2006 Blog Archive for Brian Micklethwait
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Link to 2007 Archive

	Breaking the deadlock with hybrids	18 DEC 2006
	Postal markets and front doors	11 DEC 2006
	Leon Louw on which governments do best	07 DEC 2006
	Cost benefit analysis of antitrust versus principled opposition	28 NOV 2006
	USA electricity supply and the perils of deregulation	20 NOV 2006
	Greenspan says no need for competition policy	13 NOV 2006
	"Linux has won"	06 NOV 2006
	The word monopoly is a classic exercise in definition hopping	30 OCT 2006
	The EU will never be mad enough for Britain to leave	23 OCT 2006
	Two by two is good - one by one would be even better	16 OCT 2006
	Good monopolies	09 OCT 2006
	Perfect piano competition and real piano competition	02 OCT 2006
	The cheap Vietnamese shrimp menace	25 SEP 2006
	Two cheers for the Theory of Perfect Competition	18 SEP 2006
	The EU consumer is able to consider his own interests	11 SEP 2006
	How the internet competes with regular broadcasting	04 SEP 2006
	Guido Fawkes versus the grande dames	04 AUG 2006
	Bring on the high definition monopoly	31 JUL 2006
	Roaming competition	24 JUL 2006
	The fifty pence difference between Tesco and the little shop around the corner	17 JUL 2006
	Competition between sets of rules	10 JUL 2006
	No monopoly for Ruth Miskin	03 JUL 2006
	Will London's airports ever compete?	26 JUN 2006
	In praise of dominant positions	19 JUN 2006
	Does sport have to be political?	12 JUN 2006
	Competition once - then politics	05 JUN 2006
	"Your nephew could run one"	30 MAY 2006
	Microsoft and Mittal	22 MAY 2006
	Keith Boyfield on the slothfulness of Britain's competition authorities	15 MAY 2006
	Closed skies	08 MAY 2006
	Gazprom and Centrica	01 MAY 2006
	Good news on free trade from the USA	24 APR 2006
	James Tooley on competition in education	17 APR 2006
	Competition in competition	10 APR 2006
	Compulsory interoperability	03 APR 2006
	A case of price control?	27 MAR 2006
	Declining British competitiveness?	20 MAR 2006
	Tesco versus everyone else	14 MAR 2006
	Competitions to encourage competition	06 MAR 2006
	The podcasting menace to the British broadcasters	28 FEB 2006
	Compelling Deutsche Telekom to open up its own network to competitors	20 FEB 2006
	Buying a chair from a monopolist	13 FEB 2006
	Competition versus cooperation: the false choice	06 FEB 2006
	The free car parking menace	30 JAN 2006
	Morocco opens its skies and its minds	23 JAN 2006
	Syed Kamall on how Europe's past is threatening Europe's future	16 JAN 2006
	The new language of diplomacy	09 JAN 2006

Breaking the deadlock with hybrids
18 DEC 2006 – I occasionally use the Blue-ray versus HD DVD battle of the gauges, to illustrate the point that the free market can supply rules and not just physical stuff that obeys whatever rules the world's various governments may choose to impose.

One of my current daily blog reads is engadget, and they have been giving this high definition disc saga their continuous attention. However, engadget now reports that there is, as yet, no sign of an early winner in this ferocious two horse race. A lot of people wanted this one to be all over by Christmas - and yes, Happy Christmas everyone! - but, it isn't, and probably won't be by next Christmas either.

Which has created a problem both for the hardware makers and the software creators. High definition is the wave of the future, eventually. But which format do they bet on now? Whichever way they bet, it's a huge risk, and there is the further risk that we punters will simply ignore the entire high definition ruckus until a definite winner emerges. That's definitely my response. So, like me, do they just wait and see, and meanwhile do nothing? That too is a big risk. Maybe there is money to be made now, market share to be gained now.

Maybe the immediate future belongs to those who make machines which will play both formats. Yes, such machines will be more expensive than machines which bet one way or the other but not both, but they will surely bring closer the day when someone will win this thing, because if these hybrid machines catch on, at least among a few punters, that will allow a decent number of high definition discs to be sold, and thus for a winner of the race to emerge that much sooner.

The high definition battle is between different versions of the future. In the music market, the problem was to enable the present to find its way towards a future that was already settled, but which in the meantime was rather a big leap. A winner had already emerged for the next generation of music disc, with snazzier sound than of old. It's called the SACD, which stands for Super Audio Compact Disc. But the problem was that punters like me were refusing to buy SACDs, because we couldn't play them with our existing CD players, and we weren't going to buy expensive new kit just to play a tiny handful of new discs. This time, the hybrid that broke the deadlock was a hybrid disc which will eventually play in the new machines when you finally get one, but which will in the meantime play on regular old CD players. Pure SACDs didn't sell. Hybrid SACD/CDs are selling well, and with them, eventually, many more SACD players.

The moral of all this is that competition between different sets of rules can work, one way or another, this way or that way, and even if it takes a long time to resolve itself. The market can provide.

Or, to put it another way, there is no need whatever for the metric measurement row.
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Postal markets and front doors
11 DEC 2006 – The New York Times loves to criticise the USA, and if that means sometimes criticising the USA for being insufficiently devoted to the principles of free market capitalism, well, fine, if that particular bit of mud can be made to stick, that'll do:

On Oct. 17, only one day before a meeting of the European Commission, the chief executives of five major European letter carriers, representing 60 percent of Europe's mail volume, gathered to express their support for the complete liberalization of Europe's postal sector. In their countries, the companies demonstrated, a deregulated and competitive postal industry has led to lower prices and better service.

A day later, the European Commission proposed that the 25 members of the European Union have until 2009 to open their letter-delivery markets to full competition.

Well, I do have some doubts about this free market in postal services. My worry concerns the final five yards, as they would say in the USA, the bit where the letter or the package gets through the front door of my block of flats, even when I'm not in. Letters are no problem, they can just be shoved through the letter box. But what if it's a big box of books from Amazon, or a big electrical gadget? Is every postal operator going to have the key to my block's front door? If not, then how can this market work? If so, well, I'm not happy about that either.

The postal operators who win this particular competition are going to have to get better than such operators seem to be now at arranging for parcels to, I don't know, include a phone number, so that they can be delivered at a time when the householder is in and able to open the front door. Or, an alternative idea might be to have the country dotted with offices where undelivered parcels can be dropped off for later collection. We could call them: Post Offices.

However, in order to make itself more competitive, Britain's former postal monopolist the Royal Mail is busily closing many of its current Post Offices.

