Archive for the ‘Business’ Category

Who do you write your CV for?

January 20, 2015

The Independent today carries an article pointing out that for entry level positions the screener/employer spends 8.8 seconds on average on the first assessment of a CV.

It is my experience that far too often CV’s are written to satisfy the ego of the author rather than to suit the employment process that is being entered into. If done properly the CV can even be a tool to first ensure selection for interview and then to steer the interview process towards the strengths of the aspirant. In fact the first page must be written primarily to get past a screener and be called for an interview. Thereafter the entire CV can help to steer the subsequent process.

Writing Your CV

How to use your CV to “control” the subsequent interview

…… The process must start not with the applicant’s credentials and his capabilities but with the capabilities and experience being sought. Every CV – before being written – must consider that it has to be directed at two classes of readers and has two principal objectives:

  1. First it must lead a “screener” to select the applicant for a subsequent interview.
  2. Second it must encourage the interviewer – either before the interview or even during the interview – to travel down preferred paths leading to a conclusion in favour of the applicant.

A screener who is selecting candidates to be called for interview may spend less than a minute on looking at a CV. He rarely gets past the first page.

Independant:

Young people may spend hours preparing their CV for employers to pore over, but research shows that just 8.8 seconds is spent studying any one person’s curriculum vitae in a process that has become “Tinderised”.

According to the UK’s youth programme, National Citizen Service, the pressure on employers to get through hundreds of CVs for entry level jobs has doubled, leading to less time being spent on prospective employees’ initial applications.

The average number of applications to these roles over the past two years leaped from 46 in 2013 to 93 today, and out of the 500 employers surveyed, one in 10 larger businesses, who staff more than 250 people, say they are seeing more than 400 applications for entry level jobs advertised.

Iran prepares to resist Saudi Arabia even with $25 oil price

January 19, 2015

Iran needs $72 per barrel for its budget. That Iran (along with oil shale production) is one of the targets of Saudi Arabia’s oil price strategy seems very clear. They have the lowest cost of extraction and with their accumulated reserves they could probably withstand 5 -8 years with a price lower than $50. However their strategy will be completely nullified if there is growth in demand (for example with an economic recovery in China) before they have brought the shale oil producers and Iran to their knees. The question now is how low the price can go?

Light crude price February 2015

Light crude price February 2015

The Iranians are girding their loins for a battle and are adjusting their budgets to be able to withstand a longer period with relatively low prices. Iran probably wants to avoid precipitating a further fall but I suspect that just mentioning their worst fears – in the present atmosphere – will only ensure that those fears come true. It would seem, from the almost belligerent Iranian stance, that prices will now almost certainly drop to around $25 per barrel within the next 6 -12 months.

Reuters:

Iran sees no sign of a shift within OPEC toward action to support oil prices, its oil minister said, adding its oil industry could ride out a further price slump to $25 a barrel.

The comments are a further sign that despite lobbying by Iranand Venezuela, there is little chance of collective action by the 12-member OPEC to prop up prices – entrenching the reluctance of individual members to curb their own supplies.

In remarks posted on the Iranian oil ministry’s website SHANA, Oil Minister Bijan Zanganeh called for increased cooperation between members of the Organization of the Petroleum Exporting Countries. ……. 

Oil has plunged by more than half since June 2014 to below $50 a barrel on Monday, pressured by a global glut and OPEC’s refusal at its last meeting in November to cut its output. ……. 

OPEC decided against a production cut despite misgivings from non-Gulf members such as Iran and Venezuela, after top producer Saudi Arabia argued the group needed to defend market share against U.S. shale oil and other competing sources. ……… 

Zanganeh said Iran had no plans to cut its own oil production and that it had no further meetings with Saudi Arabia – Iran’s main political rival in the Gulf – since the OPEC meeting.

Last week, Iranian President Hassan Rouhani said countries behind the price fall would regret their decision and warned that Saudi Arabia and Kuwait would suffer alongside Iran from the price drop.

Zanganeh said Iran’s budget should be based on oil at $72 per barrel, but Iran could withstand lower oil prices. “Even if the oil price goes down to $25 a barrel, the oil industry will not be threatened,” the Fars news agency quoted him as saying.

