Aquascutum: shielding a brand from financial storms

Aquascutum scarf, showing its club check
Image via Wikipedia

Aquascutum, venerable maker of stylish raincoats for over 150 years, is in administration. As this is the second time in almost as many years that it is in stormy financial waters, it may be said that they are better at shielding you from water than they are at protecting themselves. At time of typing, YGM, the Hong Kong based owners of Aquascutum’s Asian rights are exploring the possibility of buying the entire brand.

Sadly, one suspects this may result in downward pressure on quality in order to restore margins, and a general exploitation of the brand. As an owner of Aquascutum raincoats and overcoats, I would personally regret such an outcome. But are there any other possibilities? And why has Aquascutum been unable to be profitable?

The latter issue is fairly easy to understand. Aquascutum has always been an mid-to-upper market player, heavily focused on the rainwear segment. That is the model that kept in business for so many decades but it is no longer sustainable for two very simple reasons; fewer men wear raincoats regularly and the middle-market in general has been squeezed in favour of a polarisation of sales towards either niche high-end luxury brands or bargain basement low-cost retailers. This reflects the current development path of our societies in general. Aquascutum has been stuck in a no-man’s land.

It has tried various strategies to escape this trap, but they have been highly contradictory and poorly followed through. For instance, it spent a lot of money developing non-rainwear lines, but never marketed them aggressively. And it attempted to position itself as a luxury brand while having more discount outlets in its portfolio than it has proper shops, not to mention the less-than-stellar concessions it has in too many middling department stores.

It has never been able to decide what it really wants to be, diluting the brand’s identify in the eyes of consumers across the world.

A rescue strategy will have to make some fundamental decisions: do they want to take Aquascutum upmarket? Or do they want to make it a mass market brand?

In my opinion, it would find life as a mass market brand impossible. Theoretically, production could be aggressively offshored, more lines added and an attempt made to milk any latent value in the brand to the general consumer by having a small halo line of top quality products above a large range of far less impressive merchandise. This is the Burberry school of brand development. It has worked for them (more or less), but it is expensive and risky, especially with Burberry already a large presence in the same marketplace. I fear Aquascutum has simply left it too late to compete with them in this arena.

It would be better served by shrinking and focusing on a pure luxury identity. Keep production in England, focus on rainwear/outerwear/related items, drastically reduce the number of discount outlets & department store concessions, and ensure the one or two full retail locations that remain exude quality, brand pedigree and personalised service. Turnover would be a lot lower, but margins could be restored and the brand might have a fighting chance. Aquascutum now needs to be aspirational luxury to survive.

Are there any other options? Has Aquascutum simply left it too late? And is there life left in the middle class, mid-market segment generally?

Italy. Or, How Markets Got Their Groove Back.

Image via Wikipedia

Two Eurozone governments toppled in almost as many days. First Prime Minister Papandreou of Greece was forced to resign, and at time of typing we hear that Prime Minister Berlusconi of Italy is finally throwing in the towel. The common factor? Despite bluster, both eventually kow-towed to capital markets.

Markets are much misunderstood & maligned. They are either perceived as Machiavellian, plotting complex geopolitical outcomes from the shadows, or as irrational, disregarding long-term economic fundamentals in favour of short-term risk-taking. Markets are a reflection of the sum of a large number of disparate actions. As such, they are subject to the emotional temperature of those making deals. Fearful traders make for volatile markets.

Since the global financial crisis first hit in late 2007, those traders realised en-masse that something had gone dreadfully wrong. The complexity of some of the financial vehicles, especially in securities markets, led to an inability to accurately price risks. Accurate pricing of risk is an essential of any market, from the man on the street choosing how much a used car is worth, to an investment bank deciding what a trillion-dollar collateralised debt is worth.

That inability to price risk shook confidence in the entire financial system, with results we’re all familiar with. Far from being Machiavellian geniuses, traders are all too human. They became extremely fearful to trade with, well, anyone. They lost the ability to gauge what was worth investing in and what was not, and in their fear desperately turned to politicians and governments to solve the problem.

