The Structure Of British Airways Management Essay

The Structure Of British Airways Management Essay British Airways is the largest international airline in the United Kingdom and is assigned in the operation of international and domestic carriage of cargo and mail, and the auxiliary services The British Airways Group comprises of British Airways, British Airways Holidays Limited, BA Connect Limited, Deutsche BA, and British Asia Airways, amongst others. Since privatization in 1987, British Airways have persisted to develop as competition in the market becoming the worlds first airline to reduce greenhouse gas emissions and to let passengers to print online boarding passes. Structure of British Airways: As explained British airways flat structure encourages the company to have a corporate culture which can be described by applying the McKinsey 7S s model which includes Staff, Skills, Style, Shared Values, Systems and Structure and strategy. Before the privatization, British Airways had a more formalized bureaucratic structure with rules and procedures, as a result of its size and its activities. But a main change in the last years has been the decrease of its management levels and it now has a formal structure with responsibilities across different functions. Therefore the structure of British Airways is flat type because it has only one level of hierarchy that separates managing directors at the top of bottom-line employees. The organization has segregated management-level positions into ten departments and each department has own subordinates. British airways structure is shown in figure 2 in which its departments include Planning, Investment Alliances, Commerce, Ground Operation, Engineering, Flight Operation, IT, Finance, Law, and Human Resource. (British Airways, 2010) Figure 2: British airways organization structure, (British airways 2010) Description: Management structure diagram Sources: www.britishairways.com However market influences created a leaner, structure at the top of the management. As illustrated in figure 1, British Airways have a flat hierarchical structure that needs them to cooperate within all the levels of as strategic where the board of directors take a decision on the long term objective the information which flows to the managers in the tactical who furnishes the information to the operational level and the operational level (front office staff, flight stewards etc.) drives the data into meaningful messages to be operated conveniently and efficiently. Culture of British Airways: Mission Statement:                   To be the most exclusive and first choice airline for all airline travelers We recommend a new mission statement after a consultation process involving our group members. The mission statement can replace an existing statement, which had been drawn up in 1997 in the run-up to privatization, and many employees have received training in its meaning for their particular jobs. Their mission statement clearly shows that in every persons mind the first thing to come from traveling by air should be British Airways. Whatever it is called, a vision, mission or strategic intent, its purpose is to provide a guiding light for the future. Companies without a mission are prone to opportunistic. A unifying mission is especially important in large companies where staff and managers are expected to take decisions themselves, without constant referral back to headquarters or to their seniors. Aims: British Airways is to become the worlds first global airline Objectives: Like all businesses one of their objectives was to maximize profits however after September 11th they had to change their aim of having an increase in   security as this was the main issue globally and they needed to keep their customers safe after the horrific terrorism attacks in the USA. Objective:    To increase security to combat terrorism Specific To increase security for the safety of passengers and staff Measurable Hand luggage of passengers was reduced to a plastic bag, stop and search was also put into place and metal detectors as well as a regular anti-terrorism drills Achievable More security staff will be in place and they have the finances to do so. Realistic This objective is realistic as terrorism is a threat and they also have the finances to do so to ensure that all passengers and staff are fully protected. Objective: To increase profits by the end of the tax year 2009 Culture: The organizational structure of a company reflects its culture, its management style and its leader attitude in addition to the environment in which it has to operate. . British Airways have a more formalized structure with precise rules and procedures, due to its size and the global scope of its activity. A major change in the last years has been the reduction of its management layers, between the chief executive and the front line who interface with customers, from nine to five. It now has a small ad hoc group working in parallel with the formal structure, with responsibilities that cut across different functions, or in any case duplicated these functions. Corporate culture The organizational culture consists of the deep basic assumptions, beliefs, values and norms which are shared by members of an organization, arise from the organizations history and tradition and are modified by contemporary events. Management style and leadership at British Airways As clearly stated above, British airways had been bureaucratically, between functions and hierarchies. It has changed to a style of employees empowerment. This means management gets help from employees outside the formal structure and across functions. British Airways used to have a more autocratic style but at the moment company is delegating responsibility directly to key individuals. The management at all levels mutually responsive to relationships created with customers and stakeholders. In other words company is experiencing democratic leadership style. Interrelationships of functions with processes: The business process is a collection of interrelated activities and tasks that will create a service as well as products for the consumers of business. There are three types of business processes involve in British airways and they are management process, operation process and supporting processes. The management process of British Airways is all about the operation of a system which includes the strategic management and the corporate governance. Strategic planning in management process is very important because it includes business plans, risk assessment, risk management, financial objectives, management responsibility, continuity planning, quality control, IT threat, contingency plan, disaster recovery, and fulfillment. Operations: Another type is the operational process which is the most essential among all the types of the business processes. It generally comprises the core business of British airways which is transporting passengers fast, safely and comfortably. In addition to this, it also generates the primary value stream. Purchasing, sales, manufacturing and marketing functions are usually included in its operational process. These three types of business processes of British airways have their own distinctive attributes which add value to its service delivery process. SUPPORT ACTIVITIES FIRM INFRASTRUCTURE Structured hierarchy permits BA to build a massive amount of specialist knowledge in order to get a competitive advantage over economized firms. HUMAN RESOURCE MANAGEMENT Invested in the expansion of customer service training in 2007 drawing attention of the best employees. Speak Up view survey persuades employees to offer feedback (British Airways, 2008). TECHNOLOGY DEVELOPMENT BA has included value in this group over smaller companies by reason of lack of resources that can be employed to create the service in an innovative way. (e.g. Individual LCD screens). PROCUREMENT As a result of the size and chronological business relationships and alliances, BA is able to influence suppliers and during economies of scale make efficiencies where competitors may fall short. PRIMARY ACTIVITIES: INBOUND LOGISTICS: Stock Control High quality training given by City the Guilds (British Airways, 2008). A continuous relationship with suppliers (e.g. Gate Gourmet. OUTBOUND LOGISTICS: Customer Service Large database of airport slots facilitates passengers to contact the majority of destinations from preferred airport. MARKETING SALES Marketing communications to all stakeholders. Brand consenting to for large budget to be spent in this field. POST SALE SERVICE The loyalty club card is offered. Bringing up to date communication on other services Interrelationship between the processes and functions of British Airways British Airways is one of the worlds largest aviation companies. Its portfolio of aviation transportation in which it is a global leader in air transportation The companys aviation operation and extensive airplanes of growth projects are located in all over the world, South America, Australia, North America and Asia. The purpose of the organization is to set out in a mission statement. To be the leading global aviation company through the operational excellence of world class assets in the most attractive commodities and a resolute commitment to safe and sustainable air transportation. In 2008 there was a downturn in world economic activity. This resulted from a loss of confidence in the world financial system. The downturn has led to a steep fall in aviation travelling prices such as airfares. By late 2009 these prices started to rise again as demand for aviation transportation increased. Sustainability Although Airline companies are affected by changes in economic activity, aviation is a long-term investment business. Firms like British Airways have to take a long term view of the business. This involves creating more routes which is a sustainable way over a long period of time. The company focuses on those routes in which it has a favorable position. It concentrates on various routes where sales of air tickets will be possible for many years into the future. It also looks at aviation projects where costs can be kept to a minimum but where there are opportunities to expand operations. There are several issues of sustainability facing British Airways. Key ones are: Securing energy supplies, such as airplanes and resources including fuels, for the future Managing emissions to minimize harm. British Airways uses large quantities of energy in its operations. It also generates the potential for energy, e.g. by purchasing the very latest planes which are eviromental friendly. A key aim of the company therefore is to do more with less. It must achieve maximum efficiency with minimum waste. British Airways believes that by operating in innovative and socially responsible ways it can do things better than its rivals. Doing things better in business is referred to as competitive advantage. Social responsibilities are those duties to all the stakeholders of a business, not just the shareholders. Embedded within social responsibility is the concept of sustainable development. Sustainable development involves using resources so that: Resources are available to meet the needs of people now Resources can be available to future generations The needs of the natural environment are respected. The success of British Airways is the best value comfort service provides for its passengers. And to build up this solid foundation in the marketplace, British airways utilizes its resources effectively and efficiently. In that manner operations management of British Airways plays an important role in transforming inputs (labor, capital, equipment, land, buildings, materials and information) into outputs (goods and services) that offer superior value to customers.