Oil wars: US crude drops below $50 as Saudi Arabia drops prices to protect market share

January 6, 2015

Some stock markets are spooked as oil prices continue to slide, but bringing oil price back to a cost-based price is a good thing in the long term. For too long – almost 45 years – oil producers and their governments have fleeced the consumer. Oil prices have had no relationship to cost of production but have been governed by artificially controlling its scarcity (by the OPEC cartel) and pricing it at the level of unacceptable pain for the consumer. Predatory governments have assisted by taxing oil products as far as they can even for the necessities of living (gasoline, diesel, LPG, fertilisers, pesticides…). If the present oil wars bring the price to the consumer in line with the cost of production – and there is no shortage of oil available to be produced – then it is a fundamentally sound, and long overdue, removal of one of the great, artificial distortions of the market place.

History will show the OPEC cartel to have held back development for 4 decades and to have been an evil thing.

Even if Saudi Arabia is engaged in a multi-pronged war – against shale oil, against Russia, against Iran – the root cause of the drop is that there is no longer a monopoly that the OPEC cartel enjoys. And the the way being shown by US shale oil is available to many more countries. In the short term it may well affect stock markets as these fetters are removed but in the long term this is an inexorable driver of growth – especially for the developing countries and their hard pressed consumers.

Remarkably many oil producers are now even increasing production in a time of a glut and cutting prices to win market share. They are being short-sighted. As the Opec cartel collapses, and it becomes a buyer’s market it will be oil price which governs and even then only for short term supply contracts. It will no longer be possible for the cartel oil producers to extort long-term contracts at high prices from developing countries who have no alternatives.

FP0106_Oil_C_JR

2015 not 2014 — via Financial Post

 Financial PostU.S crude crashed below US$50 a barrel while benchmark Brent crude tumbled under US$53 after data showed Russian oil output at post-Soviet era highs and Iraqi oil exports at near 35-year peaks.

Meanwhile, the outright price for Canadian heavy crude fell below US$35 a barrel. ……. The drop in WTI pushed the pushed the price of Canadian heavy crude to US$34.64 per barrel, a level that could make producing crude from the oilsands unprofitable for most operators in the world’s third-largest crude reserve.

Many of the region’s operators have already slashed capital spending and slowed work on new projects in order to cope with the price crash, though production from the region has not yet been affected.

…… Top crude exporter Saudi Arabia revealed it had made deep cuts to its monthly oil prices for European buyers , the sixth time in a row since June when it had slashed prices, corresponding with the rout in crude futures markets over the period. Analysts read the latest cut as reflecting Saudi Arabia’s deepening defence of its market share for crude. The OPEC kingpin also trimmed its prices for U.S. refiners for a sixth straight month, while raising rates for Asia.

…… Some traders seem certain that U.S. crude will be trading in the US$40 region later in the week if weekly oil inventory numbers for the United States on Wednesday show another supply build. ……. 

Russia’s oil output hit a post-Soviet high last year, averaging 10.58 million barrels per day (bpd), up 0.7% thanks to small non-state producers, Energy Ministry data showed. Iraq’s oil exports were at their highest since 1980 in December, an oil ministry spokesman said, with record sales from the country’s southern terminals.

The Russian and Iraqi data overshadowed reports of drops in Libya’s oil output due to conflict. Libya’s oil output has fallen to around 380,000 bpd after the closure of the OPEC producer’s biggest oil port Es Sider, along with another oil port Ras Lanuf.

The sooner oil price drops to less than $40 per barrel, the sooner the oil price can stabilise for 12 – 18 months. Then, as the price works its way through the economies of the consumer countries, the markets could see a year or two of stable, sustainable growth.

US increases outsourcing of its war in Iraq to private mercenaries

December 25, 2014

Mercenaries have been called the second oldest profession in the world. Some claim that they are just a special sub-set of the oldest profession since they sell their bodies and their skills. But the idea that mercenaries are only those fighting under a foreign flag has never really made sense to me. Any volunteer army is essentially a mercenary army using my definition of a mercenary being any one who sells military services.

