If you remember the Washington Consensus, you weren’t there. Power dressing, powder cocaine and a genuine belief in a market-oriented approach to economic reform from Eastern Europe to Latin America. Fast forward to today and it’s all about relaxed tailoring, teetotalism and strategic (or not so strategic) protectionism.
Such has been the broader shift following the 2008 financial crisis, the Covid-19 pandemic and the return of imperialist land wars in Europe that even parties of the centre-right appear comfortable (or at least resigned) to capping energy bills amid a global bottleneck or prioritising domestic resilience over supply chain efficiency.
And yet, the fundamentals of human behaviour remain unchanged. We still feel, think, want to have other people see us in a particular light. And from the £100,000 childcare tax trap to congestion pricing, we still very much respond to incentives. And when it comes to the latter, what could be more tantalising than flying over a body of water on a lie-flat bed, sipping on sparkling wine and twisting those teeny-tiny salt and pepper shakers?
Free at the point of reservation
Well, not to be a downer but it isn’t free. Often, you need to have the right credit card, and that comes with a substantial annual fee1. Second, British Airways is famous for its punchy and rather opaque “taxes and charges”, which can run into the hundreds of pounds on top of the points you must redeem.
Then there’s friend of the newsletter, HM Treasury, with its sky-high Air Passenger Duty, the highest in the world. And of course, every economist’s favourite, the opportunity cost.
Do redeemers ever ask themselves what else might they have done with their money? Rather than points, they could have opted instead for a credit card that gives them, say, 2% cash back on each purchase. Then there is the issue of inflating the benchmark cost. If a business class ticket costs £8,000 but you would never actually pay that out of pocket, then I’m terribly sorry but the real saving is from the £500 economy ticket you would otherwise have bought.
I could go on. But essentially, and unless you generate points from other people’s spending (e.g. employer-funded travel) then it’s all a bit tricky.
And it can lead to some truly dismal decisions, such as taking out a mortgage with a particular provider because they offer you airline points with each monthly payment. Now, I’m not a financial advisor but picking your mortgage seems too important to be decided by maybe getting a slightly cheaper holiday but you maybe also lose your home?