There is something subtly different in the air this week. The repeated failure of those politicians to restore confidence, most especially in the eurozone but also in the USA, has caused something to snap. Market have gone from childlike fear to doing their basic job: pricing in risk. The cost of Italian government debt rose to near-unsustainable levels on the back of prolonged shilly-shallying by the Berlusconi government, prompting his slow-motion fall.

This is a restoration of moral hazard in markets for which we should all be very grateful, as it is the first sign in over four years of a return to some degree of normality in how markets are supposed to work, as abnormal and dramatic as the events themselves are. Unpopular as they currently are, markets are our least-worst way of judging monetary value. There is something potentially cathartic and empowering about their net actions this past week, which may encourage sustainability and further progress in the months to come.

Governments, beware.

Measuring Power

Image by JAS_photo via Flickr

Forbes magazine loves lists. One of their annual features is World’s Most Powerful People, the latest revision of which has just been published. The names on the list change occasionally; the order of the names changes more frequently. But what is power, why does it matter, and can it really be measured?

For Forbes, a business-orientated publication, the answer is a calculus of the financial, human and physical resources an individual can draw upon. Unsurprisingly, their list is therefore dominated by global political and business leaders. This demonstrates an important feature of power: it is as much in the eye of beholder (or in this case, beholden?) as beauty is.

On a global scale, Forbes’ list is not a bad attempt. If the world is a pond, Forbes measures the potential ripple effect created by an individual landing on its smooth surface. Current #1 Barack Obama is undeniably a bigger stone to throw in than a random African villager.

Another analogy would be the distortion of the fabric of space-time by large celestial objects. Massive bodies like the Sun or Jupiter create deep gravity wells, drawing other objects into their influence, to the point of bending light around them. At a gravitational extreme, a black hole creates a gaping maw that does not permit anything else to shine. People can create a similar effect on those around them.

One theory of planet formation is that small particles gradually accrete together, eventually forming planets. This analogy allows for an understanding of how large organisations wield power. Obama is not powerful because he is Obama; he is powerful ex officio as a result of the combined wealth & military might of the United States, and there are certainly those in the world who, rightly or wrongly, like to complain that the USA doesn’t let them shine.

Maintaining the strength of an organisation is therefore one method of its leader maintaining power. A more sophisticated analysis would point to the increasing importance of networks rather than organisations. To use Obama again, the power of the President of the USA is magnified through the network of allied nations whose political favours it can draw upon. On a more modest level, an individual’s power over their own network is magnified if they are the hub or major node of the network rather than a distant spoke.

All these forms of power are extrinsic in nature; they correlate power with the ability of an individual to influence the world around them. I would argue that this is a fundamentally unwise way to measure power.

Why? Because it is ultimately dis-empowering; it is a game no participant can definitively win. It is impossible for an individual to maintain their position at the head of an organisation or network indefinitely; new players keep entering the field, and the field of play itself continuously mutates. Essentially, to play this game requires you to accept a life of running to stand still, akin to a giant hamster wheel. It is not the act of a powerful person to subjugate themselves to a system in this way.

True power is intrinsic. It is the acceptance of self that comes from being able to stop. Epicurus famously said, “I would rather be first in a little Iberian village than second in Rome”, and the logical extension of this is to reduce the circle of concern to that within which it is small enough to remain permanently first. This is of course the individual himself. Mastery over one’s own life & emotions is the real challenge, and true mastery over these domains is real power.

Epicurus goes on to describe the nature of this challenge: “the art of living well and the art of dying well are one”. In other words, in order to achieve mastery over self, it is necessary to come to terms with death and the end of one’s existence. This is easy on an abstract level, and much harder on practical/personal one. Nonetheless, it is good to acknowledge the reality of the problem facing us instead of pursuing the endless distraction of extrinsic power. “It is better for you to be free of fear lying upon a pallet, than to have a golden couch and a rich table and be full of trouble”, as the aforementioned philosopher also said.

