Not Travelling Light? That's Your Problem.

With its plans to redefine the expression 'travelling light' with coin-operated toilets on its flights and higher baggage charges during the peak holiday season, Ryanair's finally done it. Not content with the vicious spiral after its "idiot blogger" incident, and the piss-taking after the last time it suggested charging for Nature's call, the airline has crossed the line from facilitator to institution - from service provider that exists to solve it's customers' problems (how to cut the cost of air travel) to one that is primarily motivated to solve it's own (how to increase profitability).

Revealingly, Ryanair explains both initiatives as it's own attempt to change customers' behaviour, rather than adapt to suit their needs. It explains the baggage charge as 'urging' people to travel light, and it's spokesman is reported to have blatantly justified its pay-for-a-leak strategy as enabling it to pack more people onto each flight:

'By charging for the toilets we are hoping to change passenger behaviour so that they use the bathroom before or after the flight. That will enable us to remove two out of three of the toilets and make way for at least six extra seats.'

Not much comfort in either explanation - especially for those travelling with kids. Maybe they won't?

Bon voyage, Ryanair. It doesn't matter how profitable you say you are. You're doomed to a lingering death.

STOP PRESS: And in breaking news, Ryanair declares its refusal to comply with regulations requiring payment of passengers' expenses incurred while being re-routed during the recent flying restrictions.

Green or Greed Investment Bank?

I wonder whose problem(s) would be solved by the public sector 'green investment bank' being touted by both the Tories and Labour. 

I mean, do you believe the British Private Equity and Venture Capital Association is a staunch advocate of completely open and transparent financial markets? Or do you think it could be helpful to have a captive investor on which to off-load one's less than spectacular speculative green investments as a last resort?

Perhaps more importantly, would the creation of a public sector green investment bank allow or encourage individuals to buy-in to alternative energy projects, financing them in the process?

The current "problems" in the financial services markets - excessive fees and bonuses, lack of transparency, poorly understood products, the credit and pension crises - are the result of the sort of institutional tinkering epitomised by the proposed 'green investment bank'. We funnel investment opportunities and funding into a zone in which relatively few firms are permitted to operate. The results are increasingly complex products, less transparency, increasingly concentrated risk and less competition.

This situation won't change until the clear objective of the regulatory regime becomes the delivery of simple, low cost financial products that are accessible to us all. Rather than vainly trying to educate an aging population to become more and more financially literate, we need to vastly simplify the process for the average individual to invest/save in a fully diversified way.

Surely the successful investment firms of the future will be the ones who race each other to demystify and simplify the funding/investment experience, rather than those who enter into cosy, self-serving institutional arrangements like this one.

Everything Is Very Personal

While it's important to be able to rise above the noise, I wonder how many senior decision makers and policy makers have lost touch with the fact that everything is incredibly personal for each of us. Especially things we tend to regard as utilities or commodities - water, groceries, garbage, money, airports, train schedules, road repairs.

Everything.

Think about it when you next run the tap to make coffee, or you take from your own kitchen cupboard a jar of something you bought at a supermarket from a row of apparently identical jars, or when you hear the binman collecting rubbish from your own bins, or you log-in to your online bank account, or you join the queue at airport security, or you sprint to catch a train that is later delayed or when you sit in a traffic jam beside an abandoned trench that mysteriously appeared in the road a week ago.

All these personal experiences are shaped by someone else, but they're yours.

In every person's reality, there is no 'bell curve', no 'average', no 'normal'. Sure, these are useful fudges we make to move things along. But how many people hold these fudges as their dominant perspective, rather than the idea that everything is very personal?

How much of a difference would it make if your dominant perspective in every business meeting was personal? None? Okay, do you think that would make a difference to politics? Banking? What would that difference look like?

Now do you think it would make a difference to what you do?

Just a thought.

Billboard Banter Beggars Belief

While amusing, the political poster saga must be very poor value for money - not a great message for anyone interested in fiscal responsibility.

