Sunday, August 26, 2007

Home Thoughts From Abroad

Lamborghini style police

Didn't encounter too many gaudy melon-flowers, but did find...

1. The Wacky Races

Driving in Italy is always a life affirming experience, especially in towns and on those twisty mountain roads. The combination of wild dodgem drivers, suicidal scooterists, and sheer naked machismo is a rejuvenating reminder that, for all our Home Counties good sense, actually we are still alive. I stay calm by pumping up the expletives, laughing hysterically, and hyperventilating.

With every outing a whirlwind blur of near misses, we guessed Italy's road fatalities must be catastrophic. But in truth, they turn out to be not much different to international averages. In terms of annual fatalities per million population, they clock up about 90, just above France and Spain, and just below Austria and New Zealand (see here). That's miles less than the Yanks, on 150, and the Ruskies on a terminal 240.

Of course, we Sensible Timmy Brits- 172mph Porsches aside- are right down at the bottom of the league, with only 50 fatalities per million population.

But wait, you say. Isn't the Pope Catholic? Aren't Italians car-mad? Surely, fatalities per head can't be a fair comparison, because they have far more vehicles per head than we do.

Yes, they surely do. Whereas the average Brit - children included - runs only about half a vehicle, the average Italian runs getting on for three-quarters. And when you take account of that, looking at the league table of fatalities per vehicle (see here), it turns out those hot-blooded Ferrari F1 wannabes* are relatively safe drivers:

So whereas the US loses nearly 200 people per million vehicles per annum, the Italians lose a mere 130. That's only marginally worse than us on about 100, and just one-tenth of the eye-popping 1222 pa Russia loses.

Conclusion? Although you feel like you're never more than a hairs-breadth from motoring disaster, and although you should never even consider driving in Italy without fully comp insurance (see below), it's actually not much more dangerous than Surrey. Maybe.

One other thing- why do successive British governments spend so much money and effort seeking to cut our road fatalities when we are already among the very safest countries around?

*F1 trivia- they may all drive like drop dead Formula One contenders, but in reality no Italian has been F1 champ for over half a century (see here). IIRC Ferrari even had to recruit an icy Me109 pilot to revive the marque.

2. Voting by wallet

For the last quarter century, Tyler has been a regular customer of Hertz car rentals. But alas, both of this summer's rentals have now been bad experiences.

To start with, there have been lengthy delays at pick-up, seemingly the result of serious undermanning. Naturally enough, the stressed-out staff have been singularly unhelpful - brusque even.
Then, there have been unexpected additional charges presented when you finally make it to the desk. Their standard collision damage and theft insurance covers have always had an excess, but those excesses have now ballooned to well over £1,000. Since only a fool would drive the wacky races round Naples carrying that sort of liability, that means you're more or less locked in to buying their excess waivers, at around £12 per day.

Refueling charges have also gone up, pressuring you to take their "special price" deal for refilling the whole tank- another forty odd quid- whether you empty the whole tank or not.

The old Hertz always imposed insurance excesses and refueling surchages of course. But not on this scale. And the old Hertz was much sharper on customer service. Not to mention supplying cars with all the standard appointments, such as a fuel filler cap and a manual (both missing on last week's hire).

So why's this happened? Here's a clue- in 2005 Hertz was bought by a private equity consortium, and just seven months later flipped into an IPO. The private equity boys did very nicely out of it, thank you very much- they recouped $1bn of their intitial $2.3bn investment within just six months via a special dividend. Or as Business Week put it, by "backing up the Brinks truck".

But of course someone has to pay for the huge debt mountain taken on to fund the deal. And that someone is ultimately the customer. Tyler and all those other poor schmucks in the one hour queue at at the Naples Airport rental desk, faced with coughing up an unanticipated extra £150 each for cars that have bits missing, we're the ones who have to pay.

Except... except... there is one teensy flaw in this brilliant plan: each and every one of us punters in that queue- and I'm guessing thousands of others- have sworn never ever to use Hertz again.

Because you see, we're the customers. We always retain the right to vote with our wallets. We want value, and we simply don't care how much LBO debt Hertz is struggling with, or any of the other manifold problems they may have. If they don't deliver value, they don't get our money. It's that direct, and that powerful.

That's how those brilliant magical markets work.

Now just take a moment to compare that power with the position of, let's say, a typical NHS customer. Just like us ex-Hertz customers, the NHS customer pays plenty for the service. But unlike us, she has absolutely no control over it. She may not like the fact that local maternity facilities are being abolished as part of a drive to fund a huge PFI debt mountain. But she can do SFA about it.

Vote with her wallet? Not permitted, by order of the Commissars (unless your wallet is big enough enough to pay twice, that is).

Write to her MP? Heat maps aside, don't make me laugh.

Vote out the current Commissars and replace them with new Commissars? Apart from the fact that you can only do that once every four or five years, and apart from the fact that your vote only counts in about 100 constituencies, and apart from the fact that you're voting on a whole stack of other things besides maternity provision, all the Westminster parties' NHS policy platforms are virtually identical. You could swap the names round and I'd defy you to spot the difference.

So our NHS customer is stuck. Locked in to a health system that costs a packet, routinely underperforms (eg our abysmal cancer survival rates), and is lumberingly unresponsive to her wishes.

No wonder it hertz. (Sorry).

3. Splendido... but how can it possibly work?

We love Italy. The warmth... the life... the fantastico posing police uniforms... it's all so brilliantly chaotically different to Guildford High Street.

But how does it actually work? How can it work?

On one level of course, it doesn't. According to the latest OECD stats, Italian per capita GDP is between 12 and 18 per cent lower than ours (depending on whether you convert using current exchange rates or Purchasing Power Parities).

Ah well, you say, that's because they work much shorter hours, so they're taking their incomes as sun-kissed leisure. And who wouldn't? We tight-assed Brits work far too hard.

Which sounds entirely plausible, until you look at the facts. The OECD data tells us that whereas the average Brit works for 1672 hours pa, the average Italian puts in 1815 hours- about three hours a week more. The reason they're poorer is not because they put in fewer hours, but because they're significantly less efficient (econonerd point- virtually alone among developed economies, Italy's Multi-Factor Productivity has actually fallen over the last decade- their efficiency levels have gone backwards- see here).

Longer hours, lower incomes, and higher taxes- which is why Tyler's Italian barber says there's no way he'd ever go back to live in Naples.

Great for a holiday. Not so great as a workplace.

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