The Pin Factory Blog

Picture the scene: you're in a room full of freedom-loving libertarians - the kind of crowd who unfailingly have an answer for everything -  and a fundamental question surges forth from your cerebral cortex.
'Just why are freedom and the free-market so good then?' Your question is met with a mixture of sympathy and incredulity. One might think this an unparalleled opportunity to extol the virtues of personal and economic freedom and the strength of the individual. However, the response is often lacklustre. In an almost automaton-like manner, void of inspiring message or conviction, the reply comes back: 'Well, you see, Hayek/Smith/Rothbard wrote about that in his book X. It must be true – it's all there in black and white!'

A response with decided limitations. In the often bubble-like environs in which an inspiring young, politically-minded person often find themselves in, this approach tends to go off without a hitch. Fellow like-minded people nod sagely and in agreeing tones affirm: 'it's true, you know. Mises did say that'.

This effectiveness, however, tends to diminish rapidly the moment you step outside of the postcode SW1. Were a similar situation to occur in my Midland home town, your Joe Bloggs would give any combination of the following three responses: 'who?', 'eh?', or a dull, cold stare.

But nor is it just about Mr Bloggs. If students, the most likely decision-makers of the future, are to be converted to the cause of freedom and liberty, throwing around names will achieve little. There is no reason to think that the alienation many of us feel when bombarded with the names of the left-wing holy-of-holies is any less alienating than others hearing about those we hold in such high esteem.

What we need are inspiring real-life examples. There are multitudes of these wherever freedom and liberty are allowed to flourish: the men and women whose inventions, made possible through economic liberty and the freedom of capital, directly benefited themselves and society as a whole; the poets, playwrights and painters who created great works of art, unmolested by restrictions on their conscience and granted independent thought. These are our ambassadors – those who made the watch on your wrist and shoes on your feet.

It is tempting to lapse back into the self-satisfied stance of thinking that we are somehow the enlightened few compared to those who are either too idle, too dim-witted or simply too far-gone to learn about freedom. This is nothing less than a monumental mistake. Many of us bemoan Westminster for being more a political club than a functioning organ of a representative democracy. Whilst not the sole remedy to this grievance, inspiring your man and woman on street of liberty is a crucial first step. Until then, the mental shackles put in place by decades of political misdeeds do not stand a chance of being torn away.

[Deirdre McCloskey wrote a fine example of 'Factual free-market' advocacy recently. — ed]

Today, with the closure of one of the internet's richest resources. the English-speaking world stands greatly impoverished. In protest against two proposed bills in the U.S. House of Representatives and Senate (the 'Stop Online Piracy Act' (SOPA) and the 'Protect IP Act' (PIPA) respectively), the English-language version of Wikipedia has taken itself offline for 24 hours. [That includes the Wikipedia links in this post, lest ye take the open internet for granted — ed.]

The provisions put forward in SOPA and PIPA enable the closing down and harassment of websites (not even necessarily located in the US) on the flimsiest of pretences: government censorship masquerading as copyright protection. But what exactly makes the laws so odious? There are four key, objectionable provisions, all of which are ripe for manipulation by rent-seeking parties (summarised from this link):

1. The Anti-Circumvention Provision, allowing the US government to close sites who offer advise on merely circumventing censorship mechanisms;
2. The “Vigilante” Provision, which would grant immunity from prosecution to internet service providers who pre-emptively block potentially offending sites, leaving them inherently vulnerable to pressures from a host of interested parties;
3. The Corporate Right of Action, enabling copyright holders to obtain an unopposed court order which would cut off foreign websites from payment processors and advertisers;
4. Expanded Attorney General Powers: therein giving the Attorney General the power to block any domain name and have their results barred from search engines: they would effectively cease to exist.

You don't need to be a rabid libertarian to realise both SOPA and PIPA are anathema to a society which readily proclaims its commitment to spreading liberal democracy; an integral part of which is the freedom of expression. After all, western nations have waged war purportedly in support of 'freedom' and regularly (this time rightly) criticise those nations which continually suppress freedom of expression online.

