Sir Freddie Laker, cartel buster and passengers' champion
Sir Freddie Laker died on February 9th, 2006, having been one of the leading pioneers in opening up civil aviation to vast numbers of ordinary people who were previously priced out of it. Most airlines, both public and private, were members of IATA, the International Air Transport Association, which in those days acted to limit competition between them. They charged the same (high) fares, and were even subject to regulations governing the quality of sandwiches they served to prevent attempts to poach passengers by serving better ones.
I sometimes flew with Loftliedir, the Icelandic airline that refused to join IATA, and could charge lower fares. But it did involve stopping at Keflavik on the way, and therefore took longer.
Sir Freddie founded Laker Airways in 1966 with a couple of second-hand turboprops. He ran no-frills charter flights for which passengers bought tickets on the day of travel, and provided their own food. It became his model for the later 'Skytrain' flights, but it took years of negotiating with civil aviation authorities, which were themselves subject to intense strong-arm lobbying by established airlines trying to squeeze out would-be competitors, and by politicians trying to protect their national flag-carriers.
He applied for a licence to run low-cost transatlantic flights in 1971, but it took years of wrangling against determined opposition before the first Skytrain flight to the US took off in 1977. It was an immediate sensation, charging £59 one-way for a no-frills flight aboard his red, black and white DC-10s. His business model aimed at a load factor of 50 percent, but within a year it was 80 percent. It was then that he received his knighthood.
It changed aviation forever. The big established airlines, British Airways, Pan Am and TWA, immediately matched Laker's standby fares and rules for a few of their economy-class seats, and standby fares were introduced. The media commented on the new "blue jean" young passengers who were taking to the airways as air travel at the new low prices achieved mass popularity. Laker's low-cost model was the precursor to later budget airlines such as easyJet and Ryanair.
His company went bankrupt in 1982, following an aggressive and sustained campaign by American and European airlines to put him out of business. The campaign included pressure on banks to foreclose on loans made to Laker. A civil lawsuit brought by Laker was settled out of court in his favour.
Civil aviation was changed forever by Sir Freddie, and his legacy lives on in the low-cost carriers that fly today. His name is preserved in several airport lounges named after him, and in planes named "Spirit of Sir Freddie." He is remembered with affection by those who campaign for choice and competition to break open cartels and service customers instead of protecting producers.
Why not do this anyway, Brexit or not?
We have to say that we don’t see this as a threat:
Britain will cut taxes and slash tariffs under secret plans drawn up by officials to kick-start the economy in the event of a no-deal Brexit.
Sir Mark Sedwill, the Cabinet Secretary, has led a cross-departmental team examining the "economic levers" that can be used to make Britain more competitive.
The plans, which have been drawn up under the codename "Project After", include a series of aggressive policies to help the UK "steal a march" on the European Union.
For we desire that low tax, free trading, nation anyway. Given that the cognomen is richer than we are we just don’t see anything wrong with Singapore By The North Sea.
However desirable we don’t see why this has anything to do with Brexit. Britain would be a better place as a free trading low tax nation whatever our relationship with Brussels. The difficulty is only on whether we would be allowed to be so given our current relationship.
Which is where some Remainers are actually right. There are those who insist we must stay in in order to be a European social democracy hiding behind the trade restrictions of the zollverein. Membership of the EU virtually forces that upon us therefore membership is desirable. For it closes off the entire political debate over the possibility of our not being such a European social democracy.
Merits or not of Brexit is argued over here among us just as it is elsewhere. But there’s no doubt that it opens the political and economic possibilities for Britain. And we think slashing tariffs and lowering taxes are a good idea in themselves, how ever we get there.
Vikings or Vagabonds?
There are two types of people in the world. One to whom the conception of Medieval Iceland as a stateless nation appears to be a Hobbesian nightmare, the other who considers it a Nozickian dream. The problem is that Icelandic society from the late ninth century classifies itself into neither category of convenience.
The structure of Icelandic society was two-fold. There was a strong community of people with shared norms, values and source of income—culminating in a nation—and following from this there was no executive branch. It was a phenomenon most poetically described by the 11th-century historian Adam von Bremen when he said that Icelandic society had ‘no king but the law’.
