The Pin Factory Blog

Do you realise how much we pay for the thrill of watching dancing meatballs?

A couple of years back, Ewan Spence had the same question, and put in a Freedom of Information request to the BBC, Eurovision's sponsoring partner in the UK. They refused to disclose all their production costs for broadcasting the competition on BB1, BB3 and Radio 2. But they revealed that the payment the BBC makes to the European Broadcasting Union was £279,805 in 2009, and £283,190 in 2010.

Since then, journalists have been watching the Eurovision bill grow. Last year, the BBC spent £310,000 – the eqivalent of 2,130 licence fees – on broadcasting Britain's disastrous entry by 76-year-old singer Engelbert Humperdinck (which only four countries gave any points at all—not that we have had many points since the Eastern Europeans turned up and formed a pact to vote for each up).

BBC officials say that their EBU membership also buys it other things, like membership of a news exchange, rights to concert broadcasts and activities around the Olympics. But broadcasting the Song Contest also imposes other costs on the BBC, including travel, hotels and incidentals for its broadcast staff.

Last year, the contest cost €48m to stage in Baku, Azerbaijan. This year's, in Malmö, Sweden, the aim was to do it for much less. Anyone with a television (i.e. virtually everyone) is forced to pay for this embarrassing, political show, whether they watch it (and the BBC) or not. Can that be right?

The government needs revenues and holds too many assets on its books. In future blogs, I will return to its holdings in finance and healthcare. For the time being, let’s look at its involvement in media, specifically broadcasting.

Is it so very wrong to confess that the BBC has been getting on my nerves since the era of the “Boat that Rocked”? Indeed, contrary to Richard Curtis’ fairy-tale, it was no bewhiskered Tory, but the sainted Beeb which connived with the Musician’s Union and that old crook Harold Wilson to suppress the pirate radio stations, replacing them with the anodyne Radio 1.

The rationale for the BBC arose when spectrum was scarce—or more accurately monopolised by the military. But this hasn’t been the case for a generation. The public service obligation is unnecessary now that bandwidth is de facto unlimited – after all, the UK doesn’t have it for the press (despite the impact of Leveson). So why carry on with a poll tax on every household for a frankly undistinguished broadcasting service? Admittedly it keeps the chattering classes quiet-ish but at the price of giving them a platform and exposing the rest of us to decades of second-rate programming. Meanwhile its news values distort national debate, though to be fair the tendency of a profession to look at things from its own perspective means journalists are bound to (and should) be inclined to have at the powers-that-be, which today could engender a left-ish perspective.

Regardless, the BBC can readily be broken up into its constituent parts: entertainment, catalogue and commercial, content generation, news, radio, minorities, regional and so on. My figures show it would raise some £5.4bn, if sold in the market, or (where there is no market value) disposed of to other bodies like charities, universities and other NGOs, as well as local authorities. I estimate that Channel Four is worth another £1.6bn for a total of £7bn. Better than a kick in the teeth, and letting the public off the cost of the TV licence, so liberating the estimated 4,500 civil servants concerned for more gainful employment.

The Newspaper Society, representing a large wodge of UK newspapers, have rejected the Leveson Report plans to regulate them and are publishing their own proposals for self-regulation - backed by a Royal Charter. All power to them.

After the phone hacking scandal, which brought down the News Of The World, the government and the opposition in the UK came to endorse the idea of an official press regulator, set up by Royal Charter, with powers to fine newspapers and demand they print prominent apologies. Trouble was, these discussions deliberately excluded the newspaper industry.

They point out that phone hacking is a crime, and that there are perfectly good laws to deal with it, without having some lumbering press regulator. Indeed, we haven't had press regulation in the UK for three hundred years, and with good reason – once government officials are put in charge of the press, there is very little hope left for free speech, as a number of international media bodies have already pointed out. It might take time, but gradually the press would become agents of the prevailing government. Indeed, it would not even take specific interventions to do so. All the regulator has to do is raise an eyebrow - and a press that could be fined very heavily, or told what to print, would quickly take the hint.

