Wednesday, 30 January 2013

Greece: still in the Euro

Back in May last year, when informed opinion held that Greece was about to crash out of the Euro currency zone, I confidently predicted that Greece would stay in the Euro because I was sure that the EU would move Heaven and Earth to make it so. Eight months on and the EU chattering classes have moved on from economic troubles to the UK's membership, so I thought it might be worth pointing out that:

1) Greece is still in the Euro
2) Talk of Greek exit and Euro breakup has faded
3) William Hill paid out my £30 winnings on Jan 1st, cheers!

Still, it's not all good news. The euro area is still littered with problems, in many ways the more subtle structural problems that remain are going to be harder to solve than the urgent problems that filled the newspapers last summer. How exactly are Spain and Greece going to rebuild their economies and solve their 26% unemployment rate while still in the same currency as Germany and the Netherlands? It's not obvious how. Is France's Socialist government mad enough to drive Europe's 2nd biggest economy into the mire as well? Maybe. Certainly, they're giving it a go.

The current uneasy truce can't last for ever; historically, economic crises tend to come to a head if unemployment breaches 30%-ish levels, as angry citizens demand radical action from their governments. Greece and Spain are closing in on that, and the EU member states have never shown much inclination to get ahead of the economic problems by taking pre-emptive action, so I dare say that another crisis is around the corner. But they have confirmed what I always believed: when push comes to shove, they intend to do whatever it takes to keep the show on the road. If the Euro or the EU does eventually go down, it will go down fighting and leave behind an almighty mess. 

Curiously Cinnamon

Are supermarket own brand products cheaper because they're poor quality, and less healthy? A quick bit of detective work uncovered a surprise and an interesting bit of economics.

Nestlé Curiously Cinnamons (aka Golden Grahams) are a roaring success in our house, the children basically inhale them and unless we buy them in industrial quantities they're gone in a matter of days. But this week we bought a box of Tesco Cinnamon Squares, a cheaper supermarket own brand equivalent, so I decided to compare.

Tesco's beaver takes on Nestlé's crazy squares

They are basically the same, and both are tasty. The Tesco version tastes slightly less sweet, which we marginally preferred, but it has a noticeably firmer texture which immediately set alarm bells ringing: the texture is fine, but salt is used in cereal to stop it going limp (the same reason you find it in bread). Cereal manufacturers have been under pressure to reduce salt levels and there's been much research into cutting salt without leaving a droopy product. Is Tesco selling an older, salt-laden recipe as a cheaper own-brand product? I decided to check.

Here's the nutritional info from the two boxes, showing grams per 100g (also known as "per cent by weight" for those of us with advanced statistical skills...)

              Nestlé             Tesco
Protein 5 7
Fibre 4.1 7
Carbohydrates 75.7 73
- Of which sugars 32.1 26
Fat 9.9 8
- Of which saturates 3.8 4
Salt equivalent 1.26 0.5

Jumping straight to the salt, the answer is exactly the opposite of what I expected: the Tesco version has 60% less salt than Nestlé's. Blimey, big win for Tesco. In fact, if you compare the other items you find that Tesco's product has more protein, more fibre, less sugar and less fat than Nestlé. That's a slam-dunk; not what I expected at all. A hearty cheer for Tesco and a salty boo for Nestlé!

Price comparison

We bought Curiously Cinnamon in a 565g pack ("big value pack") and Cinnamon Squares in 375g, so I've converted both into a price per Kg. Both were bought from Tesco yesterday.

Tesco Cinnamon Squares: £3.79 per kg
Nestlé Curiously Cinnamon: £6.00 per kg

So Nestlé are looking for a ~60% price premium for a nutritionally inferior product. When companies talk about the value of a brand, this is what they mean - they can charge a significantly higher price for a product that's no better, it may even be inferior, and people will happily pay it because they assume premium brand = premium product. Only geeks like me read the tiny numbers on the side of the packet and compare them between products to decide which is actually better.

Box Comparison

There is a final point which also goes in Tesco's favour.

The back of the Nestlé box features two enormous adverts for other Nestlé products: their Curiously Cinnamon cereal bar, and Curiously Strawberry cereal.

On the back of the beaver-themed Tesco box there are 3 beaver jokes, a Fix The Dam shape puzzle, 4 anagrams to solve, 2 beaver facts and a recipe for a marshmallow and Cinnamon Square fridge cake called Chewy Squares.