It was a decentralised order, but it’s a mistake to believe that this means chaos or confusion. Iceland was complex and small but its rules were real and are not easily dismissed as a crude privatisation of government of the kind Jared Diamond says would be ‘beyond Ronald Reagan’s wildest dreams.’ It is fair to say, though, that there was no state, in the sense that we are familiar with today.
Iceland’s unique geography, culture and population all play into how property developed, and we ought to be dubious that it could be copied in our modern, vastly populated and interconnected world today. Its geography, relative to where its initial inhabitants arrived from (Norway) may have been more fertile and thus more attractive for a largely agricultural economy. The population of c. 25,000 made it possible for more coordinated conflict resolution and a homogenous culture, an idea supported by the theory of Dunbar’s optimum number which explains why they preferred kinship over kingship. But that’s not to say there aren’t lessons to be learned.
Here I explore three approaches to medieval Icelandic society, each one offering a unique perspective on the dynamics of such a complex arrangement.
Kropotkin
Kropotkin’s ideas regarding mutual aid institutions are a helpful but insufficient perspective on Icelandic society. He maintained that self-sacrifice and loyalty to a common cause and concern for the well being of the whole are advantageous. Communities which were sociable and therefore interdependent on each other were the most successful in the struggle for survival.
Kropotkin's rejections of the Hobbesian state of nature as ‘nasty, brutish and short’ is largely evident by the lack of an executive arm of government in Iceland. Nonetheless, it is simplistic to assume that the reason there was a relatively peaceful and sustainable society was that they avoided competition by maintaining self-sacrifice.
During most of the Icelandic commonwealth period (930 - 1262 AD), Iceland was a far more independent society in which members chose to live competitively. After all, they fled from the relatively centralised reign of Harald Fairhair, King of Norway. Fairhair, in conformity with western European ideas of the time, tried to govern as the other kings had done on the continent and in the East. In doing this he deprived many local chieftains of their landed property which they perceived their heritage gave them the exclusive rights to.
Competition was evident in their political system by the relationship between the ‘godi’ and his ‘thingmen’ (those that followed the godi). This was a contractual relationship but they did not require submission in a feudal sense, as the ‘thingman’ was free to transfer his allegiance to another ‘godi’, reducing the principal-agent problem. Lineage, not the household, was the standard unit of society—though this was weakened by family ties breaking from travel from Norway to Iceland.
Iceland’s distance from Norway created a level of independence, that meant its society had to stand on its own two feet. When it needed aid they could not rely easily on neighbouring states. They developed a system of claims, where wrongdoings created fines and these could be exchanged. In effect, a market for aid based on past behaviour—not one based on territory or ancestral allegiance.
Kropotkin’s ideas are helpful in understanding how Icelanders allowed for social welfare in society. Charity was not systemic but became increasingly so with the conversion to Christianity in 1000 BC. Instead, it was provided by the ‘hreppr’, a form of communal organization (though note: not communal property ownership) and operated mainly through duties arising from lineage. All members of the ‘hreppr’ were obliged to attend three meetings a year, they did not receive any payment for their work and the right to vote was the privilege of the farmers paying tax. Those that did not pay alms to the poor (called ‘omagis’: those unable to work) were punished.
Nevertheless, the competitive nature of Icelandic society is evident as beggars and vagabonds were not allowed to receive charity, those in the ‘hreppr’ that maintained people from outside the commune were punished. The reasoning was that not only had they no fixed domicile (so it was unclear who was responsible for them), but they withheld from society their much-needed manpower, and caused social problems.
While mutual aid is evident in providing forms of social welfare, evidence for communal land ownership is yet to be found in fiery sagas such as the Laexdaela and Njal’s saga which demonstrate a competitive yet cooperative community. The Njal’s saga provides an intriguing story defending family honour, but it arises from competition and private market systems. The arrival of extended families together is understandable (presumably so travel to Iceland from Norway was safer) but large families travelling together may not always correlate to communal property ownership.
2. Friedman
Friedman’s preferred unit of analysis of medieval Iceland is its legal system which has origins in its systems of private property ownership, however, his analysis fails to consider the importance of communal organisations such as the ‘hreppr’.
