A Different Kind of Norway+

Norwegian Air Shuttle (NAS) started small. It was founded on 22 January 1993 from the bankrupt wreckage of Norwegian regional airline Busy Bee by 50 then-redundant former employees. Using three Fokker 50 aircraft, they contracted with  Braathens to link the scattered cities on Norway’s west coast. For the next decade, they grew steadily and profitably on this basis until SAS took over and absorbed Braathens, unilaterally cancelling contracts that should have been given 18 months’ notice.

Norwegian shrugged off this setback by re-purposing its fleet of MD-80 short-haul jets to become a low-cost carrier between Scandinavia and Eastern Europe. This was reinforced by their 2007 purchase of FlyNordic from Finnair. That same year, they ordered 42 Boeing 737s and their fleet of these had grown to 78 by 2011. By then, they had started leasing the new Boeing 787 Dreamliners for long-distance use between Europe and both west coast USA and the Far East.

Such a massive expansion was made possible by significant restructuring and creative financing, including sale and lease-back of much of its fleet. The spectacular growth has been led by by CEO and largest shareholder Bjørn Kjos, Under the control of Norwegian Air Shuttle ASA is a bewildering variety of associated subsidiaries. The group’s revenue passed £1bn in 2015 and has grown since—nu 30% in 2017. In its 26 years, it has grown to be the ninth-largest low-cost airline in the world.

nasroutes

It has managed to do this by luring passengers away from both conventional and low-cost airlines in Europe and by competing very effectively on long-haul routes—especially to North America—by bringing low-cost competition to airlines like BA. Not only does Norwegian undercut them on price but the Dreamliners used are faster, quieter and more comfortable than BA’s fleet of aging 747 Jumbos. But this growth has come at a cost.  Net profit in 2017 was a loss of around £100m, although it is difficult to be precise because of the flurry of operations run through subsidiaries. Although the stock trades on the Oslo exchange with an EPS ratio round 9, the stock value has halved since its peak of NOK 377 in 2015. (£1 ~11Norwegian Kroner). NAS’ capital structure shows ratio of its debt to equity stands at a dangerous level over 1,000 to 1.

By last summer, the financial gnomes of Canary Wharf and Wall Street had written NAS off as good to invest in only in hopes of a takeover by some other airline. Those in the know were advising friends not to book with Norwegian, in case they found themselves stranded. But NAS has flown on into the winter, paying its bills and keeping its vast network of routes carrying over 30m passengers during 2018. Even the Wall Street Journal admitted that (to paraphrase Mark Twain) rumours of its death had been greatly exaggerated.

This not to say it won’t suddenly go the way of  once-leading airlines like Pan Am, Laker, TWA or BMI in this highly competitive field. But if you don’t mind flying via Gatwick or Copenhagen, you can find deals under £200 to Los Angeles, Las Vegas or San Francisco you might consider worth the risk. I would.

Disclosure: I have no stock nor have any financial interest in NAS, or its subsidiaries. I have flown with them five times, finding the flights comfortable and punctual…but the staff training—both on the ground and in the air—was inadequate.

 

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The Blank Coast

Retirement is great. It means you can welly off somewhere without having to explain yourself. After half a century of travel, I finally decided to try somewhere I’ve been avoiding all that time: Spain’s holiday coast.

Never having been one for package holidays in the sun, the place that invented them offered little appeal. But, by taking the plunge out of season. it was easy to avoid acres of broiling pimples marking time between late-night clubbing. Having long been a fan of cosmopolitan Barcelona, that seemed a good launch pad. After catching the excitement of a massive Catalan crowd giving a boisterous finger to the visiting Spanish Vice-President, a weekend of tapas and sangria in the Ciudad Vella seemed tame, but enjoyable and a chance to dust off sputtering Spanish. People great; food great; city great.

Sadly, the launch pad of Sants station showed that it is RENFE that needs a rocket, with chaotic control of passenger flow, with misleading announcements in the mix. Though the Euromed train was modern, service was medieval—as was the track, which foes along way to explaining why the 200 miles to Valencia took over three hours when an equivalent LNER journey takes under two.

Getting to Valencia makes the wait worth it. Another bustling city mixing boulevards with narrow calles. Despite being mobbed by tours even out of season, the area around the cathedral that lies between Pllaza de la Reina and Plaza de la Virgen rewards exploration. It is full of hidden shops and restaurants. Tourist info helpful, people helpful bur RNEFE not. Why they need two stations within 200m of each other and run trains from both to the same place remains an Iberian secret.

A further 100 miles of coast south through Benidorm lies Alicante. The coast to there seems as despoiled as the 200 miles from the north. Trains do tend to run through industrial and less scenic areas. But, with the exception of dwarf orange groves and glimpses across sandy beaches to a glittering Mediterranean, the view was of endless beige tilt-up warehouses and boxy 12-storey apartment blocks. These latter were especially evident down the Costa Blanca, all the way into Alicante.