Commodity Price Movements in the Twenty first Century

Commodity Price Movements in the Twenty first Century Commodity Super Cycles and Bubbles Sharp movement in commodity prices, especially of oil, and some base metals like copper, since the turn of the century, have attracted enormous international attention and debate. The price of oil, which shot up from the sedate levels of approximately twenty-eight USD per barrel, a few years ago, to the high seventies, in 2006, sent ripples through the economies of advanced nations, even as it added billions to the current account surpluses of oil rich nations, like Kuwait. While the movement in oil attracted international attention because of its universal usage, prices of items like copper, steel, cement and uranium also soared to new heights. These developments led to intense discussion among economic experts and business thinkers, who were divided in their opinion about the causes of commodity behaviour, as well as its future movement. While a large number of scholars feel that the recent movement in commodity prices is no more than the initial movement of a wave that will last for many more years, if not decades, others put it down to wrong economic policies and the work of market speculators. This research assignment aims to study and explore the various aspects of this extremely intriguing and globally significant development, and thus arrive at findings and conclusions that are able to illuminate the complex topic. Executive Summary This research assignment attempts to delve deeply into the causal factors behind the sharp upward movement in prices of commodities during the last six years. The assignment is structured into sections that describe the situation in totality, and then take up the many theories that have gained ground in recent years on the issue. While many people believe that a commodity super cycle is under way, powered by the demand for materials from an enormously fast growing China, others feel that these movements, like the one in the price of oil, is a twenty-first century reminder of the commodity bubble that took the price of tulips to astronomical heights in seventeenth century Holland. The study includes an analysis of the commodity super cycle, the roles played by the growth of China and India in increasing commodity demand, the effect of liberal monetary policies, and that of speculative activity, in the price movement process. Detailed analyses of the thoughts and writings of experts on the subject, including thinkers like Jim Rogers and financial professionals like Stephen Roach, along with the study of texts and journals available on the subject, have led to findings that have lent themselves to some interesting analyses and conclusions. These will hopefully prove to be relevant in providing fresh perspectives, and increase available knowledge on the issue. 1. Introduction a. Overview Recent years have witnessed enormous changes in the global economic scenario. Much of what is happening in the cross continental market place owes its origin to the vision and determination of a slightly built and thrice married octogenarian, Deng Xiao Ping. Deng, the Chairman of the People’s Republic in the 1980s, introduced broad and sweeping changes in the Chinese economy under the name of the four modernisations. His reforms, which covered agriculture, industry, science and technology, and the military, opened up the Chinese economy, and were instrumental in transforming it into one of the largest and fastest growing economies of the world. (Deng Xiao Ping, 2007) Years of double-digit economic and infrastructural growth in China profoundly affected the economies of other countries, and, in the process, set off a huge tide of economic movement that encompassed the whole world. In the mid nineties, the socialist government of India, threatened by international debts, shrinki ng foreign exchange reserves, and an exasperated population, decided to catch up with its larger neighbour, and initiated a series of economic reforms that led to sharp increases in economic development, and catapulted the country into the ranks of the fastest growing world economies. The unharnessing of these two countries, which together account for a third of global population, from the shackles of state economic control, has created an unprecedented demand for commodities. As China and India rush to make up for decades of low growth, poor living standards, and abysmal poverty, their booming economies are hungrily devouring ever-increasing quantities of metals, agricultural produce and oil products. This insatiable hunger, in the opinion of economists and market analysts, has led to the development of a sustained increase in prices of commodities, known in economic parlance as a commodity super cycle. Other thinkers and columnists have expressed dissenting views, blaming market speculators for building up prices to unrealistic levels and creating artificial bubbles; which were bound to burst, and cover all connected with a good amount of unpleasant and possibly disastrous debris. b. Definition of problem The current upward movement of commodity prices has assumed worrying overtones. The escalating prices of crude oil, which moved up, in a period of a few years, from the regions of the mid twenties per barrel, to that of the high seventies, perplexed and worried governments, and economic thinkers all over the world. Apart from oil, prices of many commodities, particularly metals and agricultural produce, have escalated to unprecedented levels, impacting price indices, affecting buying power, and unsettling economies on a cross continental basis. Price behaviours of different commodities are under detailed scrutiny, with experts trying to pin down their reasons. While the sharp increase in the price of maize is attributed to the diversion of corn for production of bioethanol for the US and Brazilian markets, (Trade aspects of Biofuels, 2007) the increase in prices of oil is thought to be due to its increased consumption in China and India. The huge boom in the Indian stock market, on t he other hand, appears to be due to the large influx of foreign institutional investors, who have taken indices in the last two years to more than twice that of 2005. While the enormous increase in economic activity has resulted in increased profitability for business corporations, and has presumably contributed towards reduction of poverty and want, the accompanying inflation has also brought with it enormous worries, particularly for governments of developing countries. Recent months have seen governments, (under tremendous pressure from angry citizens) and central banks raise prime lending rates, and use other economic tools to suck extra money out of the system, in futile attempts to contain runaway inflation. In the midst of numerous theories, the only constant appears to be in the movements of commodity prices, which continue to climb, of course with periodic pauses, and occasional corrections. The development of a long lasting commodity super cycle, in the opinion of many experts, appears to be the major causal factor behind the present circumstances. In this scenario, it becomes important for economic thinkers to focus on the actual reason s for this phenomenon, and its likely consequences, in order to take corrective action. c. Objective This assignment delves deeply into the issues related to commodity life cycles, and commodity bubbles, from economic, political and social perspectives, and with particular reference to the current global economic scenario. The subject matter is enormous and covers local and international developments in politics, society and economics. The assignment involves examination of primary and secondary information sources, and the study of available literature and research. It makes substantial use of secondary material in the form of texts, journals and magazine articles as well as internet sources for purposes of data availability, analysis and investigation. A good amount of thinking on the subject has occurred in the past few years with numerous experts expressing frequently contradictory and quite confusing views in their syndicated and one-off columns. Despite serious and sincere effort, some important information regarding the topic may well have not found place in the assignment, a deficiency that could limit the validity of its conclusions. The bibliography provides complete details of the accessed information. The order of issues taken up for discussion is sequential, for the sake of logical progression of ideas and thought. 