Nestlé on left, Tesco on right

It's not a decisive point, but it's a bonus to have something interesting and vaguely educational for children to look at rather than a massive advert, and compiling these things takes time and effort which all has to go into the production cost. Yet it's the cheaper own brand product which shows more care and attention, and a less nakedly commercial outlook.

I think this might be the last box of Curiously Cinnamons we buy.


Just to make it clear, I've no interest in Nestlé or Tesco,  and I don't know anyone who works for either company. I'm just describing what I saw on my breakfast table this morning.

Monday, 28 January 2013

HS2: Steampunk futurism

Steampunk is a retro-futurist science fiction genre which tries to conjure up an imaginary steam-driven future. A future in which 19th century fashion and technology still reign supreme. Steam and chunky mechanical gizmos tend to feature heavily, while the internal combustion engines and sophisticated computer systems that define modern life are largely airbrushed out.

Imagine what the 21st century might look like if the late 19th century was the recent past and the 20th century had never happened: that's steampunk.

Steampunk fashion

Airships and futuristic-looking steam trains are in. Cars are out, especially modern ones full of composite materials and advanced driver aids.

Steampunk airship
Steampunk train

Steampunk is a cool, fun and entirely harmless genre of science fiction, whose fruits include the rather wonderful gentleman rhymer Professor Elemental and his Fighting Trousers.

Unfortunately it's all gone too far: steampunk fashion has now infiltrated the government and is being used as the basis for our actual transport policy, including £32 billion planned for the white elephant HS2 high speed rail project. It's as if the 20th century never happened. 

The transport phenomenon of the 20th century was personal transport: the car and to a lesser extent the bicycle. Suddenly people could go where they wanted to, not just where the transport planners had decided they may go, unleashing amazing flexibility and efficiency in people's lives and the economy. With some help, the personal transport revolution can roll on into the 21st century as bikes replace cars in urban areas, and cars are totally reinvented as self-driving personal chauffeurs. That future is already happening, for those with eyes to see.

Many of HS2's cheerleaders invoke the great vision and optimism of the Victorian era and call for a repeat of the grand thinking in infrastructure that epitomised that time. But Victorian engineers didn't put their efforts and build their fortunes with a vast network of livery stables and ever-larger carriages to boost old horse-based transport, nor into faster ways to nap flint for hand-axes, instead they seized the new technology of the day and set out to exploit the possibilities of steam engines, locomotives, metal ships with screw propellers, huge urban sewage systems, iron and steel, mass production and all the rest of the industrial revolution that transformed the world.

Much of this would have seemed strange, improbable pie-in-the-sky to people of the day, but the reason we now look back at those achievements with such admiration is because the nay-sayers and traditionalists were comprehensively routed by the engineers' and industrialists' vision and their bold realisation of it.

Alas, today the nay-sayers and traditionalists hold sway and many who think of themselves as bold modern visionaries cannot see beyond the ideas and technologies of the 19th century, the heyday of the train. Roads, cars, bikes and self-driving cars are viewed with disdain as a passing fad not to be pandered to.

Let me spell out some of the problems with their thinking and obsession with HS2.

First, time. Construction of phase I to Birmingham is not expected to start until 2017 with the first passengers travelling in 2026, phase II to Manchester and Leeds is expected around 2033. Realistically, we are talking about 15-20 years before this is a part of our transport network. Considering the pace and maturity of development in self-driving cars, I expect we'll be unveiling a great 19th century rail project just as 21st century self-driving cars become a reality. Like a Victorian launching a new, faster sailing ship just as steam ships were eclipsing sails entirely. We'll find ourselves wishing we'd build roads instead, improving and extending the trunk road network which will support 21st century transport.

Secondly, there's the total lack of flexibility and adaptability, both of which are key to modern society. If you build a high speed rail link between two cities then you link those two cities and that's it. If you link two cities with a motorway, you not only link the two endpoints but also all points in between, spreading economic gains across a wide area and leaving people with flexibility and freedom. A non-stop train line between Birmingham and Manchester doesn't do much for people in Stoke or Stafford, but a major upgrade of the M6 would. It's more 19th and 20th century thinking: the Man In Whitehall decides where you may want to go, builds the transport infrastructure to get you there and never mind if you want to go somewhere else. Roads are inherently more flexible and adaptable.

Third, demand and economics. Most people travel by road not by rail, because road travel cheaper and better. People's preference for road rings out loud and clear, but the cloth-eared experts in the Transport Department press on with their grand plan, cheered on by the retro-futurist train fetishists who have still not noticed that the 20th century happened.

