Category Archives: Current Affairs

The Shebeen and Covid-19 in Ireland

The shebeen (or síbín, in Irish) has seen a quiet revival in Ireland since the pandemic of loneliness accompanying Covid-19 lockdowns reached Ireland in early 2020. It is widely known that the pub is a temple of communal interaction, deeply entrenched in the psyche of many Irish people. Pub closures have left a void in Irish society and particularly in its rural communities, where pubs are not only social hubs, but economic pillars. It appears that some have reverted to the shebeen in an attempt to quell their craving for human contact that social distancing and lockdowns induce.

What is a shebeen?

A shebeen is an illegal, unlicensed pub, usually found in people’s homes or sheds. Their historical origin is in Ireland, but the illicit bars soon made their way around the world, appearing and evolving in countries like South Africa, the US and Canada. Interestingly, while shebeens have long been in decline in Ireland, they became an essential meeting-place for the black people community under apartheid in South Africa and most are now legally operated there. Shebeens have become far less numerous in Ireland, but have made somewhat of a comeback since the onset of multiple Covid-19 lockdowns, which left people craving physical and social interaction. While shebeens are not exclusive to the Covid-19 period, there has been an upsurge in shebeen raids and reports in Ireland since the first lockdown in March.

The problem with shebeens during Covid-19

Shebeens have raised concerns for two main reasons during the Covid-19 pandemic.

Firstly, leaving the pandemic aside, they are illegal. Defined as “unlicensed drinking premises” under the Intoxicating Liquor Act of 1962, to be found attending (or to supply alcohol to) a shebeen is to break the law. It is reasonably difficult to differentiate between a shebeen and a “man-cave” or legal home-bar. Gardaí are provided with vague metrics to instruct their course of action. The Act states that large quantities of alcohol stored on a premises and evidence of frequent consumption are indicators of incriminating behaviour. This allows for substantial variation in the make-up of a shebeen. They may range in sophistication from a crude few taps and some seating to being almost indistinguishable from a licensed pub. In addition, the law states that an unlicensed premises can serve alcohol to the owner, family members, residents, workers and “bona fide” guests. Hence, the distinction between a genuine private gathering space and a shebeen is precarious under this framework. However, these ambiguities are irrelevant in a time of national lockdown, during which household visits are banned.

Consequently, the second issue that the shebeen’s return to relative prominence in Ireland presents is that assembling in a shebeen likely breaks public health rules, even during milder levels of government regulations. Non-adherence to these rules can contribute to the spread of Covid-19, which is economically and physically undesirable, and may result in unnecessary burden being placed on an already inefficient national healthcare service. It can also cause undue tension between citizens making sacrifices to comply with regulations and those using shebeens, which carries its own undesirable ramifications. Likewise, licensed publicans and other business-owners feel aggrieved that their pubs, which must obey public health guidelines when open, have been labelled as virus-spreading “scapegoats” and forced to close while shebeens have become increasingly prevalent. It is important to note that while shebeens have become more pervasive since the outbreak of Covid-19, an Garda Síochána have repeated that their presence does not represent endemic lawlessness. Shebeens have always been in Ireland and probably always will be. The Gardaí have appealed to the public to report any shebeens, and will raid all illicit premises they are alerted to.

Understanding the Irish shebeen renaissance during the pandemic

Social drinking is a unique outlet for Irish people. The swathe of mental health issues that have arisen as a result of lockdowns and social isolation offer a simple explanation of why many have risked breaking the law and public health guidelines. People have become lonely, and one of their primary means of interacting with other humans has been placed off-limits. Generally, shebeens are not in the business of cramming in rabbles or making money. Rather, they are small spaces where a few people meet to satisfy their need for human connection. While the shebeen presents complex moral and legal quandaries, the reasons behind their upswing are as basic as any other human craving.   

The pandemic’s effect on food delivery services

The impact of the pandemic has affected companies in various industries differently. However, food delivery companies, have been on the receiving end of better performance unlike their hospitality peers. In fact, the pandemic completely turned around the situation for certain companies. 

Billions of dollars worth of losses for the food delivery sector were forecasted at the beginning of the year. One of the most notable food delivery businesses, Grubhub, was actually contemplating “putting itself up for sale after losing its foothold on the market.” 

The pandemic has proved to entirely reverse situations like these as more and more restaurants shut down during lockdown periods. As a result, people who were forced to stay indoors turned to food delivery. 

How did Uber respond?

As Uber’s core ride business drastically declined, it heavily focused on its delivery services. Sales for meal delivery increased by 135% in the US alone. With positive trends like this, Uber has planned a $2.65 billion acquisition of Postmates to increase its market share and reduce competition. This will allow Uber to control 37% of the food delivery sector in the United States, second behind DoorDash. The company also tried to merge with Grubhub but JustEatTakeaway beat the company to it, now allowing JustEat an entrance into the US market. Uber has also been focusing on diversifying its service portfolio by launching a grocery delivery service in the US. The idea is to create services that consumers form habits off of, to ultimately continue its boom growth trajectory post-pandemic.