2. Literature Review a. The Commodity Super Cycle Economists have, for decades, believed in the theory of cyclical growth, characterised by periods of growth, followed by years of depression or slump. Events, economies, and political systems move through cycles similar to the natural life cycles of living beings. These cycles, while observable, have no obvious reason and involve changes between periods of comparatively swift increase of production, income and prosperity and periods of relative stagnation. (Business Cycle, 2007) These periodic movements do not follow an established or expected pattern and behave randomly, with extended, or short, growth or slump years. In the stock and commodity markets, these boom and bust periods have been famous for causing widespread prosperity or destruction. Cycles generally comprise of four distinct phases namely contraction, trough, expansion, and peak. Whereas expansions and contractions account for the major portion of the cycle, the troughs and peaks denote the lower and upper turning poin ts where contractions change into expansions and vice versa. These cycles have been the focus of detailed economic study for ages with governments trying, mostly without success, to smoothen slumps, periods that have historically caused widespread unemployment, losses and suffering. Business cycles are as applicable to commodities as to other elements of the economy and are generally measurable in movement of national or regional GDP. Occasionally, commodities move into a phase of upward movement in prices for extended periods, which continue for many years, sometimes even many decades. They mainly occur because of major economic developments that are significant enough to drive demand and consumption on a global basis for long periods. Super cycles form because of the industrialisation or urbanisation of a major economy, (Heap, 2005) a process that normally occurs over decades, and leads to situations wherein increases in supplies of commodities are unable to catch up with increases in their demand. These imbalances, while originating in particular geographical areas, occur for years and result in substantial price increases of commodities, and that too on a global basis, for extended periods. What we can say is that there clearly are long-term cycles and that they are driven by fundamental changes in the world around us. Global wars, the industrial revolution, major innovations in transport and communications are just some of the factors that can instigate long-lasting shifts in economic growth, that in turn stimulate demand for commodities. Increased demand drives prices higher while producers struggle to increase the capacity to meet that demand. Ultimately, prices peak when excess capacity has been developed – the cycle is then completed when demand abates and general surpluses force prices lower. (Guthrie, 2007) Two discernible super cycles have occurred during the last 150 years. (Heap, 2005) Huge economic and infrastructural growth in the USA, during the turn of the nineteenth century, created a super cycle in commodities. Later, commodity super cycles developed during the post war reconstruction of Europe followed by enormous economic activity in Japan. If you look at history, there have always been super cycles in demand for commodities. There was a super- cycle during the British industrial revolution, during America’s huge period of growth before and after the second world war and during Japan’s industrialisation in the 1970s.† (Cooper, 2005) Many economists feel that the movement of commodity prices since the turn of the millennium indicates that the global economy is in the midst of a strong commodity super cycle, a phase that has just about started and still has a long way to go. Gary Dorsch, writing for SafeHaven (2006) states that the Reuters Jefferies Commodity Price Index (CRB), which comprises of futures in â€Å"live cattle, cotton, soybeans, sugar, frozen concentrated orange juice, wheat, cocoa, corn, gold, aluminium, nickel, unleaded gasoline, crude oil, natural gas, heating oil, coffee, silver, copper and lean hogs† has reached levels 91 % higher than what it was four years ago, its highest level in 26 years. Apart from the behaviour of the CRB index, prices of oil have increased seven times from its 1999 levels. Demand for oil is about 85m barrels a day at the moment and most people forecast that it will hit 125m barrels a day in the next 15 to 20 years. I see no way in which this will be met, so oil prices will stay high.† Goldman Sachs, the investment bank, has even forecast that the oil price could hit $100 a barrel in the event of a â€Å"supply shock† — a disruption to the supply of oil as a result of natural disaster, sabotage, war or political upheaval. (Cooper, 2005) Copper has also behaved in virtually the same manner from the lows it saw in 2001. â€Å"Now it’s the turn of the grains, where wheat and particularly corn have exploded higher on the US futures exchanges.† (Guthrie, 2007) A number of other experts are reinforcing this phenomenon. While metals, led by base metals such as copper, aluminium and zinc, as well as precious metals like gold, silver and platinum have, until now, along with oil, led the price charge, prices of agricultural produce are also beginning to rocket. â€Å"Recently however, commodity traders have doubled sugar prices to 24-year highs, and are moving into coffee and soybeans.† (Dorsch, 2006) Prices of iron ore have risen to dizzying heights, practically 72 % in 2005. While tracking of commodity prices is an ongoing activity, the frenetic movement of prices during the last seven years has added another dimension to the issue. Numerous articles, either prophesying its continuation for many more years or predicting a roll back in the near future, pack the pages of financial journals and magazines. Each minute movement in commodity prices is subjected to detailed scrutiny, compared with trends and used as a base for future forecasts. The majority however appears to be in consensus that the current trend of increasing prices, across a cross section of fuel, metal and agricultural commodities should remain in place for quite some time. b. Main Causes behind Current and Expected Price Behaviour in Commodities While numerous major and minor reasons affect commodity price behaviour, this discussion focuses on a few major reasons, widely accepted to be the primary causal factors behind the constant and significant price increases of the past few years. The liberalisation process kick started by Deng Xiao Ping, in China, in the early eighties, led to developments that were possibly beyond his wildest expectations, and catapulted him into the ranks of those whose actions changed today’s world. The implementation of economic reforms accompanied with the opening of the Chinese economy resulted in unprecedented and unimaginable growth rates. During the last twenty-five years, the country’s economy changed from a centrally administered system, largely closed to international trade, to a market oriented economy with a rapidly growing private sector. Reforms, which commenced with the phasing out of collective farming, expanded to incorporate freedom from price control, fiscal decentralization, increased autonomy for state controlled enterprises, a large and diverse banking infrastructure, vibrant stock markets, the growth of privately owned and controlled enterprise and the opening of the economy to trade and investment. As C hina implemented the reforms in a phased manner, the restructuring and consequent efficiencies led to a year on year GDP growth well in excess of 10 % and a tenfold increase in GDP since 1978. The country, in recent years, has overtaken the most advanced nations of the world, and in terms of purchasing power parity, stands second only to the United States. Exports are a key driver behind the Chinese economic miracle, with Chinas currency exchange controls and trade surplus with the US topping $204 billion in 2005, a 25% increase on the previous year and nearly 30% of the total US deficit. The lynchpin of Chinese exports is the low Yuan /dollar exchange rate pegged at 8.11 per dollar, undervalued by 30% to 40% on a trade-weighted basis. (Dorsch, 2006) Growth has also driven enormous spending on infrastructure and urbanisation, with millions of Chinese relocating from villages to urban centres. Foreign investors, from the west, as well as from East Asian economies like Japan and South Korea have invested significantly in the PRC, making it, in many ways, the world’s factory. The country has the largest current account surplus, nearly 180 billion USD, in the world. (CIA Factbook, 2007) This phenomenal economic and industrial growth, involving a ten-fold increase in GDP, has made the country a huge commodity consumer. â€Å"In China, intensity of use is now three times that of the USA, with demand driven by urbanisation, industrialisation and fixed capital formation.