As those who know me will attest, I am no fan of a poverty-stricken hairshirt existence. Money is important. It has an undoubted – and powerful – insulating effect, permitting an individual the necessary psychological breathing space required to focus on the self. But if I may be permitted a final quote: “Not what we have but what we enjoy, constitutes our abundance”.

Honey, I couldn’t be happier than if they were based on real grades

Hand-drawn (by one of the negotiators) diagram of the eurozone deal, via Reuters. Note the many question marks...

We have an eurozone deal. The huge sense of relief felt by worldwide markets was almost palpable in its intensity, with global indices soaring in unison.

Of course, it’s a massive temporary fudge with large blank spaces that need filling in over the next few weeks. And in itself it does nothing to address the underlying structural problems of the eurozone (more on that later).

But it’s a lot more than I expected last week, so I’m pleased that enough heads could be banged together to at least come up with something. More importantly, it really felt like some tough decisions had been made.

Which brings me onto the difference between substance and appearance, and the vital importance of psychology in bridging the gap.

The title of this post is taken from the grossly underrated mid-90s movie Clueless. For the uninitiated, Clueless follows Cher (Alicia Silverstone), a Californian high school girl with a talent for manipulation and a fondness for matchmaking. The plot is loosely based on Jane Austen’s Emma but is shrewd enough in its updating to stand strongly as a work on its own.

The title quote is spoken by her father, proclaiming his delight at her ability to deftly manipulate her way into getting higher grades than her academic ability deserved, by pairing up two of her hard-grading but lonely teachers, improving their mood, thus making them more lenient graders. Reality becomes be a malleable function of applied psychology.

The movie has a lot more of these satirical, bitingly-accurate little asides. For instance, when Cher is asked her opinion of violence on TV, she replies, “Until mankind is peaceful enough not to have violence on the news, there’s no point in taking it out of shows that need it for entertainment value”. If you’ve never seen the movie, perhaps dismissing it as fluffy/superficial rom-com, you should definitely watch it. It neatly dissects the 90s as Heathers did the 80s, except it does so with affection rather than disdain.

The eurozone deal is currently based on ephemera. It has little real substance to it, as the details of the bank recapitalisations, haircuts and EFSF expansions are yet to be fleshed out. But what it achieves is psychological; it draws a line in the sand around the problem. To paraphrase Churchill, it feels like the end of the beginning. And that may be enough of a psychological sleight-of-hand to persuade markets to react accordingly, which will then translate perception and appearance into reality.

The American investor Benjamin Graham is famous for saying, “In the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine”. What he meant was that day-to-day fluctuations are based on volatile emotion & appearances but over the years, profitable businesses with a future will outperform unprofitable businesses.

For the eurozone to profit from the breathing space granted by the psychological drama of today’s deal, they must turn around their core business: they need to remedy the structural problems of monetary union without fiscal union. There are signs this will happen. EU President Barroso is pushing for deeper fiscal integration within the eurozone. Essentially, the richer countries will gain some control over the poorer countries’ budgets in return for helping them fund their economic deficits. This would certainly help mitigate the structural problems, though of course no-one really wants to talk about the potential democratic deficit created by such a move.

On a more parochial level, the UK may potentially be able to get the best of both worlds, benefiting from a more stable eurozone while remaining outside it, and retaining relative economic independence while still being part of the EU single market. It’s an exciting, if unpredictable, situation. There is a saying, popularly though inaccurately attributed to an ancient Chinese curse, “May you live in interesting times”.

We are certainly doing that. Better try to enjoy it.

Rebuilding Greece

As global markets rise on the hope that the Eurozone may finally be mustering the courage to grasp the political nettle of the problems generated by a single monetary policy but multiple fiscal polices, it seems appropriate to post this photograph of the Parthenon being rebuilt. Taken during a recent break I enjoyed in Athens & the Ionian island of Kefalonia, the imagery of the Parthenon gradually being reconstructed, reversing the damage caused by years of neglect, resonates neatly with the wider challenge faced by the Greeks.