Each expensive billboard is ripped off and subverted online in front of more eyeballs than will see the original, for free, within seconds, by people with entrenched voting positions. So both 'sides' must see 'their' billboard as tired and out of date, swinging voters would remain unconvinced and the 3 million who've not registered to vote must instantly be reminded why.

"A Conservative spokesman said that their alternative version of the poster would be going up on the same 11 digital poster sites being used by Labour - 10 in London and one in Manchester."

Small Is Big In The Post-Credit Economy

Phillip Bond of ResPublica made an interesting comparison on Newsnight between the current economic situation and the Industrial Revolution. He says we lack the decentralised application of capital and encouragement of local entrepreneurs that drove the industrial revolution, although we do have (in the internet) the equivalent of the old periodicals that allowed everyone around the country to learn what worked and did not work in other industries.

This comparison is a little thin. There are lots of theories as to how the Industrial Revolution(s) were unleashed in Britain so successfully (putting aside the 'dark, satanic mills' of course; and child labour; and pollution; and the spread of disease through overcrowding in the cities - apart from those things, the revolutions were a success). But all the theories make Phillip Bond's comparison more instructive in terms of the economic drivers he left out,  rather than the few he mentioned. 

The UK is not in the midst of plundering a massive colonial empire to fill the coffers back home. The banks tried the modern equivalent, but quite literally failed, leaving the economy desperately short of capital. There is not a vast horde of 'cheap labour' - i.e. convicts, slaves and droves of peasants forced off agricultural land. Though there are many employable people out of full-time work who are looking for opportunities. There is little manufacturing that might be improved by inventions that vastly increase productivity. And Britain is not in transition from a low-tech agrarian economy to a relatively low-tech industrial one, where yesterday's farm worker can readily operate any machine without hours of training and health and safety supervision.

In the quest for sustainable capitalism, I suspect Britain will go through another cottage industry phase - a pre-Industrial Revolution, if you will - in which people come to grips with this new post-credit, post-capital reality. The trick is to find small opportunities that pay enough, rather than giant opportunities that pay a fortune. Some of the ensuing small businesses will no doubt grow very large, and eventually the whole cycle will repeat. But even if the pundits are right in saying these cycles are happening faster and faster, it will take a decade to repair the public finances. Life is what happens while you're making plans. For examples of the sort of small opportunities I mean, take a look at Fab Labs (actually invented at MIT): 

"Fab Labs give people the tools they need to create technology, to be creative and make the stuff that they can't buy in the shops. Manchester led the first industrial revolution and now it is at the centre of a new industrial revolution where anyone can make anything, anywhere using digital manufacturing."

But even low cost opportunities require funding. So where is the diffusion of capital to meet these diffuse capital requirements? 

All 3 would-be chancellors last night pushed banks to "lend" more money to small businesses. But what's needed is investment - venture funding that can be lost outright - not credit that operates as a drag on cashflow that would be better reinvested in the business. Trouble is, neither taxpayers nor banks can afford that sort of support in the next few years. Even venture capital funds, which generally raise money from institutions and the wealthy, are finding it tough.

Start-ups have generally always been funded from a lot of different sources: owners' savings, seed capital from angels, venture capital and deals with suppliers. In times of scarcer capital, these sources are going to fragment further, so that it will take many more capital providers to service each opportunity. Similarly, the lack of returns on bank savings deposits and other investments may mean that small venture funding becomes a more common investment amongst those with surplus cash. Already we've seen that at Zopa. Other internet platforms could help in reducing the complexity arising from many sources of capital chasing the same opportunity. A great example are those that enable invoices to be paid early, so that small suppliers can afford to sell to large companies, which are commonly extending the time they take to pay their bills.

After all, necessity is the mother of invention.

PS: It was interesting to see some of these themes in the second part of Paul Mason's Newsnight piece on Britain's economic problems, particularly the idea that we should focus on opportunities that pay 'enough' rather than a fortune - optimising rather than maximising profit.