Category Archives: Economy

General sabotage

Today, March 29, 2012, Spain is suffering a general sabotage day. It’s a sabotage by work unions to all citizens who want to work, but who will find themselves without public transportation, or who will run into a group of unionists blocking access to workplaces.

It is sabotage because work unions (and some political parties) have asked the population not todo any shopping and not to make use of any services, sabotaging many other people in their economic activity (street stores, large and small businesses, and freelancers).

It is sabotage and blackmailing because it will erode the economic activity and the welfare of citizens.

This sabotage serves only to justify the very existence of work unions, unable to play a useful role in the necessary task of generating the required conditions to create jobs in Spain.

Today, do not be part of the sabotage; go to work.

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Air traffic management monopoly in Spain

Every now and then in Spain we have to suffer threats from this or that small group of workers from different sectors of paralyzing the country (or a given city). Transporters, workers in Metro de Madrid, the Madrid subway cleaners, pilots and air traffic controllers are examples of such elements. These small groups manage to impose their claims (rarely fair, and often capricious) thanks to: (a) the monopoly of the company employing them, and the resulting lack of competition, and (b) collective agreements.

These days of summer of 2010 air traffic controllers are once again pressing for new benefits (as they did also in 2009). In view of the situation of last year (2009), and in the face of what is already happening in 2010, José Blanco, the Minister of Development(Ministry in charge of air traffic control in Spain), has taken an excellent (and long over due) step: to liberalize the provision of air navigation services. It’s the best thing we can do to rid society (individuals, workers and businesses) of blackmailing maneuvers from worker unions.

In Spain there is only one airport operator, AENA, which is a state enterprise. It is a monopoly. If the company fails to provide service (by decision of its workers, as is the case of air traffic controllers), no other service provider of air navigation, leading easily to a halt of air traffic. It’s about time someone dismantled AENA’s monopolistic cartel.

With this new measure from the Ministry of Development (hopefully it will actually go into force), it will grant licenses to operate control towers to various aviation companies. Competition will be introduced in the service. Air traffic controllers will not belong all to a single company. Each one will have to negotiate their working conditions (salary included) with a given company, which in turn competes for the air navigation service.

Two problems remain to be solved: The point (b) set out above: The existence of collective agreements that can sill be used as a grouping mechanism that grants power to the controllers, even if working in different companies.

The second problem (point “c” in this list of problems) is derived from the air navigation service nature: Traffic is controlled service by a single control area or zone, within which there is no competition between service providers. It is a problem common to almost any type of infrastructure: data networks, roads, seaports, and airports: It is not easy (and perhaps not even possible) to have multiple service providers in the same place, for infrastructure users to choose different providers at any time. This problem of “local monopolies” is inherent to infrastructures, and it makes them very vulnerable to strikes and similar blackmail.

However, these “local monopolies” would not achieve the suspension of air navigation services in the whole of Spain: Some geographical areas may suffer a strike, but not others (which may be operated by different aviation companies).

It is necessary that the State eliminates collective agreements (this is a matter for another article), but the first step, the liberalization of service provision air navigation, seems to be under way. Congratulations to the Minister of Development, José Blanco, for this measure.

Unfounded european protectionism against Google

Several European states and European companies seem to be planning a host of measures to curb the business of Google. The excuse is that Google makes too much money. Not a bad excuse, as lame excuses go.

Governments and companies around Europe are “unhappy” that Google is here to compete. Publishers in Germany complain that they only earn €100m per year in advertisement, while Google earns €1.2bn (in Germany). In Spain, the main telecom operator is considering charging Google for the use of its network. In Italy, privacy protection advocates are calling for making Google liable for the content of its Youtube service (despite it all being provided by Youtube users, not Youtube itself). In the U.S. Google has faced opposition to the new business models it has pioneered, specially from the publishing industry.

All in all, Google is under attack, simply because it is big and successful. We’ve seen this over and over throughout history: Accepting change is not easy, and there are people who feel threatened by the changes brought on by the Internet (and Google). These people resort, like many humans have done in the past, to attacking the new big guy, rather than accepting that things have changed.

Some of Google’s services have introduced new ways of conducting old business. Some of these have been more successful than others, and it is the very successful ones that come under fire from the competition and from regulatory bodies. But that’s no surprise: None of the criticism that Google suffers is founded; it is only meant to protect someone else’s business, while there is no real claim behind the accusations.