This was my first visit to Greece in many decades, and much has changed. Despite its current woes, it is undoubtedly a richer and more sophisticated country than I remembered. It has benefited from the influx of funds brought about by EU membership and the cheap borrowing costs it initially experienced as a Eurozone member. The debt has caught up with it and my personal opinion is that all the current austerity measures & bailouts are simply buying time to manage a more definitive restructing of the debt in due course. Call it a default if you prefer, for that is what it will be in effect, but it will be done in a contained way once the rest of the Eurozone has finally erected sufficient economic defences to calm any subsequent financial concern.

Greece itself faces a long period of reconstruction. It is a proud country, with a glorious past (some aspects of which I intend to blog about soon) but it must realise that many of its current problems are of its own making. Poor tax collection, profligate spending and overgenerous public sector conditions are an unsustainable and toxic mix.

I witnessed first-hand the anger and sorrow that the population are feeling. From large protest marches watched over by riot police, to individual stories of woe such as the young museum worker who hadn’t been paid in four months, Greece is struggling to transition. The risk is of an increasingly angry population causing severe unrest requiring military intervention, and a subsequent coup. This may seem outlandish speculation but it is only a few decades since Greece was under military rule. With the current political class widely reviled, it may not take much more pressure for the public to permit a coup.

The following images of the Parthenon show more of the restoration work taking place. I hope the Greeks can manage to rebuild their country with equal care.

Euro Farce

The Eurozone remains en route to implosion. But it’s a slow-motion train wreck.

I first blogged about this almost exactly one year ago, and again last November; I doubt today’s post will be my last. I won’t rehash the detail from those posts, but reading them in light of ongoing events proves their points.

Eurozone central bankers and politicians have consistently failed to definitively address the fundamental structural economic flaw generated by a unified monetary policy and nationally disparate fiscal policies.

That’s because there is no way to address this mismatch, short of unifying fiscal policy to a much greater degree than stronger countries’ economies (and voters) are prepared to accept. Or breaking up the monetary union, which Euro politicians and central bankers refuse to accept.

Paul Mason, BBC Newsnight’s economics editor, is just one of many journalists now publicly discussing scenarios previously considered verboten. His idea of Euro bonds would be one way of addressing the structural problem, but fails the litmus test, as I doubt it would be palatable to German voters. His final point, quoted below, paraphrases one I made in my earlier articles:

Whether we hit the barriers of political unacceptability or a market attempt to take down the ECB first is a question everybody hopes we never have to answer, but markets have staged attacks on central banks before.

Where I differ from his perspective, is that I hope the question is answered, and soon.

What is needed is clarity and finality, not ongoing slow-motion crisis and farce. Euro currency fragmentation will be intensely painful, but as with a sticking plaster, it’s best to act decisively to limit the overall agony. It’s been over a year since this crisis started, and the hope then was that temporising measures would buy enough time for economies to recover, and that growth would be enough to disguise the underlying problem. If it had happened, it would have worked.

It hasn’t happened, because what Greece, Ireland, Portugal (and Spain and Italy) desperately need in order to grow is rapid and major currency devaluation relative to other world currencies, to make their economies competitive again. They cannot get sufficient devaluation within the Euro, as the relative economic strength of the northern Eurozone countries keeps the currency as a whole moderately attractive internationally. It is falling in value somewhat, despite that, but not nearly enough to save the periphery. The ECB’s recent interest rate hike simply underlines how monumentally destructive the Euro is proving to the peripheral economies, not to mention their citizens.

Solving the problem demands decisive political action to either break up the Euro, or drive the Eurozone significantly towards  fiscal union. Forgive my scepticism but I doubt we’ll get either. Just more muddling through with temporary bailouts and other weak measures. In short, keeping fingers crossed, hoping it buys enough time for natural growth to kick in, and praying the market is too stupid to see what’s going on in the meantime.

Hmm, good luck with that…!