Mercenaries were in common use by the time of the Romans 2,000 years ago. They were used by Hannibal and even by Alexander. They were in use in the Egypt of 5,000 years ago. We know little of the times earlier than the first civilizations some 6,000 years ago. But it is likely that some form of paid military specialists derived from those individuals who had specialised as hunters. They were probably in use from the time that human societies created the first settlements and where individuals had started specialising. That probably takes us back to times before the first cities and perhaps even to the time of semi-permanent, seasonal settlements (earlier than 12,000 years ago). Hunters became guards and then in due course became specialised soldiers.

From the Auxiliaries of the Romans or the Seljuks a thousand years later, mercenaries have always been around. Gallowglasses and the Irish Wild Geese operated – for pay – all over Europe. The Viking traditions lived on with the Varangians who operated around the Black Sea. The business of soldiering was very lucrative – especially for the survivors. Criminal piracy was converted to the legal and profitable trade of privateering. Europe was filled with military entrepreneurs with mercenary regiments available to the highest bidder. Even the national armies and navies of various countries were available for hire. The Swedish Foreign Legion consisted mainly of Poles, The Turks employed Swedish elite troops and the Swiss Guard took care of the Popes. The Dutch had their Foreign Legion, the British had the Gurkhas and the French had their Foreign Legion in Africa. American pilots flew in the  Lafayette Escadrille and American volunteers joined the Abraham Lincoln Brigade. Chennault’s Flying Tigers were American pilots flying in the Chinese Air Force. The Spanish had their Foreign Legion and the International Brigade fought in Spain.

In the last 50-60 years, the business of soldiering has become an industry in its own right. Mercenaries – of any nationality – are now known as “private contractors” or “defence contractors”. Governments are increasingly outsourcing the business of war. As with all outsourcing, the temporary hiring of military resources minimises the liability and cost that comes with the maintaining of permanent resources. Moreover it adds a layer of deniability when things go wrong and does not deprive the employer of any credit if things go well.

The US has been using private contractors in a big way for some 4 decades now. After all, private contractor presence does not count as “boots on the ground”. The war in Iraq is now being conducted for the US to a large extent by private contractors.

Reuters:

The U.S. government is preparing to boost the number of private contractors in Iraq as part of President Barack Obama’s growing effort to beat back Islamic State militants threatening the Baghdad government, a senior U.S. official said.

How many contractors will deploy to Iraq – beyond the roughly 1,800 now working there for the U.S. State Department – will depend in part, the official said, on how widely dispersed U.S. troops advising Iraqi security forces are, and how far they are from U.S. diplomatic facilities.

Still, the preparations to increase the number of contractors – who can be responsible for everything from security to vehicle repair and food service – underscores Obama’s growing commitment in Iraq. When U.S. troops and diplomats venture into war zones, contractors tend to follow, doing jobs once handled by the military itself. 

“It is certain that there will have to be some number of contractors brought in for additional support,” said the senior U.S. official, speaking on condition of anonymity.

After Islamic State seized large swaths ofIraqi territory and the major city of Mosul in June, Obama ordered U.S. troops back to Iraq. Last month, he authorized roughly doubling the number of troops, who will be in non-combat roles, to 3,100, but is keen not to let the troop commitment grow too much.

There are now about 1,750 U.S. troops in Iraq, and U.S. Defense Secretary Chuck Hagel last week ordered deployment of an additional 1,300.

The U.S. military’s reliance on civilians was on display during Hagel’s trip to Baghdad this month, when he and his delegation were flown over the Iraqi capital in helicopters operated by State Department contractors.

……… the State Department boosted from 39 to 57 the number of personnel protecting the U.S. consulate in Erbil that came under threat from Islamic State forces during its June offensive.

That team is provided by Triple Canopy, part of the Constellis Group conglomerate, which is the State Department’s largest security contractor. Constellis did not respond to a phone call seeking comment.

The presence of contractors in Iraq, particularly private security firms, has been controversial since a series of violent incidents during the U.S. occupation, culminating in the September 2007 killing of 14 unarmed Iraqis by guards from Blackwater security firm.

Three former guards were convicted in October of voluntary manslaughter charges and a fourth of murder in the case, which prompted reforms in U.S. government oversight of contractors. …….. 

Is Saudi Arabia prepared to let oil price drop to $20?

