UK union leader Bob Crow dead

[LondonJohn]

No. As has been said, that isn't his job.

However, if he does produce the situation you describe (over-paid, under-worked members) then sooner or later there will be a big reckoning, and a lot of people will lose their jobs. They will be painted by some on the left as victims of the big bad government/ Tory Party/ ruling class or whatever, when the actuality is that they would actually be victims of Bob Crow's policies.

Exactly. This is not about whether or not Crow should have been considering the wider UK economy per se (and he should not have been doing so). But it is about him working on behalf of his members' interests in the medium- and long-term, rather than just the short term.

When the privatised BT (British Telecom, the UK national telephone/telecommunications company for those outside the UK who don't know of it) modernised to digital exchanges, a huge number of employees (tens of thousands) lost their jobs. The unions and management had a proper, sensible dialogue about the situation. The unions were astute enough to realise that if they dug their heels in about job losses (as they could well have done, given the nature of job guarantees given when BT was a government-owned civil service entity), they might have kept their members in employment for another few years, but that the company they worked for would probably go bust in the face of increased competition and a failure to streamline and modernise. The unions therefore pragmatically agreed that the best position for its members was not to oppose the job cuts, but rather to concentrate on ensuring that BT set up extensive retraining/repurposing courses for employees who were being made redundant, that BT was active in the area of finding soon-to-be-ex-employees jobs in other places, and that BT was being as generous as reasonably possible in redundancy payments.

And this example illustrates perfectly why Crow was a boorish, Luddite, anachronistic bully. Yes, he used the power he knew he had (primarily the threats of tube or rail strikes) to keep his members' wages artificially high and more of them in employment that the business actually needs. But these things are not cost-free: they have resulted in a slow-down in the modernisation of the tube and rail networks, a lesser rate of capital investment (those higher salaries and excess workers have to be paid for from somewhere....), and an adversarial relationship between workers and management. All of these chickens will, sooner or later, come home to roost.

The position is somewhat obfuscated - as Crow surely knew - by the fact that the tube and most rail services are protected monopolies, and are thus relatively immune to threats from competition. But the market will eventually have its say. For example, lower tube investment may result in more tube delays and accidents, resulting in fewer people using the tube in future. And new franchise bidders may be able to steal routes with higher financial bids, if they are able to staff their rolling stock with non-unionised staff who are fewer in number and paid less, but are still able to offer the same level of service on a modernised basis.

 

[Primus]

Bob Crow was responsible for me and plenty of others taking up cycling to work. The cost of my travelcard just wasn't worth the rubbish service. You don't get a refund for the days they are on strike.
Like many Londoners I've got from not having an opinion to actively looking forward to automation of the tubes. That is his lasting legacy for me.

 

[Skepticemea]

You're not? Well it's because social (publicly funded) housing is intended for those less able to afford market rents, and absolutely nothing to do with the political preference of the tenants.

However if Bob Crow could legitimately live in a council-subsidised house (thus creating upward redistribution of incomes--not such a good thing) then the problem lies with local authority rules, not Bob Crow (though there is a hypocrisy angle)

I may be wrong, but you seem to think that because social housing rents are lower than private rents that tenants are being subsidised by the taxpayer.

Let's leave aside for the moment that the tenant may be a taxpayer themselves, why is this a subsidy? How is the differential between private and social rent "publicly funded"? Bearing in mind that these properties are now assets as almost the entire social housing stock was built before the mid-80s.

 

[MikeG]

I may be wrong, but you seem to think that because social housing rents are lower than private rents that tenants are being subsidised by the taxpayer.

Let's leave aside for the moment that the tenant may be a taxpayer themselves, why is this a subsidy? How is the differential between private and social rent "publicly funded"? .......