Mickey Mouse, Mammon, and the Pope

Disneyworld, Las Vegas, and the Vatican City. Three disparate locations; one shared phenomenon.

At Disney, it’s parade-time; in Vegas, it’s in effect as you walk onto the floor of a casino and observe the players; and in the Vatican City I saw it a week ago as the Pope was driven around St Peter’s Square.

All three places become home to communal acts of idolisation and worship. Despite different form, the essential emotional experience to participants is identical. The three locations are each overwhelmingly artificial; designed and built purely to facilitate worship. This deliberate other-worldliness is enforced by a shared obsession with pristine cleanliness within their borders, and a rigorously enforced exclusion of competing idols. Even the decor is carefully chosen to aggrandise the object of worship. The ceiling of the Sistine Chapel, the tromp l’oeil clouds of Caesar’s Palace, and the fairytale castle of the Magic Kingdom all fulfil the same purpose.

It is the human condition to crave a shared spiritual experience and anyone watching the Champions League final earlier this evening saw football provide the medium, and Wembley Stadium the setting, for a similar emotional experience. It is a desire to be part of something bigger than oneself, and so achieve a sense of immortality and overcome the transience of life and the permanence of death. Religion, Mythology, Folklore, the idols of corporations (including the famous Mouse), and even more abstract concepts like Money, all fulfil this tribal need of allowing the propagation of a cultural meme to the next generation.

Later on the same day I saw the Pope, I was mulling over these ideas while sipping espresso in the Piazza Navona and watching tourists and locals go about their day. What were they really achieving? What was the fundamental meaning of all this travel and pseudo-pilgrimage? It reminded me of the concept of “bucket lists” and their wistful attempt to apply some quantitative criteria to measure the significance of a life. Is it really enough?

It’s a very human thing to want to be able to say you have achieved something in life, even it’s just to have been happy. People talk about the importance of “a good death”, sometimes equating it to a painless sudden death at an advanced age. But I rather think it’s more about achieving a sense of acceptance about death: what Erikson would describe as having enough Ego Integrity to no longer give death a sense of importance in life, and so no longer need idols to worship.

Why do you take photos?

Image by Capt Kodak via Flickr

Watching the amusing Business Nightmares (BBC2, Monday), the interview with a former senior Polaroid executive stood out. Polaroid is of course a company whose core product simply became obsolete for the mainstream user. He commented: “We weren’t able to see that people wouldn’t want a hard copy print; it sure came as a heck of a surprise that people wouldn’t want one…”

Then he paused and sheepishly admitted “But I don’t either”!

For many, the physical photo album has indeed become quaint, but let’s face it, those physical albums were only rarely looked through anyway. Are their modern digital equivalents viewed more, for all their greater accessibility? Probably, but I suspect there is still only a spike of initial views and then increasingly rare subsequent views.

Some photographs are taken with artistic aspirations, though perhaps pretensions is a more accurate word for the many taken with this intent but in the absence of talent. Others are taken for purely documentary or illustrative purposes in mind, be they journalistic or commercial in nature.

But the majority of photos are simpler snaps; taken to solely to mark a transient experience and commemorate the passages of life’s rituals. The documentary quality of the image is almost irrelevant in these cases; the emotional power of these snaps are nearly all in the acts of taking and sharing the image. I don’t Facebook myself, having an aversion to acquiring yet another time sink, but I’m struck by the avid taking and sharing of images by those who are on such social networking sites. The sharing of a photograph has an interesting dynamic tension: it works to define the sharer’s identity, but simultaneously the highly communal act requires others to pay the photograph attention to render it this definitional power. The photograph can thus be seen as a social transaction between the taker/sharer and the community, where the utility of the transaction is a mutual strengthening of interpersonal ties and roles.

This is a similar role to that of photos in their former hard copy incarnations. The leafing through the physical photo album was a ritual done at time of social or emotional need, to remind self and others of their respective roles through a remembrance of the emotional content of times past. This is the mythic power of the photograph, where it is not the content that matters, but the symbolism.