Less cosmopolitan than Valencia, Alicante boasts a marina, a broad beach-front promenade and an old city that wraps around the spectacular Castillo Santa Barbara atop its lofty 500-foot crag. unfortunately the promenade is flanked, as in Nice or Santa Barbara, by a four-lane arterial highway. The old city is a delightful maze of alleys and squares on a bewildering variety of levels, The old buildings towers several storeys above cobbled streets wide enough for a car to pass. The Calle Vieja leads down to La Rambla (main drag) and offers a variety of restaurants, my favourite being Casa Ibarra and their Sopa de Mariscos.

castle

The rest of the city—and the Costa Blanca—suffer the same problem: a profusion of sixties architecture that taste forgot. Lego towers clash at all angles to get a sea view. Many arre still half-built and the site fences regularly swallow the pavement. It’s as if Franco had all the building inspectors shot. The streets between are dark canyons where  traffic grumbles through a haze of tuk-tukking two-strokes. The city does have a tram  system stretching into suburbs on a scale with San Francisco that puts Edinburgh (at half again as big) to shame.

But, as with Valencia and Barcelona, Alicante is a city worth visiting. Stay in the old city —but NOT with a car. Try somewhere like La Milagrosa B&B. It’s fabulously central and you can hit both the Art Museum (MACA) and the Basilica (St Maria) with a bread roll from its rooftop terrace. And be aware the Spanish are noisy. They yell at each other in the street, especially kids; bats boom bass music until 4am, at which point, street sweepers and garbage collections take over. They still take siestas 1 – 5pm to compensate.

But if the noise and the tasteless towers get to you, try a day out on Tabarca. The catamaran leaves from the marina at 11 and gives you four hours on a mile-long piece of unspoiled 18th century dreaming just 10 miles offshore. Even the cats there are friendly.

lunchcats

 

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Drought? It’s a Fecking Desert

Say what you like about America but, once Britain had wearied of empire-building, the USA pretty much invented the modern world single-handed. China is a great country now coming into its own. But, like its prosperous Asian neighbours their recent growth comes from leeching off American innovation and technology by doing cheaper (and sometimes better) knock-offs. The gung-ho, can-do attitude among Americans is infectious and goes some way to explain how a liquorice allsorts of immigrants could forge the world’s leading nation our of a wilderness.

But this has a down side. Because they never know when to quit, they take on just about any environment if there is money to be made.  They took simple windmill-pumped we;;s on isolated ranches and ramped this up in California’s Imperial & Central valleys, as well as Arizona’s Valley of the Sun to make those areas among the most productive agricultural acres anywhere. To achieve this, massive projects trapped, stored and transported water from the great rivers of the Southwest. The mightiest of these was the Hoover Dam across the Lower Colorado River, storing its 22,500 cu.ft./sec flow for use. That’s an acre-foot or 334,000 gallons every two seconds. While the huge Central Valley is watered by the snow melt on the lofty Sierra Nevada, Los Angeles, San Diego, the Imperial Valley and almost all of Arizona squabble over this bonanza. A century ago, when settlements were barely villages and Arizona barely a state, almost all of the water flowed unimpeded on to Mexico and the Sea of Cortez.

Those days are gone. Now only a muddy trickle makes it all the way. Technology like air-conditioning, automobiles and swimming pools make life in the sunbelt not just possible, but desirable, the explosion in population soon followed. As most of the land was desert, development could be expansive. As the weather was both hot and predictably, the growing of high-value crops was both easy and profitable. The original citrus groves soon gave way to more exotic produce. While California could satisfy its own water needs if it could shift water from the wet North to the dry South part of the state, the same can’t be said for its partner in Colorado River consumption: Arizona. Although the forested North of the state around Flagtaff receives rain- and snow-fall, the lower half is the Sonora Desert, normally capable of sustaining cacti, chaparral, lizards and the odd coyote. Water made the desert bloom and agriculture become big business. Cattle, lettuce, cotton, melons, greenhouse plants and even water-thirsty rice are grown in quantity. As a result, these soak up half Arizona’s water allocation—about 4 million acre-feet a year (about 1,3 trillion gallons or five weeks of flow in the Colorado River). Sprawling Phoenix now houses 4m of Arizona’s 6m residents and soaks up 1,4 million acre-feet a year (about 440 billion gallons or twelve fays of  Colorado flow.

These are intangible numbers. But measured against annual water use by an American family of five at one acre-foot, this means Arizonans consume water at twice that rate. Why should that be?

For a start, there are 615,000 swimming pools—one for every 10 residents. With an average area of 400 sq. ft., each pool loses 10,000 gallons each year from evaporation in Arizona’s arid climate. That’s a day’s flow of the Colorado right there. Double that for leakage. Add in evaporation and leakage from many artificial bodies of open water. Arrowhead Lakes(!) development includes over 43m sq.ft. of open water, losing over 1bn gallons of water each year. Nearby 10,000-acre fishing spot Lake Placid alone loses four times that.

Then there are the 185 golf courses that spray with 29bn gallons each year, most lost to evaporation. That’s almost two weeks of Colorado flow right there. Add in massive amounts of landscaping, even if much has been converted to heat-hardy native planting you start to see how Colorado’s bounty is literally running out. And we haven’t even started on 6m people’s domestic use of toilets, showers, washing machines, etc.