But the free market will, I think, come up with innovative solutions to the problem of people no longer living near Post Offices. And the front door problem will surely also be solved. For I agree with the New York Times piece that in this particular respect, Europe is doing well. There may be troubles ahead. But just because there are troubles, that doesn't mean that they won't be sorted out. Just because I don't know what to do about the front door problem, and because others don't know what pensioners can do if they don't live anywhere near a Post Office, doesn't mean that everyone else concerned will remain similarly and indefinitely baffled.
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Leon Louw on which governments do best
07 DEC 2006 – Last Monday I recorded a conversation with Leon Louw, the Executive Director of the South African Free Market Foundation. Is it correct behaviour to recommend your own interviews? If so, I do, enthusiastically. It lasts about fifty minutes and is well worth anyone's time, I think.

I talked with Louw about his latest publication, entitled Habits of Highly Effective Countries: Lessons for South Africa. And as he made very clear, the lessons are actually lessons for everyone, everywhere.

Which countries do well, and why? Which countries do badly, and why? And what does doing well and doing badly mean? Those are the kinds of questions he has tried to answer.

Louw's overriding concern is to assemble facts whose factualness simply cannot be denied, a process which is made a lot easier in recent years by the existence of the internet. A few mouse clicks and a few hours of reading replace days in libraries and in hotels and airports and places. On the internet, you might say, ideas can compete on a level playing field.

Read the whole thing and listen to the whole thing if you want to understand the whole thing. What I will do here is point you at one particular discovery that Louw has made, concerning the nature of government. Size, says Louw, is not really the variable that matters when it comes to governmental goodness or badness. What matters is how the government behaves. Is it arbitrary and capricious, or is it predictable? Is it lawful, or whimsical? Does it concentrate on devising clear rules, and then ensuring that everyone, including its own officials, sticks to those rules? Or is it an armed criminal gang? The point is that a small criminal gang can do a lot more harm to a country that it commands than a large and quite heavily taxing government whose rules and depredations are nevertheless reasonably easy to see coming.

Government spending should also be predictable. Welfare payments are relatively harmless, provided they are governed by rules, as they tend to be. On the other hand, government "investment" like that in Concorde (which Louw specifically mentioned) or the Airbus enterprise (which he didn't mention but might easily have) is very harmful, because of its arbitrary nature. Yes a few jobs are created. But many more are destroyed because of the vast swathe of uncertainty that surrounds such governmental attempts at entrepreneurship.

As to what is meant by a country doing well, the answer to that is that economic growth is good by almost any measure that you care to use to measure it with. Louw's vision of the world is one in which all countries are as rich as the rich ones are now.

As far as the EU is concerned, I would imagine that your average EUrophile might, despite Concorde and Airbus, find himself rather comforted. Louw does not give the usual free marketeer's total thumbs-up to the Anglo-Saxon model, because when Anglo Saxons are being unpredictably Anglo-Saxon, they are liable to do worse than EUromaniacs when they are being predictably EUromaniacal.
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Cost benefit analysis of antitrust versus principled opposition
28 NOV 2006 – Braden Cox of the Technology Liberation Front includes, in his recent posting about antitrust, a YouTube video plug for anti-trust regulation, put out by the American Antitrust Institute.

It's noticeable that they begin with references to sport, playing fields, and the implication that there have to be rules imposed upon the competition, from outside and above, by the government. I mean, the players cant' referee it, can they?

Milton Friedman, recently and sadly deceased, is quoted, by way of correction:

But as I watched what actually happened, I saw that, instead of promoting competition, antitrust laws tended to do exactly the opposite, because they tended, like so many government activities, to be taken over by the people they were supposed to regulate and control. And so over time I have gradually come to the conclusion that antitrust laws do far more harm than good and that we would be better off if we didn't have them at all, if we could get rid of them.

Antitrust laws, in their static way, ban activities for which officials and scholars have not yet discovered the rationale; markets are more dynamic than that.

Cox, choosing between the consequentialist objections of Friedman and the fundamental objections of Smith, seems to go with Friedman:

But the main point is this: way too many people place too much faith in the antitrust dogma without measuring its real results. Like any form of economic regulation, there needs to be a cost/benefit analysis.

I prefer the way that Smith begins the piece that Cox links to:

Deregulators appear to be in two minds about antitrust. They denounce the actual practice of enforcement. Yet, almost without exception, they endorse it in principle.

Getting rid of antitrust would also focus reformers' energies on the true enemy of competition and consumer welfare - state created privileges.

USA electricity supply and the perils of deregulation
20 NOV 2006 – There's no denying it, if this story is anything to go by. The deregulation of electricity supply in the USA has, so far, failed.

The story is that in the USA, various states once upon a time had highly regulated electricity monopolies, which lobbied for deregulation, by promising that deregulation would bring down electricity prices, and got it. But, deregulation instead caused prices to go up. So, deregulation was declared to be a failure, and it was reversed.

Which means that, politically speaking at the very least, deregulation was a failure. They tried it, and they couldn't make it stick.

But what if another story had unfolded. Suppose that they had deregulated electricity, thanks to the machinations of those evil monopolists, and suppose that instead of regarding increased prices as a scandal, voters had just said, well, I guess we'll just have to pay more for our electricity.

At that point, surely, more suppliers of electricity would have entered the market, perhaps offering new methods of electricity generation. Competition would then have indeed been a reality, and it might in the long run have resulted in those very price reductions that the lobbyists for the former monopolists, when they were monopolists, had promised so insincerely.

This makes me speculate that those monopolists not only began by lobbying for deregulation, so that in the short run they would be able to put up their prices and make a killing, but that later, and rather more anonymously, they may also have joined the clamour to the effect that deregulation wasn't working, so that their prices would then be regulated down again, along with the prices any potential competitors would have been able to charge.

The monopolists in those states where deregulation was attempted, but then reversed, got exactly the future, immediate and long term, that they must have wanted:

Eight years later, for all practical purposes, there is no such competition. Almost no one is constructing new generating facilities because the costs are too high and the returns too uncertain.

The only good news in this story is that if any state in the USA makes a genuine, long term success of electricity deregulation, it will show up all the others, and give them something to copy. Unlike electricity supply, for the time being, the states of the USA do genuinely compete with one another.
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Greenspan says no need for competition policy
13 NOV 2006 – When I googled for news about "competition", at the bottom of the second page of hits (and don't forget that a lot of these concerned competitions in such things as dog breeding and gymnastics), was a link to a piece from or about or in some way connected with Nepal. Quite near to the top of the list, is the point. Even quite modest propaganda efforts of this sort, in relatively small countries, can have big consequences.

The piece is called Competition Law: Is It Necessary?. It is by Reekha Acharya, and makes use of the thoughts of no less a personage than former Federal Reserve Chairman Alan Greenspan. Answer: no.

Historically, as Greenspan says, the general development of industry has taken the following course: an industry begins with a few small firms: in time, many of them merge: this increases efficiency and augments profits. As the market expands, new firms enter the field, this cutting down the share of the markets held by the dominant firm. This has been the pattern in steel, oil, aluminium, containers and numerous other major industries.