On their own turf however, governments seem evermore reluctant to allow the internet to remain the vital bastion of freedom that it is. Away from the stifling proclamations of state broadcasters and the mass media, the internet has revolutionised Joe Bloggs's ability to think independently: little wonder it is increasingly browbeaten from governments worldwide.

Economic consequences must considered too. If a website is to avoid being picked-off by the keen-eyed legal-sharpshooters that would undoubtedly thrive with the passing of these laws, they would have to employ an army of workers to constantly micromanage their site's content: one slip-up and it's potentially 'Game Over'. Who would want to invest in company stifled in a quagmire of draconian legislation, able to be shut down with the hit of 'Enter'? The internet's position as a motor of modern innovation would be seriously jeopardised.

Despite the promising words coming from the White House that freedom of speech and expression will be upheld, scepticism about Obama's commitment to liberty is well grounded: less than three weeks ago the 'National Defense Authorization Act' was passed, enabling the indefinite detention of almost anybody the US government sees fit – an unsettling omen.

Albeit not alone, the world's most powerful nation is walking down an increasingly questionable path. The internet is one of history's most momentous inventions: its fate is far, far too important to be left for politicians to decide.

Easy on the cheddar, chubby! Don't even think about eating those fries, fatty! Do I even have to mention the profiteroles, porky? Are these merely playground taunts? Worringly, they increasingly echo the voice of governments worldwide.

Owing to the rise of so called 'fat taxes', authorities are taking an ever-more active part in what their citizens digest (and what comes out of their wallets, of course). In the last few months alone, Hungary, France and Denmark have all implemented their own 'fat tax'. And whilst, as it stands, no gendarme will be confiscating your next banana-split, authorities, in their paternalistic wisdom, are increasingly frowning upon foods deemed undesirable.

Take Denmark, for example: a range of fatty foods, including even milk and butter, will be subjected to a tax if their saturated fat content is above 2.3%. The price of a pack of butter, for example, will increase by 45% due to the tax. Therefore, so it is thought, those selfish souls who indulge themselves on fatty foods will buy tofu and lentils instead: hey presto, obesity problem solved!

Things are never so simple, of course. The tax has already been received by many Danish firms as a 'bureaucratic nightmare', piling on additional costs to firms in an already tough period. Once more, any tax such as this is going to be inherently regressive; those least able to afford any price increases will be hit the hardest. But what does it matter? The French 'fat tax' is expected to raise an estimated €120,000,000 p.a.. A nice little earner.

Nor are we immune to such government meddling here in Perfidious Albion. Having successfully tackled all our other social, political and economic dilemmas, David Cameron is allegedly so enamoured by the idea of a 'fat tax' that he is toying with the idea of implementing one of our very own, as too are Finland and Romania.

Most are in agreement that obesity is a society-wide problem. The more rotund we become, the more our healthcare costs increase. So what's the solution? Surely not pricing poor people out of the market for fatty foods. We must seek a solution other than 'more taxes' – the default position of any government. Perhaps our BMIs could be helped by making it easier for people to help out at sport clubs without undergoing a raft of CRB checks, or by reforming our health system which currently permits the cost of atrocious health habits to be picked up by someone else.

Sadly the precedent has already been set. When we already allow the government to dictate what we may and may not consume in the form of innumerable drugs, letting them control what we eat is a logical advancement. And it will all be done for our 'own good'.

And nor is this merely a European phenomenon: the world over governments are beguiled with the notion of controlling our bodies. In New York, for example, it is now compulsory to display the calorific content of foods, presumably because people use to think that a bucket of KFC was a healthy snack. How long is it till cars are plastered with images of car-crash victims? After all, cars are dangers, didn't you know?

Along with this, Chicago's new mayor has implemented a mandatory 'wellness programme', in which one can only presume that those unworthy enough to be a few pounds overweight are scolded by their organic-mung-bean-fed superiors. 