† (Heap, 2005) The Chinese miracle, with its huge demand for commodities has affected commodity prices profoundly in the past few years. â€Å"As China’s economy expands, it is sucking in raw materials to build up its infrastructure, including roads, power stations and factories.† (Cooper, 2005) This demand led to the country picking up a huge share of the overall growth in global consumption with growth in internal consumption. â€Å"The International Monetary Fund reports that its share of the overall growth in global consumption of industrial commodities between 2002 and 2005 was massive – 51% for copper, 48% for aluminium, 110% for lead, 87% for nickel, 54% for steel, 86% for tin, 113% for zinc, and 30% for crude oil.† (Guthrie, 2007) The country now accounts 12 % of global industrial production, compared to 6 % in 1995, 4 % of GDP on an exchange rate basis and 13 % on a purchasing power parity basis. Appendix A provides details about China’s demand for various metals. The constantly increasing demand from China, despite regular predictions of slowdown, has served to propel commodity prices year after year. While these price surges have had their periods of relative stagnation, as well as corrections, the demand shows no sign of abating and should grow for many more years. The per capita consumption of beef, for example, in China is 12 pounds per person, compared to 100 pounds per person, in western countries. As perceptions change and the possibility of the country catching up in the prosperity scales with advanced nations becomes a reality, the projected increase in demand assumes overwhelming proportions. While China has been and should continue to be a major driver of commodity prices for many more years to come, other factors have also contributed towards price movement and their effect may well increase in future. India, the world’s second largest country and its’ largest democracy started opening up its economy from the mid nineties. Shackled for years under a bureaucratic mixed economy regime that favoured the public sector, the country suffered from an abysmally slow growth rate for practically fifty years since it achieved independence in 1947. The opening up of the economy, and the introduction of economic reforms, while slower in implementation than China’s, (due primarily to the democratic and debate oriented nature of Indian society), nevertheless picked up steam by the end of the millennium, and entered an era of high growth in the early years of the present decade. The country is today, after China, the second fastest growing economy in the world, and is achieving growth rates of nearly 9 %. While both industry and services are growing at rates much faster than 10 %, agricultural growth has been comparatively slower. Indias Prime Minister Manmohan Singh, wants his country to achieve 10% economic growth in the next two to three years, to create more jobs and help lift a third of the countrys 1.1 billion people out of poverty. Asias fourth-biggest economy expanded 8% in the second and third quarters of 2005. Singhs government wants industrial production, which makes up a quarter of Indias economy, to grow 10% annually to boost the incomes of Indians, one in three of whom live on less than $1 a day. Indias industrial production grew at an annualized 8.3% rate between April and November 2005, faster than major economies like US, UK, the Euro zone, Japan, Brazil, Indonesia and Russia. Only China and Argentina recorded faster industrial production rates of 16.6%, and 9.6% respectively. (Dorsch, 2006) In India, domestic demand makes up practically 70 % of the national GDP and dominates the economy, as opposed to exports, in many other nations. Indian imports, though lesser than that of China, doubled in the last three years, adding to commodity demand and strengthening the consumer super cycle. Terming Indias economic growth since 1991 phenomenal, World Bank President Paul Wolfowitz on Saturday said its GDP (gross domestic product) growth could be pushed up by one to two per cent with speedy reforms. He said: The dynamism shown by India in the last 15 years is phenomenal. India can do better A couple of percentage more growth can be possible. But it needs sound fiscal and monetary policies. Continuity of reforms was important for the high growth, evident in the last 15 years. Indias incredible growth story was a policy model to the world. It showed continued development in democracy and open society. (India’s growth story, 2005) Apart from India, the two other BRIC countries, Brazil and Russia, are also growing strongly, strengthening the demand for major commodities. While the sharp spurt in growth shown by Japan in recent years has also fuelled demand, the growth generated by the BRIC countries, as well as economies of countries like Argentina and South Africa should continue for many years, even for some decades, as these countries try to achieve parity with the advanced nations. Monetary policies followed by the central banks of most countries have also played a significant role in fuelling commodity price increases. Central banks of most countries, Japan, Europe, China and India have followed super easy money policies from the beginning of the millennium right upto the last quarter of 2006 and this along with the demand from the Chinese and Indian economies have worked towards pushing prices up to record levels. The Peoples Bank of China increased its M2 money supply by 18.3% last year, issuing more Yuan to soak up foreign currency earned through foreign trade and direct investment into Chinese factories from abroad. Explosive money supply growth, in turn, boosted domestic retail sales by 13% last year, and industrial production was 16.6% higher in November from a year earlier. Chinas central bank raised its M2 money supply target to 17% in the third quarter from 15% earlier, to offset stronger demand for the Yuan, and maintain the peg at 8.11 per US dollar. (Guthrie, 2007) In Japan, money markets have received trillions of yen, more than required by local Japanese banks, pushing interest rates on deposits to levels even below zero. This enormous amount of excess and free liquidity has enabled both Japanese and hedge fund traders to take up large speculative positions in global commodity markets. While conservative counsel advocates a stricter monetary policy, authorities are reluctant to make changes in a policy that has seen overnight lending rates staying at zero for nearly five years. In Europe, loose money availability has also helped in fuelling inflation and price instability. The growth rate of M3 Money supply in Europe in Europe has become considerably higher than the previous year, and helped in lifting stock markets to higher levels. All over the world, bankers have seen commodity indices running away but refrained from taking action lest growth rates get hurt. Another factor that hinders bureaucrats from taking action after inflation starts hitting significantly high levels is the underlying fear of small course-corrective measures not working and the risk of dampening growth.† If a central bank stops excess liquidity too late it has to raise rates much more strongly and that causes turbulence on the markets.† (Guthrie, 2007) Indian policy makers, found to their chagrin, that inflation growth rates that had crossed 6.5 % (and were threatening to destabilize the government) proved immune to three doses of interest rate hikes, by 50 basis points each time. A sharp hike in borrowing and lending rates took place in recent weeks. With inflation up at 6.4 per cent and the RBI saying it will take â€Å"all the necessary monetary measures†, further hikes in interest rates could come. But will raising interest rates bring inflation under control? Does India have the markets and institutional framework in which raising interest rates is an effective instrument for inflation control? Does India have a central bank that has learned how to conduct monetary policy in an open market economy? The answer to these questions is: No. In this sphere, India lags behind modern practices. (Patnaik, 2007) While lack of faith in the measures taken by one’s own government appears to be a generic trait with analysts all over the world, sustained increases in commodity prices have led to a consensus that economic and monetary policies, followed all over the world, have been unbalanced in their blind preference towards growth, to the exclusion of inflation. The unbridled use of liberal monetary policies has contributed towards this present climate of inflation, and in strengthening the commodity super cycle. The creation of shortages because of rapid and unexpected growth in consumption is a fait accompli, and a short-term discomfort economists are ready to bear, (in the