Again Greenspan argues that it takes extraordinary skill to hold more than 50% of a large industry's market in a free economy. It requires unusual productive ability, unfailing business judgement, unrelenting effort at the continuous improvement of one's product and technique. The rare company, which is able to retain its share of the market year after year and decade after decade does so my means of productive efficiency and deserves praise, not condemnation.

For up-to-date confirmation of the truth of the young Greenspan's analysis, read this report headlined Ballmer takes potshots in India at Microsoft's competition. Microsoft's competition. It wasn't so long ago when the more excitable sort of pro-interventionist said that Microsoft didn't have any competition.
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"Linux has won"
06 NOV 2006 – Last week, at some blog or other which was blotted from my computer's memory when Windows, for no apparent reason, switched itself off, I read a story about how, after years of battling the growing popularity of the free Linux operating system, software giant Microsoft has unveiled a dramatic change of course. So I went a-googling, and it's true:

After years of battling the growing popularity of the free Linux operating system, software giant Microsoft has unveiled a dramatic change of course, tossing a lifeline to struggling Linux vendor Novell in the process.

I recall, many years ago now, predicting - well, guessing more like - that Microsoft would eventually oblige with its own version of Linux, and now, in the sense that it has done a deal with one of the versions that is already in business, that has happened, although it took far longer than I thought it would. Now it finally looks like it might defeat Windows, any decade now.

Linux has long dominated in the server market, and in general it appeals to large organisations, who don't want to pay lots of license fees for every desk in all their offices, but who can afford the few experts they need to make Linux do their particular thing, because they have to have computer experts anyway. But, the familiarity of Windows also appeals to the mere workers, most of whom use it at home. So, there's a real demand to make the two work together.

Linux has won, says this guy. Well, maybe and maybe not. But what is clear is that the notion that Microsoft is an unchallengeable monopolist, able to impose its every whim upon the mere market, is revealed as absurd.

How has Linux crept up on Windows like this? Well, competition has a lot to do with Linux's success. Not competition with Microsoft, but competition within the world of Linux. Several different companies offer their own versions of it, and the possibility that, sooner or later, one of these will sweep the world, and do a Windows, gets ever greater.

In particular, a South African by the name of Mark Shuttleworth seems particularly aware of what is needed for Linux to arrive at global domination. His Linux, which is called Ubuntu, seems especially threatening. He didn't rebuild Linux from scratch, he merely took the best bits from everyone else and made them even better. With Linux, that's allowed.

Microsoft seem to have decided that, for the time being anyway, they can't beat all this, and are instead joining it.

If Linux does sweep the world, to the point where even I switch to it, maybe it will crash less often.
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The word monopoly is a classic exercise in definition hopping
30 OCT 2006 – Definition hopping is an old anti-free-market trick.

What you do is observe something bad, and give it a plausible label. But this label can also be plausibly applied to something good, which for your own evil reasons you nevertheless oppose. You thereby imply that something good is actually bad.

Consider "exploitation". Sounds bad doesn't it? Exploitation means using people in a bad way. By forcing them to work for half what they would otherwise agree to, by beating them up if they refuse. By forcing them into doing your work, for peanuts, in horrible working conditions, by violently smashing up all rival enterprises and beating up those who dare to start them. Exploitation. Bad.

But exploitation can also be good. This blog exploits me, and my willingness to write for it. But this blog is not forcing me to write for it. I choose to accept this blog's kind offer. This blog is happy. I am happy. This blog can stop me writing for it any time it becomes unhappy with me. I can stop writing for it any time I become unhappy with it. In the meantime, we are both happy. This is a splendid arrangement.

These two kinds of exploitation are so deeply different that it scarcely makes sense to use the same word for both of them. Yet, we do. And as a result, the second kind of exploitation, the good kind, gets tarred with the brush of the first. If you say you are in favour of people being employed in exchange for whatever payment they consent to, you are immediately accused of supporting slavery.

Once you realise the trick that is being played on you, you are three quarters of the way to defeating it. Whenever you hear the word "exploitation" in an argument, demand a definition, and if denied one, supply two definitions yourself, and say that, like all sane and humane people, you oppose the bad kind and support the good kind.

Monopoly, I have come to believe, is another such word.

Monopoly can mean that it is a "monopoly" imposed by force. Bad. If you dare to compete with such a monopoly, you'll be shut down, by force itself if the threat of it does not suffice. Bad.

But "monopoly" can also mean that someone is supplying something so wonderful that almost everyone wants it, whenever they want one of those. Very good. Brilliant in fact. Something for all concerned to be very proud about.

If such a "monopolist" ever gets lazy, and tries to exploit, in a bad way, his "monopoly" position, then he will soon discover that he will soon be toppled, provided only that it is legal for anyone to try. Very good.

So, when you hear the word "monopoly" in an argument, at once demand to know which sort of monopoly you are being asked to talk about. Be against bad monopolies, but be in favour of good ones. Don't just tolerate them, or apologise for them. Celebrate them as the absolutely good things that they are.

These thoughts were sparked by this exchange (see my comment) between Patrick Crozier and me on the recently revived Transport Blog. I found myself putting the word monopoly in inverted commas, and asked myself why. It's because monopolies without inverted commas are bad monopolies, while "monopolies" means the good ones. And the point is: good monopolies are very good indeed. They are what all the best businesses try to be.

It's when good monopolies use their wealth to bribe the politicians to turn them into a bad monopolies that the trouble starts.
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The EU will never be mad enough for Britain to leave
23 OCT 2006 – My corner of the blogosphere is in an uproar about Metric Madness. Christopher Booker, who regularly bashes the EU in the Telegraph, started it, with this piece. EUrope is apparently determined to impose the metric system, in a way that is already infuriating the rest of the world.

"An extraordinary row, involving major European and US industries, is blowing up over the European Commission's determination to make it illegal, in three years' time, for any products made in or imported into the EU to carry any reference to non-metric measures. Not only will this cost industries on both sides of the Atlantic billions of dollars and euros, but it is in direct breach of US federal law."

". . . any US company wishing to sell to the EU will have to set up separate inventories and warehousing to ensure that its products carry no reference to non-metric units. Any European firm wishing to sell to the US will not be allowed to refer at all to the units its American customers understand. This in itself will be illegal under the US Fair Trade and Packaging Act, which permits use of metric units only so long as they are accompanied by a US non-metric "translation". "

Shoot them, someone, please.

Those involved in the worlds of politics and the media can almost hear the clatter of wheels coming daily off the EU trolley. New EU initiatives are now met with contempt and derision. The last two weeks have marked a turning point, as the unthinkable has suddenly crept onto the agenda. It is as if, somewhere far away, a fuse has been lit and is burning its way slowly and steadily towards the collapse of Britain's membership of the EU. Increasingly the attitude is to regard the EU's institutions as some kind of madhouse.