Because of several years of below-average rainfall/snowmelt upstream, an urgent conference called for December 12th in Las Vegas to square the impossible circle of satisfying all users in the Southwest of Lower Colorado water was something of a non-starter because the Arizona delegation could not agree on a position. Farmers, Municipalities, businesses and Indian tribal lands have stretched the state’s demand for river water well beyond that allocated and are furiously pumping artesian water out of aquifers that, being beneath a desert with 12 inches of rainfall, are not being replenished. Over 40% of Arizona’s water use now comes from this source, which is unsustainable.

This is where American’s irrepressible gung-ho/can-do would appear to lead them into an incipient car crash. Arizona offers a California-like climate at 2/3rds the price, so this will get worse. With the population forecast to grow by almost 50% to 9m people by 2025, attracted by lakeside living and golf courses, the problem of supplying adequate water appears intractable. California and Nevada are desperate to increase their own share of the Colorado, so any increase from that source seems unlikely. There are no other substantial rivers to tap. Yet the business machine keeps development sprawling ever wider across the Valley of the Sun, lawmakers run scared of not boosting their patch and the whole fragmented layers enshrined the US shibboleth of a constitution mitigates against anyone having clear authority to bang heads.

The fact that the last few years has seen waters supplies shrink certainly exacerbates the problem. But it has bot caused it. What caused it was a gravitational shift in American population from the Rust Belt to the Sun Belt and the blessing that the country’s second-biggest river flowed between the Sonoran and Mohave deserts. How this riparian car crash can be avoided is not clear. It is a hot spot when commerce and environment clash—and my money’s on the latter. I would not counsel investing in a lifetime membership of the Arrowhead Lakes Golf & Country Club as wise.

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“The Only Easy Day Was Yesterday”

For a nation at peace, the United States packs a hefty military punch.  Apart from a ten-division Army, 286-ship Navy and a 5,000-plane Air Force, they also can deploy 190,000 in the US Marine Corps—a force larger than all Britain’s armed forces put together. Unlike the Special Forces role of Britain’s Royal Marines, the USMC  is actually more like British paras, tasked to deploy in large units overseas, with their own aircraft and support units. Known as ‘jarheads’, marines are known for their young, aggressive attitude, which cause some unrest and high profile around the 20 marine bases scattered down America’s coasts. A recent crash of a marine F-18 fighter refeuling off the coast of Japan was a reminder that there are also another 20 marine bases scattered around the world.

But if jarheads don’t fill the role of commandos, who does? The less well known and probably most effective of the many weapons in the US arsenal are the Navy SEALs. Their name derives from their ability to deploy and be effective by SEa, Air and Land. Formed in 1962, their first deployment was to Vietnam where they quickly earned their spurs. While the bulk of the 500,000 U.S/ troops deployed (including Marines and Air cavalry)fought a conventional was against the elusive Viet Cong, SEALs were deployed to beat them at their own game.

Trained not just as elite infantry but they deployed specialist skills, including parachutist, frogmam, stealth, unarmed combat, survival off the land and fluency with various weapons and explosives. They were, as the Americans say, some mean dudes, especially those assigned to Long Range Patrols, known as ‘Lurps’. Navy SEALs are called on to perform missions of ‘strategic importance’. including: Direct Action: Neutralize, Capture and Kill Enemy Forces Offensive strikes against an enemy target using tactics like raids, ambushes and assaults. Special Reconnaissance: Observe and Report. Heaven help the village commissar they were tasked to eliminate. Deployed in small squads of four, they  penetrated all over South Vietnam, far into Cambodia and Laos and even deep into North Vietnam as far as Hanoi.

While such tasks could be undertaken by other branches of service but the trickiest tasks—and certainly those to be carried out deep hostile territory—would be entrusted to SEALs. That requires a rare breed: men at the peak of fitness with unswerving dedication, guided by astute intelligence, able to read and react swiftly and decisively in a myriad of unforeseen circumstances. All of this needed to be carried out professionally under the pressure of imminent death and a fierce loyalty to the handful of comrades taking the same spine-chilling risks with you.

SEALs proved so effective they have been used in every serious conflict the US has been involved in, from Somalia to Iraq, through Afghanistan to Syria and now in the Sahel. Eight ‘teams’ of several hundred each, ready for deployment and split between home bases at Coronado CA and Little Creek VA, But the toughest assignments must have been the myriad missions executed in the early days in Vietnam. Not only was this against a wily, tough and experienced enemy, but had to develop many of the skills now commonplace. These included exiting from a submarine at periscope depth and HALO (high altitude, low opening) parachute jumps to achieve safe and stealthy insertions.

Such an adrenalin-pumping life took its toll, The enemy was almost the least of the worries—very few SEALs died on engagement. But years in Vietnam of the tension of engagement and exposure to chemicals such as the Agent Orange defoliant in the field left returning SEALs with even more difficulty with re-entry in and acceptance by American society than the ‘grunts who served their 364-day ‘tour’. Even now, SEAL veterans are tight-lipped, stay close to buddies who walked through the same hell, show huge mistrust in ‘the system’ that put then in harm’s way and sometimes left them there unsupported to preserve ‘plausible deniability that America was ever involved. This extends to politics and government, for whom they have a bitter distrust.

And can you blame them? Their country created some of the most flexible, autonomous and effective fighting units, honing them to be fiercely self-reliant and trust no-one. Like a peak athlete or intrepid explorer, how do you return to the soft, easy civilian world and be content with it?