Can't we be left alone to comfort-eat in peace? Lord knows we need it, considering how grim the new is nowadays. If only someone would implement a tax on bad ideas produced by government.

For just over a week now Zuccotti Park in New York has become yet another place to be 'occupied' by those claiming to represent the majority in society: in the case of Occupy Wall Street, they claim to represent the '99%', which I suppose includes me (and most likely you).

And their demands? Unclear. The movement is a hodgepodge of the frustrated and annoyed, not a particular coherent political or economic ideology. However, overarching aims demand an end to corporate influence on the political process combined with a generic anger at the bankers and other 'fat-cats' who have, figuratively speaking, gorged themselves on our milk. All this, of course, is topped off with the expected banners exclaiming 'Stop Capitalism'.

Some of the aims I have sympathy for. Undoubtedly the corridors of power have been captured by interest groups and lobbyists (although here big business is not solely to blame). People have a right to be furious about the economic decisions that have been made, thereby saddling them and their future generations to indebtedness. But who are they to be angry with? Is it really Gordon Gekko who should be vilified?

To a certain extent, yes. However the real culprits of this calamity are our disastrous politicians, who dish out taxpayers' money without second thought, disregarding their electorates' wishes. A billion here, a trillion there: when you're seeking re-election spending other peoples' money must be easy. It is government who repeatedly bails out bankrupt firms (with our money) and thereby takes away risk, a vital function of the market. When government encourages Wall Street to act recklessly by shielding them from losses, little is likely to change. To top it off we have no choice in the matter – the government is the only force able to legally steal your money.

True Capitalism is not the problem. The reason successful firms are successful is because they offer things we want. We can choose whether to give them our money – Ronald McDonald has never coerced you into buying a Big Mac. If the government were a firm on the open market, it would go broke within milliseconds.

But we haven't got true capitalism. It is a bastardised form. We have currencies controlled by central banks who artificially manipulate interest rates and money supply. We have governments who are in bed with a harem of interest groups, all vying for special favour and concessions. Our government steps into markets, naively trying to 'correct' them but only emboldening crises. Firms which should have gone under long ago have made too many friends in office: the system is cancerous.

To those at Occupy Wall Street: you have every right to be furious. But who enabled Wall St. to act with such careless abandon? March down to D.C. or the Fed: it is the politicians who have squandered your money on vain political projects and hide behind the redoubt of 'broken capitalism'. Helicopter Ben is not throwing his own money out the side of his helicopter, after all.

It is not capitalism that needs fixing, it is our meddling, incompetent political class and our bankrupt political system. Our economic and political freedom is stifled and it is time to take it back.

As I sit looking out of my window here in Berlin I see all manner of depressing buildings: pre-fabricated tower blocks, industrial-looking chimneys; all suitably lying under a grey, overcast sky. If any one place in the world displays the battle-scars of the twentieth-century and the ravages of totalitarianism, that place must surely be Berlin.

Looking back at what happened here over the last 100 years should give cause for anybody to think: the state, under various guises, has done its utmost to destroy this city. In 1914 pickelhaubed soldiers marched down Unter den Linden to the battlefields of northern France. Although the allegiance and ideology of the troops, shells and bombs that came subsequently changed, be they Hitler's brownshirts or Honecker's Nationale Volksarmee, they all acted on behalf of the state.

Today, however, much of this seems relegated to the history books – done and dusted. We are told we live an enlightened age; we are experiencing the End of History. Whilst we concern ourselves with our 42” plasmas and obsess over Kate Middleton's daring fashion exploits, the barbarity of the state has been replaced by politicians giving away teddy-bears; politicians who 'understand' us and who want to be 'our mates'. We have become politically inert, but not to worry; our friends up top have it all under control.