Two by two is good - one by one would be even better
16 OCT 2006 – The WTO talks having got stuck, countries are now switching to doing bilateral deals. The EU and India are now going to try to hammer out one of these, and I hope they succeed.

The point is, even if the other countries aren't doing free trade, if yours does, you will benefit. Hence the switch from trying to get free trade for a hundred countries all at once, to doing it two by two.

The problem with the EU trying to do "bilateral" deals is that it is not actually one country. It is a whole clutch of countries, and most of them have to agree, and agree to twist the arms of any backsliders. The Indians may find themselves getting very frustrated.

Still, in principle, it's a good idea, and I hope they make it work.

But, the question must be asked: why stop at two? Why not bring free trade to the world one country at a time? If a particular country is not able to do any bilateral deals with any other countries, let alone participate in a multi-country deal done under the auspices of the WTO, it would still be in its interests to do free trade, unilaterally.

Free trade is not like disarmament. It does not leave you defenceless against foreign aggression. It merely enables your citizens to do more business with more people. They benefit, a lot, and so, although far less noticeably of course, does the rest of the world. Military metaphors abound in business, but it must nevertheless be insisted that when the Chinese "capture" your market for cheap electrical goods, that means those goods getting a lot cheaper even than they were before, and that's good. You get to have better electric toys for your money, and/or more money to spend on other things. That is absolutely not the same thing as a war. It is much, much nicer.

As Tom Clougherty says, when discussing the EU-India negotiations:

Of course, the Globalisation Institute has long argued that the best trade policy is simple one: unilateral free trade. Free trade would bring enormous benefits to British citizens and to say we should only remove tariffs if others do is, as Milton Friedman once pointed out, like saying "I'll only stop poking myself in the eye if you do too."

Good monopolies
09 OCT 2006 – When I googled "competition policy" this week, the most enticing link was something in "On Line opinion Australia". The Google blurb went as follows:

Competition policy dilemmas: time for a new direction
As fruitful as it has been, National Competition Policy has hit the policy wall when it comes to network businesses. It can no longer ...

Error
The article you requested does not exist, or may have been removed. Please check the URL.

Consider Skype, the free internet phone programme. It costs nothing to install the basic version, and it costs nothing to use. So, on the face of it, a bargain, yes? Yet, I don't use it. I use the plain old telephone, and they send me their plain old bills, every quarter. And I plain old pay them. Why? Well, Skype is, as yet, and unlike "the telephone", insufficiently ubiquitous. I'll use Skype when most other people use it, and not before. The sign will be when people start saying to me, with a disapproving sneer, as they did with faxes and then with email: "Oh, can't you do that?"

Meanwhile, what if I endure all the complication of getting started with Skype - and I insist that getting started with anything involves complications - and then it collapses, as a result of some other similar-but-better arrangement suddenly sweeping the world? What I'm saying is: I'll use it if everyone else does. Once that happens I'll trust it (a) to stick around, and (b) to be really, really useful.

What I want is for some version of the above - Skype or something like it but even better - to happen.

What I really, really do not want to happen is for the EU competition-ocracy to go after Skype (or whoever) for the crime of being exactly what they call a monopoly and what I call really useful. I do not want Skype (or whoever) punished for being the exact thing I want it to be, namely a network through which I can have free phone conversations with just about anyone who wants to talk to me that I want to talk to. When the time comes for me to be switching from Skype (or whoever) to whoever else, I'll do the switching, thank you very much. Let the EU competition-ocracy keep right out of it.

Of course, I could be quite wrong about what that On Line opinion Australia piece was about, and it could have been about something entirely different to what I've just put. If so, apologies to all concerned.
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Perfect piano competition and real piano competition
02 OCT 2006 – Last week, the final concerto round of the fifteenth Leeds International Piano Competition took place. The competition was won by the eighteen year old Korean Sunwook Kim, whose efforts culminated in a truly fabulous performance of the fabulous Brahms First Piano Concerto.

Classical piano playing in the West combines competitive ferocity with futility to an almost unique degree. Never have more young people taken turns to give a greater number of technically faultless performances - often recorded of course - of the same old stuff. There were two hundred and thirty five competitors for this latest Leeds prize. Talk about a mature market!

British TV - in the form of BBC 4 TV, one of the free digital channels - also recently showed the veteran pianist and conductor Daniel Barenboim fine-tuning various performances of Beethoven piano sonatas by a succession of yet-more-brilliant young piano virtuosi, including another Asian, the Chinese keyboard wizard Lang Lang. Each young tyro would play through a sonata movement, very, very well. Maestro Barenboim would then say that it was very, very good, as indeed it invariably was, and then the two of them would spend the next half hour or so making the performance even more flawlessly fabulous. The sense that the land of Diminishing Returns had been entered was overwhelming. Barenboim talks about Beethoven piano sonatas and about the young people whom he is now teaching the play them as if this music and these musicians are the very Future of Civilisation. But he is wrong. These young people are museum curators, as is he.

The real future of keyboard music will surely emerge in Asia, but not in the hands of Sunwook Kim or Lang Lang. No, the place to look and listen will be among the millions of keyboard maniacs who are now trying and failing to copy these young titans, but who will then switch to doing something much more interesting and innovative. Electronic keyboards have long existed which enable a practised keyboardist to storm the heavens, and I imagine that Asia in particular already pulsates with this kind of music, in among the millions of obediently pointless recreations of Beethoven piano sonatas. Most of this newly minted electro-keyboard music will be tripe, in fact it probably already is - which is why I haven't bothered to go chasing after it now and can offer no links. But the best of it will be (is?) . . . the Future of Civilisation, the perfect marriage of keyboard technique to die for and Asia's exploding technology miracle.

If you object to the above, and believe that I am supposed to be writing here about such things as Perfect Competition, True Competition, and such like, well (as the more perceptive of you will surely have realised), that's just what I have been doing.
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The cheap Vietnamese shrimp menace
25 SEP 2006 - In Vietnam they are grappling with anti-dumping laws:

Speakers at the seminar - Successfully Dealing with US Anti-Dumping Investigations: The Experience of the Vietnamese Shrimp Processing Industry - said that Vietnamese enterprises could learn a lot from previous experiences with anti-dumping lawsuits. The seminar focus [sic] on means of taking legal action against such lawsuits to ensure that Vietnamese enterprises would be able to defend themselves against investigations in the future.

The director general of the Trade Ministry's Competition Administration Department Dinh Thi My Loan said that although anti-dumping lawsuits caused problems to Vietnamese goods, the growing number of these anti-dumping lawsuits indicated the competitiveness of Vietnamese products on the international market.

She said that between 1994 and August 2006, Vietnamese exported goods encountered 28 anti-dumping investigations, 10 of them filed by EU enterprises.