 

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Ultimo Tango in Roma

“After a fight with cancer, film director Bernardo Bertolucci died on Monday 26th in Rome, surrounded by family.”

Most famous for his Oscar-laden sweeping historic “The Last Emperor“, acclaim had come earlier in his career with the 1970 “The Conformist” But he achieved an almost permanent notoriety with “Last Tango in Paris” in 1972. Even allowing for the sexual revolution still echoing from the sixties, this film pushed the boundaries of taste to the point that one of the backers (Transamerica Corporation) withdrew from the publicity.

The story is straightforward: While looking for an apartment, Jeanne, a beautiful young Parisienne (Maria Scneider), encounters Paul (Marlon Brando), a mysterious American expatriate mourning his wife’s recent suicide. Instantly drawn to each other, they have a stormy, passionate affair, in which they do not reveal their names. They are driven to this by different demons: Paul struggles with his wife’s recent suicide and Jeanne has a last fling before marrying her besotted fiancé, who is making a documentary about her.

They both arrive to view an empty apartment at the same time and there is sudden chemistry between Schneider’s coquettish innocence and Brando’s brooding intensity. Many audiences at the time were outraged by the explicit sex scenes, especially one involving anal sex. But feminists especially rail against what they see as an egregious  brutality of behaviour and an exploitation of the innocent Jeanne on a vein against which the Me Too movement has vigorously campaigned recently.

It’s hard not to sympathise with that view. But I feel this is selling Bertolucci and his empathy for humanity short. In the earlier scenes, Paul is definitely cavalier, even callous in his ‘no names’ treatment of Jeanne as a sex object. But he is clearly tortured by incomprehension of his wife’s suicide and virtually punishing himself, as in the anal sex scene, which she performs on him. For her part, Jeanne is a willing partner, experiencing an excitement her ardent but sweetly innocent fiance seems unable to provide.

The brilliance of the movie is not the shocking sex but how the dynamic of dominance shifts in Jeanne’s favour. Their exciting, nameless intimacies revive Paol from his slough of despair and he starts to court Jeanne, as if he wants a serious relationship.  This shatters Jeane’s fascination as he takes her places outside the apartment that has been their sole connection, including a dance hall full of older people intently dancing the tango.

Appalled by an age mismatch with this and with Paul, Jeanne flees home, only to be pursued by Paul—roles now reversed— right into her parents’ apartment, where the terrified Jeanne shoots him with her father’s army revolver. The final scene has Paul standing on he balcony, mortally wounded, staring out in incomprehension at a beautiful view over the roofs of Paris and Jeanne repeating sotto voce: “I don’t know who he is. He just broke in…

It is a heart-rending masterpiece of how a brutally wounded soul in the midst of the beauty of Paris can find the innocence he had lost—and find it more brutal than his original anguish. To focus on the sex scenes (not, in my opinion, rape scenes), however distasteful they may be, and not see them as a necessary element in this arc of tragedy is to miss the insight into humanity that Bertolucci achieved.

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Get Yer Wellies Out

Like a spoiled kid in a toy store, President Donald Trump has played with just about every lever of American government available to him. Unlike his moderate predecessors, he has rampaged about, playing fast and loose with immigration laws, trade deals, long-established alliances and America’s hard-earned status as a champion of human rights. But the most egregious in its long-term effects has been his implacable disbelief in climate change and global warming. He tore up the Paris accord, decimated the EPA and declared open season for exploitation of mineral, fuels and forestry resources. As a part of this, his Administration sneaked out a hugely important document on Black Friday )the day after Thanksgiving when everyone is out shopping) in the hope it would go unnoticed.

The Fourth National Climate Assessment report has a dire warning for all humans within its more than 1,650 pages: People need to take immediate action on global warming to avoid “substantial damages to the U.S. economy, environment, and human health and well-being over the coming decades.” The report, produced by 300 scientists and 13 federal agencies, is hard-hitting in its conclusions by being specific how the American economy and way of life will suffer if global warming continues to be ignored by the biggest economy in the world. The report begins:

Earth’s climate is now changing faster than at any point in the history of modern civilization, primarily as a result of human activities. The impacts of global climate change are already being felt in the United States and are projected to intensify in the future—but the severity of future impacts will depend largely on actions taken to reduce greenhouse gas emissions and to adapt to the changes that will occur.”

The assumption that current and future climate conditions will resemble the recent past is no longer valid. Observations collected around the world provide significant, clear, and compelling evidence that global average temperature is much higher, and is rising more rapidly, than anything modern civilization has experienced, with widespread and growing impacts. The warming trend observed over the past century can only be explained by the effects that human activities, especially emissions of greenhouse gases.