This sector is subsidised by the tax payer. The government gives grants for the purchase of land, some or much of which isn't available for private property (just about the only housing that can be built outside village envelopes in the so-called green-belt is social housing, and the land is bought at below market prices because it isn't available for private housing). The government also gives grants towards the construction costs, and the purchase of properties not built directly by or for the Housing Associations. The net effect is that these houses can be built very much cheaper (for the developer) than private housing, and this is almost entirely down to the subsidies they receive. If the capital cost of the housing is cheaper, then the rents (or shared equity rates) can necessarily be reduced when compared with the private market, particularly given that the landlord (the particular Housing Association) is set up as a non-profit making organisation.

There are further methods other than subsidies involved, by, for instance, requiring developers to build a certain percentage of any development for Social Housing, and for those properties to be sold to the HA at a pre-agreed price. This involves essentially forcing the developer to work as a non-profit organisation on those units, by using a form of blackmail (Section 106 agreements, requirements in Planning law etc, potential denial of Planning Permission and so on).

 

[Francesca R]

I may be wrong, but you seem to think that because social housing rents are lower than private rents that tenants are being subsidised by the taxpayer.

Yes they are. Local authority rent is below market rent and the only way that comes about is the taxing (and fee-earning etc) power of the authority itself (plus grants from central government)

Let's leave aside for the moment that the tenant may be a taxpayer themselves

That doesn't affect the reality that it is publicly subsidised rent.

why is this a subsidy? How is the differential between private and social rent "publicly funded"?

Because the opportunity cost of charging council rent is the differential between that and market rent for the same property.

Bearing in mind that these properties are now assets as almost the entire social housing stock was built before the mid-80s.

Assets that have a depreciation charge and assets that could be sold/leased for higher than the imputed value of the subsidesed rents they attract.

 

[Skepticemea]

Yes they are. Local authority rent is below market rent and the only way that comes about is the taxing (and fee-earning etc) power of the authority itself (plus grants from central government)

That doesn't affect the reality that it is publicly subsidised rent.

Because the opportunity cost of charging council rent is the differential between that and market rent for the same property.

Assets that have a depreciation charge and assets that could be sold/leased for higher than the imputed value of the subsidesed rents they attract.

Opportunity cost? Because they could charge more it's a subsidy?

 

[3point14]

Bob knew about power at a point just as the bankers do.

The bankers threatened the country with a financial shutdown if they didn't get their bailout and their bonusus.

Bob threatened London with a shut-down if his members weren't well paid - If it's that essential (which it is) then, at a time when there are record profits all over London, why shouldn't Bob's members be paid in accordance with their importance to the running of one of the largest financial centres in the world?


I can't see a lot of difference.

* Withdrawn. Can't prove it.. Ironically, I had to strike it.

 

[Francesca R]

Opportunity cost? Because they could charge more it's a subsidy?

Yes.

 

[MikeG]

.......The bankers threatened the country with a financial shutdown if they didn't get their bailout and their bonusus........

Did they? You'll no doubt have a link to something authoritative supporting this?

 

[3point14]

Did they? You'll no doubt have a link to something authoritative supporting this?

I'll give it a go. It's something I recall from reports at the time. If it turns out to be inaccurate, I'll happily retract it.

In the mean-time, I don't really think it makes a great deal of difference to the rest of my post, it's power at a point. If the union members are that important to the running of the City which is overflowing with profit, then why should Bob not be (or not have been) fighting for his members share of it.

If the city won't run without the transport workers then when trying to bring them into the race to the bottom that everywhere else is involved in, don't be suprised when they demonstrate just how essential they are.


I'll see if I can find a link now.

(ETA, nope, can't prove it for the UK - withdrawn)

 

[MikeG]

(ETA, nope, can't prove it for the UK - withdrawn)

Thank you.

Your broader point, about the right for Bob Crowe to fight for his worker's' interests, is undisputed. What some are disputing, including me, is whether those best interests actually include being over-paid and over-manned......because of the inevitable corrections.

 

[LondonJohn]

I'll give it a go. It's something I recall from reports at the time. If it turns out to be inaccurate, I'll happily retract it.

