Economics divide businesses into oligopolies, monopolies or those in perfectly competitive markets.  Theory doesn’t address excessive competition – markets so competitive that nobody makes any money.  For an example consider the US domestic airline industry. It seems impossible for a carrier to make money for a sustained period, but players never go out of business. Economics says that companies exit markets if they lose money.  

To the casual observer airlines rarely seem to go out of business, but go into Chapter 11 bankruptcy regularly as clockwork. Why can nobody make any money and why don’t these apparently unsuccessful operators get forced out of business permanently?

In fact, over the years numerous airlines have gone belly-up, if you include those acquired by other airlines. The few successful airlines, such as Southwest, have carefully avoided acquisitions, but mergers are fashionable among the incautious. Wikipedia lists more than 200 defunct airlines, including such notables as PanAm (1927-1991), Braniff (several existences) and TWA which lasted from 1930 until being acquired by American Airlines in 2001.  

Clearly there is excessive competition in the airline industry. I think there are two reasons for this. One is an abundant supply of people just itching to start an airline, none of whom have any experience or knowledge in the business. Some do manage to beat the odds, Virgin being one, although they do not operate in the cutthroat US domestic market.  Numerous others such as Trump, Hooters, ValuJet (now AirTran) and Song (merged back into Delta), have been willing to jump into the sacrificial fire. A new entrant, Skybus, is launching the ultra-low fare model made popular in Europe by Ryanair.  I will be extremely surprised if they are profitable, but I expect they will survive several injection of financing from their hopeful backers.  This regiment of entrants inevitably pulls down potential returns.

The second reason for the excessive competition is the apparent willingness of large lenders to the industry to lose big sums of money.  When airlines are in bankruptcy there seems to be an endless troop of banks willing to advance more cash in the expectation a recovery in the industry is just around the corner.   Additionally airline costs are still very high, and bankruptcy is seen as a model for getting down to a lower-cost model that is thought to be a requirement for survival.

This is a fairly miserable situation for the customer.  Employees have seen their pensions go west, so are generally demotivated and surly.  The airlines have no money to spend on planes so the conditions range from down-at-heel to alarming. Operators, desperate to fill seats, offer very low prices to the casual traveler, subsidized by us business travelers, who pack in despondently. 

I am waiting to see the emergence of small, business-only flights on domestic routes.  If this happens then the big carriers will melt away like summer mist, taking a fortune in frequent flyer miles, but otherwise unmourned.

The great advantage of an organized church is that it can develop and maintain a reliable income stream. Listen to any evangelical radio station or read the novels of Anthony Trollope and you quickly realize that money is the chief preoccupation of the church leaders. Finance gets a lot of time and attention in churches, managing it and to making sure it continues to flow in. Atheism has no such institutional advantages. The problem with atheism is that there is no money in it.

Several organizations exist for the propagation of atheism, but since the obvious advantage of atheism is that you can stay in bed on a Sunday morning, there is no clear mechanism for raising funds. Atheists don’t gather where they can be exhorted. For the cynical who believe that evangelical organizations are established at least in part because of the power and influence that accrue to the founder, it might seem that the same motivation should inspire a guru of non-belief to start a non-church. This might be a little too obvious and blatant. Even if it were successful in generating cash flow, what would an atheist organization do with the money? All you need is to support a few web developers.

I suggest this is actually a problem for society. Atheists are invisible. There is no organization that a TV station can call upon to defend the interests of atheists when someone like former President Bush says that atheism is incompatible with being an American – something that he would not have considered saying about any other minority. Since nine percent of Americans describe themselves as atheists, this would appear to be a large amount of people to antagonize. Another problem with this invisibility is that the average person can be lead to believe that an atheist is some kind of crazed neo-Marxist hiding in the woods, probably making pipe-bombs.

All this has shown some signs of changing in recent months with the publication of several books by atheists that have received a lot of publicity. Christopher Hitchens’ God is Not Great is the most recent one, hotly following The God Delusion by Richard Dawkins and Letter to a Christian Nation by Sam Harris. Sam Harris is notable for having been catapulted if not into fame at least notoriety by his book.