Allowing the local businessmen to get away with this behaviour, by having "anti-dumping" laws, has real costs attached to it for the economy of the world as a whole. In a world where excessive production (whether deliberate or accidental), anywhere in the world, of this or that product is liable to cause slumps in price, everywhere in the world, in short, in a free global market, producers everywhere must have a care for who among their rivals is overproducing, so that they in their turn can cut back, and avoid making what will soon be a bad market, from the seller's point of view, even worse. Often specialists emerge, who speculate - a slightly longer word for "bet" - about what the price of shrimps, say, is likely to be in three months time. They thus inform shrimpers everywhere how hard to work at any given moment.

In a world full of "anti-dumping" laws, none of this will happen, or happen as much as it might and should. Shrimpers in the EU and the USA are protected by these laws from concerning themselves with the state of the global shrimp market, and they happily continue to sell their higher priced shrimps. They deal with cheap foreign competitors by turning their lawyers loose on them, rather than by making their shrimps better or cheaper.

It's truly creepy how the Vietnamese official quoted above calmly associates the increasing number of anti-dumping suits with Vietnamese businesses simply getting more competitive. In other words, even when they are not losing money by deliberately selling their shrimps, or whatever, at a loss, they get penalised as if they are. Not that deliberately losing money should be forbidden. It should merely be penalised by the traders who do it . . . losing money.
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Two cheers for the Theory of Perfect Competition
18 SEP 2006 - I never mention the Theory of Perfect Competition here without complaining about it (most recently towards the end of this), and it is the same in many other pro-free-market parts of the blogosphere. But this theory is only a way to model the economic world. Models are never completely true. They oversimplify. They reduce. That's the whole point of them. When they work, they show that the world is a simpler place than it looks, and even, in a sense, paradoxically, a simpler place than it is, in the sense that, for certain purposes, only certain aspects of it matter.

No doubt some economics teachers offer the Theory of Perfect Competition as either a world that exists already, or as a world which does not exist but which should. Firms either are or should be tiny and numerous. Information either is or should be perfect. And so on.

Yet when I was taught economics at Essex University in the 1970s, I distinctly remember the man saying that this was only a model, and one which made no claims about the real world that were either false or politically or morally demanding. Firms are often big. Information is nearly always imperfect. This was instantly conceded by my teacher, indeed emphasised, repeatedly. Nevertheless, he continued, the Theory of Perfect Competition, despite the manifest imperfections of its starting assumptions, still seems to tell us things about the real world, most notably about things like short-term price fluctuations in response to changed market conditions, either on the supply side or on the demand side. And I know that my fellow competition blogger Antoine Clarke had a similar experience when he was taught economics, because he recently told me exactly this.

The word "perfect" does indeed imply how the world should be. The world should indeed be, if not perfect exactly, then at least moving - and if necessary it should be moved - in the very approximate direction of Perfect. That's what "perfect" suggests. But academics who have found a new and worthwhile way to look at the world often reach for a regular old word to describe what they are talking about, and this often causes confusion to the innocent bystander who doesn't realise that they are using this word to mean something different, something more technical and less preachy, than the regular word would suggest. The worst that can be said of the Theory of Perfect Competition is that it would probably have been better to have found another name for it, but that, because of the name that was chosen, wrong conclusions (as we constantly complain here) are routinely drawn from it.

These wrong conclusions add up to the claim that the market must be made Perfect, by the politicians.

But if the politicians had not had the Theory of Perfect Competition to misunderstand and to give them ideas about how to meddle, they would still meddle, and if their Competition meddlings compete with others of their meddlings (of the sort that destroy competition), then that is something to be grateful for.

So, two cheers for the Theory of Perfect Competition. When properly understood, it is not such bad economics. And even when misunderstood by the politicians, it is not always such terrible economic policy.
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The EU consumer is able to consider his own interests
11 SEP 2006 - Like Antoine Clarke, I have been looking at the never-ending Microsoft versus EU Competition Commission row, the latest manifestation of which has been sparked by the news that four MEPs (three British, one Polish) have written to the European Commission saying that regulatory confusion may delay the introduction of the latest Microsoft operating system, Vista, in Europe.

"It is alarming that one of the world's most successful technology companies considers the European Commission's attitude a 'risk factor' that might delay European companies' access to future Microsoft products such as Windows Vista," the letter said.

"The onus is on Microsoft to design its product in conformity with European competition laws, which it is well aware of."

Or mine. My opinion about this is the same as is stated in one of the comments, on the above report. WaltC writes as follows:

I wonder if you could advance the case that anything the EUC has ever done re: Microsoft in any way advances the interests of EU consumers. I personally think the EU consumer is at least as intelligent as the US consumer and is therefore equally able to consider his own interests in such a way as to be able to make his own decision about whether or not he wants to buy a Microsoft product of any description. With that in mind, who needs the EUC?

How the internet competes with regular broadcasting
04 SEP 2006 - Here is an article by David Rowan, in a Big Media outlet par excellence, The Times, about one of the new Small Media, namely crazy little videos on the Internet.

There are real stars out there. I don't mean media fads such as 79-year-old English widower, Peter, whose grumbles on life as "an old person" have been seen 1,617,416 times on YouTube. Look instead to natural performers such as Minouye from Honolulu and his lascivious friend Abbe, whose petty comic banter is equal to any network sitcom. Or try engrossing art projects such as the video by "ahreelee", who photographed herself each day for three years and edited the results together - it has been seen 1,896,061 times.

The assumption here is that these new videos are doing the same thing as old school TV, but just doing it a bit differently. Whereas in the golden age of regular television we all used to stare at our TV sets, now we can also stare at at our computer screens, gawping in similar numbers at new stars.

But this misses the point of the new internetted and personally computerised media, which is that now all of us who want to can do this stuff ourselves. Accordingly, the number of different videos on YouTube, done by people who are not video stars and who never will be, and most of which are watched by hardly anyone, is just as important a statistic as the number of downloads there have been of the relatively few extremely popular videos.

It's always the way when the old is competing with the new. New is thought of by the guardians of old to be competing with old by just doing old differently. But it's more than that and different from that. New may actually do old less well, at any rate in the short run, but that doesn't matter, because new is new. The point about my podcasts is not that they are better than the BBC's radio output, but that they are my podcasts.

The guardians of the Old are encouraged in their error by the Theory of Perfect Competition, which offers a world in which like only ever competes with like. In Perfect Competition World, new never competes with old. It is just different versions of a timeless now competing pointlessly against each other, and doing the same old same old.
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Guido Fawkes versus the grande dames
04 AUG 2006 - This blog is not really supposed to be about competition between products, because of this product being better to buy or cheaper to make than that product. It is supposed to be about government meddling in the competitive process, especially if this interference is justified with reference to the idea of enhancing or improving competition itself. Such meddling is bad. Competition is a permanent fact of life, provided only that governments don't suppress it, and can confidently be left to take care of itself. Only if the government is meddling in its own monopolies, and rendering them less monopolistic, is such meddling a step in the right direction. Government interference can be good, if the right hand of government is meddling in what the left hand of government is already doing. Otherwise, to hell with it.