In the mean-time, I don't really think it makes a great deal of difference to the rest of my post, it's power at a point. If the union members are that important to the running of the City which is overflowing with profit, then why should Bob not be (or not have been) fighting for his members share of it.

If the city won't run without the transport workers then when trying to bring them into the race to the bottom that everywhere else is involved in, don't be suprised when they demonstrate just how essential they are.


I'll see if I can find a link now.

Ah, this demonstrates a fundamental misunderstanding of market forces, competitive advantage, fair value and macroeconomics in general.

As a thought experiment, consider this: the companies who supply the electricity to the banks and other financial institutions are vitally important to the running of the City. Would you suggest that they deserve a significant cut of the banks' profits as a consequence? Or would you suggest that the electricity companies have some sort of intrinsic right (or ability) to go to the banks etc en masse and offer them an ultimatum: "You can only generate your revenues and profits because of the electricity we supply to you. Therefore unless you give us half your profits, we'll collectively cut off your electricity"?

Of course, everyone knows that this could and would never happen, since a) the provision of electricity is a well-regulated utility market, and b) there is a well-functioning (on the whole) level of free-market competition between electricity suppliers. And in turn, this means that in practice the electricity companies are mainly focussed upon being able to supply electricity at the lowest price possible - especially to high-value corporate customers - while still generating an acceptable profit and level of reinvestment etc.

The tube is in a slightly different - and more protected - position, in that it holds the local monopoly on underground rail transportation, which is usually the quickest and most convenient way for most City workers to get to and from their offices. But in those situations, proper regulation is the key, together with limited introduction of competition where appropriate and applicable. For this reason, the tube cannot be allowed to charge passengers what it likes, and nor can it decide when to work and not work.

A very good example is to go back to the telephone service provision market. Before the mid-1980s, BT (or the Post Office telephone division before it was renamed) had an absolute monopoly on the provision of telephone services across the UK (with the curious exception of Hull!). While its charges were highly-regulated in certain areas (line rental and local/national calls), BT was essentially able to charge what it liked for international calls on a take-it-or-leave-it basis (government thought that few mass-market residential customers made international calls, and therefore this section of the market did not require stringent regulation). In addition, customer service was shockingly bad - even to large corporate customers. After all, everyone had to deal with BT whether they liked it or not, and telephones were an absolutely vital part of business life.

But post-privatisation, competition was introduced at a service provision level. Suddenly, competitors such as Mercury and several business-specific service providers realised that there were rich pickings of very high-value corporate customers who were disillusioned with BT's international prices and customer services, but who nonetheless required these telephone services in bulk as vital to their operations. They quickly began to hoover up the market, and (naturally) BT responded by changing its own attitudes, practices and pricing. Telephony thus found its proper fair value: a value which reflects the costs of provision plus an allowance for profit and reinvestment.

And that's how macroeconomic systems work in a well-functioning economy. It's not about "sharing wealth". It's about providing fair value, whether in a competitive environment or in a monopolistic/duopolistic environment with appropriate regulatory safeguards.

 

[LondonJohn]

Thank you.

Your broader point, about the right for Bob Crowe to fight for his worker's' interests, is undisputed. What some are disputing, including me, is whether those best interests actually include being over-paid and over-manned......because of the inevitable corrections.

Exactly. Jam today....... dole tomorrow.

They are probably already ready with their whinging demonisations of "foreign raiders coming in here, winning our franchises with better, more modernised, more streamlined services at a lower cost and/or higher franchise fee, putting our hard-working members out of work"

 

[LondonJohn]

Yes.

It's astonishing how few people - even within the financial services industry or in senior management of any industry - cannot properly grasp the twin concepts of opportunity cost and sunk costs.

Many a dreadful investment decision has been made, especially in government procurement or major infrastructure projects, on the back of ignorance or misunderstanding of one or both of these concepts.

 

[3point14]

Ah, this demonstrates a fundamental misunderstanding of market forces, competitive advantage, fair value and macroeconomics in general.