While Europe may have experienced unprecedented temperatures and storm violence, because of  its size and varied ecosystems, the USA is dealing with a wider range of problem and their severity. From hurricanes in the Gulf, to drought in Colorado and Nebraska, to wildfires in California, authorities are struggling to cope and need little convincing that climate change is the driver. The future will see more:

  • high temperature extremes
  • heavy precipitation events,
  • high tide flooding events (esp. Gulf of Mexico)
  • ocean acidification and warming
  • forest fires, especially in the US West
  • more severe and more frequent tornadoes in the Mid-West
  • more severe (category 5) and more frequent hurricanes

Despite insouciance radiating from the White House even normally sceptical Republicans are shifting their stance. Originally, Republicans supported “developing the technology to meet our environmental needs by providing market-based incentives to advance said technology”. More recently, a number of more thoughtful members have realised that long-term profitability requires a stable and benign environment. Trump is starting to look isolated.

Many climate change effects are projected to increase. By the middle of this century, annual losses in the United States due to climate change could reach hundreds of billions of dollars. Global climate is changing rapidly compared to the pace of natural variations in climate that have occurred throughout Earth’s history. Global average temperature has increased by about 1.8°F from 1901 to 2016, and observational evidence does not support any credible natural explanations for this amount of warming; instead, the evidence consistently points to human activities, especially emissions of greenhouse or heat-trapping gases, as the dominant cause.

The American press is raising quite a stink of the report and whether it was covered up. On p[resent form, Trump will dismiss this as another piece of ‘fake news’. He is just egotistical enough to keep that up for the rest of his term. If America does stick its head in the sand, things will get out of hand and, in the large portion of our land mass lying within 10 metres of sea level,  it would be wise to get yer wellies on.

 

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Are We All FICO’d?

It is a constant amazement how much we still need to learn, no matter how old we get. Six years ago, as I was disengaging from a highly active political life, I set up a small tour business to keep me  busy. For this purpose, I needed a large, comfortable people mover and needed a five-figure sum to secure such a vehicle. I walked into my local RBS branch where I held a four-figure balance in an account I had held there for over 40 years.

After receiving a polite rebuff and a phone number, I found myself talking to a “Business Account Manager’ who appeared to be reading from a script. After printing off the six-page application form she sent me, I realised that I required a credit score to complete it. Further phone conversations established that, because I had none, no loan could be forthcoming. The reason, it appeared was that I had neither mortgage, not credit card history; The careful stewardship of debit cards, prompt punctual payment of bills, nor forty years of healthy balances with the same institution counted for nothing.

Rather miffed by all this, I secured a business loan elsewhere (paid off with punctual instalments in three years) and have been fulminating about personal and small business finance ever since. Having run my finances since my penny-pinching student days as a card-carrying Scot, I had not realised I was such a fiscal outrider.

The most widely used credit scores are FICO Scores, the credit scores created by Fair Isaac Corporation. 90% of top lenders use FICO Scores to help them make billions of credit-related decisions every year. FICO Scores are calculated based solely on information in consumer credit reports maintained at the credit reporting agencies. Here’s how it works.

In order to establish a credit score, you must assume debt. Although this may seem counter-intuitive but more debt is better. The sole proviso is that you must make the agreed payments on your debts. Though any new lender might, FICO doesn’t care if you are in over you head and stealing your grandmother’s pension to make payments. As long as the payments are made, you FICO score will stay robust or even rise. Advice given to young people wanting to buy a home is to get into debt in the fist place but using credit cads or buying major appliances on credit. A fat bank deposit is not enough, as it will do nothing to establish or raise a credit score.

It is, in fact, a hugely profitable collusion among financial institutions. Pay day loans may be usurious but credit card rates between 15 and 30% are hardly bargains, especially when most people do not pay the balance off each month to avoid such interest rates. It is not unusual for a family to be £10,000 in debt on various credit cards and paying £200 each month in interest alone. Because many want a mortgage, they boost their FICO by running up such debts but seldom find the cash to pay them off once they shoulder the mortgage burden. Many fixate, or even boast, about their FICO scores, ignoring the damage their debt burden does to their disposable income. And it is always too easy to make some large purchase with a card as the world is now too impatient to save.

Banks and other lenders love this system. No longer is it necessary to invest huge time and effort to know your customer, your sales staff need little training and PR damage by refusal is minimised by blaming it on a faceless rating agency. But, worst of all, millions are encouraged to get in debt over their heads, with ‘financial advisers’ and a major marketing machine encouraging them to do so.

Is there a way to avoid this? Not unless your dad is rolling in it—or you never want to buy a house. But you need not go n over your head. Use a couple of credit cards each month but pay the balance off immediately. Buy big items you really need (TV; sofa; fridge) on credit and set up direct deposit to ensure payment. Best of all: make yourself so rich (or frugal) that you don’t need credit and you can thumb your node at the money-grubbing pencil=necks who want to FICO you.

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Lessons from the Land of the Car

Europeans can can get sniffy about public transport in America. Outside of New York, they have a point. But, despite the money we Scots throw at public transport, we should not be so smug. Santa Cruz county is a satellite of Silicon Valley, much as East Lothian is of Edinburgh. A commuter and recreation component of the greater metropolis, it is linked by one trunk road artery— in their case the tortuous 4-lane Hiway 17, which snakes over the intervening 1,000-foot mountains. These prevent any rail link with the main urban centre.

Yet their Santa Cruz Metro (SCM) bus system knocks ours into a cocked hat. Instead of our rag-tag of six different bus companies, each running a couple of services that link with beither train nor other buses, SCM runs an interlinked system across the county.