interest of growth), until increased supply stabilizes the situation. In the absence of measured intervention, unbridled increase in prices, apart from inducing speculative activity, also attracts hordes of genuine investors, big-ticket investment funds, pension funds, and even individual retail investors. Pension funds, as well as small, retail investors are looking to commodities as a crucial part of diversification of any investment portfolio. Although schizophrenic commodity day traders could decide to turn massive paper profits into hard cash at a moments notice, causing a 5% shakeout, the longer-term odds still favor a continuation of the Commodity Super (Guthrie, 2007) c. The Future of the Present Inflationary Movement Commodity super cycles, by their nature and their reasons of origin, run for extended periods, for many years and some times for decades. Modern day literature refers to just two or three super cycle in the last two centuries, one caused by American industrial growth at the beginning of the twentieth century, and the other caused by post war reconstruction in Europe, followed by intense Japanese economic activity. The second super cycle lasted for nearly three decades from the late forties until the depression of the eighties. The current super cycle, if at all it is one, has gained momentum only during the last six years, and prima facie still has a long way to go. While monetary policies of powerful and rich individual nations, like the USA and Japan, as well as regional groupings, like Europe, will be able to influence commodity prices through tightening or loosening money supply, the extent of the commodity super cycle will depend primarily upon the growth stories being played ou t in China and India, and to some extent in the other two countries, Brazil and Russia. While China and India are both on the fast track to economic prosperity, they remain countries with low per capita incomes and consumption. The desire to achieve economic prosperity, in these economies, will not be satisfied with achievement of national GDP targets but will continue until individual aspirations of people are met in these two countries. We have China embracing capitalism. We have India embracing capitalism. That’s brought 2.2 billion people into play as very ambitious earners, who aspire to middle class status. If we take Asia, there are 3.5 billion people who aspire to the same middle class lifestyle many of us in the West take for granted. If we look further beyond Asia, this same phenomenon is evident with many other developing countries. We see it in parts of the Middle East with the Dubai city-state as an example. (Finch, 2006) Two simple examples will serve to elaborate this argument. As stated earlier, per capita consumption of beef in China is 12 pounds per person whereas it is more than 100 pounds per person in the advanced countries. Similarly, in India, where the majority of the people do not eat beef, and around fifty percent are vegetarian, the per capita consumption of chicken is around 12 pounds compared to more than 200 pounds in the west. A recent report by Goldman Sachs states that even if, as predicted, both these countries reach the GDP levels of the USA by 2050, their per capita income will not exceed half that of the USA. This gives rise to two inferences, (a) the huge amount of latent demand in these countries and (b) the extended period over which these growth stories will possibly play out. Indias Prime Minister Manmohan Singh, wants his country to achieve 10% economic growth in the next two to three years, to create more jobs and help lift a third of the countrys 1.1 billion people out of poverty. Singhs government wants industrial production, which makes up a quarter of Indias economy, to grow 10% annually to boost the incomes of Indians, one in three of whom live on less than $1 a day. (Dorsch, 2006) Apart from the enormous potential for prolonged economic and industrial growth that can occur because of progress in these two countries, the fact that India is moving roughly ten years behind China, could lead to a situation where India’s growth rates start improving further when China’s starts tapering off; thus extending the period of the cycle. Climbing markets are prone to periods of lulls, stagnation and even correction. Experts feel that these phenomena are bound to continue to happen, but the demand for commodities will grow at such an overwhelming pace, not just in China and India, but also in other countries of the developing world that it will soon reassert itself and bring back bullish behaviour. While there is intense speculation in academic circles about the probable period of the inflationary run, very few people are ready to take a bet on its probable date of demise. Economists are quite sure of phases of economic activity where waves of activity and growth follow periods of slowdown and even stagnation. The problem arises when quantification is called for. In the past Dewey and Dakin in their book â€Å"Cycles: The Science of Prediction† (1947) that a super cycle that moves from trough to peak to trough can last for as long as fifty to sixty years. Obviously, these longer waves comprise of a number of sm aller waves, where activity increases and decreases in finite periods Even as convinced a believer in the commodity bull cycle as Jim Rogers points out that the shortest boom lasted 15 years, while the longest lasted 23 years. His conclusion is that we have much further to go, but don’t expect a great deal more precision than that. Oh, and don’t forget that we’ll endure some huge corrections along the way. (Guthrie, 2007) Much of the current discussion on commodity super cycles owes its initiation to

Gasoline Essay -- essays research papers

GASOLINE TOXIC COMPOUNDS AND ADVERSE EFFECTS ON THE ENVIRONMENT In the early 20th Century gasoline was being produced by oil companies using distillates from petroleum. Unfortunately, this was not enough energy to power the new atutomobiles that would soon be arriving. More chemicals, addetives and research had to be done. Around 1910 laws were passed that prohibited gasoline from being stored. Perhaps the car industries were growing so rapidly, it was then the government began to take note to regulate the use of gasoline for the protection of the environment. Lead and benzene are toxins found in gasoline that are confirmed to be regulated human carcinogens. Carcinogens have been tested also to induce cancer found in humans and animals. This paper will determine and discuss these two types of toxins identified in gasoline, the dangers of these toxins and how they affect the environment in which we live in. When gasoline is burned it releases a form of energy of hydrogen and carbon. This energy forms water and carbon dioxide. Carbon moxide may be formed as well if the compnents are not precise and complete. Gasoline is said to contain over 500 hydrocarbons. There are two types of hydrocarbons; saturated and unsaturated hydrocarbons. Saturated hydrocarbons are somewhat stable found in leaded gasolines and burn a clean flame in the air. On the other hand, unsaturated hydrocarbons are unstable and tend to burn a dark smoky flame. Studies have proven lead poisoning can be obta... Gasoline Essay -- essays research papers GASOLINE TOXIC COMPOUNDS AND ADVERSE EFFECTS ON THE ENVIRONMENT In the early 20th Century gasoline was being produced by oil companies using distillates from petroleum. Unfortunately, this was not enough energy to power the new atutomobiles that would soon be arriving. More chemicals, addetives and research had to be done. Around 1910 laws were passed that prohibited gasoline from being stored. Perhaps the car industries were growing so rapidly, it was then the government began to take note to regulate the use of gasoline for the protection of the environment. Lead and benzene are toxins found in gasoline that are confirmed to be regulated human carcinogens. Carcinogens have been tested also to induce cancer found in humans and animals. This paper will determine and discuss these two types of toxins identified in gasoline, the dangers of these toxins and how they affect the environment in which we live in. When gasoline is burned it releases a form of energy of hydrogen and carbon. This energy forms water and carbon dioxide. Carbon moxide may be formed as well if the compnents are not precise and complete. Gasoline is said to contain over 500 hydrocarbons. There are two types of hydrocarbons; saturated and unsaturated hydrocarbons. Saturated hydrocarbons are somewhat stable found in leaded gasolines and burn a clean flame in the air. On the other hand, unsaturated hydrocarbons are unstable and tend to burn a dark smoky flame. Studies have proven lead poisoning can be obta...

