A point of view, albeit not a good one

In the comments at CiF, a commenter called Heyone summarises their supposed ‘non-racist’ objections to immigration:

It’s ridiculous that whenever immigration is talked about there’s always people shouting “racists!” and everybody starts debating what’s racism. This is just counterproductive.

These people have all missed the point. The majority of people are not concerned what race these immigrants are; they have real concerns about the strain that’s being put on NHS, schools, policing and the benefits system with a ever rising population due to Labour’s mass immigration policy.

No – rather, we’ve taken on the point that none of these ‘real concerns’ are, in fact, true. The NHS, schools, policing and benefits system all work well in the UK; hence why our levels of health, education, serious crime and absolute poverty as a society are all at comparable levels to other wealthy developed countries, and haven’t changed appreciably over the last 10 years of relatively high net migration.

The only way you can make a case otherwise is rely on “ooh, it’s all gone to the dogs round here” anecdotes. And yes, of course the occasional granny will preventably die in hospital; some yoofs will leave school with no skills; some stabbers and robbers will go unfound by overworked coppers, and so on, generating emotive stories. All of which would still happen if we had no immigrants at all and doubled the funding for all public services…

So the ‘pressure on public services’ case against immigration is instantly undermined by all the relevant data, and can only be defended through copious use of irrelevant anecdotes and idiotic assertions like “ooh, the numbers are all rigged” or “ooh, you can prove anything with facts”. In other words, it isn’t really a case at all.

So no, ‘it’s all about the resources’ anti-immigration people, you’re not racist in the same sense as someone who explicitly says they want to kick out the darkies. However, your premises for your stated argument are completely, demonstrably untrue. The remaining question is whether you cling onto demonstrably untrue beliefs solely through ignorance, or whether your stated argument is just a rationalisation of the fact that you don’t like to see foreigners…


I probably ought to add that the post above only applies to people who use the argument above.

If, on the other hand, you think that immigration is wrong because it depresses wages for low-skilled UK-national workers, and believe that 1) a mild disbenefit to a minority of UK nationals somehow isn’t outweighed by the enormous benefits to the migrant *and* 2) the problem can’t be solved by income redistribution from the population as a whole (who benefit from immigration) to unskilled locals (the only people who don’t), then you’re deluding yourself in a completely different fashion.

Those British Airways strikes

While there’s been a lot of commentary on the British Airways strikes, the analysis (whether pro-company or pro-union) tends to miss two major points.

The business model is unsustainable – but that’s the management’s fault, not the unions’

BA’s model before the global financial crisis was to charge a fortune for excellent service in Club World and First, while matching its competitors’ prices and service levels in World Traveller. Together with BA’s massive global coverage and its excellent connections between the financial boom centres of London, New York and Singapore, this business model allowed BA to attract a lot of passengers and make a lot of money.

This was lucky, as BA’s cost base is and remains far higher than that of its competitors. Not on planes, or marketing, or even management – but on staffing. At the time, the money that bankers were willing to pay to fly to Singapore in a bed whilst being served champers by reassuringly camp gentlemen was so vast that BA could get away with paying long-serving cabin staff double the national median wage.

However, this wasn’t a sustainable business model unless you believed the boom times would never end. BA should have taken advantage of the good times to stuff its current crews’ mouths with gold (pay rises, massive early retirement packages, one-off bonuses), in exchange for permission to hire new recruits under less generous contracts so that the long-term cost base was more sensible. Virgin Atlantic pays new recruits gbp15,000 ranging up to about gbp30,000 for senior crew, and anyone who’s flown on Virgin will confirm that this is enough to attract motivated people who provide excellent customer service.

Unfortunately, BA’s CEO for most of the boom – Rod Eddington – had approximately no aptitude for long-term strategic thinking, so kept with the status quo for an easy life (my assessment of his aptitude is supported by his report on UK transport policy two years ago, which managed to miss out high-speed rail completely. I’ve only just discovered via Google that he’s done much the same half-arsed job in Melbourne). Willie Walsh has a better track record, but by the time he’d taken over and settled in, the recession was already imminent. Now, BA has to cut costs for long-term survival, but doesn’t have the money to bribe its staff to accept the cuts.

The unions are in a far stronger position than most commentators realise

BA’s enterprise value – the amount that its assets plus goodwill are worth, before taking into account its financial liabilities – is something like GBP7bn. The reason its market cap is only GBP3bn is because it also has a GBP4bn pension deficit. In other words, money that BA owes to its workers and former workers accounts for more than half of the company’s total value.

This has two policy implications.

One is that Red Tory Philip Blond’s suggestion that the government should mutualise BA isn’t quite as insane as it looks – more than half the company is already owned by the workers, and if things were to get worse then the pension fund has priority over the shareholders as a creditor. A deal like the one the US government brokered for GM, leaving the workers as majority shareholders, isn’t totally implausible.

The other consequence of this ownership pattern is something which should make BA shareholders rather nervous.