As a thought experiment, consider this: the companies who supply the electricity to the banks and other financial institutions are vitally important to the running of the City. Would you suggest that they deserve a significant cut of the banks' profits as a consequence? Or would you suggest that the electricity companies have some sort of intrinsic right (or ability) to go to the banks etc en masse and offer them an ultimatum: "You can only generate your revenues and profits because of the electricity we supply to you. Therefore unless you give us half your profits, we'll collectively cut off your electricity"?

Of course, everyone knows that this could and would never happen, since a) the provision of electricity is a well-regulated utility market, and b) there is a well-functioning (on the whole) level of free-market competition between electricity suppliers. And in turn, this means that in practice the electricity companies are mainly focussed upon being able to supply electricity at the lowest price possible - especially to high-value corporate customers - while still generating an acceptable profit and level of reinvestment etc.

The tube is in a slightly different - and more protected - position, in that it holds the local monopoly on underground rail transportation, which is usually the quickest and most convenient way for most City workers to get to and from their offices. But in those situations, proper regulation is the key, together with limited introduction of competition where appropriate and applicable. For this reason, the tube cannot be allowed to charge passengers what it likes, and nor can it decide when to work and not work.

A very good example is to go back to the telephone service provision market. Before the mid-1980s, BT (or the Post Office telephone division before it was renamed) had an absolute monopoly on the provision of telephone services across the UK (with the curious exception of Hull!). While its charges were highly-regulated in certain areas (line rental and local/national calls), BT was essentially able to charge what it liked for international calls on a take-it-or-leave-it basis (government thought that few mass-market residential customers made international calls, and therefore this section of the market did not require stringent regulation). In addition, customer service was shockingly bad - even to large corporate customers. After all, everyone had to deal with BT whether they liked it or not, and telephones were an absolutely vital part of business life.

But post-privatisation, competition was introduced at a service provision level. Suddenly, competitors such as Mercury and several business-specific service providers realised that there were rich pickings of very high-value corporate customers who were disillusioned with BT's international prices and customer services, but who nonetheless required these telephone services in bulk as vital to their operations. They quickly began to hoover up the market, and (naturally) BT responded by changing its own attitudes, practices and pricing. Telephony thus found its proper fair value: a value which reflects the costs of provision plus an allowance for profit and reinvestment.

And that's how macroeconomic systems work in a well-functioning economy. It's not about "sharing wealth". It's about providing fair value, whether in a competitive environment or in a monopolistic/duopolistic environment with appropriate regulatory safeguards.

I fail to see how your first paragraph relates to any of those following it.

 

[Jules Galen]

I like Bob Crow. Unlike most workers in the UK, Bob refused to

Edited by kmortis: 

Removed offensive language

of his corporate masters and actually demand to be treated as a human being.

Of course, that a worker should demand to be treated like a human being is too much for the owners of the UK, so they tool every opportunity they could to smear Bob Crow and show the masses what a bad, bad man he was for not

Edited by kmortis: 

Removed offensive language

.

I guess what I'm saying is that Bob Crow was not a typical Brit - he was a man - and the other Brits resented him reminding them of how much they have given up.

 

[MikeG]

........Of course, that a worker should demand to be treated like a human being is too much for the owners of the UK, ......

Who exactly are you talking about here?

 

[3point14]

Who exactly are you talking about here?

Well, a succession of governments have been sellling all the (profitable) bits of my country for years. I don't think they've quite managed to sell it all just yet, so that's still us. Isn't it..?

Give it time...

 

[MikeG]

Well, a succession of governments have been sellling all the (profitable) bits of my country for years.....

Oh I see..........It's YOUR country. So you must be the owner that the previous poster referred to.

When you say profitable, you mean like British Leyland?

 

[3point14]

Oh I see..........It's YOUR country. So you must be the owner that the previous poster referred to.

When you say profitable, you mean like British Leyland?

No. I said profitable.