Suddenly there are some spokesmen for atheism who come across as being reasonable beings, somewhat passionate about their non-beliefs, but otherwise quite normal. In Hitchens, the cause has a formidable, polished and assertive debater, who reduced Sean Hannity to incoherence in a recent discussion.

Society now effectively enriches people solely for their adoption of atheism as a personal creed, which has not happened before, at least not to this extent. Atheists may regret that two of these authors appear to be definitely non-American (which might be viewed in some quarters as bolstering Mr. Bush’s opinion), although Christopher Hitchens has recently become a US citizen.

What happens next? If non-believers are really as much as nine percent of the population, then it would seem that politicians cannot ignore them indefinitely. Historically a minority is ignored as long as there is an unspoken agreement between the two parties to do so. Typically, a politician will break ranks when he or she reckons the advantage to be gained is worth the potential dismay among existing supporters. Eventually the cause of the minority goes mainstream and both parties battle for their vote, with the advantage usually going to the original champion.

There is no sign that atheism will get the nod from anyone, judging by the tone of the presidential nomination debates. But that could change, especially of someone emerges as an articulate spokesman for non-believers at large.

The biggest problem for politicians who might want to court the atheist vote is how to address it. After all, on Sunday morning atheists are all in bed.

Like most, our family subscribes to several magazines. I get Wine Spectator and The Economist, we get a horse magazine, one on computer games, Gourmet and so on. All of the various subscription departments seem to operate in the same way, so I have developed a set of Standard Operating Procedures for anyone contemplating setting one of these up:

· You have to snag the first-time subscriber by making it essentially free. The classic was the school fund-raiser, still a good get, but airline miles work well too. Find a list of dormant frequent flyer accounts – these are worthless because the account holder no longer uses that airline but he doesn’t want to see the points go away. Offer a list of magazine subscriptions for points and you have him.

· You can now sell the list of magazines that the guy ordered to a direct mail company. This will cover what you need to pay the airline for the miles

· When he has subscribed, send him lots of copies of the magazine instantly, recent enough that they are almost, but not quite, back issues. You can probably go back a month or two and even three is worth a try. These copies were going to be pulped anyway, and you are pulling forward the time when you are going to get real money from him.

· After three or four issues have gone out send him an offer to subscribe for another year at a deep discount, especially if he commits for 24 months.

· Start hitting him up for gift subscriptions. Depending on the magazine you can target these to specific dates. Wine Spectator is a favorite Fathers’ Day pitch. Anything slightly old-fashioned works for Mothers’ Day. As soon as you hit September out come the holiday gift subscription offers, and you can hit him up with “That Special Person” any time during the year.

· By now he has had six or seven issues (half were back issues) so his subscription is in imminent danger or expiring. Send out a reminder, but reduce the discount. He won’t know anyway. Slow down the deliveries a bit, now. You want him to see the issue in the stores before he gets it in the mail. With luck he is hooked and will end up buying next month’s issue for full cover price when on a business trip somewhere. This is gravy! The subscription issues he gets in the mail will have an ominous countdown insert “Only five issues to go!”. (By the way, make sure these aren’t just cards stuck in there. The experienced target simply shakes his new issue over the trash bin. You want them stapled into the binding so they appear at two places in the magazine).

· Now start sending out the new year’s subscription demands in the form of a friendly-looking reminder, but in an envelope like a bill. Have a box he can check to renew and include a pre-paid envelope. Chances are he will just do it along with his bills. You are vulnerable right now.  This is the danger time and it is vital that he hold out and then renew with another school fundraiser.

· If he doesn’t renew, send him one more copy after the expiration, “as a courtesy”, and then follow it up with a stern-looking invoice. “You may have overlooked our recent invoice…” Most people will cave at this point.

· Once you have got him to subscribe for one year at full freight you are home free. You can now start hitting him up for life insurance and other stuff, as you have a legitimate business relationship.

· Start over again with the gift subscription offers…

All-in-all, this is guaranteed to work.

I posted a few days ago about people finding it hard to accept scientific results, preferring instead to rely on politicians and preachers. Here is a splendid example on the subject of Heliocentrism, apparently in support of Senator Sam Brownback’s presidential ambitions., Geocentrism was discredited so long ago that it has become completely obscure, but the author also dismisses pretty much everyone from Newton to Einstein via Darwin, Copernicus and Kepler. I originally thought this must be some form of satire, but I think is genuine.

