"Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice" - Adam Smith
With all the bankruptcies in the airline industry over the last few years, companies blame high fuel prices, the war in Iraq, the industrialization of China and India, and several other factors for their difficulties. But Southwest Airlines, based in Dallas, Texas, took a different approach that is paying dividends as oil prices rise. In 2000, the company realized fuel prices could rise dramatically and hedged their gas price.
As Moira Herbst wrote,
For 2008, 70% of its fuel needs are hedged at $51 a barrel. That means that while competitors have to contend with spot prices hovering around $120 a barrel, Southwest can buy oil at less than half that... For 2009, the company is covered about 55% at $51 a barrel; for 2010, 30% at $53 per barrel; and for 2011 and 2012, at more than 15% at $64 and $63 per barrel, respectively.
Although continuing this strategy will prove more expensive as fuel prices continue to go up, Southwest has continued to make profits while other airlines have failed. Former CEO of American discount airline JetBlue David Neeleman hoped to follow a similar strategy, but the company rejected his Idea.
As airlines continue to fail and the number of bankruptcies continues to rise, it is not difficult to imagine the Federal Government following the same path it did in the 1980s with Chrysler and recently with Bear Stearns. But Southwest proves that innovative thinking and sound strategy can carry a company through the most difficult times. Government intervention allow less wise companies to unfairly take away Southwest's business, once again rewarding incompetence and penalizing intelligence.
THINK TANK OFFERS $15,000 PRIZE FOR JOURNALISTS
London, 1 April 2008 – For the seventh year, International Policy Network (IPN), a London-based think tank, is accepting submissions for its annual Bastiat Prize for Journalism.
The $15,000 prize fund will be divided among First, Second and Third placed authors. The Prize is open to writers anywhere in the world whose published articles eloquently and wittily explain, promote and defend the principles of the free society, including property rights, free markets, sound science, limited government and the rule of law.
Since 2002, the Prize has been inspired by the 19th-century French philosopher Frédéric Bastiat and his compelling defence of liberty. Bastiat's brilliant use of satire and allegory enabled him to relate complex economic issues to a general audience. In keeping with his legacy, Bastiat Prize entries are judged on the intellectual content of each article, the wit, eloquence and persuasiveness of the language used, the type of publication in which it appeared and the location of the author.
Last year, the competition attracted over 280 entrants from more than 60 different countries.
Previous judges have included Lady Thatcher, James Buchanan and Milton Friedman. This year's panel includes the former British Chancellor of the Exchequer, Lord Lawson of Blaby, and Amity Shlaes, syndicated Bloomberg columnist, a senior fellow at the Council on Foreign Relations and a previous Bastiat Prize winner.
Submissions – in English – will be accepted from 1 April until 30 June 2008. (Postal entries must be postmarked 30 June or before). Submissions must be in the form of up to three articles totalling no more than 4,500 words, published between 1 July 2007 and 30 June 2008 in recognized news publications. Finalists will be invited to a ceremony in New York in October 2008, where winners will be announced.
Last year’s Bastiat Prize winner was Amit Varma, an editorial columnist for Mint (a joint venture between the Wall Street Journal and India’s Hindustan Times). Second and third prizes went to Clive Crook, senior editor of the Atlantic Monthly, and Jonah Goldberg, Contributing Editor to National Review and a syndicated columnist. Previous winners include Robert Guest of The Economist, Brian Carney of The Wall Street Journal and Sauvik Chakraverti of the Economic Times (India).
An online submission form, rules, judging criteria, and articles written by previous winners can be found at IPN's Bastiat Prize website: www.bastiatprize.org.
Queries to Marc Sidwell, Bastiat Prize Administrator: telephone +44 207 836 0750 or email email@example.com.
What with the Home Secretary's announcement about cannabis a little story of what happens when you pursue the War on Drugs in this manner. As so often in social trends, the US is only a decade ahead of us.
Getting that Burmese cyclone in context: yes, it's horrific.
Again, the unintended consequences of regulation: in this case, reducing the knoweldge of the population.
An economic conundrum solved. Why haven't US wages risen with productivity? Answer, they have.
It can be amazing how the newspapers miss the background to a story, In this case, all of them missed the basic point about the Post Office and Royal Mail story.
Quite possibly the best video of the election season so far.
And finally, why is a bunch of Spaniards speaking Spanish on a football field different from a bunch of Latin Americans speaking Spanish on....?
Politicians complain that politics is being devalued, with the populace disenchanted with the political process. One could retort that this cultural shift is to be expected in a free society where the affluent can largely look after themselves, but perhaps the politicians need to look at their own culture a little more closely.
Where government is limited, politicians can restrict themselves to matters of principle, to the standards and constraints that govern the actions of the people. When government becomes a vast social work department, all the paradoxes and imponderables of constructing the public "good" come into play. In particular, politicians become slaves to a mismatch between idealised objectives and their own interests.