If the industrial action were to turn into a major, long-term dispute that drove down passenger numbers and revenues to such a severe extent that BA had to go into administration, then the pension fund would have priority over BA’s assets (including not only its physical assets, but also its brands, goodwill, systems, etc). It’d be hard work to rebuild BA as a global brand after that kind of collapse, but it wouldn’t be impossible – particularly with worker ownership ending the company’s labour crisis overnight. The shareholders, however, would lose everything.

So while the “nobody backs down” outcome isn’t good for either side (as the workers lose salary in the short term, and in the long term their pensions end up secured on a much less valuable asset), it’s a lot more optimal for the workers than it is for the shareholders. This makes negotiations, erm, challenging.

Conclusions? None really, except that I wouldn’t want Willie Walsh’s job, and Rod Eddington shouldn’t be put in charge of the strategic direction of a whelk stall (although he’s probably competent to administer one day-to-day).


Update: another conclusion is that if you blame the strikes on Gordon Brown’s ‘weakness’, you’re so utterly clueless that you shouldn’t even be allowed to assist Rod Eddington at his whelk stall…

Update 2: Jim notes that BA’s business model is also unsustainable in the sense that the oil’s going to run out. This is true, and worth a read (I’m not yet totally sold on Jim’s view on precisely when the oil’s going to run out, but that’s mostly based on sheer incredulity that if the oil’s really going to start running seriously short by 2015, governments and large companies haven’t done more to mitigate that. The GFC highlights that this may be over-trusting of me…).

What I’ve been up to, week ending 2010-03-28

  • #ebz waiting for my new phone to be delivered requires a certain degree of timewasting, hence http://fallenlondon.com/c/38970 #
  • Self-professed 'libertarian' argues for increased public spending on people living abroad: http://bit.ly/bpJCHU #
  • Boo! The hitherto excellent Daily Mash channels Richard bloody Littlejohn with rubbish "PC gorn mad" nursery rhymes: http://bit.ly/d1a4zI #
  • Alex Massie is ace. I hope someone less crazy than the Speccie will offer him a job shortly: http://bit.ly/c3RxLb #
  • And healthcare is duly reformed. Hurrah! #hcr – wonder if this will help the president's popularity ratings? #
  • W00t – @Captain_Deltic is now Tweeting #transportgeekery #ifyoudontknowyouwontbeinterested #
  • Anyone recommend a Twitter client for a #Nokia #N97 ? #
  • #ebz It's cloudy today, so I'm not all that inclined to get up in a hurry http://fallenlondon.com/c/39984 #
  • It strikes me as utterly insane that alcohol tax isn't a simple "10p per 10ml of pure alcohol whatever the drink" #
  • #budget2010, #verybadsituation and #itsreallyannoying are trending together. TWITTER WIN. #
  • Least appealing offer ever -> RT @DuncanStott watch @Nick_Clegg's response live: http://bit.ly/aQ4szR #budget #
  • Another day, another #ebz tweet http://fallenlondon.com/c/40534 #
  • Bah. I finally get around to updating my website *exactly* as my host takes their server down for 2 hours… #
  • Right. http://www.johnband.org now looks like it came from a half-capable designer 3 years ago, instead of a lazy blind designer in 1997 #
  • Glad I've left the UK just as the union movement decides to fuck the few bits of the country left unfucked by the bankers #
  • BA is bust because its salaries are high; the railways cost too much. If you disagree with either of those facts, you have no clue #
  • Yes, tho' not as much as the bankers -> RT @manipillai The irony is the unions are doing a great job in ensuring Lab doesnt get re-elected. #
  • V interesting post from Jamie – http://bit.ly/9Fyzyi – if the trend continues, I may withdraw my grudging support for democracy… #
  • Back from a reasonably successful driven lesson, time for more #ebz http://fallenlondon.com/c/41127 #
  • Excellent visual response to people who think Labour have done nothing to alleviate poverty and redistribute income: http://bit.ly/9qYntb #
  • Conservative government in "opposed to human rights" shock: http://tinyurl.com/ylhql4y – seriously, did anyone expect this not to happen? #
  • Meanwhile, Iceland channels Saudi Arabia http://bit.ly/cgMGbi – Mad Julie approves… #
  • The most pretentious drivel you'll read all week, GUARANTEED: http://bit.ly/8XAaSY #
  • Heh, I'd missed Hamilton falling afoul of Australia's dedicated anti-hooning laws: http://bit.ly/9CcYgR #
  • I just plugged #ebz on my blog as well, I wonder if that gets me extra credit? http://fallenlondon.com/c/41743 #
  • http://bit.ly/bznngP = "exactly the kind of offence right-wingers believe can't get dealt with like this any more due to evil PC brigade" #
  • Sorry the last link wasn't all that interesting, partly I'm testing my PHP script… #
  • My PHP script works, following much wailing and gnashing. New personal homepage ALL MY OWN WORK: http://www.johnband.org/ #
  • If you've not seen this movie, you need to: http://www.imdb.com/title/tt0068173/ #aussiewithnail #
  • CROWDSOURCING: what song should I put on next? Bear in mind that it's 2AM and I'm drunk #
  • .@brettsr to be honest, any government initiative to diminish Peter Gabriel has my vote #
  • I was actually counting down the days from seeing this ad to seeing a grumpy UberFeminist appraisal of this ad: http://bit.ly/af5JNa #
  • Also, the 'this ad is evil because HAIRSHIRTS! DWORKIN!' post below wins points for actually saying "I am not lacking a sense of humour" #
  • If you say "I'm not a racist but" or "not a misogynist but", you are. Lacking a sense of humour isn't as bad, but the same rules apply #
  • This is the finest thing ever to have happened on this earth: http://www.youtube.com/watch?v=bXKwBvhd-ww (indirectly via @anattendantlord) #
  • Another piece of awesomeness: http://www.youtube.com/watch?v=_NljLKfcwOc – bastarding YouTube doesn't have Mini Correct or Poppy #
  • They do have this though: http://www.youtube.com/watch?v=e-aWjD5gea4 – everyone has and loves, or possibly is, this friend #
  • …and the nonsense goes viral. RETURN TO REAL LIFE, PEOPLE -> RT @LDN Is the new Pepsi Max ad 'a bit rapey'? http://bit.ly/dr2luL #
  • For anyone who's gone to drinks and regretted the company, but not the drinks: http://www.youtube.com/watch?v=vbWP8VWqGn0 #
  • Happy summer, UK tweeps… #
  • Shortly, to lunch and to the beach. First, #ebz http://fallenlondon.com/c/42308 #
  • Dulux aside, the 2 main brands of paint in .au seem to be Nippon Paint & British Paint. Wld be interesting to plot market share over time… #
  • A flame-war in CiF comments – nothing new, but the commenters are Toby Young and Jay Rayner: http://twitpic.com/1bhxt6 #

