Thursday, April 27, 2006

Chavez Watch: What's he up to now?

Two things, actually. First, he's increasing the 'rubbing-your-nose-in-it' cut price oil programme to deprived areas of the US, and he's withdrawn Venezuela from the Andean Community of Nations trade bloc. This second development is overtly targeted at those countries within the bloc (Peru and Columbia in particular, it appears) that have strengthened ties with the US. He really doesn't like the USA, this guy. I'm concerned he might push it too far. It's populist, yes, and it is defining. It's also principled, which is admirable. Indeed, it is defensible, given Venezuela's position of strength, particularly with the price of oil at $75 a barrel. But is it perhaps lowering himself to the standards of the White House by pursuing such anti-Americanism with such vigour?

Peruvian Election Update

Lest we take our eyes off Peru, where Ollanta Humala and Alan Garcia are preparing for a run off, it appears that Garcia has taken a lead in the polls, a somewhat surprising turn of events. Sitting on 54% of opinion, this commentator suspects that some of the Humala support remains hidden, much like the Sinn Fein vote here in Ireland - people don't necessarily tell pollsters that they're voting for the anti-establishment guy. We will wait and see. The run-off takes place on May 28th.

Employment Rights? Employment Wrongs...

And so, as mentioned yesterday, the Unions move on to pay. Of course, everyone is concerned with employment rights, which after all are the most important thing. Right? Right? 'No deal can be struck until the the Employment Rights Agenda has been agreed', say all. Here's the thing. Pay is everything in this negotiation. Absolutely and unequivocally everything. Otherwise, agreement on employment rights would have been lodged as a prerequisite for progress in the talks. Here's what's happened. Everyone has agreed on the things that everyone agrees on. The stuff that really matters in terms of employment rights is the controversial rump that requires hard bargaining.

By moving on to pay in the absence of agreement on the more controversial issues, the government has managed to move the talks on so that agreement in pay will be subject to their position on employment rights. By acceding to move on to the pay issue, the Unions have effectively announced to the world that pay is all that they are concerned about, and everything else is for sale.

Socialists are just great, aren't they!

Wednesday, April 26, 2006

The PD's Vision of Ireland. Again.

It may appear a little easy to have a go at the PD's in order to fill space, but it just never ends, I'm afraid. They appear to represent the bad stuff in Ireland, and we had more of the same at the PD conference at the weekend (Tax Reform 100-40-40: Sharing the Gains). Here are the problems:
1. Health Service problems caused by their own limitations on public service numbers
2. Gardai problems caused by their own limitations on public service numbers
3. An abject and unapologetic allegiance to Smithsonian economic model and the invisible hand as the cure-all
4. A short termism that is devoid of vision, clarity and all too political.

Here's why. Being an economically right-wing party, the PD's are all for free markets and small government. In theory, almost all services provided by the state can be provided more efficiently by the free market. Hence privatisation is a good thing, and small government is a good thing. This translates into a number of trends. First, no new hires in the public sector. Net numbers must fall, and continue to fall. Where additional staff are required, contractors can be brought in, supplied by the private sector - agency nurses, security companies to protect money (and staff prisons), and so forth. When investment is talked about in the public services, it is in infrastructure and buildings, not in new staff. Macro-economic policy is all but ignored, and the enrichment of the private individual is championed, noting that the freedom of the individual will in turn protext the economy as individual rational actors will provide the necessary protection.

Here's why that's wrong. First, the vagaries of market forces mean that staff that are not permanent may not always be available. Second, the minimalist approach to state protection marginalises the disadvantaged and the poor, and exacerbates their position. Third, the existing permanent staff in state services get demoralised by the deterioration of the work environment, and the lack of consistency in the work environment. Fouth, we have yet to test the theory in an underperforming economy. Fifth, the scale of the country is such that the Smithsonian economic model is not necessarily applicable here. Sixth, Ireland is a part of Europe, within which the increasing sovereignty of Europe compromises the State's ability to appropriately manage the Smithsonian model in the face of the European Social model, which is by far the preferred model throughout the EU.

The lack of vision is about where Ireland is going - it is becoming, to use, the tired old cliché, an economy rather than a society.