December 20, 2014

Saudi Arabia seems to fighting two battles; one against oil shale and one against the Iran-Russia combination. In the long term both are doomed to failure. At best all that Saudi Arabia can hope for is that

  1. the smaller shale oil producers find it uneconomic to continue production, and
  2. Iran and Russia’s oil production is severely curtailed.

But any such result is bound to be temporary. It may force the reduction of investment in shale oil but Russia and Iran will need to produce more to keep their revenues up. It is unlikely to lead to the permanent impairment of oil production from shale or in Iran and Russia. It may allow Saudi Arabia to take control of pricing for a while but the OPEC monopoly has already gone. And the limited monopoly they can win, can only continue as long as oil price stays too low to make it economic for the shale and tar sands alternatives. The reestablished monopoly will only apply as long as oil stays cheap.

It becomes intriguing now as to whether Saudi Arabia has the nerve to allow prices to drop to as low as $20 per barrel and for how long? The long term benefits to Saudi Arabia are not quite so clear for me. Having a monopoly which does not allow prices to rise seems somewhat useless. Certainly their cost of extraction is so low (less than $5 per barrel) that they could continue making profits, but they would need to keep the price low for many years to see off the competition – and the competition would come back if prices rose again.

Anatole Kaletsky considers this question at his Reuters blog:

…… Low oil prices will last long enough for one of two events to happen. The first possibility, the one most traders and analysts seem to expect, is that Saudi Arabia will re-establish OPEC’s monopoly power once it achieves the true geopolitical or economic objectives that spurred it to trigger the slump. The second possibility, one I wrote about two weeks ago, is that the global oil market will move toward normal competitive conditions in which prices are set by the marginal production costs, rather than Saudi or OPEC monopoly power. This may seem like a far-fetched scenario, but it is more or less how the oil market worked for two decades from 1986 to 2004. ….

….. The key question is whether the present price of around $55 will prove closer to the floor or the ceiling of this new range. The history of inflation-adjusted oil prices, deflated by the U.S. Consumer Price Index, offers some intriguing hints. The 40 years since OPEC first flexed its muscles in 1974 can be divided into three distinct periods. From 1974 to 1985, West Texas Intermediate, the U.S. benchmark, fluctuated between $48 and $120 in today’s money. From 1986 to 2004, the price ranged from $21 to $48 (apart from two brief aberrations during the 1998 Russian crisis and the 1991 war in Iraq). And from 2005 until this year, oil has again traded in its 1974 to 1985 range of roughly $50 to $120, apart from two very brief spikes in the 2008-09 financial crisis.

What makes these three periods significant is that the trading range of the past 10 years was very similar to the 1974-85 first decade of OPEC domination, but the 19 years from 1986 to 2004 represented a totally different regime. It seems plausible that the difference between these two regimes can be explained by the breakdown of OPEC power in 1985 and the shift from monopolistic to competitive pricing for the next 20 years, followed by the restoration of monopoly pricing in 2005 as OPEC took advantage of surging Chinese demand. ….

……. There are several reasons to expect a new trading range as low as $20 to $50, as in the period from 1986 to 2004. Technological and environmental pressures are reducing long-term oil demand and threatening to turn much of the high-cost oil outside the Middle East into a “stranded asset” similar to the earth’s vast unwanted coal reserves. Additional pressures for low oil prices in the long term include the possible lifting of sanctions on Iran and Russia and the ending of civil wars in Iraq and Libya, which between them would release additional oil reserves bigger than Saudi Arabia’s on to the world markets.

The U.S. shale revolution is perhaps the strongest argument for a return to competitive pricing instead of the OPEC-dominated monopoly regimes of 1974-85 and 2005-14. Although shale oil is relatively costly, production can be turned on and off much more easily – and cheaply – than from conventional oilfields. This means that shale prospectors should now be the “swing producers” in global oil markets instead of the Saudis. In a truly competitive market, the Saudis and other low-cost producers would always be pumping at maximum output, while shale shuts off when demand is weak and ramps up when demand is strong. This competitive logic suggests that marginal costs of U.S. shale oil, generally estimated at $40 to $50, should in the future be a ceiling for global oil prices, not a floor. …

…… So which of these arguments will prove right: The bearish case for a $20 to $50 trading-range based on competitive market pricing? Or the bullish one for $50 to $120 based on resumed OPEC dominance?