But competition between bloggers and the Mainstream Media is rather different. First, it's blogging, and this is a blog, so that's us! Second, this is competition between two very different ways of doing things. This is no like-versus-like competition, such as competition bureaucrats know and love, and are obsessed with perpetuating, but regulating. This is a clash of philosophies, a clash, you might almost say, of civilisations. Even if all the newspapers of the world were all owned by the same enormously fat and complacent individual, then this media monolith would still face an enormous competitive threat, from bloggers. Which means, by the way, that when the newspapers start to respond to this threat by amalgamating into defensive monopolies, the governments of the world should relax and just let it happen. They won't, but they should.

All of which is a mere preamble to me telling you that, in Britain, the bloggers versus newspapers needle has arrived at a quite new state of hostility, largely as a result of the activities of the first great individual genius of British blogging, who goes by the name of Guido Fawkes.

Guido Fawkes has not got it in for the entire newspaper industry, yet. But he has got it in for Britain's political correspondents, and especially for the so-called lobby correspondents. Why read the grand dames when you can read their best stories a week earlier, at Guido Fawkes? He bestows derisive awards upon those who steal stories from the blogs. (I could have written this posting for here.) All of political Britain that matters now reads him.

The Big Media, a few years ago so disdainful of bloggers, now starts blogs of its own, hoping thereby to raise the same old money by means of advertisements that interrupt the perusings of a new readership. But is the advertising revenue there to support the massed ranks of the old media salariat? What if it switches to Guido and friends?

I mean, what chance do the old media have, when Guido gets his best photographs for nothing?

More from me about the Guido phenomenon here.
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Bring on the high definition monopoly
31 JUL 2006 - Why is the EU is investigating the battle of the gauges that rages (rauges) between the two competing formats for high definition DVDs, Blu-ray and HD-DVD? I don't know? Do these people need a reason to meddle? This is like asking why cows gotta moo or why sharks gotta swim.

So far their meddlings are only unofficial.

The creators of the new DVD formats can license their products to both hardware manufacturers wanting to make new video disc players and disc producers themselves. Currently it is unknown whether the Commission is interested in a specific type of licensing, as officials decline to comment. Obviously, the Commission wants to find out whether the inventors of the Blu-ray and HD DVD formats and their fellow companies could monopolize the market of high-definition video discs in any way or whether the policies may be discriminatory.

If the EU is merely concerned that these rival camps are refraining from using, say, violence, to further their campaigns, then okay. If the Blu-ray standard is being forced upon, say, DVD shops, at the point of a gun, then indeed that should be stopped. But since when did EU meddling ever stop at that point?

Meanwhile, the usual EU notions of "monopoly" make nonsense of what consumers want from high definition DVDs. What we consumers want is for someone to win this battle. We want a "monopoly" to emerge. We want this competition to end. We want this fight between Blu-ray and HD-DVD to be fought to a finish - to a total victory and a total defeat - until one of these standards is totally dominant and the other is utterly wiped out. From then on, the high definition DVD market will be a classic case of what EU competition meddlers may well choose to regard as a monopoly, and it will for the rest of us be . . . absolutely great! Only when the format war is over can the content creators confidently set about stuffing the new discs with content. This EU meddling can only delay that happy day.
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Roaming competition
24 JUL 2006 - I've been trying to get my head around this argument about cellphone roaming charges. Being only a very occasional traveller, and almost never on business, I have no experience of multinational cellphone use. Come to that I have very little experience of mononational cellphone use, compared to just about all my friends.

All I bring to the argument is a general prejudice in favour of free markets and a belief that businesses should be allowed to charge whatever crazy prices they like - crazy high or crazy low or not that crazy one way or the other - for what they are selling. So, I am prejudiced against the EU forcing cellphone roaming charges, whatever exactly they may be, to be less than those selling them now charge.

Mobile phone users would all love it to cost less to use a mobile phone when they are themselves being mobile, so this exercise in price control will be widely popular. But, as all my fellow kneejerk opponents of price control have been asking, what new technologies will be slowed or stifled by this forced price reduction? What money would have been makeable (because so profitable) with a brilliant new innovation, which will now not be makeable (because not profitable)?

The thing I do use a lot of is the Internet, from my unmoving kitchen, and that doesn't seem to involve roaming charges, does it. If it's there, you can access it, anywhere. And if all the people you want to talk to are plugged into Skype, you can talk to them with that, without any further charge. I think that's how it works. The point is, markets aren't fixed, with fixed and permanent boundaries. And the more greedily those who temporarily dominate them are, the bigger their comeupance when some radically new way of doing whatever it is comes along.

Skype gets a passing mention in this report about this argument:

Another option is to bypass the telephone networks and go direct to the internet, using services like Skype.

Roaming charges for visitors to New Zealand are among the highest in the world, because Vodafone enjoys a monopoly on its network and socks other providers a huge whack for access.

The fifty pence difference between Tesco and the little shop around the corner
17 JUL 2006 - A short while ago, as I write this, I stuck a couple of pictures up at my personal blog, which I took in shops near where I live. Both are of the fizzy drink Red Bull, of which I happen to be very fond. The adverts for Red Bull on the television say that Red Bull will perk me up, and I believe them. It certainly feels that way.

Picture number one was taken in Tesco, about a week ago. It shows that Red Bull has quite suddenly fallen in price by over a quarter, from 99p to 69p, in Tesco. You used to have to buy a clutch of four Red Bulls to get them at this kind of price, in Tesco. Now you can get your Red Bull this cheap, one can at a time. Red Bull has been drifting downwards, in Tesco, for quite some time. But this was a nosedive, and I celebrated by taking a picture, right there, right then. On the same trip, I noticed that Brie cheese, of which I am also very fond (especially the Tesco version of it) had also dropped in price by a similar amount.

Picture number two was taken in a nearby mini-supermarket, where they charge £1.19 for Red Bull. Which is fine by me. These cans of Red Bull are theirs, and they can charge what they want to charge for them. Especially if it's 10.45 pm on a Sunday evening, which was when I took this second photo, and Tesco shuts on Sunday at 4 pm. (I've seen Red Bull on sale in other even smaller shops for nearer £1.50. Again, their perfect right.)

After I'd sneaked that second photo, I thought it only fair to pay out £1.19 for one of the cans, so I did. But usually I shop at Tesco for Red Bull, and for lots of other things. Tesco is not the biggest and most profitable high street retailer in Britain because it destroys its competitors with high explosives. The basis of Tesco's competitive edge is that they realised, years before others did, that using computers and computer networks cleverly was going to be the wave of the future for retailers, and they embraced that technology while their competitors hesitated. Now they are cashing in, and good for them.