The photo is a conduit to emotional social resonance, similar to ancient folklore passed on through the oral tradition, or engrained ceremonial ritual such as we recently witnessed in the Royal Wedding.

If you have a favourite photo, do you love it for the image, or the emotional memory it evokes?

Japan Earthquake: Consequences

Map of tsunami wave height; click for source

The twists and turns wrought by the Japan earthquake have gripped and troubled me. I am by nature, and to some extent profession, a contingency planner. When faced with a difficult situation, I tend to switch into a pattern-recognition and problem-solving mode, anticipating consequences in order to take advantage of them. The Japan earthquake is troubling because its medium and long term ramifications are very unsettling.

The facts are straightforward: the 9.0 magnitude earthquake that occured off the Sendai coast on 11th March was one of the most powerful ever recorded. It generated a massive and rapidly-arriving tsunami, leading to major loss of life and catastrophic damage. Several nuclear reactors at Fukushima are in danger of core containment breach, and at time of typing, there are reports of a minor containment breach at reactor 2. The Bank of Japan has pumped trillions of yen into the economy to prop it up during the crisis, and the emergency services and military appear to be doing the best they can under trying circumstances.

The consequences are much harder to define.

The loss of life is of course immensely tragic on personal, national and global levels. However, the calculating side of me is bound to point out that on that global scale (comparing it to previous natural disasters such as Haiti’s earthquake) it is not disproportionate.

Many tens of thousands (probably hundreds of thousands) of lives were undoubtedly saved by Japan’s affluence. Its wealth enabled adherence to strict building codes, making deaths from the earthquake itself relatively limited. This is a triumphant testament to technology and its careful widespread implementation.

The tsunami killed many more. It is much harder to prevent tsunami deaths. One would assume that Japan will respond by implementing more safety restrictions into its building code for coastal properties, such as mandating the orientation of buildings to permit the force of tsunami waves to pass through rather than destroy. These would be relatively straightforward regulations and I have little doubt Japan will respond well in this regard.

The economic consequences are more painful. Natural disasters are generally associated with an immediate GDP hit, followed by a rebound 6-18 months later as reconstruction kicks in. Under normal circumstances, Japan would follow this overall neutral pattern (as it did following Kobe’s earthquake). But Japan’s national debt is enormous at about 200% of GDP, and interest rates are already in the basement following decades of stagnation and the 2008 financial crisis. This limits economic room for manoeuvre and magnifies the impact of that short-term GDP hit, making it more likely to be prolonged. If Japan’s GDP is negatively affected for more than 6 months, it may trigger a global slowdown. Although it has been stagnating for 20 years, Japan is still the world’s 3rd biggest economy and a major recession would impact global demand chains.

This is particularly concerning for the UK, given that the success of the austerity programme being implemented by the coalition government is dependent on moderately strong private sector growth. Direct UK-Japan trade is in the order of about £10-20bn only, so although knock-on effects via the USA are harder to quantify, it’s possible that the fallout to the UK economy will be relatively contained. It’s simply too early to be sure about the impact on the UK beyond noting that several large insurers will bear major, but largely absorbable, losses.

Fallout of another nature is perhaps more troublesome in the long term. It’s highly unlikely that radiation from Japan will cause the UK any problems whatsoever. Even within Japan, the impact should hopefully be fairly limited, especially if the cores at Fukushima do not lose further containment. But the effect on our energy policy may be significant.

Elements of the Green movement have been swift to use the incident to buttress their more generalised anti-nuclear policies. While some environmentalists now support nuclear power as being cleaner than coal or oil, and therefore helpful in mitigating climate change, the majority still push very strongly against an expansion of fission plants. Public opinion has gradually been shifting back towards nuclear power in the decades since Chernobyl, but this progress is likely to be reversed in the emotional knee-jerk response to what we are seeing unfold in Japan. The longer it takes to control the cores, the worse that response is likely to be.