Granted, their population is larger—240,000 versus our 105,000. But it serves a comparable area, running thrice as many routes, most at 30 minute intervals. And its cheap: while we pay a fiver to cross our county, their flat fare of $2 (£1.50) or £3 (£4.50) day ticket covers theirs. There’s no free travel but seniors pay half fare; 75p breaks nobody’s bank. The whole system works to a unified timetable, abailable in two languages (1 in 3 residents are Hispanic).

All of this does come at a cost: SCM’s budget is $40 million (£30m), which dwarfs ELC’s £3/4m. But adding in £4.5 million concessionary travel cist, adjusting for population and SCM driver wages at twice East Lothian’s gives a budget of £10m to provide a comparable service here. Finance for SCM buses comes 20% from the fare box, with the rest from State fuel and local sales taxes. Both ridership and fare box revenues are better, here leaving a £3m shortfall to make up. If such bus services were rolled out across Scotland, the bill wuld be £60m. This is barely 1/3rd of current concessionary travel costs—or 10% of the income tax tweak to be levied on Scots next year.

Instaead of sitting around girning about bus re-regulation, it;s time for Wur Parly to realise how even the land of the automobile is luring people out of traffic jams by making bus alternatives cheap and frequent. East Lothian would be the perfect place to try this out and—at only£3m—a snip.

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A Testing Time for Democracy

With Brexit and Trump testing the resilience of democracy on both sides of the Atlantic, will it cope with a possible fiscal fallout should either fail to address imbalance in wealth?

Much to the annoyance of Young Turks with no memory of the 20th © or of TV before The Simpsons and reality shows, older people are still prone to musing wistfully about the “good old days” when life was better. It is true that such ‘buftis’ often lack any social media skills or even the smartphones on which to display them, and so miss out on gifts of modern life . But sometimes they are right. The benefits to civilisation of gunpowder, machine gums and ICBMs are, to say the least, a matter for debate. On a similar vein, have resent frenetic social and financial developments made the world a better place?

Social and financial developments are more subtle in their impact, but just as pervasive in their effect, Among these, political systems have evolved to govern such advances. Though they still have adherents, neither Dictatorship (of which Monarchy is a hereditary variant) nor Communism offers a viable form of government, acceptable to its people. So, with exceptions of the strange hybrid of China and some grubbier corners of the globe, Democracy has become dominant, even though it may be, in Churchill’s prophetic words “the worst form of government—apart from all other forms of government”.

Given rising standards of living over the last couple of centuries of those living under Democratic rule, it deserves some praise. But, because of its present role as “the only game in town”, scant attention is paid to its drawbacks, let alone its vulnerability. In one respect, it is no different from Monarchy, Dictatorship or Communism, in that it relies on a belief in its rewards and authority. If it fails in either,  the result is revolution.

Revolution may not come as pitchforks and torches descending on the palace.  In Portugal, the Soviet Union and Zimbabwe, scarcely a shot was fired. Only belief in “the system” running the country by the bulk of its people will resist and see off attempts at radical change. The foundation stone of such resistance is a constitution—or, in the case of fuddy-duddy states without one like Britain, long tradition having a similar effect. This provides both authority and common cause as long as citizens believe in it. But when constitution is seem as constipation, history shows instability, then misfortune for all follow: Weimar Germany; pre-civil-war Spain; Allende’s Chile. Currently Venezuela—an ostensibly rich democracy—is sliding down this slope.

Pillars of Western democracy, such as Britain and the USA, are considered immune to any such disruption. With centuries of political stability and increasing affluence behind them, why would any significant part of their population feel disaffected enough to cause unrest? The British union of 1707 led to 250 years of profit and prestige, right up to 1945. America fashioned a rich superpower out of boundless space and eager immigrants, using civics and wealth as common cause: widespread belief in the Constitution and the American Dream. This found its peak in the period after WW2. There was reverence, not ridicule for Kennedy when he said “ask not what your country can do for you but what you can do for your country”.

Shocks from oil prices and the Vietnam War dented nut did not damage America’s belief in itself. Britain, on the other hand, underwent a traumatic transformation under Callaghan and Thatcher. The miners’ strike and Toxteth tore British social fabric deeper than Watts did in the States. The Reagan boom years and military prowess displayed in the Gulf Wars restored Americans’ belief in “the system”. British faith was restored later with the salary and property boom around the millennium..

Boom times both sides of the Atlantic ended in the financial crash of 2008 when a witches’ brew of opaque financial derivatives, irresponsible lending, “Master of the Universe’ hubris and sloppy oversight laid several major financial institutions low. The British public was landed with eye-watering bills to clean up the mess. It was in the resulting austerity that cohesive belief in the system—in equality of opportunity and fairness on both sides of the Atlantic started to erode. In America, Joe Sixpack had pulled down $30 an hour building autos in Detroit, bulldozers in Ohio or airliners in Seattle found Toyota, Komatsu and Airbus had eaten their lunch. In Britain, from Cleveland to Coventry, British ex-miners, ex-steelworkers, ex-factory hands, etc found themselves on the economic scrapheap. On Canary Wharf or Wall Street, P45s fell on a few minions while board member and CEO carried on, remuneration unscathed. Fred Goodwin might have said ‘sorry’; Philip Green sweated a Parliamentary Committee easily. Both laughed all the way to the bank.