And before one jumps to conclude that this writer is a left-wing pinko crying out for increased union membership and so forth, let it be known that the Unions are as bad if not worse than the PD's. They are as bad because they ignore the wider interests of society in return for increased pay within the partnership model. You lie down with dogs and you rise with fleas. And it is purely pay that they want. More and more and more pay, and the more leverage that they can get to secure more pay, the better. They talk about social development and servives, but at the end of the day ideology gives way to existential questions - trade unions are becoming (have become) redundant save as collective pay bargaining organisations, and therefore in order to preserve their existence they need to deliver that. This ignores the economic reality that unlimited wages means unlimited inflationary pressures and ultimately compromises the economy. Short termism again. They are of course worse than the PD's because they pretend to be socialist, when they are in fact the most heinous of capitalists.

Tuesday, April 18, 2006

Progressive Democrats: Lust for Power

The PD's have been talking up the possibility of further lowering income taxes after the next election. This is, of course, their stock in trade, following the American capitalist model of small government, empowering the individual. Critics have denounced such moves as undermining further investment in schools, hospitals and other state services. Politically, it is allegedly aimed at the middle income earners, where the PD's see potential for growth, those specifically have benefited from all the Celtic Tiger years, including, no doubt, your correspondant.

I don't like the PD's, I never have. McDowell is an arrogant so and so, and is too right wing in terms of civil liberties for my liking. Harney seems snide, and the rest of them are like the rest of the Fianna Fail muppets. However, one has to hand it to them, they are still here. Also, there have been some good things. The economy, which they claim sole credit for, is undoubtedly booming, and will continue to boom for another while at least. A serendipitous coalescence of policy and market it may have been, but successful nonetheless. There are a number of substantial problems with this.

The PD's are fundamentally anti-social. The whole 'are we living in a society or an economy' thing is targeted at them. Social in respect of this particular argument is about government, and what the government does for us. The PD's simply believe that government should not be overly intrusive, and choice theory requires that the government does not dominate services, including basic social services. This includes health and education. Both schools and now hospitals are being built in public-private partnerships. Nurses are not being hired, agency nurses are being contracted. Even the head of the HSE is on a 5 year contract. Teachers are finding it more and more difficult to secure permanency, more difficult than at any time in the past. Gardai are not being hired - private security firms are being allocated things like money minding, and MMD has even toyed with outsourcing the prison service. Instead of 2,000 new Gardai, we are getting 4,000 unpaid part-timers.

The PD's are fundamentally acultural. They do not believe in culture as a national resource, no more than they believe in the nation as icon, the nation as brand, the nation as identity. It is not something that should be invested in. It is not a part of the economy, no more than the Irish language is a part of the economy. This is disturbing.

Ultimately, if the PD's get their way, we will all be earning loads of money, and have no public services. We will, of course, have money to spend on private services, which will abound. Those who remain at the bottom will be imperilled. A little bit of inequality is no bad thing, MMD said two years ago. Maybe, but some are invariably more unequal than others, and do we as a society have a duty to protect them?

Monday, April 10, 2006

Center for Public Inquiry Shuts Down Quietly

McDowell victorious again! In an inside article in today's Irish Times (subs reqd), Liam Reid notes that the former High Court judge and Chairman of the Center for Public Inquiry has declared that the CPI, pilloried by the so-called Justice Minister, and ultimately compromised by his breach of secrecy in disclosing confidential security data to a foreign citizen, to be at an end. The winding down of the CPI is being completed, and McDowell can laugh smugly in his victory.

His ignorance of the rule of law, due process, the presumption of innocence, and the separation of powers has been astounding. As Minister for Justice, he has sullied government and stained the state. He has rejected what so many of us cherish, he has misrepresented his constituents, and brought great dishonour on us all. Yet we, the apathetic, do nothing. The chattering classes mumble in some slight discomfort, but do nothing. The political classes defer to his leadership of the government (see the Waterford Speech) and rest contented that a potential bastion of the propriety of state has been laid to rest. Well done Michael. We can all sleep easier in our beds knowing that this unscrutinised rabble in Leinster House will be ever less scrutinised with you in charge. Now where's that press council, so I can put the final nail in democracy's coffin.

He should be ashamed of himself. Everything is wrong with this, everything.

Iranian Crisis Continued

Today's New Yorker carries a story that Bush is planning an invasion into Iran, and using tactical nukes if he has to (via The Guardian). Here's the thing. It's daft. It's stupid. It's reckless. 'Bush Accused of 'Messianic' Mission', proclaims The Guardian in the same piece.