No method of power generation is risk and impact free, but nuclear is in many ways safer, cleaner and more cost-effective than other methods. It has some major drawbacks of course, not least that if all the lines of defense do collapse, then the consequence of a fully exposed core are very significant. Nuclear power stations are designed with significant depth of defense and I hope and pray that the depth is sufficient to allow the Fukushima cores to be brought under control. Newer designs of plant are more defended still (Fukushima is about 40 years old), with passive as well as active lines of retreat in case of emergency.

While it is absolutely right that nuclear plants should be designed with the precautionary principle uppermost in mind, I believe it is fundamentally wrong to construct an entire energy policy around such worst-case scenarios. Any energy policy has to be balanced not solely against the risk of incredibly unlikely catastrophe, but against the far more likely effects on the economy, and the need to securely keep the lights on.

Britain is a much more geologically stable country, and with newer reactor designs, I firmly believe that nuclear power is easily a safe enough option. It is also going to be necessary in order to maintain power grid stability in the face of our international obligations to mitigate climate change. Renewables alone simply cannot fill the gap in the short time we have. I hope there isn’t a knee-jerk response against nuclear fission’s planned expansion in this country.

Of course, a more lasting solution would be cost-effective large-scale nuclear fusion, and there is a very strong international effort to develop the technology required, which I touched upon in an earlier entry. That would be both cleaner and safer than fission.

National disasters can paradoxically bring out the best in people. All the reporting from Japan conveys images of an understandably shocked and frightened populace, but one attempting to work with authorities to rebuild their country. Having visited and worked there, I believe they will succeed.

Equality is not Fairness

 

The impact of women on male insurance premiums

The European Court of Justice ruled today that it is illegal for the insurance industry to use of gender to determine risk.

It contravenes the European Convention on Human Rights (ECHR) which requires that wherever possible, each gender should be treated equally in order to prevent discrimination. The result of this attempt to mandate equal rights has led to the bizarre situation of the Court being forced to rule that an industry which distributes the cost of insuring risk according to the eminently fair principle of riskier individuals bearing more of the cost, can no longer do so.

And I doubt that anyone really expects the outcome of this to be that men’s car insurance premiums will fall by more than a token amount. Instead, the more likely outcome is that women’s rates will increase instead, making the population as a whole a lot worse off. The impact on the wider insurance industry will affect pension annuities too: men generally get higher rates because statistically they are likely to die before women. Now both sexes will get something closer to the lower female rate.

This ruling is a beautifully accessible example of the difference between equality and fairness.

Treating everyone equally – assuming that just because they are all human beings, they all deserve the same treatment – is fundamentally unfair. People are not equal. Fairness and justice should be about equitable outcomes, not equal ones. Confusing these concepts leadings to well-meaning but ultimately self-defeating creations like the ECHR that do a disservice to the population they are meant to protect.

Individual variation resulting in inequality and differential outcomes is not something to be feared. Fairness demands that our society is freely able to distribute its bounty equitably – albeit unequally – between individuals.

Now, preventing discrimination is vitally important. But stopping discrimination is about preventing inequitable outcomes to individuals because of their group membership, not to prioritise the group membership over the individual, which is what the ECHR does.

The Court had no alternative but to rule the way it did, because the ECHR is deliberately phrased to emphasise the gender identity sub-group rather than considering humanity as comprising a mass of individuals who just happen to fall into various sub-groups.

Membership of a sub-group should never lead to inequitable outcomes; gender (or religion, race, sexuality, and so on) should never be used as a reason to inhibit rewards to a particular individual. But membership of a sub-group should never be used a reason to mandate equal outcomes with other sub-groups.

The way to avoid this is to bypass the importance of sub-group membership altogether: value the individual instead.

Related Articles

• This insurance ruling trivialises human rights | Stephen Booth (guardian.co.uk)
• EU court bans insurance sex discrimination (foxnews.com)
• Gender case hits insurance costs (bbc.co.uk)
• “UK insurers face “large-scale adjustments” over ECJ gender ruling” and related posts (insurancedaily.co.uk)