Whether market pressures dominate or whether the cartel reestablishes control, we seem to be in for a long period of prices around $40 – 50 per barrel. At this price bio-diesel would need hefty subsidies to survive. Assuming that gas prices continue their link to oil prices, gas becomes the dominating choice as fuel for power generation. Renewable energy will need even greater subsidies which are already being cut back. Not all of this price reduction will be passed on to the transport industry. The pass through of the price cut will be greater in the US than in Europe or Asia. But any pass through is itself a stimulus for consumer spending.

For the stagnating world economy low oil prices can only be a good thing.

Guardians of Peace -1 Sony + Hollywood – 0

December 18, 2014

Well Sony and the US theatre owners caved in and the release of The Interview has been cancelled for now and put off indefinitely. It will not even be released as a Video on Demand. There is a wave of indignant voices about the attack on “free speech”.

By all accounts the film itself was of little artistic merit. It is apparently the imbecilic, tasteless but clever form of humour that teenagers and tabloids love. But I am no longer a teenager and I am bored by the tabloids. So I feel no great sense of loss with the cancellation of the release. It is not a movie that I would have watched anyway.

HuffPo: Sony Pictures will not release “The Interview” on Christmas Day, and the studio has “no further release plans” for the film, this according to a studio spokesperson. It had been speculated that Sony would consider releasing the film either via on-demand services or in theaters at a later date.

Sony announced “The Interview” will not come out as planned in a statement:

In light of the decision by the majority of our exhibitors not to show the film The Interview, we have decided not to move forward with the planned December 25 theatrical release. We respect and understand our partners’ decision and, of course, completely share their paramount interest in the safety of employees and theater-goers.

Sony Pictures has been the victim of an unprecedented criminal assault against our employees, our customers, and our business. Those who attacked us stole our intellectual property, private emails, and sensitive and proprietary material, and sought to destroy our spirit and our morale – all apparently to thwart the release of a movie they did not like. We are deeply saddened at this brazen effort to suppress the distribution of a movie, and in the process do damage to our company, our employees, and the American public. We stand by our filmmakers and their right to free expression and are extremely disappointed by this outcome.  

Sony’s decision caps a whirlwind day, which saw the nation’s five biggest theater chains cancel plans to screen “The Interview.” Regal Entertainment, AMC Entertainment, Cinemark, Cineplex Entertainment and Carmike Cinemas pulled the comedy following a terror threat made Tuesday by hackers who had attacked Sony Pictures.

The indignation is not about the film but about the “spineless caving-in to terrorism”. I am not so sure about that. Big Entertainment, with Sony as a leading light, has been quite ruthless in bullying and killing any move when their music revenues have been threatened by smaller and more innovative players. They have lobbied and obtained extensions of copyright protection to quite unjustifiably long periods. They have brought their clout to bear and cracked down viciously on “piracy” in films and music. Even where the so-called piracy has been quite trivial. Nothing wrong with any of that of course. Any enterprise is justified in protecting its market. But they have relied too much on on their “power” and size. They have used the threat of legal action to terrorise the small entrepreneur who has no possibility of bearing the cost of defending against their big legal guns.

So when a group of hackers brings one of the Entertainment Giants to its knees – mainly because they were complacent and thought thought they were invincible – I may not be moved to cheer but I am inclined to smile quietly. I have a tiny bit of sympathy for the makers of the film but none for Sony. And if the hackers – Guardians of Peace – are really an off-shoot of the North Korean government, it is even more remarkable.

Less than $60 – but where’s the bottom for oil price

December 12, 2014

I reckon the bottom is about 6 months away and probably less than $40 per barrel before there is some recovery. If the price does not fall that much, or if it recovers faster, then Saudi Arabia will have lost its battle against shale oil. In any event, shale oil is here to stay and all Saudi Arabia can hope for is to restrict new and small oil shale wells. Even a steep fall to around $40, held for a period of only 6 – 12 months, will not be enough to put all shale oil producers out of business and win the battle against shale oil.

oil price bottom

Marketing terrorism is becoming obsolete

December 1, 2014

Black Friday is over, today is Cyber Monday and tomorrow is Giving Tuesday. But this kind of marketing terrorism is becoming obsolete.

