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item0059B 892, 893 892 25 December 2003 Misconceived Defeat
Last week I flew to Baden Baden with Ryanair for a £35 Return, to do a day's legal work in Stuttgart. Baden Baden is Ryanair's alternative airport to Strasbourg, where the civic authorities ran into legal flak for paying a subsidy to Ryanair, for using their airport. Last week the French Courts upheld the ban on the Ryanair subsidy, declaring it illegal. And Strasbourg is left out in the cold. Yet why should cities and regions not promote themselves by such means? Is it not tantamount to advertising, or equivalent forms of promotion? The Ryanair cases (one at Strasbourg, the other at the Belgian airport of Charleroi) have huge implications for the way “mixed economies” are permitted to be managed. Over the last quarter-century we have developed models of twin-element economies, almost purist in their structure. And the imagery of these models is derived from Adam Smith, via the USA, domineering American capitalism, Sir Keith Joseph and Margaret Thatcher.
This two element (i.e. “binary”) model carries with it several ancillary propositions. The freer the market, the better – competition within the private sector is “good”, and Governments interfere with it at their peril. Governments should never favour one competitor against another. Markets must always be kept open to as many firms as possible, so as to enhance the quality of the competition. Intervention should be minimal. In competing with each other, firms must always have access to all the relevant information, to inform their tendering. And Government regulatory intervention should always be even-handed, avoiding any favouritism as between competing firms. And these principles should be applied internationally, as well as nationally and locally.
But is it true? Does it accurately reflect reality? Surely - within a single nation-state, Government and firms regularly collude to “beat” other national champions? Surely – Governments compete with each in other lucrative inducements to footloose industry to settle within their national territories, thus making a mockery of the binary model? Surely, the Strasbourg Chamber of Commerce was perfectly entitled to favour Ryanair (which was bringing visitors to Strasbourg at the rate of 20,000 a month) over Air France (which was generating 1,000 visitors a month)? Surely – local authorities the world-over make sure that they build advance factories, with the aim of attracting firms to locate with them, rather than in another jurisdiction? Surely – in many respects, the relevant model is a unitary one, in which public/private teams combine to beat other public/private teams? as a State subsidy – and the Court held that it offended against the no-subsidy principle. It was the same at Charleroi, which is a municipal (and not a privately-owned) airport. The French and Belgian Courts were applying the law as they found it. Payments which would be unexceptionable if made by a private company, were illegal if made “by the State”. Is that sensible? If the business community of Strasbourg, which funds the Chamber of Commerce through its subscriptions, agrees to subsidise Ryanair as a proven means of getting more business – surely that is acceptable? They could have spent the same amount of money on an advertising campaign, albeit to far less effect. It is the same with national and local governments in developing countries: is their any reason why those societies, even cities, should not deploy their collective resources in such a way as to improve their local economies?
What do you think? Drop me a line
24 December 2003 Fabian Study Tour to Berlin 1 May – 5 May 2004 Open to all Fabians – 30-places only – first-come first-served. Leave Stansted 7.30 am Saturday 1 May 2004 – Return 7.30 pm Wednesday 5 May – four nights B&B in Berlin – we will get a good four-and-a-half days in Berlin, arriving mid-morning Saturday, leaving Wednesday evening - this timetable will require participants to overnight in London on the Friday and Wednesday – own arrangements to be made – price is for sharing a twin-bedded room, single-room price on application – price also to include cancellation insurance, but not general travel insurance - all incidental Berlin costs, including meals to be met personally. Full educational programme planned – commentaries/lectures in English - German Parliament (Bundestag, not Bundesrat) – Social Democratic Party HQ – new British Embassy – UK Berlin-based Correspondents - Potsdam (Brandenburg Regional Government) – Berlin City Hall – German TUC Price: £335 per person* * Subject to possible review - prices can be finally determined only when bookings are confirmed, but this is a well-researched estimate
Roger Warren Evans Fabian Executive Committee 23 St Peter’s Road Newton Swansea SA3 4SB Tel 01792-360673
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