IncSpread

Comparison of UK Incomes, by Decile

With incomes now differing by a factor of nine, even after tax, the stage is set for the two horsemen (we can’t afford four)of the economic apocalypse: Brexit and Trump. The former being driven by a privileged Home Counties few using disaffected ex-workers in the North as democratic pawns. It is an unholy alliance that may drive Britain into an economic river-of-no-return and polarise the population in a rift that tears acoss party lines. Both repentant Remainers and hard-line Bexiteers are disowning a government that appears to speak for fewer and fewer people. Brexit is now inevitable. But the ‘Brexit Dividend’ appears to be, id anything, economic damage to a wide swathe of people, most of whom were not rich to start with, This bode ill for peace and stability.

But potential civil unrest here will be dwarfed by what is going on in the States, two years into Trumpdom out American cousins are digging themselves into a political feud worthy of the Hatfields and McCoys. America has long lived with an institutionalised two-party system and massive wealth disparity. As long as a generous amount of bi-partisan agreement mitigated the former and everyone believed they had a shot at rectifying the latter, things happened that benegited all. It wasn’t Trump who invented blinkered partisanship. But he has developed it into public entertainment in the style of a wrestling match or reality TV show. The recent political circus made of the (supposedly apolitical) appointment of a Supreme Court judge was largely of Trump’s doing. But, since the Democrats chose to engage in the debate with the same mid-wrestling absence of restraint and dignity means their chances of sweeping next month’s mid-terms are doubtful, even with outraged women incentivised to vote.

But, whatever the outcome, constipation in politics will we dwarfed by the effect of constipation in social mobility. Even before Trump came to power, weallth disparity in the States made  Britain’s factor of ten inequalities seem positively minicule. The chart below shows wealth distribution by single percentile in 2016—before Trumpr’s tax breaks boosted the wealthy even further.

USwealth

Wealth Distribution in the USA by Percentile

Were this $94.2 trillion distributed evenly over America’s 124 million households, each would have a tidy $760 million to bequeath the kids. But the lower 50% average $11,000 or under 1% of the wealth. In gact, the tip 1% owns more than the bottom 90%combined: a worker must toil for a month to earn what a CEO is paid in an hour,

What the media both sides of the Atlantic fails to realise (and therefore to cover) is the great mass of ordinary people, possibly even a majority, who are appalled by what has happened to those who represent them. They see them turning into self-absorbed, dogmatic pit bulls; many are repelled by the whole shooting match. In prosperous times, this might not have mattered. But people harmed by Trump’s tax break for the rich or by Brexit fallout will start looking for scapegoats.

This is dangerous.

Whereas monarchs could lop off dissenting heads, fascists could wheechle them into forced labout and communists could cattle truck them off to some KGB gulag east of Tomsk, dissent in democracy is a ticklish thing. It is never hard for politicians to pull the wool over the public’s eyes. Indeed it is a brave politician who risks his/her career by being honest. Present politicians on both sides of the Atlantic mostly lack such moral candour. So, when frustration with ineffectiveness of a vote between party rent-a-quotes makes more people angry and frustrated, them—Constitution or no— watch out.

Without a Constitution to check its government, the British have, until now, relied on  good sense and fair play among MPs to find tolerable solutions. Thatcher broke the mould on this but May is exploiting what has never been exploited outside of times of war; the almost untramelled power available to her. It will need no more than a botched Brexit with no deal for the degree of disgust outside of political and media circles to boil over into something very un-British and very ugly.

To some extent, the Americans have it easier. There is still faith in the Constitution and its ability to handle aberrations as crassly insensitive and partisan as Trump. The fist line of defence is the Legislature—but it is being as tribal as the President. And, now that the Judiciary, in the from of the Supreme Court, has been stuffed with two Trump appointees. as check  on White House demagoguery must be in question.

Americans are even more pecuniary than the British.  As long as Trump’s claim to have boosting jobs and manufacturing holds, then the broad population can keep believing the American Dream is theirs,. But, should the ‘trickle-down’ effects of last year’s tax cuts for the rich not compensate for the massive budget deficit they imply by growing the economy and spreading the wealth, then a narrow rich elite will get even richer and the vast majority get poorer. Should that majority ever conclude the much-vaunted Constitution does not protect them and has become the tool of wealthy lawyers protecting their super-wealthy clients, this could get ugly. If Trump’s luck does not hold then the Constitution will mean no more than it did to those fomenting the LA riots of the 1990s. And once faith in any democratic system collapsess, it is a long, hard, impoverished road back. Ask any Venezuelan, or Zimbabwean.

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Our Future Begins Here

Those of you who were off broiling yourselves on some distant beach this summer will no doubt have taken along a couple of juicy potboilers to while away the hours on the lounger. If so, you would have missed three ‘good reads’ that have appeared and which, taken together, pretty much pose the question of what will become of Scotland. For once, this is not a Mexican stand-off between Indy and non-Indy tribes but they pose a more fundamental debate, one which no-one seems to want to have.