There are so many reasons why he shouldn't - the real vs. perceived threat level; the relative threat level (once again, remember Iraq vs. North Korea); the legacy issue - what will George be remembered for?; the logistics - how many troops do you need now?; the International support, or lack of it; the abject failure in Iraq - hello?. But one has got to think that, well, that he might do it anyway. And maybe that's the key. The threat (from the US, as opposed to Iran) needs to be perceived as real if it is to have any impact on the international position.

Which brings me to another question. Why did the New Yorker get this story? Not how, but why? One suspects that following the Valerie Plame stuff, the WH would be furious with an uncontrolled leak like this, unless it was controlled. And therefore the New Yorker is actually acting as a mouthpiece, positioning the WH where is wants to be. Am I cynical, or are things getting really scary?

Thursday, April 06, 2006

Iranian Nuclear Crisis

The New York Times carries an opinion piece from Javad Zarif, Iranian ambassador to the United Nations. Zarif argues substantially that there need be no crisis, that things really can be dealt with satisfactorily in a collegiate way, addressing the concerns of the west and the needs of Iran.

I'm leaning towards Iran here. Nuclear proliferation is a dodgy thing, and one to be watched. However, it's difficult to think that Iran poses more of a nuclear threat viz. terrorists sourcing nukes there than, for example, some of the former Soviet satellite states. Iran is a huge, fairly well developed country, that has a lot to show others in the region about how societies can be run. There are pretty bad things going on there as well, but as I blogged yesterday, the USA ranks alongside Burma in the jailing of reporters stakes, so there's no beacon of virtue there.

Many of the Soviet satellite states already have nukes. Many of them are far more repressive than Iran. Many of them are more anti-American than Iran. And many of them are absolutely corrupt. Yet they are not threatened by America - why is this?

Here's a conspiracy theory - maybe the really really corrupt states are 'buy-offable', and the enrichment of leaders can make them pliable and controllable. Iran, being less corrupt and more ideological (or simply ideological) cannot be bought. Maybe that is the problem. Maybe this is all about control, and those who cannot be controlled (irrespective of their human rights records, their political ideology if any, or their crimes) are designated enemies - axis of evil types, like Iran and North Korea. Larger countries, like European countries and China, are controllable through the financial markets. Rogue states are those that simply do not agree, and as they cannot be dealt with through bribes disguised as aid, or financial market powers, they are dealt with through the international theatre, generating international concern for their inherent threats.

Wednesday, April 05, 2006

Iraq court drops charges against CBS cameraman - Yahoo! News

The US is now the sixth worst jailor of journalists in the world, alongside Burma. Burma.


One of these days we're going to wake up, and realise that our collective apathy has allowed a once great nation to destroy itself, and what it stands for, and in so doing corrupt the ideals for which we stand. The poor guy in this case was denied all due process, and even when the court said (after a year in prison) that there was no case to answer, the guy was thrown back in jail anyway.

I don't honestly believe that these guys, the US guys, I mean, have actually stood away from the battlefield and looked at what they have done to themselves, to what it means to be an American. Such greatness, such wisdom, such intelligence, squandered. Shame.

Iraq court drops charges against CBS cameraman - Yahoo! News

Tuesday, April 04, 2006

Peruvian Elections

The BBC did a very interesting Newsnight last night (and will do so for the rest of the week) from Lima in Peru, looking at the Peruvian elections, (possibly trying to trump John Snow's Channel 4 News Series from Tehran) with a good interview with Ollanta Humala. A good blog on the elections seems to be Peru Election 2006, run out of the University of British Columbia in Canada.

Ollanta is smart, articulate, handsome, and has lot's of good catchphrases like 'the globalised versus the globaliser', and is generally peddling an anti-American line, though he is loathe to admit as much. The comparison with Chavez is made (he even tried his own coup before resorting to more conventional methods, as did Chavez), but Ollanta rejects the extremeties of Chavez. He is against, he says, being globalised by neo-liberal economic policies of the likes of America, and is for the redistribution of the country's admittedly vast natural resources.

On the same show, Greg Palast explores the implications of Venezuela becoming the largest source of oil in the world (alongside Canada) in a permanently high oil price landscape. The Canadians and the Venezuelans sound much more appealing than the Saudi's and the Iranians, dontcha think...what price a hispanic president of the US in the next twenty years?