How did DoorDash respond?

DoorDash has been taking full advantage of the soaring appetite of customers for its services and has secured an opportunity for an initial public offering. It was able to secure $2.5 billion in capital to expand from its original food delivery service to offer convenience and grocery store products as well. DoorDash also expanded its product portfolio to create Storefront to support restaurants in listing their stores on DoorDash without the charge of commission on items sold. It also set up Self-Delivery which allows restaurants to be listed on the app but use their own delivery services. DoorDash is aware of the benefits it is receiving from current circumstances and is not ignoring the possibility of its soaring demand potentially decreasing once the pandemic starts to settle. “Warnings in its IPO paperwork [that]… the circumstances that have accelerated the growth of our business stemming from the effects of the Covid-19 pandemic may not continue in the future.” Nevertheless, consumer dependence on such services continues to grow the longer the pandemic prevails, which is why DoorDash is now valued at $38 billion.

The holiday season

Food delivery services are now increasingly focusing on speed of delivery as a key source of competitive advantage – especially as orders increased during the holiday season. For example, Postmates is launching a new business model for retail that allows customers to get “instant delivery from clothing, home, beauty and wellness retailers, and allowing the delivery company to broaden its reach.” It seems as though companies that initially started off in the food delivery sector are now beginning to dip their feet in offering services similar to that of Amazon. Mike Buckley, the senior vice president of Postmates, notes that there has been a shift in consumer habits as they increasingly transition to online shopping. Companies are allowing faster provision of these products as they work to increase the speed of their deliveries.

This shows the new opportunities the pandemic has created for the food delivery industry. The use of digital marketplaces is now being broadened to provide a bridge for customers to virtually shop for both household essentials and recreational products from retailers.

Airbnb Facing Strict Regulations From The EU

The go-to holiday rental company, Airbnb, is under scrutiny as the EU is expected to release a draft of a new Digital Markets Act this December.

What is the Digital Markets Act?

Since 2000, this is the first time an act like this is being revised. It is “expected to overhaul the management of content on platforms like Google and Facebook with its Digital Services Act.” Representatives, from Amsterdam, Barcelona, Florence, had a meeting with the EU Competition Commissioner, Margrethe Vestager, to discuss the implications of the current legal framework being outdated and inhibiting officials from addressing concerns created by online platforms. As Big Tech companies grow increasingly powerful in the marketplace, the aim of this act is to enforce stronger regulations that promote fair competition in the EU market. 

How will this affect Airbnb?

One of the current issues at hand regarding the Digital Markets Act is deciding whether or not Airbnb will be among the companies that will have to comply with the new rules. Officials are still in the process of deciding whether the rules should apply only to tech giants such as Google and Amazon, or to also include 20 other companies.

22 European cities have come together to persuade the EU to impose stricter regulations on Airbnb (and other short-term holiday rental platforms) because they are squeezing out domestic competition. The Dutch government indicated that the short-term holiday rental industry creates negative externalities for the “house market, liveability, social cohesion, safety, and the level playing field for other providers of such accommodation.”

Without regulations directly from the EU, Airbnb is permitted to continue its operations with great freedom by affirming “it is simply a platform to put people in touch with renters.” Airbnb definitely has a chance of being targeted because of “its large share of short-term rentals market.”  If the EU does decide to include Airbnb, the company will be expected to share their research and data with smaller rivals and local authorities. The Digital Markets Act would impose a ban on pushing out their own products and services stronger than those of third party sellers. There will also be additional rules that prevent unfair competition to allow markets to function better. Officials will have greater power to “intervene in digital markets to address structural problems before they become… baked-in internet monopolies.”

Industry impact

This will significantly affect the dynamics of competition as tech firms spend a great amount of time and money on capital developing systems that collect and analyse consumer and market data. This gives them a strong competitive edge which is why these companies have declined to reveal their algorithms for years. The regulation will especially impact Airbnb as it is preparing for its multibillion dollar public listing in 2021.

Hungary and Poland block ground-breaking EU budget

While conflict and drama are not uncommon during negotiations for the EU’s seven-year budget, this week’s round of negotiations were notably tense. The stakes were higher and the implications of deadlock more consequential than ever, with the EU’s largest ever budget and historic Covid-19 recovery fund hanging in the balance.

What is the issue with the plan?

The €1.1 trillion budget, along with the €750 billion recovery fund, has been vetoed in the European Council. Hungary and Poland have blocked the historic deal, which required multiple rounds of negotiation with the European Parliament, due to the budget’s rule of law conditionality mechanism. This aspect of the budget has birthed protest from the two countries, who insist that their regimes operate democratically. They claim the EU’s rule of law requirements are extremely vague, and that linking them to EU funding “jeopardises trust” within the bloc.