But is it so? Or are we merely being duped by a class of political elites out of touch with reality? By almost every yardstick our politicians are failing us, and despite the cuddly façade of our political elite there are dark clouds on the horizon. Our economy remains in the doldrums despite being 'injected' more times than Pete Doherty. The Eurozone staggers from one crisis to another like a drunk navigating an obstacle course. Our personal liberties are increasingly curtailed whilst we are being 'nudged' in directions deemed suitable by the state. If the last century has taught us nothing else, it is that humanity is better served with minimal state interference: the state is history's largest mass-murderer.

But so what? One only has to observe history to realise that the state is most dangerous when it is of an extreme persuasion. Electorates tend only to swing to the outer reaches of the political spectrum when socio-economic uncertainty is rife: people are loathe to throw their lot in with an unknown, potentially psychopathic, ruler when everything is running smoothly.

It is with these thoughts in mind that I look upon events unfolding in Brussels with peculiar mix of emotion. Whilst an unaccountable, undemocratic and, in my eyes, dangerous behemoth may be in the last throes of life, at what cost has this come? It may prove overly-wishful to believe that the EU will simply fizzle out be followed by a resumption of normality – there is too much economic and political baggage for such a simple resolution. A dissolution of Europe as we know it could lead to a political environment not seen since the darker decades of the 20th century.

History reminds us that things often don't stay trouble-free for very long, especially when government is at hand. Will the state be as deadly to this century as it was the last? Only time will tell.

Germany is a land of environmentalists. The first successful green party in Europe, Die Grünen, won their first seats in the Bundestag in 1983 (compared to Britain's first Green MP in 2010). And much German environmentalism revolves around the rejection of nuclear power. This, when taking into account Germany's history, is not altogether surprising: Germany bowed out of World War II only four months before the first nuclear weapon was dropped on Hiroshima. Afterwards, in the Cold War era, a divided Germany found herself as the potential battleground of a full-scale nuclear war between NATO and the USSR. The seeds of nuclear-rejectionism were planted. After Chernobyl, the German neurosis took another knock.

Then, a few months ago, the fifth most powerful earthquake ever recorded struck Japan, promptly followed by one of the largest tsunamis in history. In the path of these natural disasters was an antiquated, poorly-designed nuclear plant called Fukushima. Was the building reduced to rubble by the earthquake? Nope. Did the subsequent tsunami turn it into radioactive driftwood? Not that either. Were hundreds killed? No. Only one person has been recorded as dying because of the disaster – of a heart attack.

I'm no expert on nuclear power, but it strikes me that Fukushima stood up remarkably well to the worst that mother nature could throw at it. Granted, the designs were not perfect, but improvements in last 40 years must have more than solved these issues.

However, hysteria is often far more attractive than common sense. Although not under any immediate risk of neither a magnitude 9.0 earthquake nor a tsunami, Germany immediately took its nuclear power-plants offline and ordered a review. Only after a few months of stating that Germany wouldn't abandon nuclear power 'on her watch', Merkel allowed exactly this to happen and committed Germany to decades of increased energy costs and the importation of (nuclear) power.

In deciding to shut down all of its nuclear power-plants by 2022, the Chancellor has finally caved in to environmentalist scaremongering. No concrete plans have been laid out about to replace the 23% of formerly-nuclear energy, although it is almost certain that the emphasis will largely be on renewables. Business leaders have criticised this, stating energy costs could rise by 30%. At a time, of growing inflationary pressures, the German electorate may live to regret such decisions, especially considering that nuclear has a lower carbon footprint than wind and hydroelectric power. (PDF)

The German abandonment of nuclear energy is a sad example of a minority of sanctimonious Luddites reversing human progress. Cheap, nuclear energy, especially for one of the world's greatest industrial powers, is the way forward. Instead, the irrational fears of an objectionable few will result in reduced prosperity for the majority.

Ich bin enttäuscht.

Здравствуйте! It's 1972 and you're in Russia, in case you were wondering. So I understand you want to buy a car? Here, take this brochure. It shows you all the cars on offer. No - you haven't misread it – you can have a Lada, or a Lada, or a Lada. Which would you like? The Lada? Excellent choice. But please, take your time over the decision, there's no rush – getting any of the fine range of shoddily-built cars will take a wait upwards of five years.