Political leaders competed for non-territorial jurisdictions, thus political power was over people rather than land, and crucially - marketable - so seats in the legislature could -quite literally- be bought. The government, as we would understand today, was not very political (in the sense that they did not have much power) perhaps they had understood the virtues of public choice theory before us. This system helped to ensure that subjects were consumers so their leaders; ‘godi’ had to win over their loyalty thus a leader rife with corruption and abuse would simply lose followers.
Furthermore, the system of property rights in relation to the law ensures that the weak are not always defenceless and the rich are not always immune to consequences from their wrongdoings. Those who could not prosecute or enforce a verdict could sell the claim to another who did and who expected to make a profit in both money and reputation by winning the case and collecting the fine.
As with Ostrom, Friedman provides evidence from the sagas which emphasise the cultural norms which governed the society and made it conducive to sustaining the system of property rights.
“ Conflict between two groups has become so intense that open fighting threatens to break out in the middle of the court. A leader of one faction asks a benevolent neutral what he will do for them in case of a fight. He replies that if they are losing he will help them, and if they are winning he will break up the fight before they kill more men than they can afford!”
This arises from the ‘feud’ system; a system of private law whereby the threat to harm is more believable if you have harmed a member of the society than if you have not. Those who died must be paid for, demonstrating a strong spirit of individual responsibility in the society.
Although the reliability of the sagas is questionable, they are more useful than many give them credit for. Most of the sagas were written during or after the Sturlung period, the final violent breakdown of the Icelandic system in the 13th century and so are seen by many as evidence for a largely violent society. However, even during this supposedly violent period, the sagas still demonstrate the cooperative nature of the society; the death rate then, is comparable to the rate currently in the US.
3. Ostrom
An approach using Ostrom’s seminal work; ‘Governing the Commons’, is centred around common-pool resource property arrangements. Though not intended to be projected retrospectively to previous societies, her work allows for further exploration between the usual public-private dichotomy when examining Icelandic society.
Ostrom opposes both the ‘Leviathan is the only way’ dogma on the left and the free market technocrats on the right. Instead, she emphasises a middle ground whereby decision making is taken at very low levels. This explains the occurrences of the ‘hreppr’ (communal organisations which may have arisen from neither public nor private property ownership) and why such systems which were not private could still have well defined rights and responsibilities.
Her empirical study focuses on societies vastly different from medieval Iceland, nonetheless, the lack of a centralised system in the fishery of 1970s Alanya, Turkey provides some insight as to what life could have been like in medieval Iceland. National legislation that has given cooperatives jurisdiction over ‘local arrangements’ has been used by cooperative officials to legitimise their role in helping to devise a workable set of rules. Albeit a lack of an executive branch of government, customary laws or risk of being outlawed from Iceland may have encouraged such a system of mutual cooperation.
Medieval Iceland has many lessons for us today. One is of the importance of decentralised systems of power; from the hreppr, to the system of courts, the only ‘King’ was the consumer. The advancement of technology can help to coordinate localities to make such a system easier to implement. Additionally, turning criminal offences into civil ones where victims could transfer their claim then victims would have a greater incentive to bring the criminal to justice. This would help in overcoming the public good aspect of criminal enforcement. Though this is not a panacea to solve the array of problems that come with very centralised governments, it reminds us that keeping leaders on a short leash and economic freedom go hand in hand.
The medieval Icelandic state outlasted the United States by 106 years (the U.S. had its first civil war after c. 80 years of its birth) and had incredibly civilised and complex societies. Exploration of this fascinating society from different perspectives allows for both rigorous analysis of their political philosophies and even ideas for policy prescriptions today.
Stasi – the East German secret police
It was on February 8th, 1950, that one of the most feared and extensive surveillance organizations was established in East Berlin. It was the State Security Service, (or Staatssicherheitsdienst, SSD), which everyone called the Stasi. It spied on its own citizens on a massive scale, as well as engaging in foreign espionage. It was the counterpart of the Nazi Gestapo, although considerably more extensive. Like the Gestapo, it used citizens to spy on citizens.
The opening of its files after the fall of the Berlin Wall and the collapse of Communism staggered the world with the scale of its operations. It was estimated to have had 500,000 informers, although a former Stasi colonel put the figure as high as 2 million if occasional informants were included.