Fouth, phased benefits. We are already spending money on HS2 and once construction begins we'll start spreading negative externalities far and wide across the English countryside, but no passengers will benefit until almost 2030 because the whole line must be finished before any of it is usable. With a new road or a road upgrade, as soon as you finish one section you can open it and the benefits start flowing.

Fifth, speed. The whole point of high speed rail is that it's fast, and it certainly is that. But there a Hare & Tortoise effect: the top speed of HS2 is 200+ mph, but that is not your average journey speed thanks to all the time you waste getting from home to the HS2 railway station, waiting for your train, and then making a connecting journey at the other end to your real destination. By contrast cars will take you from where you are directly to where you're going, avoiding a lot of messing around and boosting your average speed. Not to mention being more comfortable, convenient, having greater load carrying capacity, more flexibility if there are problems, and probably also cheaper. A self-driving car is also far more useful to the old or disabled, people who find public transport stressful and difficult. It's all part of that 20th century personal transport revolution that some of us have noticed.

Sixth, cost. The M6 Toll motorway cost around £33 million per mile, the M25 western widening cost about £150 million per mile. One was a new motorway in relatively open land, the other was a major upgrade to an extremely busy motorway through an expensive and densely populated area of the south east, so these probably give a fair range of minimum and maximum costs for building and upgrading motorways in the UK. 

Using the M6 Toll price, the £32 billion cost of HS2 would build almost 1000 miles of new motorway. England is about 400 miles from top to bottom (HS2 is only happening in England), the entire UK is about 650 miles, so 1000 miles of new motorway would go a long way. It is easily enough to extend works into Scotland, Wales and Northern Ireland, whereas HS2 will exist only in England.

Even using the very high M25 upgrade cost, the £32 billion HS2 money would upgrade about 210 miles of old motorway which is about two complete laps of the M25 or half the length of England, and it's hard to believe that similar widening projects on the M1, M6, M5, M4, A1(M), etc would cost as much as the western M25. We are talking about a lot of new road capacity.

Bear in mind that in both cases I am comparing the actual finished cost of road projects (including a ~30% overspend on the M25 widening) with the probably optimistic initial estimates for HS2. Given the strength of opposition it's hard to see HS2 coming in on budget. It's clear that £32 billion is enough money to completely overhaul the road network of Britain, building new motorways, widening old motorways, and upgrading A-roads to dual-carriageway or motorway. Self-driving cars will allow us to turn this network into efficient, flexible 'road trains' or platoons of cars which slipstream each other to save fuel and road space, giving you the efficiency of trains, but still all the flexibility and low cost of cars.

I won't even get into how much cycling infrastructure you could build with £32 billion, except to say that anyone who says there's no money to do it properly is wrong. There is plenty of money, but it's all being funnelled into a single massive, pointless vanity project by people whose imagination and vision of the future have been stunted by a neo-Victorian steampunk image of technology that is now a century past its prime.

It's time to wake up to reality, kill HS2 before any more money is wasted on it and channel the money into modern infrastructure to leave a valuable, useful legacy for the future.

Update: one more important benefit of roads over high speed rail is fairness. Anyone with a car can enjoy the benefit of a new road, whether they're in a supercar, a limo or a 10 year old Citroen. But HS2 ticket prices are likely to exclude most people, leaving it as a plaything of the well off, people on high days and holidays and those with generous expense accounts. Yet another reason why the eventual pay-off from a new road will be larger and more widely spread than the pay-off from a new high speed rail line.

Sunday, 27 January 2013

Leadership challenges

Leadership challenges are like overtaking a car: ideally you want to be brisk, purposeful and decisive. Unless you're likely to pull it off, best to hold fire.

Before you throw on your indicator and bury the throttle, you should have a look round, take stock of the situation and work out whether there's a chance of getting past in one piece. Otherwise you risk dithering into the path of oncoming traffic, looking like an indecisive behatted Sunday driver, while your fellow drivers point and laugh. That's best-case scenario, obviously.

required to report a crash
What we've got here is failure to overtake

One mistake is to poke your nose out prematurely, find a lorry bearing down on you, scurry back into line then attempt to style it out by pretending you never had any intentions of getting in front.

The opposite mistake is keep trundling along without any sense of purpose, behind a large, slow vehicle that is clearly holding everyone up. You have the speed advantage to get past, people shout at you to get a bloody move on, you know you ought to, but your courage fails and you blunder indecisively time and again, leaving yourself and everyone behind you stuck staring at back end of a tractor.

It can be a tricky dilemma: weighing up the risks and benefits, picking a moment when the path looks clear, making it stick.