In reality, both governments are opposed to the clause because it ties the receipt of EU funding to the EU’s rule of law requirements which, to varying degrees, Hungary and Poland are both in breach of. The two countries are currently being investigated by the EU for undermining the independence of courts, the press and NGOs within their borders. If the rule of law mechanism is implemented, it could cost them billions of euros in EU funding.

How have they blocked the budget?

The EU’s long-term budget is initially formulated by the European Commission. Then, it is usually amended by the European Council, who send it to the European Parliament for debate and approval. If it is rejected in Parliament, the Council make further amendments. Once approved in Parliament, the final draft of the budget must be approved unanimously by the European Council, before being sent off for ratification in national parliaments.

The clause was initially accepted by the European Council, because only a qualified majority was required to link rule of law adherence to EU funding. However, the budget needs unanimous approval in the Council to be passed. Every country in the EU has the power to veto legislation under this voting system, which has famously caused problems in the past. Poland and Hungary have withheld their consent to sign off on the finalised legislation.

What does rejection of the budget mean?

Most significantly, it means that an agreement is unlikely to be reached before January. The Parliament will not offer any more opinion on the rule of law mechanism, declaring it an internal Council dispute.

This news comes at a time where EU funding is desperately needed. EU economies have been significantly damaged by a second wave of Covid-19, and the support brought by the Covid-19 recovery fund in January would be warmly welcomed. Quite ironically, Poland and Hungary are two countries who could benefit the most from the fund being promptly distributed, particularly if they do adhere to the rule of law, as they claim.

Significantly, the dispute is likely to affect other EU policy areas. The most immediate example is the likely delay of the EU finalising its climate change plan. Talks are due to take place from December 10-11, but a plan cannot be made without the financial stability that a finalised long-term budget will bring. Again, Poland is ironically set to be the biggest beneficiary of the EU’s €17.5 billion Just Transition Fund, designed to help economies deal with the shift from fossil-fuel to renewable energy dependent economies.

However, EU leaders have said that they will continue to insist on linking EU funding to rule of law adherence. Angela Merkel also assured the EU that talks with Poland and Hungary would push forward and find a way to overcome the Council’s deadlock. Hungary’s Prime Minister, Victor Orbán, too is confident that the issue will be resolved, indifferently stating that this is “how it [EU negotiation] usually goes”. He is likely correct, but time is of the essence.

Covid-19 Vaccine News Sparks Market Rally

Investors showed confidence in the market last week as certain stocks hit all-time highs. This bull market comes on the back of positive news in the race to find a vaccine for Covid-19, which has been responsible for putting many countries into output crushing lockdowns. Investors are betting that the vaccine developed by Pfizer in collaboration with Germany’s BioNtech could be the key to ending the pandemic.

Investor confidence was also given a boost when it became clear that Democrat Joe Biden would become the next US President. Investors see this as a return to predictable policy-making especially in combination with a Republican controlled Senate. A Republican Senate would make it very difficult for any radical regulatory or tax changes to be enacted, giving investors more confidence.

Market Records

The apparent turning point in the fight against the Covid-19 and the election of Joe Biden have given investors the chance to look beyond the current crisis. So-called “stay-at-home” stocks such as Zoom and Netflix fell sharply while the stocks hit the hardest by lockdowns such as British Airways rose 16% on Monday. Last week saw the largest capital inflow into equity markets in past twenty years according to The Financial Times. $44.5 billion worth of US stocks were bought in the first half of the week. This growth came mostly from large institutional investors such as pension funds. Smaller retail investors accounted for just $3.3 billion of inflows. Extremely low interest rates and the promise of more fiscal stimulus will have also played a part in the rally.

Yield Curve Growth

The yield curve on U.S Treasury Bonds – the difference in interest rates between long-term and short-term bonds – which can be an accurate measure of the likelihood of a future recession grew from 0.57% to 0.77% signifying growing investor confidence. The steeping yield curve will help banks who borrow for the short term and lend for the long term.

The Winners and Losers

The stock price rally was the most visible in what are known as value-stocks. The performance of these stocks is more linked with the overall performance of the economy as opposed to individual companies. This has meant that tech stocks did not see the same rise with the tech heavy NASDAQ index actually falling a percentage point. This bucks the trend seen over the decade as value stocks have been unable to produce the same yields as growth stocks.

Market Challenges

There are still many reasons for investors to remain cautious. Attention will inevitably turn to the complex roll out of any new vaccines. It appears for the short term that European countries will have variations of lockdowns that have suppressed economic activity in order to suppress the virus. Germany’s health minister confirmed on Saturday that “severe restrictions” would be in place for the next 4-5 months. The U.S has seen its largest daily case figure of 155,000. The incumbent President Donald Trump has vowed that there would be no lockdown, however the incoming President may be more cautious.

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