The Newspaper Society's proposals would deny Parliament free rein to change newspaper regulation as it pleased – an important safeguard of free speech. Instead, the regulator and the media would have to agree. They also call for members of the regulation panel to be appointed by retired judges, with various interests (including the press) represented. Former editors could sit on the panel (the government's plan would ban them), which is important in order to have a proper discussion, after all. Media customers would have a say too – and let's face it, this is all about them. And there would be limits on what the regulator could demand newspapers to print by way of apologies. Which is good. One can think of a point in the future where some newspaper exposes government wrongdoing and is then forced to publish a two-page endorsement of everything the government does.

If anything, the Newspaper Society should have been tougher with these proposals. Their proposals would still allow for fines of up to £1m, and strong investigative powers from the regulator. And let's face it, there are already plenty of laws out there to protect people's privacy (where this whole thing began) and who break the law should be punished. But our newspapers have a vital role in exposing the shortcomings of the establishment: they need to be free to do so. We don't need a new regulator to do these things. The trouble with regulation, in any case, is that it usually has the opposite effect of that intended. Competition between different media is probably a surer way to keep them clean.

Allemannsrett (literally 'All Man's Law') is an ancient custom, most clearly found in Norway, Sweden (Allemansrätten) and Finland (Jokamiehenoikeus), where it has been formally enshrined in law.

Currently, in Britain I am largely restricted in my freedom of movement, despite thousands of miles of footpaths, bridleways and other rights of access,. Furthermore, in England and Wales, I cannot camp in the 'wild' – instead I must pay to use a campsite.

Implementing Allemannsrett in Britain would change this: it allows everyone to use rural, uncultivated land for walking, camping, foraging and other outdoor activities, regardless of who owns it.

An objection might be that this infringes on the right to personal property, but I believe Allemannsrett is in accordance with J.S. Mill's harm principle. The laws of the Nordic countries clearly demand that those taking advantage of the Allemannsrett are respectful to the land they are using: there are rules concerning littering, the lighting of fires and so on. The saying 'take only pictures, leave only footprints' sums it up well. Therefore, those who use Allemannsrett properly are acting within the basic libertarian principle. The rules on foraging, and other more controversial aspects could be adapted as desired.

Another issue is that of privacy: landowners would not want hikers peering in through their windows. The Nordic laws cover this as well: any 'trespassers' must maintain a respectful distance from houses or cabins at all times (at least 150 metres in Norway).

A final objection is the claim that it would be pointless to introduce the Allemannsrett in Britain as it is in Scandinavia, since here we have a much higher population density. But the vast majority of the British population lives in urban areas, and the country has many places of natural beauty and sparse population where greater rights of access could allow much greater appreciation of them.

Allemannsrett in Britain would allow each individual to enjoy the countryside to its full extent. It would out us back in touch with our ancestors, by allowing us to camp 'wild', away from the mod-cons of everyday life. All this could be achieved without infringing on the basic principle of liberty, as clear rules would ensure respect for the land and its owner.

Libertarian regulation theory shows us how state power, apparently used for benign purposes, ultimately results in the exploitation of consumers and the misallocation of resources. Of the two great threats to our economic progress and liberty - state spending and regulation - I would argue that it is regulation that is the greater threat.

State spending is often contested and its results are at least clear to see (although the fact that state spending in the UK is vast and growing should not be forgotten). Regulation, on the other hand, is a far more subtle threat and seems to gain approval across the political and public spectrum. The corporatist pseudo-markets created by regulation in banking, energy, rail and so on are decried as evidence of the failure of capitalism when they are anything but.

As we have a current example of new regulation, it is interesting to apply the theory and see what might be the result. Regulation* is often introduced when there is assumed to be a case of 'market failure'. Broadly, the impact of regulation is to create barriers to entry which protects existing market players and tends to promote consolidation within the industry. Small and more innovative firms, which would otherwise enter a market where large profits are to be made, are thus excluded. Existing players are thus able to dominate the market and drive up prices or prevent innovation. 'Government failure' is thus ignored but it is the consumer and the society at large which suffers.

In the case of Press regulation, many of these features may occur. We cannot call the print media a 'free market' but it is freer than, say, the broadcast media which is dominated by the BBC and bound by tight regulation on objectivity. An instance of perceived 'market failure' in the form of phone hacking was used to justify regulation, ignoring the fact that phone hacking was illegal under existing laws. We can already see how regulation might drive out small players who are currently undermining the profits and market share of the established Press.