Since Tesco is currently one of the favourite punchbags for British competition bureaucrats, I thought it worth emphasising why mere customers actually like Tesco so very much. Tesco is, you might say, the Microsoft of Britain's high streets. When all the smaller competitors of Tesco gang up on Tesco and demand that the government clobber them for this, or for that, or for pretty much anything, it's the Microsoft story all over again.
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Competition between sets of rules
10 JUL 2006 - In our latest elections around the world mp3, Antoine Clarke talked about Bolivia, where they have recently had a referendum, about how much power in Bolivia should be centralised nationally, and how much power should remain with the separate provinces. I think the right side won, which was the side saying: let the provinces have, if anything, even more power than they have now.

I thought of doing this posting here entirely about that Bolivian referendum. But then I thought, how can I ignore one of the biggest sporting contests on earth, the one that recently climaxed in Berlin with Italy beating France in the soccer World Cup? I can't. And it turns out that I have a lot to say on that subject, because I just posted a big piece on Samizdata, comparing the World Cup Final unfavourably with the Wimbledon men's tennis final, and likening soccer to squash. Squash, when played by really expert squash players, is the dullest thing to watch in the entire world, and soccer, I assert, may be heading the same way.

What both the Bolivian referendum and that World Cup posting have in common is that both of them are about competition between different sets of rules. As a result of that Bolivian referendum, there will continue to be competition between the different provinces of Bolivia, rather as there always has been in the USA. Major sports compete with one another, for the enthusiasm of players, present and future, and for audiences in the stadiums and on television, by constantly tinkering with their rules to make the games that little bit more attractive to play and to watch.

Cricket, which counts for little on the European continent but which is a very big deal in the Anglosphere, has been hugely innovative in recent decades, twenty overs (never mind) cricket being the latest, very popular, very exciting (and surprisingly subtle) newly minted version of that fine old game.

The main thing that talking about different sports flags up is that just because you have to have rules, that doesn't mean the government has to supply them. And I'll bet that was one of the things they were arguing about in Bolivia, too. In some provinces, the provincial government, or the national government, makes all the rules. In other provinces, the rule is that independent organisations make lots of the rules. And by having a different rule in different provinces, people get to compare things, and to see which rules works best.

Wouldn't it be silly if all games were run by the same governing body? And wouldn't it be silly if entire continents were governed with just the one set of rules? But that could never happen, could it?
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No monopoly for Ruth Miskin
03 JUL 2006 - On the Thursday and Friday of the week before last, June 22/23, I went on a course to learn about how to teach reading. I was taught about the Ruth Miskin way of teaching reading and writing to young children, based on what's called Synthetic Phonics. I heard about this course as a result of being a subscriber to the Reading Reform Foundation.

The details of this system are, well, detailed. First you teach the sounds, the easy ones. Then you map those sounds, so to speak, on to letters. Then you give the children stories to read, stories using only the letters that have so far been learned. And so on. English being such a complicated language, it gets very complicated. (Although it is interesting that English, with all its complications, still seems to do so well in the global linguistic contest. But I digress.)

My point here is not the details of this teaching system, which in any case I am not now qualified to write about. If and when I get to see this method working, or not, in real classrooms, maybe then I'll tell you what I think of it. No, what I want to pass on is something very interesting that our course teacher said to me during one of the intervals between her performances. This wasn't Ruth Miskin herself; it was a lady called Caroline Brittain. And she said, first, that too much bureaucratic nonsense is piled upon Britain's head teachers. And second, she said that not nearly enough is said about phonics in British teacher training colleges.

She was especially insistent upon the need not to torment head teachers. In particular - and I questioned her most particularly about this - she did not want the Ruth Miskin method to be forced upon schools by the government. Synthetic phonics is now being encouraged by the British educational powers that be. But they must not, said Ms. Brittain, go beyond encouragement to outright compulsion. Let the Ruth Miskin method spread by voluntary means, which she was confident would suffice. Let it compete with other systems also based on Synthetic Phonics, and with other methods of teaching reading generally.

For such a detailed method of teaching to be imposed upon teachers who might be unpersuaded of its merits and hence only going through the motions, badly, would, said Ms Brittain, be a disaster, especially if many of the educrats doing the imposing were likewise unconvinced. This would destroy the very process she wanted to encourage, and the only good way to encourage it was for her and her colleagues to do just that, encourage it, and hope that others saw the point of it and joined in.

To put all this in the language of this blog, she, Caroline Brittain, herself a Ruth Miskin devotee, was arguing passionately against a Ruth Miskin monopoly. Monopolies, she was saying, are bad, even for the monopolists, if they know what is good for them and for all the people whose lives they are trying to improve.

I could only agree.
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Will London's airports ever compete?
26 JUN 2006 - Alex Singleton recently did an appreciative little posting on Samizdata about the various CNE blogs, including this one. So let me return the linkage, and draw your attention to another recent posting at Samizdata, by Michael Jennings, about airline regulation.

Michael mentions the matter of landing slots only in passing, but the thing that has always puzzled me is: why can't they just be auctioned off to the highest bidders for them? These people favour that, although their argument is - or was ten years ago - that landing slots are a public asset which the public deserves to get paid for to the maximum. But in practice free marketeers and public asset maximisers are saying the same thing. Make the most of them! Sell them for the most money possible!

So why hasn't this happened with landing rights? Why no open skies? Why this weird business of politically determined allocation of slots? Michael Jennings's answer is that maybe politicians just love to meddle. A free market, in which, by definition, they don't meddle, would not serve their purposes at all. They meddle. That makes a mess. And then they use that mess to say they should meddle some more. That certainly makes sense to me.

This Wikipedia entry about Heathrow provides a clue to the answer.

In order to prevent monopoly profits, the amount BAA is allowed to charge airlines to land aeroplanes at Heathrow is heavily regulated by the Civil Aviation Authority.

Michael Jennings told me that there's now talk of a Spanish consortium acquiring BAA, but that there is also talk that they won't have enough money to buy all three airports. Or rather, they will buy them all, but then sell Stansted and Gatwick. If that happens, says Michael, price control may be slackened, because then London's airports will become genuinely competitive, with each other.

Well, we wouldn't want Stansted and Gatwick handing money over to Spaniards, would we? Nothing like foreigners to make things more competitive. Which, I suppose, is an argument in favour of the EU.
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In praise of dominant positions
19 JUN 2006 - This is very strange. First, in this Times story, I read this:

"BT FACES the imminent threat of a multimillion-pound fine for alleged anti-competitive behaviour over the pricing of its high-speed internet access.

The former telecoms monopoly is expected to learn within weeks the outcome of a four-year competition investigation by the regulator, Ofcom, and its predecessor, Oftel, into whether the group abused a dominant position in its pricing of its household broadband products."