Paradise Lost Essay -- Literary Analysis, Bible, Adam and Eve, God

In Milton’s Paradise Lost, before the fall Adam and Eve live in harmony with one another, enjoy the provisions and comforts of nature, and have a direct relationship with God and the angels. Unimpeded with conflict, they live in innocence, working not out of necessity but to make their home beautiful, speaking not to clear up misunderstanding but for the pleasure of it, and anticipating a time when they will rise up to the order of angels and be favoured with a closer communion with God. The fall changes all this. Everything becomes more separated, more differentiated: there grows a distance between Adam and Eve, they can understand each other less and they argue more; nature is no longer harmonious but rather something to be wrestled and toiled with; what was once pleasurable and innocent might now be incontinent and evil; God and the angels no more indulge humankind with friendship and discourse but distance themselves and become almost inaccessible. Adam and Eve, raised on innocence and pleasure alone, have to learn how to live in this new world where nature is mutually incompatible with God. The first thing Adam is taught is how to reason morally. Michael spends a lot of time showing Adam the image of death, lust, greed, disease, and other vices that are now to be a part of his world. When shown the image of lascivious festivities, Adam says â€Å"Much better seems this Vision, and more hope / Of peaceful days portends [†¦] Here Nature seems fulfilled in all her ends† (11.599-602). Adam is accustomed to the pleasures of paradise, and this idyllic scene reminds him of the times he enjoyed feasting with Raphael and sleeping with Eve. He believes that sex, once the pleasing and natural nightly activity, is still to be thought as such.... ...ey are now differentiated and divided. Once they shared in their labours, now they are given different roles; Eve is told to bear children and Adam to work the earth for sustenance. Adam and Eve are now to live divided in a world from which God has distanced himself, and in consequence they are distanced from Him as well. In the invocation of Book 9, the narrator said that prior to the fall God would sit indulgent with humankind, â€Å"permitting him the while / Venial discourse unblamed† (9.4-5). Now the discourse with heaven is no longer be unblamed. The lessons given by Michael stand in contrast to those of Raphael as much colder and formal; Raphael would sit with Adam and Eve and partake in their meal, while Michael stands with full armour and lectures Adam. Michael also criticizes Adam’s judgment on numerous occasions, correcting him for misguided interpretation.

A Separate Peace - Symbolism Essays -- essays research papers fc

In John Knowle’s A Separate Peace, symbols are used to develop and advance the themes of the novel. One theme is the lack of an awareness of the real world among the students who attend the Devon Academy. The war is a symbol of the "real world", from which the boys exclude themselves. It is as if the boys are in their own little world or bubble secluded from the outside world and everyone else. Along with their friends, Gene and Finny play games and joke about the war instead of taking it seriously and preparing for it. Finny organizes the Winter Carnival, invents the game of Blitz Ball, and encourages his friends to have a snowball fight. When Gene looks back on that day of the Winter Carnival, he says, "---it was this liberation we had torn from the gray encroachments of 1943, the escape we had concocted, this afternoon of momentary, illusory, special and separate peace" (Knowles, 832). As he watches the snowball fight, Gene thinks to himself, "There they all were now, the cream of the school, the lights and leaders of the senior class, with their high IQs and expensive shoes, as Brinker had said, pasting each other with snowballs"(843). Another of the principal themes in this novel is the theme of maturity. The two rivers that are part of the Devon School property symbolize how Gene and Finny grow up through the course of the novel. The Devon River is preferred by the students because it is above the dam and contains clean water. It is a symbol of childhood and innocence because it is safe and simple. It is preferred which shows how the boys choose to hold onto their youth instead of growing up. The Naguamsett is the disgustingly dirty river which symbolizes adulthood because of its complexity. The two rivers intermingle showing the boys’ changes from immature individuals to slightly older and wiser men. Sooner or later, Gene and Phineas, who at the beginning of the novel are extremely immature, have to face reality. Signs of their maturity appear when the boys have a serious conversation about Finny’s accident. Finny realizes that Gene did shake the tree limb purposely so that he would fall. However, he knows that this action was spontaneous, and that Gene never meant to cause him life-long grief. Finny sympathetically says to his best friend, "Something just seized you. It wasn’t anything you really felt against ... ...iendship between Gene and Phineas is amidst themes such as lack of reality, low maturity levels, and false appearances. Their relationship deteriorates and leads to death because they fail to learn these valuable life lessons. The purpose of Knowles’ novel is to exaggerate the life of two young boys to the extreme in order to reveal the unfortunate things that can occur in a relationship when these themes are not taken seriously. As stated in Magill’s Survey of American Literature, "It (A Separate Peace) can be viewed, for example, as a tale of Original Sin, with the Devon School as an Eden enclosing the great Tree of Knowledge through which humankind falls far from innocence but is redeemed by the suffering of a totally innocent one. It may also be approached as a reworking of the classic tale of the need to accept the potential evil within everyone and thus make peace with one’s self." BIBLIOGRAPHY "A Separate Peace." Magill’s Survey of American Literature, Vol. 3. New York: Marshall Cavendish Corp., 1993. Beacham’s Guide to Literature for Young Adults, Vol. 3, pages 1186- 1192. Knowles, John. A Separate Peace. Prentice-Hall Literature, Platinum, 1996 ed.