Obviously the marketing terrorism involving special days has worked – but it has worked not to increase total sales but only to shift consumption patterns. Sales are a little more concentrated on these days and to those stores who offer discounts. They encourage those chasing discounts but discourage those who don’t rely on the discount to make their purchases.

I suspect that rather than representing additional sales which would not otherwise happen, these “discount” days have only shifted buying – which would have happened anyway – to be concentrated to these “special” days and to those stores with the largest discounts. Imbuing artificial meaning into Valentine’s Day, Father’s Day and Mother’s Day, the invention of Black Friday, Cyber Monday and Giving Tuesday, having special “Sales” days after Christmas and the New Year, have all certainly served to change consumption patterns. But they have not really contributed to increasing the total sales. With the new buying pattern no store can afford to be the one that nobody comes to. I suspect also that the increased sale of discounted goods on these special days at just a particular store or chain is no longer worth the additional advertising and promotion costs.

But this kind of marketing is already obsolete. There is no more to be gained by inventing a Brother’s Day or a Sister’s Day or a Cousin’s day or a Children’s Day. On-line information gathering and on-line shopping have taken over. High street stores and even stores in shopping malls are increasingly showrooms for goods where the sales are actually consummated on-line. A few stores have caught on. They are converting their stores to become places to view goods and services and places to pick-up the goods bought on-line. They have realised that the “consumer commitment” has shifted from the store. The real capture of the sale happens on-line and no longer in the store. The store still has a role to play but this role is changing. The store needs to complement the on-line presence and to provide those bits that are missing from the on-line experience (viewing the goods and delivery of the goods). Walk-ins to the store have to be led inexorably to the web-site.

Those who have caught on have realised that the on-line store is open 24/7. The web site has to do an “IKEA” and ensure that the visitor is led through every part of the site and that he willingly parts with his money as he comes across little extras as he buys!!

Break-even price for shale oil could be as low as $40 per barrel

November 28, 2014

UPDATE: Reuters – Saudi Arabia’s oil Minister Ali al-Naimi declares war on US Shale OIL


 

Yesterday Saudi Arabia got its way at the OPEC meeting and successfully resisted all calls for a cut in production to try and stop the decline of world oil prices.  It seems Saudi Arabia (which has the lowest oil production cost in the world) has chosen the strategy of maintaining an oil price low enough to put a cap on US shale oil production and provide a disincentive for new shale oil wells.

This strategy is premised on the break-even price for shale oil being at or above $80 per barrel for small production sites down to about $30 per barrel for large production sites. For example Credit Suisse estimated these levels as varying between $24 and $85 earlier this year.

shale oil break even estimates credit suisse

shale oil break even estimates credit suisse sep 2014

 

The US department of Energy puts sustainable break even values between $35 and $54. The Saudi calculations seem to be based on similar estimates. They appear to believe that with current oil prices moving down to about $70 per barrel, some of the smaller US oil shale wells are already uneconomic and that at this price new investment for further production sites will dry up.

But shale oil production costs are declining – fast. Costs are coming down following the learning curve for both capital costs and running costs. The analyst estimates are already out of date. My estimate is that actual break-even points are already down about 20% from those in the Credit Suisse estimate.

So I believe the Saudis have miscalculated. The average break-even world price for shale oil is probably – already – closer to $40 per barrel rather than $60-70 per barrel being assumed. While new investment in shale oil wells may well be toned down by world oil consumption, it will probably not be because world oil price is below some critical threshold. If the Saudis believe that any uptick in consumption will bring the oil price back up to over $80 per barrel, they are following a flawed strategy. We could be in for a decade of relatively low oil prices perhaps with a floor at around $40 per barrel and set by the average break-even for shale oil.

Consumers are still very wary. They are not sure that the reduction in oil price will be sustained and is not just a temporary dip which might lure them into a higher and more vulnerable consumption level. It will take a few months for them to see that OPEC has actually lost control over the world oil price but is still in denial about that. A sustained low oil price is what will trigger a new – and sustained – wave of global growth that is now so badly needed. The cartel is shrinking. New shale oil producers will all be outside the cartel – and the sooner Europe, China and India start production the better. But it is the beginning of the end of the OPEC cartel power.