The debacle over the ten percent income tax rate highlights the contrast. Technically, a single rate of income tax is a good idea, it smoothes out marginal tax rates and helps remove the high barriers to escaping welfare. But the headline interest of politicians is not to be seen to be punishing the less well off. Retaining a 10 percent rate "for the poor" is a simpler message than removing a 70 percent marginal rate as the poor try to get less poor. Equally, the obvious route of cutting income tax to 10 percent for everyone is seen to be "helping the rich".
Politicians, in concert with the media, regress in these complex circumstances to a slanging match about whose incompetence was it that led to the mix-up in the first place. The Whitehall Village bellows to itself in its glass box thinking it is addressing the policy issue; while the public see weird people indulging in weird antics to protect their interests. Is it any wonder that so many of us respond by saying "frankly, my dears, we don't care a damn".
From an usually funny email I received this week:
Research has led to the discovery of the heaviest element yet known to science.
The new element, Governmentium (Gv), has one neutron, 25 assistant neutrons, 88 deputy neutrons, and 198 assistant deputy neutrons, giving it an atomic mass of 312.
These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lepton-like particles called peons.
Since Governmentium has no electrons, it is inert; however, it can be detected because it impedes every reaction with which it comes into contact.
A minute amount of Governmentium can cause a reaction that would normally take less than a second to take from four days to four years to complete.
Governmentium has a normal half-life of 2- to 6 years; it does not decay, but instead undergoes a reorganization in which a portion of the assistant neutrons and deputy neutrons exchange places.
In fact, Governmentium's mass will actually increase over time, since each reorganization will cause more morons to become neutrons, forming isodopes.
This characteristic of moron promotion leads some scientists to believe that Governmentium is formed whenever morons reach a critical concentration. This hypothetical quantity is referred to as critical
When catalysed with money, Governmentium becomes Administratium, an element that radiates just as much energy as Governmentium since it has half as many peons but twice as many morons.
Speaking to an audience at the Palace of Westminster on policing in the 21st Century, Baroness James of Holland Park (better known as the crime novelist P D James) said that Britons are increasingly living in segregated ghettoes and bedevilled by political correctness. Society, as she sees it, has become fractured beyond belief with a strong commitment to the immanent community yet with little for those beyond it. She also adds that, "mutual respect and understanding and recognition of our common humanity cannot be nurtured in isolation."
The UK’s 21st Century society is one that has been largely moulded by government, all the more so in urban areas. The idea of community has been taken from us by successive governments who, convinced that they "know best", have transferred power from the proverbial coalface to their own towers in the sky. Government weapons such as political correctness and multiculturalism have reduced 'communities' to small pockets of familiarity. Man has a predilection to comfort and trust though immediate relationships, which cannot be replaced by central government and the dictats of multiculturalism. It has to evolve through the interactions of those on the ground. Once this ever-changing and adapting civil society has been supplanted by the state, people retreat into atomised safety. We are now seeing across Britain with the breakdown of society.
The ties that once bound are now in Whitehall, as the government is attempting, through language and education, to take control of every aspect of our lives. As Baroness James stated, political correctness is "a pernicious if risible authoritarian attempt at linguistic and social control". The government backs this further with legislation that criminalises us all and silently celebrates the death of community and the atomisation of society. They seek for us all to be reliant upon them.
Another in the long running series of dead economists explain the modern world. No, legislating maximum interest rates is a very silly idea.
This might provide us with a clue or two about the current state of government. There appears to be a link between the clarity of prose and effective management.
All that talk of resourcing and plan rollouts leads to this.
Slippery slope arguments are bad logic: they can still be true though.
It's amazing what can be found out when a reporter picks up the telephone to ask a question or two.
And finally, the answer we've all been waiting for: why so few reporters do pick up the phone to ask a question or two.
Once again, Ireland seems to be the destination of choice for companies driven out of the UK by high taxes. Last week, reports Dominic White, WPP, Glaxo, International Power and AstraZeneca all hinted that they could follow Shire and United Business Media's plans to switch domicile to Ireland.
Why the rush? Well, Corporation tax is 30 percent in the UK, compared to just 12.5 percent in Ireland. After Alastair Darling's not-a-word-of-consultation attack on non-doms, many companies feel they just can't plan ahead under such a capricious regime. The Irish Development Agency has seized its chance and is actively courting UK decision-makers.
White might also have mentioned that Ireland is near. It's in the Euro area and part of the EU. There is no language barrier. Ireland has a well-educated, cultured population. It's green and pleasant (if a bit rainy in parts). The peace process has eroded the old national resentments and made the life and cultures of Ireland and the UK much more integrated.
With such stiff competition on its doorstep, why can't the UK government see what it must do?