The key document, published early this month is “Delivering for today, investing for tomorrow: the Government’s programme for Scotland 2018-2019” Snappy titles are not Holyrood’s forte (we’ll call it SGPG for short). But the Executive Summary does contain some lively intentions, including:

“We will make it our mission to steadily increase annual infrastructure investment so it is £1.5 billion per year higher at the end of the next Parliament than in 2019-20…On current estimates that would mean around £7 billion of extra infrastructure investment by the end of the next Parliament.

Were this to come to pass, there is a strong likelihood of it triggering  an economic boom, much as Roosevelt’s New Deal dragged the USA out of the Great Depression in the 1930’s. There are two questions that must be answered before knowing whether such good intentions pave the way to Scotland’s heaven or its hell: 1) Where is all that money coming from and 2) Which infrastructures will receive that level of investment? For the first any benefit will be offset if the money used us diverted from other, essential services and investment; for the second, though the construction of popuar swimming pools and community centres may win votes, it does little to boost GDP.

The second document, which gives a context within which the is SGPD operates is the Sustainable Growth Commission’s Report of May 2018 (SGCR). Part A of the report considers the performance of the Scottish economy, set in the context of the global and UK economy and assesses the potential for improvement. It sets out principles for a new Scottish economic model and long-term policy strategy. The approach is to grow GDP by focusing variously on productivity, population and participation (inclusive) growth. The central argument is that Scotland should be seeking to emulate the performance of the best small countries in the world, rather than sticking to its current position as the best of the rest of the UK.

This position is reinforced by the third document, Wealth of the Nation, (WotN and a deliberate reference to Adam Smith), published by the David Hume Institute this month (September),  It puts Scotland’s productivity in an international context, where it fares much less favourably than in comparison with the rest of the UK. Some definitions:

  • GDP (Gross Domestic Product) = income generated in a country over a year
  • Productivity = GDP, divided by the total number of hours worked
  • Value added = a much trickier thing to measure per worker than the hours worked

By these raw  measures, Scotland (and, for that matter, the UK) is not doing well. To quote WotN and show one of its charts:

Scotland’s productivity over the last fifteen years has been largely stagnant and has under-performed, compared with many other European countries.”ScotProd

Scotland enjoys a low unemployment rate and its workers already work a high number of hours. Meanwhile, its working-age population is shrinking. This means that productivity growth will be of central importance to future increases in Scottish incomes and living standards. This is compounded by two decades of the Scottish Parliament focusing on social, rather than business priorities in its legislation. Though nobody would question the social value of hours worked by social workers or NHS staff, the extent to which they increase the actual wealth of the country, as compared to a farmer or oil worker, is less clear. It is not simply a question of services versus goods production—financial services contribute prodigiously to national wealth— but not all employment contributes the same “value added” per hour worked. The series of case studies within WotN suggests ways in which such questions can be addressed in Scotland. The turnarounds in the case studies involved:

  • focus on the evidence, (Scottish public bodies dwell on intention, not outcome)
  • consensus and collaboration, (multi-body working is rare or superficial)
  • credible and strong institutions, (work done by juniors who are not empowered)
  • focus on skills (time served does not mean experience and, even less, qualified)

The SGCR emphasises Scotland has very significant comparative economic assets and advantages, in terms of natural resources, the education and skills. Yet, median income of the group of 12 small advanced economies is 14% higher in GDP per head; a
gap of £4,100 per person. To redress this, two fundamental lessons are clear: Scotland must become more engaged, not less, in the global and European economy in order to boost growth. And the opportunity to contribute to, and benefit from, that growth must be more widely shared—as in those countries.

Will the EGPG achieve this? Consider the suite of bills that form the backbone of the programme:

  1. Budget Bill
  2. Biometric Data Bill
  3. Census (Amendment) Bill
  4. Consumer Protection Bill
  5. Disclosure Bill
  6. Electoral Franchise Bill
  7. Female Genital Mutilation Bill
  8. Non-domestic Rates Bill
  9. Scottish National Investment Bank Bill
  10. South of Scotland Enterprise Agency Bill

While not every piece of legislation can be a barnstormer, much of the lists are re0treads from last year with a whiff of populist grandstanding thrown in. The promise of funding a mental health worker in each high school sits badly with a promise made last year to fund extra staff that were never provided.

With the exception of the one on an SoS Enterprise Agency (which will do little beyond shore up damage from decline in Borders knitwear and atrocious transport options along the Solway coast), there is nothing to make Finance Ministers in Ireland, Denmark or Singapore quake in their Gucci loafers at the impending appearance of a Scottish tiger on global markets. And none of these bills come near the inspirational. There is certainly nothing that can hold a candle to even the Land Reform Bill in terns of social impact.

So, if we do see “£7 billion of extra infrastructure” materialise in the life of this and the next parliamenst, the probability it will be in the shape of a myriad pork barrel projects with plausible social cover but little leverage to boost the economy is high. If Messrs Mackay, Hepburn and Ewing were worth their ministerial salt as Finance, Business and Tourism champions, respectively, we might all wake up in 2026 with a world class global hub airport, or the Aberdeen/Ventral Belt triangle electrified, or a world-beating renewables sector, or a Munich-quality transport system for our constipated capital. Infrastructure vision on that scale could light a roaring fire under our national productivity.

But ah hae ma doots…

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