Dogfight over Europe: Ryanair Essay

Ryanair was launched at a time that did not seem highly favorable to the airline industry. As a matter of facts, in 1986, the market was still recovering from the aftermaths of the OPEC oil embargo and the 1979’s oil crisis which led to an important increase in the jet oil prices, along with a recession that cut demand for air travel and thus gave an impulse to the aircrafts’ cheaper substitutes, such as trains and ferries. Despite that high bargaining power of suppliers and threat of substitution products that made the external environment unfavorable, the Ryan brothers’ wish to launch their airline did not diminish. The company’s first service was launched in 1985 between the southeastern Irish city of Waterford and Gatwick Airport, located on the outskirts of London. One year later, the newborn company started operating between Dublin and the British capital. Two majors Airlines operated on this latter route at that time: British Airways and Aer Lingus, the Irish flag-carrier company. Moreover, some strong US airlines reached out for new routes into Europe after the deregulation of the domestic US airline industry, which made the pressure of competitors even more intense in the airline industry. Last but not least, charter flights, which thrived during the 1960’s to bypass the European regulations and to tap the increasing demand for leisure travel, were transporting 60% of all European passengers by the mid-1980’s. Despite this high unwelcoming rivalry in the market, Ryanair made the choice to focus on the challenging Dublin-London route, which was reputed to be quite lucrative for both British and Irish flag-carriers. At that time, data showed that three-quarters of a million round-trip Dublin-London travelers opted to use rail and sea ferries rather than aircraft. This information, highlighting the high pressure and threat that the airline industry was undergoing on behalf of the substitution products, confirmed the unattractive character of the local market. In spite of this fact, Ryanair initiated service on the Dublin-London route in 1986, using a 44-seat turboprop during its early stages. Ryanair adopted a launch strategy that differentiated it from its competitors in two main ways. First, it employees would focus on delivering first-rate customer service; second, the company would charge a simple, single fare for a ticket with no restriction, while British Airways was offering a spectrum of ticket prices with varying restriction and the full range of classes of service. The company publicized its first Dublin-London service fare of I £98 dollars, whereas Aer Lingus’ and BA’s least expensive, unrestricted round-trip fares on the route were priced at I £208. At the same time, Ryanair would offer meals and amenities comparable to what Aer Lingus and British Airways provided. Thus, the newborn company benefited from the beginning from a distinctive business model focused on low operational costs and low fares, but which was not undermining the quality of its services. These low operational costs are partly linked to the company’s choice to operate on secondary airports, located outside London. Indeed, Gatwick and Luton airports were charging low landing and take-off charges compared to Heathrow main airport, which allowed Ryanair to keep its overhead costs at a lower level than British Airways, and thus gave it a competitive advantage toward other airline companies. However, this choice of secondary airports could also arise as a weakness of the company, since it prevents it from reaching a broader target of customers who predominately go through main airports such as Heathrow. Finally, British airways’ and Aer Lingus’ tickets for the Dublin-London round-trip were priced at I £153 higher than the cheapest rail-ferry ticket (costing I £55), which may have deterred most travelers of flying the route. When launched, Ryanair charged fares which were only I £43 higher than the rail-and-ferry ones’ for this journey. Knowing that the journey took nine hours by rail and ferry and only one hour by air, the newborn company could therefore tap into a segment of customers who might be ready to pay an additional I £43 for gaining 8 hours while travelling comfortably, which might be a valuable offer. Thus, this pricing strategy could enable the company to gain large shares in the market of these potential customers. (2) How do you expect (a) Aer Lingus and (b) British Airways to respond? And why do you expect each of them to respond that way? Ryanair’s launch is 1986 put a pressure on its two major competitors who are operating on the same challenging Dublin-London route. Indeed, the newborn company, benefiting from low costs, setting low fares, but offering a similar level of quality, would rapidly gain market shares over its competitors. British Airways and Aer Lingus had therefore to respond on an efficient way to retaliate to Ryanair’s entry in the airline industry. a) When Ryanair was launched, Aer Lingus domestic and European routes earned a modest operating profit while its trans-Atlantic flights sustained operating losses for the sixth time in seven year. Despite these difficulties, Aer Lingus, whose main profits where coming from its diversification in the hotel business (among others), was still backed by the Irish government, and aiming at its objectives of providing an air transport service that was â€Å"safe, efficient, reliable, and profitable†. Moreover, for being the only Irish airline before Ryanair, the company, which was touting the many benefits it brought to the Irish community, might have been benefiting from a good reputation and reliability in its local market. Thus, thanks to the state support but also to its reputation, Aer Lingus operations’ were well established in Europe, but also in the United States, where the airline has been operating for years. These resources and capabilities, reinforced by the recent successful introduction of a computer reservation system, therefore gave to the company a – temporary – advantage toward the newborn Ryanair. To retaliate to this latter’s entry, we expect that Aer Lingus reduces its European routes’ fares to match Ryanair’s ones. Thus, relying on its value of â€Å"safety† and â€Å"efficiency†, and implementing a low cost / low fares business model on its European and domestic flights, the company could protect its market shares from Ryanair’s prospective growing success. Besides, it may be all the more attractive to customers since it was spending tens of millions of pounds in renewing its fleet of jets, while Ryanair was just starting to operate with turboprops, and still did not have permission to fly larger jet aircraft on the route. b) As Ryanair started operating in 1986, British airways (BA) had been earning record profits for the last years, and its forthcoming privatization in 1987 was planned to improve these performances. The company’s strategy was mainly focusing on international routes and intercontinental flights. Indeed, BA was operating one of the world’s most extensive airline route networks, serving 145 destinations in 68 countries. This focus is highlighted by the fact that international journeys accounted for roughly two thirds of the seats that the company sold, and nine tenth of its revenues. One of British Airways’ advantages is its establishment in Heathrow airport, a major international transportation hub, through which 80% of the company’s passengers were passing. This focus on London’s main airport therefore arises as a competitive advantage toward Ryanair, whose flights, which are taking off and landing in secondary airports, hamper it from reaching a broader target of customers. Besides, British Airways’ large range of offers, implying from first class to economy tickets, distinguishes it from a low cost company as Ryanair, and may also arise as an advantage to some customers, looking for a better quality of service. As a result of this importance differentiation in service, and from our analysis, British Airways’ reaction to Ryanair entry should not be as thundering as Aer Lingus’ one. Indeed, BA already operates on a different segment than Ryanair, targeting business class and international customers. Since BA is mainly operating on international flights from and to main airports, Ryanair’s new focus on point-to-point flights and minimizing overhead costs should not arise as a threat to the British company. Moreover, with the prospective deregulation of the European airline industry whose foundations were laid by the 1986 Single European Act, British Airways should benefit from a major opportunity to expand to new European routes, relying on its valuable international experience. These forthcoming benefits and growth therefore make British Airways a company which does not â€Å"share the same playground† with Ryanair.