The position of small internet bloggers and innovative media news outlets is jeopardised - will the Pin Factory blog be forced to sign up to the press regulator? What influence would we have there? What if the new regulator imposed punitive fines on us?

In many markets, it is the large occupants who welcome regulation and - in fact - connive at its introduction. While they have to sacrifice some control to regulators, they are guaranteed a protected market share and healthy profits whilst avoiding the trouble of innovating against and out-competing small rivals. Further, large firms often have a 'revolving door' to regulators and are able to undertake expensive lobbying to further protect their positions.

Some portions of the Press are opposed to the new regulation, a condition which probably stems from an ideological position unique to this industry. However, it is clear that, under the system of state regulation, it is the large, extant players who would dominate the regulator and be in a position to use this power against potential rivals. In many industries, the emergence of corporatism would be unfortunate. In the case of the Press it threatens to be fatal to liberty.

*We must take care to distinguish 'regulation' from 'law'. Regulation is intervention designed to control the size and shape of a market, prices and quality. Law is (or ought to be) solely concerned with property rights. 

Long term readers will recall that for some years now I've been saying that we've not really got a gender pay gap. We've a motherhood pay gap, that we do, but not a gender one. In this I am supported by all sorts of interesting evidence. Like this from the Telegraph, this from this here blog, and even this quite delightful piece. Where the Statistics Authority chief rapped Harriet Harman over the knuckles for misleading people with bad statistics. You know, the crime of being a politician.

Now, the proof that we do not have a gender pay gap comes in the details of the (correct) statistics. Single no children women in their 40s earn more than their male age cohort. Women in their 20s on average make more than men in their 20s. There is indeed a pay gap though: one that opens up in the average pay for women as they enter their prime child rearing years. And we can even see that it really is child bearing years as well. A generation ago average age at first birth was in the low 20s. And that's where the pay gap started. Today it's around 30 years old and that's where the pay gap starts now.

And between all of us we've managed to get this basic fact across to the political classes. Shared parental leave might not be everyone's cup of tea but it is indeed an admission that since it is childcare that causes the pay gap then perhaps parents might want to share that pain? All of which is lovely. Then enters Viviane Reding:

16.2%: that’s the size of the gender pay gap, or the average difference between women and men’s hourly earnings across the EU, according to the latest figures released today by the European Commission. The news comes ahead of the 2013 European Equal Pay Day on 28 February. The EU-wide event marks the extra number of days that women would need to work to match the amount earned by men: currently 59 days, meaning this year the day falls on 28 February.

Sigh. As we know domestically in Britain the pay gap is not a gender pay gap. It's a motherhood/child rearing one. Which, even assuming that you wanted to solve it means rather different policies to do so, no?

To make matters worse they also peg the UK pay gap as being at 19.6%. Which as we know from the Statistics Authority chief isn't actually the correct number at all.

This is the problem with multiple levels of government. You beat back ignorance and idiocy at one level and it just reappears at another.

Today the Adam Smith Institute is calling on the government to commit to a ‘Digital Freedom Charter’ ahead of the Communications Bill. The charter should set out principles to protect competition, innovation and growth in and around digital communications and the Internet.
 
The Internet is currently under threat from an increasing regulatory burden.  Only if politicians in power and opposition commit themselves to Digital Freedom Charter can we ensure that the Internet remains a place where people can conduct business, engage with others and communicate freely. The charter should include the following principles:
 
·     Freedom from EU/EC regulation: UK based businesses should not be impacted by regulation from the European Commission. EU regulation, such as the Privacy and Communications Bill and General Data Protection Regulation, increase compliance costs. This means money and time is taken away from businesses and invested in compliance. Businesses should not be forced to comply with onerous regulations – instead the UK should enforce existing competition and anti-trust laws.
 
·     Freedom to Contract: Websites should be free to form contracts with their users. The government should not seek to get involved with the relationship between a user and website. If a user has agreed to terms on a website, but feels that this contract has been violated, this should be dealt with by laws that already exist for breaches of contract. The EU is wrong to push for the regulating of user terms on social media sites like Facebook. Users are not coerced to join social media sites, which make their money out of targeted advertising, and therefore need access to user data. There is a danger that the privacy regulation called for by a vocal minority will end up punishing all users by killing the dominant and popular free-to-use social media business model.
 