I am moved to create a new category.

You can tell a lot about a leader by the appointments he or she makes.  For the President of the United States, filling vacancies is arguably the most important aspect of the job, since many appointees are in place long after the president’s term has expired. Supreme Court justices are the most obvious examples, but the Chairman of the Federal Reserve and the President of the World Bank usually occupy their offices for multiple administrations, Paul Wolfowitz notwithstanding. We tend to believe, or maybe we just hope, that the process is objective, independent and designed to find the best-qualified candidate. This administration and others have revealed that this is not always the case. What do leaders really consider when they make these decisions?

• Patronage.   An executive usually has a coterie of advisers and associates who have all helped him advance. These people are not highly paid. They see their current role as a stepping stone to greater things. An incoming president will introduce people from outside his circle, but the bulk of the plum jobs are seen as rewards for loyal followers. Harriet Myers must have felt that her loyalty was being appropriately rewarded…

• Protection. Sometimes you need a colleague you can count on – a person you can depend on completely. You don’t know whom you can trust in the new organization, but you have one associate who always tells you the truth – or at least that part of the truth you want to hear at the time. I have known several CEOs who went from position to position with the same second-in-command. It wasn’t always the case that he could do the job very well, but he didn’t rock the boat, and he was a good source of information about what was going on in the organization…

• Neutralization. On occasion a leader will use a top position to silence a potential critic. After a bruising battle for the leadership, typical in large companies, the loser often gets a substantial consolation prize. This appointment keeps him or her at least ostensibly loyal to the new leader and shuts down the election campaign.  Appointing a former opponent can also mollify a constituency that supported the wrong candidate. There is no guarantee that the disgruntled loser will keep quiet, but criticisms will at least be off the record. It might seem that when Tony Blair gave Gordon Brown the Treasury it didn’t keep him quiet, but it probably stopped him from mounting a serious leadership challenge during Blair’s ten years in office, and it gave Brown something to do between meals.

• Competence. It is always nice to have someone who will be good enough at a job to forestall embarrassment. You don’t want someone who will overshadow the boss, though. Given all the other the priorities in filling positions in the leaders, job performances that outshine the leader are not so common, unless the latter is particularly incompetent.

Unfortunately, chief executives place many factors above demonstrated ability to perform a job.  Given that it shouldn’t be too surprising that many executive appointees perform so poorly.

I have been following, as is surely obvious, the saga at the World Bank.   For a closer , more informed, view click here, where they were kind enough to quote me.  It would be fair to say that the contributors seem unenthused about Mr. Zoellick.

Here is an interesting article, on a site called Edge that I got to from the excellent Arts & Letters Daily, that explores why some people find scientific ideas so difficult to accept. It is worth reading the entire article, but one conclusion is that on the whole scientists do not enjoy much of a position of authority in modern America. Consequently, when scientists pronouncements go counter to generally held, intuitive, but completely wrong ideas about the role of design in the origins of life, people tend not to give science much credence. The authors demonstrate that this extends to simple misperceptions about how objects move, a field that is subject to a level of objective proof.

An unwillingness to accept blatant appeals to authority sounds somewhat healthy, but this is a selective unwillingness. What puzzles me is that the authority of preachers and politicians seems able to trump that of scientists. This seems to be peculiar to this country and according to the authors, accounts for why the theory of evolution is accepted by only 40% of the adult population in the United States. Of 34 countries sampled only Turkey has a lower percentage.

I wonder has this always been the case. If this is a recent phenomenon, what caused it?

There has been much commentary about the Creation Museum, an institution which opened recently in southern Ohio, but little has been said about what this implies for economics, science, business and society at large.   

At one level it is all somewhat encouraging.  Clearly a determined person can get almost any enterprise off the ground in this country.  Whether there will be a market for this is less certain, but if there is it is perhaps another small victory for private enterprise. 

Less facetiously, the emergence of this museum and the degree of publicity it has received both nationally and internationally is worrying.  The people who are responsible for this are trying to assume a mantle of scientific respectability, and this is bad for the rest of us, even if, as will surely be the case, their efforts will be entirely fruitless.