Before Google existed, there were other search engines out there: We used to use Altavista and then Yahoo (circa 1996 or 1998). Noone ever complained that Altavista’s search facility was a threat to privacy (Google’s search engine is seen by some as a means of control over people’s interests). Noone ever complained that Yahoo’s e-mail service looked at the content of private e-mails to display targeted advertisement side-by-side your e-mails (Google’s e-mail service is considered by some as an invasion of privacy, for Google’s AdWords uses your e-mail content to display targeted advertisement, analogously to what Yahoo used to do).

The difference is that today, the number of Internet users is far larger than in those old days of the Internet, and now any company with a good product (like Google) can attract lots and lots (and lots) of users, producing high revenues for that company. Along with the high revenues come the hyenas trying to scrape some of that money from Google, simply to try and cash in on Google’s success (like Telefónica in Spain), or simply because they are unwilling to accept competition (publishers in Germany).

Telefónica (the main telecom operator in Spain) has proposed to charge for the use of Telefonica’s network to reach customers. As such, Google would have to pay Telefónica, because Google users reach Google services through Telefónica’s network. This is completely outrageous: A customer of Telefonica’s will sign up for Telefónica services, to be able to reach several services that exist out there in the Internet: reading newspapers, writing blogs, shopping on-line, checking e-mail, or searching for information. But now the operator sees the cash cow in Google and they try to make up a new excuse to take money from Google, just because they do have the cash. This is plain and simple highway robbery.

Likewise, German publishers complain that this new competitor (Google) has eaten some of their market share of advertisement, and they turn to the government to “help” them by stopping, curbing, or charging Google somehow.

It is outrageous to see how private companies (Telefónica and German publishers for instance) turn to governments to introduce legislation intended to benefit them, but disguised as legislation that curbs some professedly monopolistic practice of Google. It is also shameful to see public authorities (the European Commission or the Italian Government, for instance) introduce legislation to attack Google. Europe must change their ways, embrace innovation and thus embrace strong competition from the outside, if we do want Europe to survive. As a European citizen, I do not want protectionist practices like those of the E.C., Italy, Telefónica (and many others). They are the wrong way to help the European citizen or the European business.

Subsidies produce lazy individuals

Spanish daily newspaper ‘El País’ published an interview with surgeon Pedro Cavadas, using a sentence by him as the title: ‘Subsidies produce lazy individuals‘.

Gladly, El País is publishing something like this in big letters. Dr. Cavadas is just saying one of those paramount truths very few people date to admit. Subsidies produce lazy individuals, damaging those who receive them because subsidies are strong private initiate deterrents, while they represent severe burden on taxpayers, whose taxes pay for those subsidies. Moreover, subsidies also impose dependencies, inefficiency, and only drive people to both economic and spiritual poverty. Subsidies are simply free money in exchange for nothing, and as anything that’s free, they are not valued nor appreciated. The very
nature of subsidies makes them prey for abuse, and in the end they are nothing but wasted work and money.

Subsidies should be completely eliminated. Truly needed monetary aid (a very small fraction of existing subsidies in several countries) should be available in exchange for something, committing the aid recipient to a responsible use of the aid, as if it were their own.

Until that happens, subsidies will continue to produce lazy individuals and lazy companies, driving countries and their populations to poverty.

False privacy protection

Finland’s Parliament passed a law allowing companies to track workers’ e-mail messages, but not to read the messages themselves. With this law in effect, companies will be able to retain information about the e-mails, such as the sender, recipient, the sent and received time and date, and whether the email contained attachments [ref].

Even with such a weak law (it does not permit reading the content of messages), some opposed it arguing it “gives employers more powers than the police, and could lead to an erosion of Finland’s proud heritage as a world leader in human rights” [ref].

It is rumoured that Nokia was pushing for such a law to pass (for it was dubbed “Lex Nokia”). If it were so, they should be applauded for that, because opponents to that law are but yet another example of undue zeal for privacy.

There’s no privacy concern with work-related e-mail messages, or any other company communication material. All company communications, and all company communications channels should belong to the company, not to the workers. The company should have the right to access and read the contents of their worker’s e-mail at any time. The content of those communications are not private. They do not belong to the individual. Workers are dealing with company information when they exchange e-mails, phone calls or postal mail with any other party, and the company has the right to decide who that information can and cannot be shared with. For this reason, the company should also have the right to inspect all company e-mails if they wish to, for policy enforcement, or for whatever other reason. People should keep our private conversations separate from company e-mail systems, if we are so concerned about our privacy.