·     Freedom to Finance: Individuals and firms need to be responsible for how they spend and invest their money, in order to allow market discovery processes to take place. Government investment in content creation, broadcasting, and communications infrastructure are distortionary, crowding out the private sector and using up resources in an inefficient way.
 
·     Autonomy for families and individuals: Family and individual autonomy is of the utmost importance. There is a growing fashion for government to decide what should and should not be viewed online. Such website blocking would put the UK in the same place as Russia, China and other authoritarian states.  Website blocking doesn’t work. The government should leave the decisions to individuals and families rather than having a government committee decide what we view online.

Dominique Lazanski, author of the report, adds, “The internet has brought countless benefits to our society, but is under threat from piecemeal regulation. Although well intentioned, it is fundamentally misguided and leads to the increasing erosion of Internet freedom.
 
“We need this Digital Freedom Charter to ensure the Internet remains a free and innovative market place. The state must roll back its involvement in the growing digital industry and stop state funded content, state mandated website blocking, and the state sanctioning of businesses.”  

Over on the Guerrilla Economist blog, Ust Oldfield discusses the economic consequences of the dragon Smaug on Tolkien's fictional universe, Middle Earth. He argues that the net effect on Middle Earth's economy may well have been positive. Both Dwarves and dragons hoarded the gold, so there would have been no monetary shock from the rapid withdrawal of so much precious metal from the economy. The Dwarves were then forced to offer their labour and skills to the outside world as refugees, contributing to the economy at large.

Perhaps. But there is something wrong with this picture. Ust neglects to mention that much of the Dwarven kingdom of Erebor and nearby Dale were utterly destroyed. Thousands of years' worth of accumulated physical, human (or should that be Dwarven?) and social capital incinerated. In order to have a net positive effect on the economy of Middle Earth, the Dwarves' integration with the wider economy must outweigh this massive destruction of wealth. This is unlikely, to say the least. For a start, the human city of Dale existed because of its trade with Erebor. Therefore the Dwarves were already engaging in peaceful and mutually beneficial exchange with the rest of Middle Earth. The Dwarves' actions as refugees can only have created less value if their highest-value, voluntary choices were forcibly eliminated.

The second problem is an epistemological and moral one. Sure, this is fiction, but Ust should not be so quick to defend forcible actions to create the most value for the most people. In his analysis, the values of a minority are subjugated to that of the population at large in a zero-sum manner. Creating a Dwarven diaspora constitutes the loss of the economic, social and cultural institutions that best satisfy their demands. Dwarves lose, Middle Earth supposedly gains. And yet, in a peaceful world without the destructive interventions of Smaug, both parties gain through voluntary exchange according to what they themselves value most.

Ust, like many other Keynesians, loses sight of what actually matters in economics: economic growth and production are only important because they satisfy peoples' demands and values. Forcibly removing their best avenues for peacefully satisfying demands can only be a net loss to all.

George Orwell died on January 21st 1950, only 47 years old.  Short though his life was, his achievements earned him a place in history.  His Homage to Catalonia, describing his experiences as a volunteer in the Spanish Civil War, brought him fame, but with it the enmity of the hard, pro-Soviet left because of his indictment of the duplicity of the Communist forces in Spain.

Orwell's passionate concern for the underdog and the poor shines through his writings, as does his fervent opposition to the lies and distortions used by some to advance political ideologies.  Some of his essays on the use and abuse of the English language earned the status of enduring classics.

Although on the left himself, two of his works, Animal Farm and Nineteen Eighty-Four constitute the most effective exposures of the fraudulent brutality that underlay Soviet Communism.  Indeed, the latter work, completed just before his death, bequeathed us the vocabulary that describes totalitarianism, with phrases such as "Big Brother," "thought police" and "doublethink."

Orwell genuinely loved liberty and had a deep affection for the British people and their way of life.  His ability to project his honesty into his writing has earned him a place among the top British authors of his century.  In the fight for freedom he played a significant role, and is rightly remembered and appreciated.