Its purpose was to stamp out ruthlessly any dissent in the German Democratic Republic, described by Sir Alec Douglas-Home as “neither German, nor Democratic, nor indeed is it a republic.” It was in fact a totalitarian Communist dictatorship, like the other Soviet satellite states of Eastern Europe. Its secret police infiltrated most aspects of East German life, such as schools, universities and recreational organizations such as sports and computer games clubs.
Its agents filmed people though holes drilled in hotel rooms or in their apartments. It intercepted people’s mail and telecommunications. It had a Division of Garbage Analysis that searched garbage for signs of Western foods or other suspicious items. It stored people’s scents so that sniffer dogs could track their movements. It trained, armed and sheltered Western terrorists such as the Baader-Meinhof gang. It ran prison camps for political dissenters. It funded neo-Nazi groups in West Germany to desecrate Jewish sites in a bid to discredit the West.
The activity of spying on, intimidating and imprisoning their own citizens is something that had been practised by all Communist governments, including the Soviet Union, its Warsaw Pact allies, Communist China, and Cuba—which received help from the Stasi in setting up its own secret police. More recently it has been done in Venezuela. This is not something that just happens to be done; it is part and parcel of Communist totalitarianism that it cannot tolerate dissent and has to seek out and expunge it, no matter what the cost is to the human rights of their citizens.
People who suppose it would be different today, and that current apologists for those brutal regimes would behave differently if they achieved power, are living in a fool’s paradise. This always happens. It is a necessary corollary of an evil system, and the Stasi is simply one of the most brutal examples.
It's rare to find The Guardian so entirely right about something
Certain ways of doing things are but passing phases - the technology of production can indeed determine social relations. Given the centrality of this idea to Marxist thought we’d all rather expect The Guardian and the like to grasp it but it does seem to be rare that they do.
For example, in the conversation about the High Street. Quite clearly there is going to be pressure on retail space dependent upon footfall as online removes that footfall part. The latest ONS figures are that 20% of retail sales are online now. It’s not a surprise therefore that the High Street is looking a little gap toothed.
This being something that must, we are told, be fought. A struggle that must be undertaken. Whereas this is rather something that must be adapted to - that technology has changed so therefore so must the relations.
Then we get that rarity, The Guardian explaining this to us all, clearly and simply:
We must fight to save our dying high streets
Ah, no, not that bit. This:
Perhaps we should consider that the high street is a passing phase in history, a 20th-century phenomenon? The modern high street evolved in the 19th century from temporary then more permanent markets set up within a living community. The markets evolved into permanent shops and, in doing so, displaced the very lifeblood of the living community. Then we had the adverse effect of cars bringing out-of-town supermarkets and the huge additional cost of parking near the high street. Now we have the internet killing off the remaining high street shops but leaving no living kernel in their place because of housing regulations and excessive rent and parking charges from councils.
I believe the 20th-century high street may be essentially dead and what is needed is further evolution so that these empty shops are converted back to living accommodation. We may have fewer shops, but they will again be within walking distance.
Yes, quite so.
Don’t worry too much about this though. It’s not that the institution of The G has suddenly managed to get something right. This is a reader’s letter, not something from the production team - that explains why it’s right perhaps.
The meaning of Maastricht
On February 7th 1992 the Maastricht Treaty was signed. It was more properly called the Treaty on European Union, and was signed in Maastricht by the then members of the European Economic Community. Its purpose was to further European integration. As part of that project it renamed the EEC the European Community, dropping the word ‘economic’ to emphasize its move into social, foreign, judicial and security matters. It retained that name until 2009, when it officially became the European Union.
The Maastricht Treaty heralded moves to create a common European currency, the Euro. The UK and Denmark secured opt-outs from the European currency and its attendant convergence criteria. The UK also secured an opt-out from the Social Chapter, a concession rendered meaningless when the working time directive was imposed under health and safety rules instead. The first government of Tony Blair abandoned the Social Chapter opt-out, but the UK and Ireland retained the opt-outs they secured on the Schengen agreement on borderless travel.