Greek and Roman Contributions to Modern Society

Both Greece and Rome made significant contributions to Western civilization. Greek knowledge was ascendant in philosophy, physics, chemistry, medicine, and mathematics for nearly two thousand years. The Romans did not have the Greek temperament for philosophy and science, but they had a genius for law and civil administration. The Romans were also great engineers and builders. They invented concrete, perfected the arch, and constructed roads and bridges that remain in use today. But neither the Greeks nor the Romans had much appreciation for technology.The technological society that transformed the world was conceived by Europeans during the Middle Ages. Greeks and Romans were notorious in their disdain for technology. Aristotle noted that to be engaged in the mechanical arts was â€Å"illiberal and irksome. † Seneca infamously characterized invention as something fit only for â€Å"the meanest slaves. † The Roman Emperor Vespasian rejected technological innovation for fear that it would lead to unemployment. Greek and Roman economies were built on slavery. Strabo described the slave market at Delos as capable of handling the sale of 10,000 slaves a day.With an abundant supply of manual labor, the Romans had little incentive to develop artificial or mechanical power sources. Technical occupations such as blacksmithing came to be associated with the lower classes. With the collapse of the Western Roman Empire in the fifth century AD, a Dark Age in philosophy and science descended upon the Mediterranean region. But the unwritten history of technological progress continued. In northern and western Europe, there was never a period of regression. As early as 370 AD, an unknown author noted the â€Å"mechanical inventiveness† of the â€Å"barbarian peoples† of northern Europe.The Christian ethic of universal brotherhood slowly spread through Europe, and slavery began to disappear. Tribes and peoples became united under a common creed. Euro peans not only embraced technology, but they also developed the idea of a universal society based upon respect for the dignity and worth of the individual human being. From the sixth through the ninth centuries AD, Europeans adopted new agricultural technologies that dramatically increased productivity. One of these innovations was a heavy wheeled plow that broke up the soil more efficiently than the Roman â€Å"scratch† plow.Formerly unproductive lands were transformed into arable cropland. The Greeks and Romans had harnessed horses with a throat-and-girth harness that consisted of a strap placed across the animal's neck. As soon as the horse began to pull, he would choke himself. In the ninth century, Europeans began to use a padded horse collar that transferred the load of a draught animal to its shoulders. Horses harnessed with collars were able to pull four to five times more weight than those with throat-and-girth harnesses. Horse power was also facilitated by the intro duction of the iron shoe.With fast-moving horses harnessed efficiently, it became possible to transport goods up to 35 kilometers in one day if a sufficiently good road was available. There was now a way to dispose of agricultural surpluses and create wealth that could be used for investment in technology and infrastructure. Thus, the introduction of the lowly horseshoe and collar fostered commerce, civilization, and the growth of towns. Under the Roman system of two-field crop rotation, half the land was left fallow and unproductive at any given time. In the eighth century, Europeans began to practice three-field crop rotation.Fields lay fallow for only a third of the year, and grains were alternated with legumes that enriched the soil with nitrogen. The cultivation of legumes such as peas and beans added valuable protein to European diets. In the tenth century, the climate began to warm, and Europe entered the High Middle Ages. By the thirteenth century, the new agricultural techn ologies had doubled per acre yields. Population surged; architecture and commerce flourished. Europeans began a program of aggressive territorial expansion. They reclaimed Sicily in 1090 and systematically drove Muslims out of Spain.The First Crusade was launched in 1095, and Jerusalem was captured from the Seljukian Turks in 1099. The prosperity created by the new agricultural technologies subsidized education and the growth of knowledge. In the late eighth century, Charlemagne had revived education in Europe by setting up a general system of schools. For the first time, not just monks, but also the general public were educated. As the European economy prospered, students multiplied and traveled, seeking the best education they could find. Christian Cathedral Schools evolved into the first universities.The Universities of Paris and Oxford were founded c. 1170, Cambridge in 1209 AD. The harnessing of water power began around 200 BC with the invention of the quern, a primitive grain mill consisting of two rotating stones. The Romans had been aware of water power but made little use of water wheels and mills. In contrast, by the tenth century, Europeans had begun a wholesale conversion of their civilization from human and animal power to water power. The water-mill came to be viewed not just as a grain mill, but as a generalized source of power that could be adopted for many uses.This new approach was to fundamentally alter the fabric of human civilization. By the thirteenth century, water power was being utilized in sawmills, tanning mills, and iron forges. Mechanical power derived from moving water was used to process beer mash, to turn wood lathes and grinding stones, to power bellows, to drive forge hammers, and to manufacture paper. Because water power was available only where streams were located, Europeans developed other sources of mechanical power. Tidal power was used in Dover and Venice in the eleventh century. The first windmill in Europe appeared in 1085 AD.Over the next hundred years, windmill technology spread rapidly over the plains of northern Europe. Windmills provided power in the cold of winter, when water mills were shut down by frozen streams. The utilization of mechanical power in these many forms required that Europeans develop methods for transferring and redirecting power, crucial technologies for the Industrial Revolution of the late eighteenth century. Most important of these was the crank. The crank is a device that allows rotary motion to be converted into reciprocal motion, or vice-versa.For an industrial or technological civilization, the importance of the crank is second only to that of the wheel itself. Without the crank, â€Å"machine civilization is inconceivable. † Water clocks had been known since ancient times, but they were notoriously inaccurate and inconvenient. Near the end of the thirteenth century, it became possible to construct the first mechanical clock when some unknown genius invente d a device known as the verge escapement. The verge escapement enabled the power delivered by a falling weight to be modulated and delivered evenly at a constant rate.The techniques developed in clockwork for regulating and transferring power were essential for the complex machinery of the Industrial Revolution. The introduction of mechanical clocks also made it feasible to adopt standardized timekeeping. This was a necessary step for the eventual development of a technological civilization that needs to coordinate complex administrative and commercial interactions. Modern science traces its roots to the natural philosophy of the ancient Greeks and the pre-Socratic enlightenment c. 600-400 BC.The Greeks began the evolution of what became modern science by introducing naturalism and rejecting supernatural explanations. Describing epilepsy, a Hippocratic author noted that the disease was â€Å"no more divine nor more sacred than other diseases, but has a natural cause from which it o riginates like other affections. † But neither the Greeks nor the Romans ever hit upon the experimental method. Greek philosophers favored the deductive logic used in geometry. They had several reasons for being skeptical of a science based on observation.The world was in state of continual flux, different people observed things differently, and the only data available to them were anecdotal. Modern science began in the thirteenth century when Christian theologians such as Robert Grossesteste became seduced by Aristotelian logic and the Greek principle of demonstrative proof. But when Grossesteste and his student Roger Bacon contemplated the mysterious properties of the magnet, they were forced to conclude that logic alone could never uncover the secrets of the cosmos.Magnetism was a phenomenon that could never be predicted by logical reasoning. It could only be observed. Thus the need for a systematic experimental method. Gunpowder originated in China, but firearms were a Eur opean invention. Cannon date from the first part of the fourteenth century in Europe, and they were common by 1350. The use of cannon in particular helped break up feudalism, as it made central fortifications obsolete. Even the strongest structures were now vulnerable. The protection offered by a stone castle was eviscerated.The possession of personal firearms gave individuals more political power and was an engine for social and political change. The firearm was also the first internal combustion engine and demonstrated the enormous potential power that lay in confined and controlled combustion. Like gunpowder, many of the technologies developed and utilized by Europeans originated in China. But the Chinese were never able to fully develop the promise of these inventions because their economic development was strangled by a â€Å"bureaucratic, state controlled economy. â€Å"In Europe, the leaders in developing medieval technology were not philosophers, but craftsmen, merchants, and businessmen — in a word, entrepreneurs. There were profits to be derived from the new technologies. A water-powered mill required a considerable capital investment, but the investment was likely to return a significant profit. Inventive, free people looked for ways to improve their productivity. Individuals profited, and society prospered. Thus, the Industrial Revolution that began in England c. 1760 was the inevitable outcome of a thousand years of European technological progress fostered by economic freedom.During the nineteenth and twentieth centuries, the technological innovations pioneered in Europe began to spread throughout the world. This process continues today, most notably with the transformation of the world's most populous countries, China and India. The most undeniable benefit of the technology that Europeans bequeathed to the world was a dramatic increase in life expectancy. Before the Industrial Revolution, average life expectancy at birth was only 25 year s, no higher than it had been in Roman times.But as of 2009, life expectancy in the world had reached 69 years. And Japanese women now enjoy a record life expectancy at birth of 86 years. Thus the world was transformed — not by philosophers, scientists, or politicians, but by engineers, craftsmen, and entrepreneurs. Writing in 1768, Joseph Priestley predicted that â€Å"whatever was the beginning of this world, the end will be glorious and paradisaical, beyond what our imaginations can now conceive. † Thanks to European inventors, Priestley's prediction was fulfilled.