John Reid and the Geneva Conventions

Oh dear. Just when we were beginning to think that the Labour Party in the UK hadn't gone all NeoCon, John Reid decides to attack the Geneva Conventions as outdated and irrelevant.

While that may be true - sovereignty has long been a contentious issue, this is not a recent debate - the thrust of his argument is that, basically, it should be made easier for the strong to dominate the weak. This is naive and stupid. As I said, it may be that the GC's need reform, but surely not so that the West can annihilate the East? Dumb dumb dumb. Perhaps he's just figuring out that what he could get away with in the North he can't get away with Internationally.

Investing in Protestant Northern Ireland

Sinn Fein complains that the £30m announced for investment in the Protestant community is disciminatory and panders to DUP whinging about underprivilege in Protestant areas. Pity. Sinn Fein should be big enough to accept that this is a necessary move, that all areas need investment, and that politically this is ultimately a good thing. One has to second guess the Shinner's these days as to whether they're talking generally and telling everyone what they really think, or whether they're saying these things for a particular constituency, but on the face of it you've got to say that anything that truly helps the disadvantaged in the North must be welcomed with open arms, and anything that can be pointed to as proof that protestant's aren't in fact, second class citizens, will be politically useful.

And while we're on the trade union buzz...

The French really know how to strike. Chiraq has already relented on the two year thing for firing people under 26, bringing it down to one year, but the strikers are enjoying themselves. Being rowdy is en vogue in France right now, and it is dangerous. There's much to be angry about, and the problem is that every little problem seems to become a huge one really quickly. Remember the Moslem kids running away from cops who were electrocuted? Night after night of rioting. More riots at the weekend about this under 26 issue, strikes continuing.

One suspects that this is not about merely the under 26 thing, or about the Moslem kids for that matter. It is about a deeper rooted malaise that is affecting France, a search for something a little more engaging in the corridors of power perhaps? For Chiraq to go from the populist stratosphere after the contretemps with the US over Iraq, this is a surprising place for him to be. We will watch with interest.

Trade Unions - Addendum on SIPTU and Aer Lingus

Today's Irish Times (sub reqd) reports that SIPTU are threatening strike action if assurances on job security are not received in advance of the floatation of Aer Lingus. Tosh and piffle, again. The Trade Unions are holding the country to ransom again, arguing, in effect, that the labour laws are insufficient to protect the workers in Aer Lingus from the vagaries of the market. Let's extrapolate on this - if the market pushes Aer Lingus to operate in a particular way, in the interests of its shareholders (which it is obliged to do whether a semi-state or not), SIPTU want a guarantee that none of its workers will be affected. They want a guarantee of jobs for life for those that want them, and similarly argue that privatisation is a risk to the future of the soon-to-be-former state airline.

Try this. Given that the market is as the market is, the future of the state airline is threatened ONLY by the insistence of its staff that their jobs are irrevokable in any circumstances. The only way to avoid this is to guarantee state subvention as and when the airline requires it. Therefore, they are asking the tax payer to guarantee their jobs.

As a tax payer, I for one say no. I will not pay the wages of staff in an industry that is underperforming, that is not geared to handle market changes. I will not subvent the baggage handler who refuses to work overtime, the check-in clerk who consistently and dishonestly collects her wages despite chronic underperformance, in the full knowledge that her job can never be taken away.

People, staff, and companies need incentives upon which to operate. Indeed, countries need incentives too. Take away the incentives, or, more accurately, impose disincentives, and you destroy productivity, you destroy motivation to do better, and you fundamentally compromise what should be a key pillar of Irish industry. No, no, and no.

Saturday, April 01, 2006

Are Trade Unions Relevant or Counter-Productive? Part 1

I'm beginning some research into the economics of trade unions, and whether they make sense in a mature market. My concern is derived from two recent events - first, the decision by Irish Ferries to replace its domestic workforce with cheaper East European contractors, and second, the Health Service problems which appear at least in part to stem from trade union politics.

