TCS Daily


When the EU Blogs

By Tim Worstall - March 7, 2005 12:00 AM

Margot Wallstrom, Vice President of the European Commission, has been running a blog for the last couple of months. She's had the digital decorators in, replete with photo showing her making an important point to an adoring audience, lips perfectly glossed and untouched by the pen canted forward to emphasize the seriousness of what is being put over. As she is in charge of the Communications Directorate it doesn't actually seem like such a bad idea that she should embrace this new medium, that is, until you begin to read the actual posts she puts up. One comment was that it is Martha Stewart blogging ("...and frankly it's so nice I fear I may start floating tea lights in my toilet cistern. This is Martha Stewart blogging, and I don't think I like it.")

But quite frankly that is as nothing to what people like myself, fellow occasional TCS contributor Richard North and David at North Sea Diaries have been doing. Her every pronouncement has been met with snarls and refutations for my part in the hope of beating (in an intellectual and metaphorical manner, of course) some sense into the woman.

She has defended the new REACH Directive (essentially every new and old chemical in the entire Continent must be tested at a cost of $100,000 each) by pointing out that we all have trace amounts of modern chemicals in our blood stream. She then insists that cancer rates are rising and this is why we must do this testing. The fact is that cancer rates are not rising on the correct, age adjusted, basis of measurement, quite clearly showing that these trace amounts do not matter. Sigh, so disappears the wisdom of the centuries, that it is the dose that makes the poison.

She also talks about....but no, you have the link to her blog and if you really want to find out about how the New Europe is run you can read it for yourself. Whether there should be a European Union at all is debatable (in the sense that one can logically argue for either side, I, as you know, thinking that there should not be one) but if we are to have one then please, can we have people running it who are a little more switched on, slightly more capable of grappling with the problems of the real world? The issue for me which was the straw that broke the camel's back was her defense of a new set of rules, the Denied Boarding Directive.

This is similar to the system that Americans have had in the States for decades, if the airline screws up and overbooks the plane, proves incompetent to get a plane to the right place on time, then they have to compensate those who cannot get to where their ticket says they have a right to go. I'm happy enough about such systems when the Government decides who can fly where, when and how much they can charge... in essence, when there is a State imposed monopoly/oligopoly I have no intellectual problems with that same State regulating what it can do with the captive customers. However, here in Europe we have just, in the past decade or so, swept away that series of monopolies. We have what is called an Open Skies agreement, any airline, from any country, may fly anywhere they like in the EU, charge what they like, generally act like properly competitive companies.

This has led to a burst of innovation and competition, not least on price and service levels. One, which I shall not name as I cannot prove the quote, is run by a man who is said to tell customers "No f***in' refunds, what part of no don't you understand?" which might seem a little harsh yet his company does offer to fly people from London to Milan for $10 at times. Others offer a slightly better level of service, actually attempting to get your luggage to the same country that you are going to, and still others offer the traditional full service of the legacy airlines, lounges in airports, free food and drinks, something more than a cattle car moving through the sky. Prices vary according to those service levels of course, which is precisely how it should be, customers pay their money and make their choice, are they to be pampered, cosseted and fleeced or will they put up with being packed into a flying veal crate in order to get drunk in Prague?

The new rules do not manage to understand this, of course, alongside most of the rules and regulations that come from our new masters. The compensation levels are fixed, fixed at levels that make sense for the price structures of the legacy airlines. One of the budget airlines has pointed out that their average ticket price is about $50 one way, so insisting that they provide $400 for a canceled flight is simply absurd. They will have to raise their prices to cover such risks. So far so normal, those who run the EU just don't grasp how markets work and they instinctively protect extant companies at the expense of new and entrepreneurial ones.

But what really gives me pain, as my ulcers play up, has me shouting at the screen as I read it, is Wallstrom's defense of this new Directive:

        "A deregulated market for air travel has created a bigger need for 
        consumer/passenger protection."

I'm sorry, could you run that past me again? I get the point that markets need regulating, there isn't an economist on the planet who thinks otherwise, the argument being who does the regulating. The general assumption is that in a free and competitive market it is the customers who do so, voting with their money in each transaction they make. You now think that a deregulated market, one that has more competition, more choice, requires greater regulation?

But if you really want your blood pressure to rise, steam start to come from your ears, consider this. The same regulation was thought up, supported and approved by the bureaucracy in Brussels, supposedly the very best of our communitaire minds. It was then voted on and passed by the European Commission, (at that time headed by Romano Prodi who is an economics professor for the Lord's sake,) then the Council of Ministers deliberated and approved. Finally, the European Parliament debated and passed it, followed by the legislatures of 25 independent countries (who are allowed to debate such things but not reject or change them). The end result of this process is a law of the utmost fatuity, one which flies in the very face of logic and reason. In a more competitive market customers need less protection from the law, as they themselves are providing their own protection by making choices!

It's sad perhaps, but there it is, we have handed the entire continent over to the economically illiterate and as there is no way to change this fact we'll just have to get rid of the system.

Unio Europea Delenda Est.

Tim Worstall's other writings can be found at www.timworstall.com.

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