Archive for June, 2012


Innovation Fatigue in Portugal: The Burden of Eurozone Bureaucrats

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Dave Galland’s recent column at Casey Research discusses the malaise that has swept Portugal, resulting in utter discouragement across the rising generation. In spite of the beauty and natural richness of Portugal, the entrepreneurs and innovators of the future tend to be looking to leave as quickly as possible. What has gone so wrong? Casey suggests that the innovation fatigue factor of stifling Eurozone bureaucracy and oppressive regulations have gutted Portugal’s spirit.

‘ll give you a hint by relating that as a condition for inclusion in the Eurozone, functionaries in the European Commission based in Brussels required the Portuguese to retire and destroy a large percentage of their fishing fleet. As I understand it, the commissioners felt that the size of the Portuguese fleet coupled with the sea-faring nation’s long history in commercial fishing gave it an unfair advantage over other nations in the Eurozone. They also helped rationalize the demand to burn the boats by saying that the Portuguese fishermen were putting the ecosystem of the Atlantic Ocean at risk.

The result of forcing the Portuguese to burn these tools for capital creation is that since joining the Eurozone in 1986, Portugal’s fish harvest has effectively been cut in half. I was told that the country is reduced to buying many of the sardines that find favor in the local cuisine from the Spanish fleet.

The Euro-meddling doesn’t stop with fish. The Portuguese are mandated to trash a large amount of their annual orange production lest they exceed the quotas set in Brussels. Apparently the Spanish, ever attuned to capitalize on Portugal’s mandated misfortunes, buy the unsellable excess oranges and use them to make marmalade… which they then sell back to the Portuguese.

Of course, actions have consequences. One of them has been that Portugal has run a trade deficit for about twenty years now – in other words, starting soon after joining the EU in 1986.

And even though the country (and the continent) is tight in the grips of the most dire crisis in living memory, the EU commissars are still at it. In fact, as I write, Portugal is being forced by the European Commission to kill a large percentage of its chicken population, with the slaughter to be completed over the next month. This by virtue of the ironically named EU Welfare of Laying Hens Directive, forbidding the continued use of conventional egg-laying cages.

Once the chickens are destroyed, and provided the Portuguese egg farmers can ever find the capital needed to rebuild, they will have to build to the specifications of the EC Directive that requires that all laying hens must be kept in “enriched cages” providing each hen with at least 0.8 square feet of cage area, a nest-box, litter, perches and claw-shortening devices, allowing the hens to satisfy their biological and behavioral needs.

Tragically, as Europe stumbles in a massive economic crisis, the bureaucrats aren’t backing off, but increasing the burdens on the backs of the people and making it harder than ever for business to grow and innovation to thrive. This is sadly typical of minds disconnected from reality and deaf to the voice of innovators, a voice that will become largely silent if the burdens on their backs aren’t eased.

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Punishing Innovation: Lessons from the Court Martial of Billy Mitchell

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A grand old movie is “The Court Martial of Billy Mitchell” starring Gary Cooper as the aviation innovator Billy Mitchell. Billy Mitchell has a major airport named after him in Milwaukee and there is a small museum honoring him in the airport. Today his name is honored as one of the great champions of innovation that led to the United States developing air power for military advantage. His patriotism and his commitment to progress, though, resulted in a court martial by those in the military who were threatened by Mitchell’s ideas regarding aviation.

After World War I, hundreds of airmen in the military, including many friends of Colonel Billy Mitchell, were dying due to poor maintenance of the fleet. The military was neglecting aviation. The politically powerful Army and Navy saw no need for an airforce. Only a handful of functional aircraft were in the US military. But Mitchell had a vision of the future and recognized that aircraft must be an essential part of our future military strength. He argued, he cajoled, he carried out dramatic demonstrations of what aircraft could do, all at great risk to his career. He also predicted that there would be a military strike against us at Pearl Harbor, and that we needed to prepare more vigorously. His efforts to bring change resulted in court martial and a dramatic trial.

The opposition to military innovation was so great and yet his desire to make a difference was so strong that he chose to give up his military career and push for aviation as a civilian.

If the military had listened to Colonel Mitchell earlier, if there has not been so many innovation fatigue factors hindering Mitchell, many lives might have been saved.

Thank goodness, though, that Mitchell, like many great innovators, endured and was willing to sacrifice to bring about change. He should be counted as one of the great heroes of the U.S. and of innovation.

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