If one had any doubt about the desire by the creationist wing to put a scientific stamp on their beliefs, the Creation Museum should settle the question. Behind this costly effort is a desire for acceptance.  Creationists don’t seem to want the recognition and respect of established scientists, on whom they regularly pour scorn.  Instead, they seem to want acceptance from the public as representing legitimate scientific thought. 

Before going any further I should first declare my colors: I am entirely sure that creationism is an essentially religious belief.  The young earth variant of creationism as espoused by the founders of this museum is contradicted completely by a vast body of unconnected scientific evidence.  No reasonable, well-educated and intelligent person doubts this, and no serious scientist gives literal creationism any credence whatsoever. So at one level, the whole thing is a bit of a joke. The museum will have no effect on accepted scientific ideas.  The only people who will emerge convinced by this depiction of the origin of life will be those who know absolutely nothing about the accepted explanations – the scientific illiterates – or those who are familiar with those explanations but dismiss them on religious grounds, i.e. the zealots. 

Nevertheless, what bothers me is the advance of the idea that what one believes is more important than what is actually the case.  This entire venture is the diametric opposite of pragmatism, and pragmatism is what we need much more of if economies and societies are to progress. Given that a majority of people in this country believes that the fairy-story portrayed by the Creation Museum is broadly correct, the picture is quite bleak.  When it comes to issues of what used to be called political economy, where is this majority going to side?   Not with the facts and the data, you can be sure. This is a manifestation of a tendency to abandon real experience and objective data in favor of a system of belief, a system of economics, for example, as the believer wishes it to be, not as it is.  This negates the credibility of the professional who has made a life study of a subject, whether that might be economics, geology, biology or genetics.  In fact, I wonder why someone would really want to go into any demanding technical field if any new ideas that might be developed can be trumped by this faith-based, ideological way of looking at the world. 

All good business people, all great economists and scientists and all effective politicians are pragmatists and empiricists.  The world is the way it is, notwithstanding any theological mindset we bring to trying to understand it.   If we want to affect any useful change we need to accept things as they are, not as we would like them to be.   This is the defining characteristic of reasonable people. 

Down the other way lies chaos, turmoil and ultimately a type of self-destructive individual and collective deceit that will drive civilization back, not forwards.

Those of us who thought the Iraq war was going to be a disaster failed to persuade the majority. Those who believed that the war was going to be a success or at least that it was a good idea, now recognize they were unthinking or deceived. There aren’t many good feelings going round this Memorial Day weekend.

Even people who were against the war wanted it to go well, or at least for some good to come out of it. As we all gradually became aware that the adventure had transformed itself into a disaster, this single ambition shared by almost every American, that all the deaths should achieve something positive, seems now quite unrealistic.

I was struck how many cartoonists, who often accurately identify public preoccupations, reflected yesterday and today on the death toll.

People are now in one of three camps: those who want to quit Iraq now, those who want to quit later and a final diminishing element who feel that things will in some way turn around and we will secure peace and victory. Even the supporters of the “surge” are really proposing quitting later. I wonder if there are any genuinely informed people in the third opinion group; if so, perhaps they can persuade themselves that the war avoided something worse. Something worse is increasingly difficult to imagine.  Public opinion will gradually coalesce – the two groups who support withdrawal will gradually coincide on when is a good time to leave Iraq and declare the war over. At that point public opinion will become decisive.

An article in the UK newspaper the Daily Telegraph, entitled Bush gets ready for Iraq U-turn by Brown predicts that the next prime minister of the UK, widely expected to be Gordon Brown, will announce a withdrawal of British troops within the first 100 days of taking office. This will be around the time that General Petreaus is expected to deliver his assessment of whether or not the surge has been effective. If the UK withdraws its troops and the increased US military engagement is not seen as definitively succeeding, the pressure on the Bush administration to start some form of disengagement will become impossible to withstand. Republican members of Congress have already indicated that their support cannot be taken for granted beyond the summer.

What will happen after a withdrawal is not entirely clear. Central government authority in its present form cannot survive, so the country will either fracture following a period of ethic cleansing or a strongman will emerge, most likely from the Shi’ite community. It is not impossible to imagine an Iraq that is hostile, nuclear-armed and subject to Iran. That such a comprehensive catastrophe faces us, brought about at the expense of so many lives, makes for a very sobering Memorial Day weekend.