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Financeblogger playground spat

When I grow up, I wouldn’t object to being an incredibly rich, disgraced, highly influential, not-proven-guilty-of-fraud Wall Street figure and would-be press baron.

However, unlike Henry Blodget, I don’t think I’d devote a day’s worth of output to slating other financial commentators for being insufficiently productive, hard-working, etc. Worrying about the productivity of people who actually work for you is stressful enough – and besides, I’d want to leave at least eight waking hours a day outside of work to enjoy my enormous pile of ill-gotten gains.

(I am, however, also a little jealous of Felix Salmon. If any multinational news organisations want to pay me a decent-ish New York salary to tweet and blog about finance and the economy all day, then you know where to find me…)

This blog may be of some use after all

Someone found the blog yesterday by Googling for “my right testicle is as big as a kiwi”. I hope the story they read had the desired effect – but just to reiterate, if your right testicle is as big as a kiwi, then go see a goddamn doctor RIGHT NOW. Indeed, even if it’s only as big as a kiwi fruit, go see a goddamn doctor right now.

In other news, Sydney remains excellent. The drive to attract freelance work continues, and I’ve poshed up my personal site as part of the hunting process. Which has taught me that CSS is fun when you get to know it (this is the first website I’ve built without using tables, which makes me geekily happy), and that PHP was invented by the Devil (possibly as a way of making ASP seem fun, sensible and intuitive by comparison).

Incidentally, if you want to waste time on online things that are more interesting and less frustrating than PHP, then I’d thoroughly recommend Only Connect and Echo Bazaar. The former will steal your lunchtime; the latter will steal your life.

Feared by the banks, loved by the gullible

In explaining how he avoided falling into the common liberal trap of supporting the Iraq war, Dan Davies listed the maximGood ideas do not need lots of lies told about them in order to gain public acceptance“. The fact that all the main proponents of the Iraq war were lying like rugs about WMDs inherently casts doubt on the case for war, even if you believe that a war for regime change would have been justifiable in its own right.

I was reminded of this when looking at the website for the Robin Hood Tax campaign (the Robin Hood Tax is the new, nauseatingly cute, name for the Tobin Tax on financial transactions):

The Robin Hood Tax will not impact on personal banking or on retail banking. That’s because it targets a distinct area of bank operations – high-frequency large-volume trading, undertaken by financial institutions in the ‘casino economy’. 

If you change money to go on holiday, send remittances abroad, invest in a pension fund or take out a mortgage, you will not be affected by this tiny tax.

The Robin Hood Tax consists of a levy on:

financial assets such as stocks, bonds and foreign exchange, traded both physically and as derivatives (options, forwards, futures and swaps).

Hence, any money you change (whether for a holiday or for remittances) and any investments that your pension fund makes will, very obviously, be taxed under it. The tax will, definitely have a negative impact on ‘good’, non-casino-y transactions like people buying shares in companies to generate income for their retirement, or companies converting euros from their export sales into pounds.

This doesn’t, in and of itself, make the Robin Hood Tax a bad idea. That negative impact could well be outweighed by the benefits of the revenue raised and of dampening the speculative excesses of the global financial system (I’m sceptical of the latter: we all know with each successive crisis the speculative excesses of the GFS turn out to be concentrated in areas that aren’t regulated or taxed or indeed understood. But that’s for another day).

But the tax’s proponents are simply lying that the negative consequences for the real economy simply don’t exist, rather than acknowledging them and saying that the benefits are larger. And that definitely triggers my Iraq filter.