"The broadband complaint is complex, in part because of the huge changes that have taken place in the consumer market for high-speed internet access since 2002 when broadband was in its infancy. As demand for "always-on" internet access has taken off, a stream of competitors has entered the market, sending prices plummeting. Carphone Warehouse and Orange, the French-owned group, have launched "free" broadband, a move expected to trigger a price war. The changes mean that since 2002 BT's share of the retail broadband market has fallen to about 33 per cent. Including cable broadband customers, BT has about 24 per cent of the retail market."

I personally do not like how BT has been behaving - it is the tone of voice and manner at least as much as the price - with regard to the Internet. Did I tell you people about how it took them a month to reconnect me, not so long ago? Yes I did. And I then said I thought they were already being subjected to state interference, which was what was making them behave so badly.

It would figure. The state meddles in a big business, changing its incentives. It responds rationally to the new incentives by maltreating some of its customers. The state punishes it again.

And all the while, the problem, such as it was, was solving itself. Unless, the other big businesses which are doing the solving decide that they don't like the look of this state, and decide to stay away. If that happens, the problems become permanent.
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Does sport have to be political?
12 JUN 2006 - Maybe you've noticed, maybe you haven't, but there's a football competition just started, in Germany.

As I have speculated here before, maybe one of the reasons why it is so widely believed that competition has to be governed, by the government, may be that competitions like the World Cup involve contests that are also governed, that is to say refereed. And maybe football also explains the widespread popularity of the phrase "level playing field".

But the fact that football occurs on level playing fields and is always refereed doesn't mean that level playing fields and referees have to be supplied by governments for everything.

FIFA, the governing body of soccer, is self-governing, i.e. not itself supplied by politicians. But it is political in its manner of operating. Every national football association has just one vote in FIFA elections. And that seems to lead straight to corruption.

A rather persistent journalist by the name of Andrew Jennings was featured in the latest edition of Panorama, on BBC 1 TV here in Britain, complaining that FIFA boss Sepp Blatter has been bribing a man from Trinidad to vote for him in FIFA elections, by giving him World Cup tickets to sell, and such like. Jennings has even written a book about it all. (His previous book is about the way the Olympic Games are run. It's a similar story.)

Is there something inherently political about the administration of big, global sports? Does the fact that everyone involved in football knows that there must, so to speak, be only one version of football mean that major sports are those elusive beasts, natural monopolies? And does that necessarily mean corruption, and bad governance generally? Worse, will all the complaints now being aimed at FIFA and its administration result in the real politicians wanting to take it over, and make it political for real?

I don't think that has to happen. First, like all other major business enterprises, major sports do still compete, with other sports, and with other kinds of entertainment generally. And second, why can't all this media criticism simply result in a bit of house-cleaning?

Meanwhile, if the alternative is having different versions of football, then maybe a bit of politics is a price worth paying. Think of the frightful split which still afflicts the world of rugby - between Rugby League and Rugby Union. Some union! Think what rugby might have become without that. If that is sporting competition, then monopoly is surely better.

I could go on, but I'm busy watching some seven-a-side rugby internationals on the television, which I find much more entertaining than soccer.

I have just rung Antoine Clarke to ask if he'd like to talk about FIFA in our next mp3. (We've already talked about Barcelona Football Club.) Stay tuned.
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Competition once - then politics
05 JUN 2006 - Last Sunday lunchtime I channel hopped into a TV news-and-yelling show about London Underground, and the various alleged deficiencies of the consortium, Metronet, which has been awarded a three decade London Underground maintenance contract.

London's Transport Commissioner, Peter Hendy, is convinced that Metronet are falling down on the job and should be doing far better, but unable simply to sack them, what with it having a contract.

"This basic failure to carry out routine work calls into serious question their stewardship and must cause people to question their professional ability," Mr Hendy told the BBC website. Aside from imposing fines of up to £1m, Mr Hendy said there was little else he could do to force the private firm to improve its performance.

I am reminded of this posting I did a few weeks back at my other CNE blog, which was about repeat business. A good business relationship works if it can be repeatedly renewed, or not as the case my be, by both parties. That way if either is unhappy, the unhappy party has something to threaten, namely an end to the relationship. But this thirty year contract that Metronet has ties everyone's hands. Metronet and London Underground have put all their contractual eggs in one basket. Metronet only had to compete for the contract once.

So why was the contract signed? A hairy looking chap whose name I didn't catch, on that Sunday television show, said that it had all been imposed by Chancellor Gordon Brown. But again, why? Metronet must have reckoned they just might make a killing, or they wouldn't have signed. But presumably also Mr Brown's Treasury people were able to make the deal, from their end, look like a cash saving too. And if that turns out to be wrong, well, politics is politics. It'll be someone else's problem.

For this is politics, and at the root of this mess is a bungled attempt to switch politics off, to do nationalisation without nationalisation, state control but exactly like a market.

But since Parliament can still rearrange this whole business, by passing a new law about it, politics it remains.
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"Your nephew could run one"
30 MAY 2006 - David Tebbutt's heading tells it the way lots of people on both sides of the divide now see it: bloggers vs press.

Yet even as we bloggers and the older media compete, we also cooperate. We bloggers, as old media people never tire of pointing out, feed off mainstream media stories, even as we gloat about big media decline. True. But this does not mean that we bloggers depend on the big old media, and it certainly doesn't mean that we are willing to go on paying them for their stories. If they didn't supply us, free of charge, with stories to comment on, news bloggers and news aggregating bloggers would immediately step in to fill any gap. Where do you think those "eyewitness accounts" now come from, upon which old media journos base their precious scoops? From people who now have the power to tell their stories for themselves, or friends who can if they personally can't be bothered.

Which adds up to a disaster for the economics of the old media, as the noted US investor Warren Buffet patiently explains here. (Thanks to this man and his blog for the link to that.) Says Buffett:

It's been interesting to watch newspaper owners and investors resist seeing what's going on right in front of them. It used to be you couldn't make a mistake managing a newspaper. It took no management skill - like TV stations. Your nephew could run one.

Print media journalists point to defects in the new dispensation, as if there were some judge somewhere who might be persuaded to shut down all the blogs. In particular, they point out that bloggers often make horrific mistakes. Indeed. Via this blogger, I came across an alarming story about how the old media are reacting to all this, namely by buying up new media environments. Says the writer of this:

Yet, thinking practically, MySpace - one of the best known 'open' platforms for sharing content and information - recently changed its copyright policy following acquisition by Murdoch. Today everything which is uploaded to the site, your pictures, movies and recordings belongs, legally at least, to them.

But I needed to look no further than the comments on this same posting to learn that this was a wildly misleading account of what has happened, and links and quotes are supplied to prove it.

Yes, every blogger can have his own wildly misleading say. But every blogger can blow a raspberry whenever any other blogger m