The Pin Factory Blog

Stephen Littlechild, Professor emeritus at the University of Birmingham, fellow of Judge Business School at the University of Cambridge and a top regulatory from 1983 to 1998, explains how politicians and regulators have, by misunderstanding how markets work, regulated to boost energy firms' profits at the expense of higher bills for consumers.

Britain’s competitive retail energy market was the first in the world, and for many years the most competitive. It had the most active suppliers, and the most active customer switching. This competition and choice brought better offers for customers. It may not seem like it because of recent energy price increases. But these reflect increases in fuel costs like gas, higher costs of renewable energy and other obligations on suppliers, not a lack of retail competition.

In fact, retail competition was sometimes too fierce, witness the problem with doorstep mis-selling. But Ofgem took action to fix that problem.
Retail profits in the domestic sector used to be minimal; Ofgem calculated that many were negative. New entrants came into the market, but until recently most found it tough to survive.

Retail competition has been enhanced by a dozen switching sites. Each seeks the best way to attract users, to offer the simplest calculations, to include the most relevant information and the clearest comparisons, to facilitate subsequent switching. No other country can boast as lively, innovative and effective market for information and assistance to energy customers as Britain.

Continue reading.

Summary: US household spending is holding up

What the chart shows: The chart shows the % change in US personal income and expenditure in nominal terms in the most recent three months (January-March 2013) compared with the previous three months (October-December 2012)

Why is the chart important: In 2011 the US temporarily cut the employee payroll tax rate from 6.6% to 4.6%. In January 2013, this cut was reversed as part of the fiscal tightening.  There were fears that this tax increase, equivalent to 1% of household disposable income, would lead to a sharp cut in consumption, potentially throwing the US economy back into recession. These fears were always exaggerated. The payroll tax cut did not lead to a spending boom, as households used the extra money to pay down debt faster. The increase could be – and was – met by drawing down savings somewhat. Although monthly income fluctuated over the year-end, this was due to pay-outs in December to avoid the tax hike. Averaging the past four months shows income remaining steady. This confirms the continued US recovery.

Martin Durkin's documentary is to be shown on Channel 4 at 7.00pm on Saturday April 13th.  Amid all the anti-Thatcher myths put out by the chatterati, this movie offers a refreshing assessment of how she changed the lives of ordinary people for the better.

"Martin Durkin's controversial thesis is that Margaret Thatcher was a working class revolutionary.  She believed that capitalism was in the interests of ordinary people, not the toffs. Many ordinary people agreed.  And that is why the left hated her so much - Margaret Thatcher stole the working class."

The documentary features interviews with many of those who knew and worked with Lady Thatcher, including brief contributions from Dr Madsen Pirie, the ASI's President.

On a gap year and looking for something interesting?

If you are already on a gap year and looking for something stimulating, rewarding and worthwhile that can also enhance your CV and your experience, you might consider spending some time with the Adam Smith Institute.  We have space for someone currently on a gap year who might join us to help on some exciting new projects. 

You know what we do and where we stand.  If you feel this is compatible with your own position, get in touch with us at TNG@adamsmith.org with a copy of your CV and a few paragraphs about yourself. We will cover expenses and compensate you for your time.

This week on Samizdata, Brian Micklethwait has been writing some very nice things about the Adam Smith Institute and Madsen Pirie's book 'Think Tank'.

He writes in regard to 'Think Tank': "The fact that I particularly enjoyed these early pages suggests to me that someone who only recently became aware of the ASI might enjoy this book even more than I did, which was a lot. If you have only recently arrived on the libertarian-stroke-pro-free-market scene, and the only thing you know about the Adam Smith Institute is that they are there, alive and kicking, blogging and publishing, arranging public meetings and not so public meetings, generally advancing the libertarian economic and political agenda wherever they can, in London and everywhere else on earth that beckons, and that everyone else you admire thinks they’re terrific people, then this could be just the book for you. It will tell you how they got where they are, and what they did for the next three decades. And it does this in the style of a man who is not, as he freely admits, always accomplishing all that he wants to accomplish, but who is nevertheless engaged in the exact struggle that he wants to be in, and who is therefore fundamentally happy. The style is long on entertaining and often quite self-critical anecdotage, less burdened with much in the way of earnest tactical or strategic theorising."

You can read Brian's full review here.