And therein lies the problem of monopolies. They allocate resources inefficiently and react poorly to customer demand. When you're the sole provider of a service, there is little incentive to provide a decent service to your customers. By privatising firms, you make once publicly funded, clinically obese organisations compete on a for-profit basis with other firms and, ceteris paribus, the service improves. It's pretty basic stuff.

Why, then, do people fight so passionately for the last few state monopolies today in Britain? This weekend, UK Uncut have organised the 'occupation' of 30 high street banks in protest of proposed NHS reforms. Ignoring the fundamental flaws (PDF) of many of UK Uncut's arguments, it is unclear why they demand the perpetuation of a health system that fails the population of various accounts.

The NHS is, as of last year, the third largest employer in the world. Britain, by contrast, only has the world's 22nd largest population. Perhaps this discrepancy is due to the fantastic healthcare we receive? Alas, no: compared to other similar countries, it under-performs in a wide range of key areas, notably cancer survival rates (PDF).

Sadly, these statistics are not merely academic – they describe real-life outcomes that have irrevocable consequences to the people involved. For every percentage point that the NHS under-performs, people die. For every vested interest in the NHS protected against patients' interests, people die.

To end on a personal experience: I went to hospital a few months ago. I spent 11 hours sitting in a waiting area, without any food or drink facilities, sporadically being told that I might be seen soon. Eventually I was seen. Thankfully I was okay. However, given the choice, would I go back to this hospital? No. Do I have a choice? No.

Much of the problem lies in the public's 'it'll do' attitude towards the NHS. In my own minor experience it did'; but nothing more than that. We should all demand better.

The more I think about it, the more amazed I am that I was ever able to drink milk. Even from a young age, I was drinking pints of the stuff every day: on one particularly hedonistic binge aged twelve, I consumed approximately 36 Weetabix, all of which was washed down with gallons of milk. Even when I return home today I have to tell mum to buy in extra milk. All things considered, I am a big milk fan. What I find most astonishing is that this happened spontaneously. I decided, in my uncontrolled youth, that I liked milk without a government advisory panel nor supra-national entity telling me to do so.

Soimagine my confusion when, looking out of the bus window this morning, I saw another bus adorned with the red-headed chap from Harry Potter, sporting a milk-moustache and the slogan 'Make Mine Milk'. At first I didn't think much of it: what's wrong with an industry promoting its own product? Nothing at all. If were a milk-magnate, all London buses would be plastered in adverts proclaiming the benefits of dairy. But, as I look a little closer, something strikes me. The EU flag. What's going on? Is Ron Weasley in cahoots with Strasbourg? It would seem so: the 'Make Mine Milk' campaign, according to this press release (PDF), received a €3,000,000 'promotional grant' from the European Commission.

At first I tried to reason with myself – surely it can't be a bad thing that the EU is promoting our health interests? What's the problem with encouraging people to drink milk and thus increase their calcium intake? Rather a lot, actually. First, it should not be the EU's business to effectively subsidise private industries. What differentiates giving €3,000,000 to the milk industry from giving €3,000,000 to the carrot, marzipan, or orange-squash industry? I'm sure they all have equally valid claims to health benefits: where would this process logically end? Let the consumer decide. Consumer "information" usually ends up as advertising for the loudest special interest.

Second is the nature of the EU's funding. €3,000,000 by itself isn't all that much, but it is a symptom of a wider disorder. The European Commission recently called for a 4.9% increase in the EU budget at a time of Europe-wide austerity (in theory, at least). Of the EU's budget, €700,000,000 (PDF) is spent on 'citizenship, including culture, media, public health and consumer protection'. Although this portion of the budget represents less than 0.5% of the EU's annual budget, it is a microcosmic view of a profligate behemoth. I dread to think about the money being squandered elsewhere.

