British rule in Ireland was getting underway. Reprisals against Protestants, resulted in the halving of their population in County Cork, within the subsequent five years.
Henry Ford's contribution to Ireland was immense.
Today, our top private sector industrial employers Intel and Dell, together employ about 9,000 people directly. In 1930, when the population of Cork was approximately 80,000, Ford employed 7,000 there and until the assembly operations were closed in 1984, Henry Ford & Son Ltd. was the star company in Cork.
Henry Ford had introduced the world's first moving assembly line in 1913, which reduced chassis assembly time from 12½ hours to 2 hours, 40 minutes. However these innovations were unpopular and turnover of staff was high. So Ford Motor Company pioneered the minimum wage and the 40 hour work week. In January 1914 to the dismay of fellow industrialists, Henry Ford doubled pay to $5 a day, cutting shifts from nine hours to an eight hour day for a 5 day work week, and instituting hiring practices that identified the best workers. By the end of 1913, Ford was producing 50 percent of all cars in the United States, and by 1918 half of all cars in the country were Model T's. In 1928, the last Model T was assembled in Cork.
The Fords and Cork
Henry Ford's grandfather John left famine-stricken Ballinscarthy, near Clonakilty, West Cork, with his family for America in 1847. Ford ancestors had been evicted from land in Somerset, England.
John bought a farm in Michigan from an old acquaintance from West Cork, Henry Maybury (on the night of the 1901 Census, an 18-year old Harry Maybury was staying at one of my great-grandfather's farms near Dunmanway in West Cork). A Patrick Ahern from Fair Lane off Shandon Street in Cork City, had an adjacent farm.
John's eldest son William Ford (1826-1905) married Mary Litogot (c1839-1876) in 1861. She had been an orphan and had been adopted by Patrick Ahern and his family. Henry was born in 1863.
In 1914, the then hugely successful Henry Ford chose to build a 56-room mansion on a 1,300-acre tract of land approximately two miles from his Dearborn birthplace. He named the estate "Fair Lane" after Patrick Ahern's birthplace.
In a 1998 speech, the then US Secretary of Defense William S. Cohen, told a story about one of Henry Ford's visits to Cork:
Distinguished graduates and members of Congress, and members of the faculty, honored guests, Janet, ladies and gentlemen. I'm always a little bit intimidated when I come to a new audience. I feel somewhat like Henry Ford, who after having made all of his millions in this country wanted to go back to his fatherland in County Cork, Ireland. His reputation for wealth had long preceded his arrival. So, when he finally stepped off the plane, there were a group of local town officials waiting seeking contributions for the construction of one of their local hospitals.
And Ford, who was quite accustomed to being touched in that fashion, he pulled out his checkbook and made a check out for $5,000. The next day in bold print the local paper said Ford contributes $50,000 for the construction of the local hospital. The local officials came running back and said oh, Mr. Ford, we're terribly sorry. It was not our fault. It must have been a typographical error, and we'll be happy to see to it that a retraction is printed in tomorrow's paper. (Laughter)
He said, wait a minute, I think I've got a better idea. He says, you give me one wish and I'll give you the balance of $45,000. So they said anything you want. He said, I want, when that hospital is finally built, to have an inscription over the entranceway with a quote taken from a source of my choice. They said it's done.
So he gave the check for $45,000, the hospital was built. It is there today. It has a plaque over the entranceway with a quote taken from the book of Matthew. It says, "I came unto you as a stranger and you took me in." (Laughter)
I come unto a little bit as a stranger this morning and I hope you'll take me in, but not quite in that fashion. (Laughter)
Henry Ford died in 1947. He had been a pacifist during World War 1 and had stoked up anti-semitism by blaming Jewish financiers for the hostilities. During World War II, the aviation industry could produce one Consolidated Aircraft B-24 Bomber a day at an aircraft plant. Ford Motor Company would show the world how to produce one B-24 an hour at a peak of 600 per month in 24 hour shifts.