There is no violation of privacy with this new Finnish law, and neither there would be if the law allow companies full access to their own company e-mails. On the other hand, such “privacy protecting” laws are a refuge for damaging activity by harmful employees. The problem of information leakage in enterprises is more complex than what this Finnish law is addressing, but these “privacy protecting” laws for enterprise environments (in effect in Finland but also in Spain, for instance) only cause problems for business while delivering no benefits to anyone.

Intellectual Property and liberties

In a friend’s blog I see a critic of a statement by a representative of the Spanish Ministry of Culture: “Without intellectual property, there is no free thought”.

Well… this sentence is not untrue: Let us imagine a world without intellectual property. Anything created by an individual would be nobody’s, not even the individual’s own property. There is no recognition for that individual for all the work that led to the production of that idea, of that new thing. Without acknowledgement there is no incentive to put effort into anything, and without that effort there is no thought: not free, and not captive. There is nothing.

Part of the very nature of humans is to associate ideas with people who published them. Such association is natural and it is what we call today “intellectual property”. Intellectual property is necessary, for anyone who creates a piece of music, new scientific work, a book or any writing.

A different matter is the economic exploitation of intellectual property. In most cases, such exploitation is needed and justified.

However, was the Ministry of Culture making reference to the illegal tax imposed on people by the SGAE (Spanish association of authors) in collusion with the Spanish Government? (in Spain, recording media and machinery used for copying, like photocopiers or video recorders, are taxed with a imposed royalty collected by the SGAE). As i said: on the one hand there is intellectual property, and on the other its economic exploitation, which may be just (in most cases) or robbery (Spanish Government + SGAE).

My friend also translates the words of the Ministry into: “without private property, there is no free market“, in an attempt to scorn the Ministry’s words. However, this translation is absolutely correct and an important truth.

Disreputable business practices go unpunished

Ryanair lost a court battle in Spain against an intermediary travel agency (Atrapalo)
that was selling Ryanair flight tickets irregularly.

Ryanair has no agreements with this travel agency. Ryanair sells its own flights through its own web page, directly to its customers. The Ryanair website usage policy states that their website may be used exclusively for private and non-commercial purposes. Atrapalo was using automatic mechanisms to use Ryanair’s end-customer service, introducing itself as an intermediary, and offering Ryanair flight tickets to its own customers, thereby using Ryanair’s website for commercial purposes and thus clearly violating the website usage policy.

Even so, the Spanish court has ruled against Ryanair. Ryanair was right to claim that this travel agency (Atrapalo) and others (e-Dreams, Rumbo, Opodo, Bravofly, V-Tours and Tui) must stop selling Ryanair flight tickets. The airline should have the right to decide how to sell their flight tickets, and for this reason they choose not to advertise their flights on the global travel agency sites (Amadeus, Galileo, Sabre, Worldspan). If they choose to do it exclusively directly with the customer, without intermediaries, they ought to be allowed to. The Spanish justice system just denied them that right. The Spanish joke justice system is hard at work once again, siding with the criminal part (in this case, Atrapalo).

Any company must be free to choose how to sell or not to sell their services, and this court sentence rids Ryanair of any say on the matter.

The Spanish court order blocks competitiveness and productivity: Ryanair is one of the best run airlines in Europe and with the highest punctuality rate thanks to their business practices. The court orders Ryanair to accept piracy-like business practices of Atrapalo, regardless of the damage they may cause Ryanair’s business or its effectiveness.

It’s discouraging to see the Spanish press (here and here) taking sides with the illegal practices of the Spanish on-line travel agency. The attitude of the justice system and the press are two examples of the the many reasons that keep Spain well behind in terms of productivity, in Europe and worldwide.

It’s also very discouraging to see that the European Commission criticized Ryanair too for not allowing an intermediary to sell their flight tickets. As with last year’s language despite a pro-regionalism local Spanish government with Air Berlin, public authorities intend to tell companies how they should run their businesses. They ought to limit themselves to making public infrastructures and public services work, and to ensure the conditions for businesses to foster, but that seems to be too much hard work for them, so they rather spend their time criticising profitable and efficient businesses.

If the European Commission cares at all for consumers, they ought to defend the willingness of companies to establish a direct channel with the customer, even if exclusively, as Ryanair wants to do. Among the business practices truly damaging for consumers are redundant intermediaries in product and service delivery which increase cost, create little or no value, and introduce unnecessary complexity for the consumer. If a company wants to have an exclusive and direct relationship with its consumers, they should be allowed to. Ryanair is being denied this right.

Hopefully Ryanair will win their appeal of the spanish court sentence, and the similar court battles in France, Germany, Italy and UK.