The Maastricht Treaty probably marked the start of an increasingly fractious relationship between the UK and the EC/EU. Many people in the UK thought that European integration was completed with the establishment of a single market, and were opposed to the creation of a European state as a political entity. Some European leaders were quite open about wanting a political union to oppose the influence of the United States, and to have a European currency that could compete with the dollar for world eminence. Most UK people did not support such ambitions. Indeed, many saw more in common with the US than they did with the EU.
Edmund Burke had written of the American colonists’ attitude to British rule: “They augur misgovernment at a distance and snuff the approach of tyranny in every tainted breeze,” and the same might be said of increasing misgivings many UK people felt about the rules being imposed on them from afar. It is an entirely plausible claim that it was on this day 27 years ago that a fuse was lit that would eventually burn its way to the heart of the UK’s relationship with the EU, and would explode into the vote in 2016 to change that relationship.
It could be that only the older among us can afford to drink reasonably
Those of us who work or have done in journalism have a certain problem with the current safe drinking limits. What is said to be the maximum safe weekly consumption is what we certainly used to call lunch. That says more about us than anything else of course.
And yet it is also true that the limits of 14 units a week are ludicrous. The earlier, higher, limits were quite literally plucked from the air. That’s before the near random reduction in them. The actual truth is that being teetotal carries risks, as does any level of alcohol consumption. What we want to know though is what is the accumulation of the various risks, that being imbibing up at the 30 to 40 units a week level being as risky, overall, as drinking none.
However, we think there might be a different explanation for this:
Overall, 21% of people aged 16 and over in England drink more than the 14 units a week recommended by the UK’s four chief medical officers, a fall on the previous year.
Far more men (28%) than women (14%) drink more than this threshold, according to NHS Digital, in a detailed portrait of alcohol and the harm it causes.
Men are likely to drink more than women - not a great surprise to any observer of our society over the generations.
NHS Digital’s report, which used 2017 data from England, showed that adults from wealthier backgrounds (27%) were almost twice as likely as those from poorer homes (15%) to drink more than the 14-unit weekly ceiling.
The rich tend to drink more than the poor.
Those aged 55 to 64 are the likeliest to drink more than 14 units a week, with 36% of men and 20% of women doing that.
Those more mature in years are more likely to drink more than those less wise. A reasonable response to modern life we might think.
Yet we should also consider the manner in which race changes with age cohorts. The BAME, for example, portion of the population is rather higher among the young than it is among the old. That’s what the recency of mass immigration means.
It’s possible to piece this together. We tax drink highly in the UK. The result of which is that those who are able to enjoy it are the richer, older, whiter, males among us. The only group left that can afford to enjoy it in quantity perhaps.
Any other policy we had which privileged rich old white guys would be rightly decried and changed. Perhaps we should change our taxation of alcohol therefore?
Matthew Lesh on Radio 4 on zero tariff free trade
This morning our Matthew Lesh took to Radio 4’s Today Programme to explain why zero tariffs in event of no deal, might actually be a good thing. Of course you all knew that, but it appears that Mercantalists are still out there, fighting the bad fight.
Why is the health of Public Health England not assessed?
You will have noted that the Secretary for Health and Social Care is promoting the notion that the NHS books can be balanced by keeping citizens fit, well and away from hospitals, doctors and nurses. That would be a good idea if it worked but, if it does not, NHS costs will keep rising and the new budgets for Public Health England (PHE) will be wasted. Meanwhile public health activities at local authority level, where the real work is done, continue to be stripped of resources, leaving the NHS actually worse off. The DHSC must be aware of the contradiction but this is their usual Management by Press Release.
PR and financial shuffling apart, the big question is whether spending more money on prevention, i.e. “health”, actually saves having to cure people, i.e. the NHS. How effective is the generalized spending by PHE as distinct from their essential research and prevention of epidemics?
Since 2012, the “outcomes” from public health spending, at national and local levels, have been formally measured. We should therefore have good idea by now of where value for money lies. Needless to say, it is not that simple. The measurements have, mostly, been taken but no one has added them up or drawn any conclusions. Every three years or so, the goalposts move: the consultation on the latest such exercise concludes (after a computer glitch) on 19th February: “Proposed changes to the Public Health Outcomes Framework from 2019/20: a consultation”. Join in and share the wonder.