The Irish Ferries dispute was one of a number of incidents where, generally, expensive Irish labour was being replaced by cheaper free-moving, newly-acceded European labour, generally from the former Soviet Bloc, in the Baltic states and Poland. The Gama dispute in 2005 also had similar problems, where imported Turkish labour was not afforded the same rights that Irish workers were entitled to. The whole series of events were symptomatic of what was termed a 'race to the bottom', where Irish industry (and indeed the state itself, through sub-contracting and semi-state structures) was seeking to minimise costs by employing cheaper labout from overseas. The immediate thought struck me that there were three facets to this debate. First, Irish unskilled workers were annoyed that their inflated wage demands were suddenly unacceptable in the face of others who were willing to do the same work for much less. Second, Irish trade unions were annoyed that workers rights were being ignored, which was de facto illegal, when foreign workers were employed. Third, that the unions themselves were being frozen out by the recriutment of non-unionised labour, and often contract non-permanent labour.

The Irish Corporations who were directly or indirectly seeking to recruit cheaper labour were de facto acting properly in trying to minimise costs and maximise shareholder return, which is what they are set-up to do, and indeed under company law this is what they are obliged to do. The corporation would technically be acting in breach of company law if an opportunity to secure reduced costs and increased shareholder return were ignored. I think there is a need here to separate out workers rights from the 'cheaper option' argument.

The 'cheaper option' argument is the most divisive, and emotionally charged aspect of all this. Workers are basically concerned that they are no longer competitive, that their way of life is being eroded by European enlargement, and by a general levelling of the playing field for unskilled labour in particular. The answer to this problem, however, is that these workers need to skill up, to increase their usefulness through training and education. This is of course difficult for the older members of the labour force who find it more difficult to change.

The workers rights argument is more complex. First off, laws are laws and all employees in Ireland are entitled to the protection of those laws. Where those laws are not upheld, this is not right. However, as arguments over the European Services Directive have shown, there are structures within which employees can be employed in one country, and therefore under one legal regime, and physically work in another country with a different, though non-applicable regime. My career has involved considerable consulting, for example, very little of it based in Ireland, but my employer has always been an Irish company. My work has taken me all over Europe, but never did I seek the protection of the laws of that country, I was always under the impression that the terms of my contract of employment, under Irish company and employment law, would be protected by the courts of Ireland. Now that's OK for me, as the standards in Ireland are pretty strict, and I am a skilled worker. However, let's invert that. A Polish worker working for a Polish company but labouring on a building site in Tullamore remains subject to Polish law, and is out of sight and out of mind of the Polish authorities, let alone subject to standards that may or may now fall below those expected in Ireland.

In a completely hypothetical example, this may mean that while the Irish minimum wage is €7, and the Polish do not operate a minimum wage, the worker may only receive €2. The worker may be fired after a single written warning as opposed to the complex employment law in this country that requires a complex series of choreographed events before anyone can be dismissed, and even then the possibility of losing an unfair dismissal claim is significant. The worker may be required to work more than 39 hours a week, and not get paid for overtime, which may be legal in Poland but not in Ireland. I do not at this stage know what specific differences there are between Ireland and any other European country, but there are differences to be sure, some of which will be either more or less favourable to the worker in each jurisdiction.

What we have therefore is an opportunity for European companies to trade on the imbalance in labour laws across the EU, and indeed beyond. The free-movement of workers in an enlarged EU makes Europe more susceptible to this. This is like globalisation, generally. People complain about people working for one dollar a day in China or Bangladesh to make products for 'the West', which is simply another example of corporations exploiting global imbalances in wage expectation and cost of living.

Ultimately, the globalisation process, and the European enlargement process, will rise all boats, and, to mix my metaphors, ultimately level the playing field. What happens in the interim, however, is that raw materials and labour will no longer be acquired in the richer countries where the cost of production is so high (think also the demise of the Irish and European sugar industry). The cost of products in the West will not rise so dramatically as a result, and may well decline. Therefore jeans that would cost well over €100, possibly €200 to make in the west can retail for as little as €20. This would not be possible without globalisation. Government building contracts would be far more expensive were companies like Gama not able to offer such low prices on labour costs.

The question therefore is this: do we go on and allow globalisation and the markets to take their natural course, causing some pain in some sectors in the interim (both in the rich countries where jobs flow east, and in the poor countries where labour standards are poor) or do we intervene to artificially manage the market so as to minimise the pain of transition, and implicitly therefore delay that transition (to the level playing field that I spoke of earlier)? Can the invisible hand of the market actually manage these things well, or does it need support? And the answer to that question is in two parts - social and political.