I'm sure we can all relate to this scenario: you stroll up to the cash point and put your card in, only to be confronted by a message reading 'insufficient funds'. You ring up the bank to get to the bottom of this and, to your horror, you are told that you are $14,294,000,000,000 in red. What is the solution to this conundrum - tighten the purse-strings? Start going to Lidl instead of Waitrose? Scale back the foie-gras consumption? Of course not: the most sensible option is to borrow some more money. After all, if you owe money you may as well borrow so more to cover the gap. What could possibly go wrong with that?

To any normal person this should, quite rightly, sound like insanity. To the Obama Administration, however, it’s a way of life. Yesterday, with the issuing of $72,000,000,000 worth of notes and bonds, after which each US citizen owes $46,000, the US government finally reached its legally-binding borrowing limit. President Obama was soon on TV calling for the borrowing-ceiling to be raised. On CBS he claimed:

"If investors around the world thought that the full faith and credit of the United States was not being backed up, if they thought that we might renege on our IOUs, it could unravel the entire financial system."

Maybe he is right, although S&P's once-inconceivable downgrading of America's debt outlook to 'negative' last month shows confidence is already waning. Even more ominously, as early as November last year the Chinese rating agency Dagong downgraded America's debt from AA to A+. With mounting concerns over the infeasibility of US debt levels, what is Obama's solution? More borrowing. More debt.

And where does all this money go? Into either the immediate black-hole of government entitlements spending or into propping up companies destined to failure. A mere $600billion was rolled off the presses for the Keynesian nightmare of QE2. $50billion was pumped into the over-unionised General Motors to produce more poorly-built cars destined for the scrap-heap. With Obama unwilling to face the realities of America's precarious fiscal position and his ill-fated anticipation of being able to purely grow out of this economic dilemma, it seems there will be no end in sight.

If I were an American taxpayer I know the course of action I would prefer: take the medicine, and take it now. Facing up the realities of fiscal illusions may be painful but it will happen eventually. If only that would be sooner rather than later.

Sir Bob Geldof and Lord Bono can take the day off from their quest to eliminate African poverty today. A new report by the African Development Bank (PDF) shows that the African middle class is growing at a unprecedented rate, with almost 35% of Africa's population now being considered middle-class – an increase of almost 10% over the last thirty years. Measurements of living conditions are up across the board: electricity consumption has almost tripled since 1985, as has the continent's petroleum consumption. Although certain states in Africa, such as Liberia, continue to suffer from abject poverty, things are on the whole looking up.

Have the efforts of Elton John, Sting, Paul McCartney and other celebs finally started to pay off? Well, probably not – the report is distinctly lacking in references to celebrity activism. Instead, it says that the growth of this middle-class is due to social-economic opportunities provided by the private sector. Indeed, economic growth and an embryonic entrepreneurial spirit has led to formerly unheard-of levels of prosperity for many Africans who, instead of subsisting beneath the poverty line, are increasingly buying fridges, cars and televisions.

Sir Bob might argue that these changes were initially brought about by the West's aid generosity. Apparently not, as the report again states that macroeconomic policy changes are to thank for this upturn. In contract, over the last fifty years Africa gained little from $500,000,000,000 worth of poorly-structured aid that only encouraged aid-dependency.

Overwhelmingly, Africa needs trade, not aid. Trade was one of the key factors in the economic prosperity of the western world, and it can do the same in Africa. The current situation, however, denies Africa vital trading opportunities. The CAP impoverishes Africa. By having huge barriers to Europe's agricultural produce market, and therefore denying Africa the ability to trade in what they have a comparative advantage in, the CAP is plainly a raw deal. (Not to mention the fact that the CAP also costs each UK household £398 annually (PDF).)

While serious challenges no doubt lay ahead for Africa, notably HIV and its potentially devastating demographic impact, the route to Africa's long-overdue development is free trade, not another evening of banal comedy sketches, regardless of their benevolent intent. The current situation benefits only a small number of over-subsidised farmers, to the detriment of everybody else.