“The PHOF [Public Health Outcomes Framework] consists of 66 high level indicator categories which include 159 individual indicators” (p.5). It is immediately obvious that even if there was measurement consistency and expected or planned outcomes with which to compare them, the sheer number of probably contrary indicators would make overall performance impossible to judge. It would appear that no thought has been given to defining what PHE is supposed to achieve.:
“The indicators are grouped into overarching indicators and 4 supporting domains:
• overarching indicators (high level outcomes of life expectancy)
• improving the wider determinants of health
• health improvement
• health protection
• healthcare public health and premature mortality.” (p.6)
This looks a bit more plausible; life expectancy and certainly healthy life expectancy (i.e. before one needs permanent health or social care) are valid ways to measure public health. But once one gets down to the details, it transpires that almost every aspect of life is being measured and included in PHOF, irrespective of whether improvements in those indicators can be attributed to PHE, for example, readiness of children for school, their performance in school, “Percentage of people aged 16-64 in employment”, crime, first time offenders, complaints about noise, children in low income families, road fatalities, re-offending rates, and homelessness.
Clearly quite a few, probably the minority of, metrics are relevant to PHE but the main thrust here is that no distinction is made between health and other social measures. Ironically, despite all the publicity given to the “Five a Day” promotion to restrain obesity, the listed metrics (2.11i) were not collected.
One major issue amongst the lists of outcomes is loneliness which “has been identified to be a serious public health concern, as harmful as smoking and obesity, At the beginning of 2018, the Prime Minister highlighted the issue of loneliness, announcing a Minister for [sic] Loneliness and committing to develop a national strategy to help tackle loneliness and a national measure for loneliness. The national strategy was published on 15 October 2018.” (p.18). The first Minister for Loneliness, who was also the Minister for Sport, quit after her first month and does not appear to have been replaced. The Strategy boils down to saying loneliness is a big social problem, too big for government so everyone must pitch in and sort it. It’s hard to see how PHE can be accountable for it.
The metrics that most illustrate the division of PHE from reality are those for inequality in life expectancy (0.2ii, iii and vi). It is well known that the more affluent tend to live longer. In the mind of PHE this is unfair and PHE should work to increase life expectancy for the less affluent. No one would argue with that but the performance measures selected look only at reducing the gap, i.e. the level of inequality, which can be more easily achieved by reducing the affluence of the wealthy than by increasing the affluence of the poor as the study of any left-wing government shows. In any case, that is a matter for the Chancellor of the Exchequer, not PHE.
The bottom line of all this is that, despite the much publicised collection of data to assess the productivity, i.e. health, six years ago of PHE, no one has attempted to add up the numbers or draw conclusions. Until the government does that, it will continue to chuck our money away.
Happy birthday, Singapore, a prosperous high achiever
On February 6th 1819, 200 years ago today, Singapore was founded by Sir Stamford Raffles on behalf of the British East India Company. The islands became a crown colony in 1858, achieving independence as part of Malaysia in 1963, and as an independent nation two years later.
Under Lee Kuan Yew’s free market, low tax governance, Singapore made the transition from developing country to developed one in a single generation. Although it consists only of a group of islands lacking natural resources, Singapore became an Asian ‘tiger’ economy, relying on external trade and the talents of its peoples. It is now one of the richest countries in the world, and scores highly for the quality of its education, healthcare, life expectancy, quality of life, personal safety and housing. Income inequality is high, but 90 percent of homes are owner-occupied.
It is very business-friendly and enterprise-friendly. Its top income tax rate is 22 percent, and its top corporate tax rate is 17 percent. It has no capital gains tax and no inheritance tax.
Its spending on social welfare as a percentage of GDP, is among the lowest in the world. There are no unemployment benefits. Healthcare in largely financed by Medisave, a compulsory national medical savings account system that covers about 85% of the population, and public hospitals make independent management decisions, and compete for patients. A subsidy scheme helps low income people. Singapore has the world’s lowest infant mortality rate, a high vaccination rate, a low obesity rate, and life expectancy is 80 for men, 85 for women.
Singapore has been an economic success story, and one based on sound policy. Other nations, rich in natural resources, have been ruined or held back by inappropriate, anti-business policies, but Singapore has moved up the world rankings of economic freedom to be among the top few. It has been, and still is, an example to the world of what can be done. It is a pity there are not more like it.