One reason the EU doesn’t deserve the Nobel Peace Prize

Unlike some, I think the EU winning the Nobel Peace Prize is a good thing. Europe was the most warlike place on earth for millennia. I have trouble thinking of somewhere more incessantly violent than pre-1945 Europe.

The Americas, Africa and Australia were both too sparsely populated for properly sustained warfare of the European variety. They also didn’t have the technology to produce viable killing machines. South Asia and East Asia, e.g. the Muhgals, Han etc. settled into imperial systems in which a hegemon acted arbitrarily violently, but which was never as dangerous as Europe”s state of war.

Things got a bit peaceful from 1815-1914, but once Europe had run out of non-Europeans to kill they went back for a hundred-year-giant-slaughter-anniversary bash which they ran, with intermission, from for about the next 30 years.

But, suddenly, since 1945, we haven’t really killed each other that much – apart from the Russians, but we’ve always thought they were a bit odd. In my view somebody needed an award, the EU is good enough. Plus, it has at least been pretending that maintaining the peace is what it was trying to do.

However, a couple of days before EU was awarded the prize, they did something which made the world a marginally more warlike place. Europe killed the BAE/EADS merger. BAE is synonymous with the British military-industrial complex, EADS is the same for continental Europe. A merger would have created one of the largest producers of military hardware in the world.

By killing the deal Europe has managed to prevent the management of BAE and EADS from rushing headlong into a pointless merger and stopped them from destroying millions of pounds worth of weaponised wealth.

Mergers have a terrible history. Rather than enabling synergies and economies of scale or scope, mergers often leave everybody worse off than if the firms had remained separate. The juries out on why mergers so often go wrong; it could be managerial hubris; it could be the winner’s curse wherein the winner is the person who bids ever so slightly too high; it could be something more Hayekian, in that people underestimate the complexity of the larger company.

In any case, I thought it was likely a BAE/EADS merger was a value destroying proposition. Both BAE and EADS are tightly linked to their sponsor states. A merged company would have had to answer to the British, the French and the Germans. Can you imagine them getting anything done if you had those three bosses? It would be a recipe for disaster, but disaster in the “killing things” supply chain is a net plus for the world, so I thought it odd to see these two stories come out at about the same time.

Oh, and why would two medium firms merge into a large one if it is such a bad idea? Well, its a bad idea for the owners, but for the management

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When Amazon own everything

A couple of days a go, my friend Linn sent me an e-mail, being very frustrated: Amazon just closed her account and wiped her Kindle. Without notice. Without explanation. This is DRM at it’s worst. 

I cannot verify whether the e-mail exchange actually happened or whether both parties are being honest, but it is instructive of the trouble with digitally “owning” something.

In digital form, in extremis, you own very little of what you think you own. A lot of the time you are merely leasing the material. So long as nothing goes wrong, and so long as you stay onside with the usually unburdensome terms and conditions nobody will notice.

For example, most music, films and books bought online are in fact leased. You have full use rights of the material you purchase but you don’t own it, and your use rights can be revoked if you transgress the terms and conditions nobody reads.

Most people don’t know this, and this is why people don’t mind. However, as seen at the link at the top of this page, when you break, or are thought to have broken, the terms and conditions of the lease it can be cancelled and all the content you thought you owned will vanish.

This points to one reason people pirate material. Pirated material is material you own, unlike most of that provided commercially. Paradoxically, it is in the real world that ownership allows anonymity. In reality, we are all very traceable on the internet. Each click or digital transaction involves electronic data passing between two known, verifiable and unique IP addresses.

When you buy something in a shop in the real world you usually don’t know where the other guy lives, but on the internet you know just where their computer “lives.” That means if you annoy the person from which you bought a game, song, book or movie they can slip in and silently take what you bought.

The internet and tech sector is growing much more quickly than the rest of the economy. That means that digital goods are becoming a bigger part of what we own and these problems are multiplying. As the digital world expands more and more of the valuable things you own could end up being leased and power will pass from the state and from individuals to private companies.

Kinda creepy when you think about it.