History will – I think – show that the OPEC cartel lasted for 50 years. It will show that the cartel started in 1973 and that market forces of supply and demand were re-established around 2020.

Status of German women directors degraded to be “quota directors”

November 27, 2014

German companies have a reputation for excellence. But this is being sacrificed for the sake of political correctness. Currently every woman company director in Germany can be assumed to be of exceptional competence. When a new quota law goes into force in 2016, every woman director in Germany will be nothing more than a “quota employee”.

Discrimination to fight discrimination is an invitation to failure. I do not find any case of “affirmative action” – which is a euphemism for introducing a new, institutionalised and unjust discrimination ostensibly to correct the effects of some other unjust discrimination – which has actually achieved its objective. No program of enforced quotas has yet succeeded in achieving a condition where the “affirmative action” becomes unnecessary because the original injustice has been eliminated. Quotas or confiscation and rationing, enforced by the state and based on irrelevant criteria, remain a favourite tool of those with socialistic aspirations. But not only don’t they work, they also perpetuate the “injustice” that they are intended to correct.

Fifty years of quotas for the “scheduled castes” in India have only become entrenched and have been counter-productive. Rather than ensuring that the lot of the “disadvantaged” groups have improved such that they can compete fairly for jobs or education places, the “affirmative action” has instead ensured that competence and ability have been removed as requirements for selection. Even worse, the “system” is self-perpetuating and encourages the reduction of standards. Those who were to be helped now only need to be the “best of a bad lot” to be selected. Instead of raising standards, “affirmative action” allows and enables lower standards to become “acceptable”. To be classified as a “scheduled caste” has now become a path to privilege.

The experience  in the US with reservation of places in education and in the work-place for minorities has been no different. Even after over 25 years of “affirmative action” the SAT scores of African-Americans admitted to the top US universities remains significantly lower than the average of all those admitted. But this is only to be expected. Effectively the SAT scores to be targeted by aspirants for admission have been reduced for those qualifying for the privilege. Aiming high has no longer any value. Reserving jobs for women or Latinos or other “disadvantaged” minorities has only succeeded in lowering standards but – what is worst – also in making these lower standards acceptable. The quotas for the employing of ethnic Malays in Malaysia has removed any incentive for such “quota employees” to excel at anything other than being Malay. Quota students or quota employees are not burdened by requirements of superior performance or competence – let alone any expectations of excellence.

It should be obvious by now that I believe that quotas based on having an irrelevant characteristic are counter-productive and contribute to equalising standards only by lowering them. Even when quotas try to bring in minimum qualification requirements, it is inevitable that the criterion becomes being “just good enough” and not “to be best”. The use of quotas automatically and inevitably downgrades the quest for excellence. It is settling for the mediocre.

So I am not very impressed by the new German law which will now force the largest companies to have women constituting 30% of their supervisory boards from 2016.. Again the justification is that it will be a trigger for social change and anyway that there are enough women who are qualified. That misses the point. Women directors for these companies have now been effectively degraded to become quota directors – even where they are there for their competence. They can no longer claim to be the “best available” even if they are. Angela Merkel has had to give in to the socialists on this point. Forty percent of the German cabinet is women. Angela Merkel herself is there because she was the “best” for the job. But note that many of her female cabinet colleagues are there not because of their competence or excellence but only to fill an unwritten quota. Other countries are also considering quotas for women directors – not least in “politically correct” Sweden. For example, I observe when I watch Swedish TV – which is very politically correct – that it is easy to discern when a female presenter or a news reporter has been selected to fill some gender quota rather than for her excellence.

But why stop at women quotas? Why not quotas also for other minorities and abandon excellence or competence? Why should women be more privileged than some other disadvantaged minority? Is the disadvantage suffered by women more important to correct than the disadvantage suffered by a gay person? or an immigrant? Perhaps there will come a day when a German Supervisory Board will have to be at least 30% female, 10% gay, 5% transgender and 15% of immigrant origin! That will be the time when I shall sell any German stocks that I might have.

As an investor in any company I would prefer that the Directors be the best available and affordable and not “just good enough” to fill a compulsory quota.


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