The Pin Factory Blog

Cameron and Gove have fleshed out their education policy a little, and I have to say, I’m not quite as excited about it as James Forsyth over at the Spectator. There are a couple of useful announcements, but if this is what the manifesto will look like, then one thing stands out that should worry any parent lacking the spare change to send little Johnny to Eton: We will not be getting new for-profit schools.

In the Draft Education Manifesto it is explicitly stated on page seven that the new academies will be run by “charities, parent and teacher groups, trusts, voluntary groups and co-operatives." The 'radical' Conservative education policy wouldn’t be so radical without education companies. This draft manifesto claims to be “[d]rawing on the experience of the Swedish school reforms and the charter school movement in the USA", but in both instances for-profit schools are both an option, and I would argue, vital for their proven success.

If Cameron and Gove really are to give every parent access to a good school (as they claim), then unleashing competition into this shackled marketplace is vital. Without the profit motive and all the attendant drivers for excellence, a great part of the radical reform will be left in the paddock. But surely Cameron and Gove don’t need to be told that, why else were they busy championing the Conservative cause when Margaret Thatcher was busy liberalising huge swathes of the economy from the dead hand of the state in the 1980s?

I hope to be proved wrong on this point. Last year Frazer Nelson – who has incidentally done an excellent job with the Spectator – suggested that Gove’s schools would be run for a profit. At the time it appeared that he was privy to information that likely future Prime Minister had accepted the logic of Anders Hultin – an architect of the Swedish government’s voucher system – that profit was the key to success in Swedish schools. We will see...

One of Labour’s early campaign pledges is to provide £300 million worth of laptops to provide computers to 270,000 families.

Given the state of the public finances, it hardly seems appropriate to make new unfunded expenses. There are around 30 million income tax payers, so this scheme averages £10 per head. As for the educational merit of this scheme, a lack of laptops is not at the root of our falling standards. Rather than just chucking more of our money at the declining system, when education is already well funded, the government should instead attempt to reform the education sector to empower the users (parents and children), and deliver value for money.

Doing basic computation shows that this scheme costs over £1100 per laptop. This is a ludicrous expense for laptops. Private philanthropy through the one laptop per child project since 2007 has been delivering £62 ($100) laptops for children in developing countries and a new and perfectly capable windows laptop, as I myself use, can easily be acquired in the UK for under 300£. In the profit making private sector the Alienware M15X, the “universe's most powerful 15" gaming laptop", starts at £1158. Perhaps the government wishes to equip children for state of the art gaming? No doubt the government provided computers will be much less potent than those that can be purchased at the same cost in the private sector and like most government IT projects, this one will not only start with ludicrously high figures, but end horrendously over budget.

However, even if one supported the principle of the government spending more rather than tackling the deficit, and even if one believe that laptops were the best way to improve education (rather than transforming the sector, allowing money to be directed by the choices of parents and pupils), this scheme is terribly flawed. Why must government administer it? Instead, if the government gave families a £300 laptop voucher, this would not only vastly reduce costs but also allow parents to decide where to spend the voucher, which brand to buy, and what type of laptop they desire.

The government’s education policy is in desperate need of a reformat and reboot, but before doing so, this shallow vote seeking pledge should be sent to the recycling bin.

We've all heard about this new paternalism, haven't we? You know, Cass Sunstein and "Nudge" seems to have got David Cameron all excited, there are even those calling the whole idea libertarian paternalism. We. the populace, are such confused little baa lambs that we need the wise and the good to tell us what to do. But instead of actually insisting we do something we'll just get a few nudges from taxation or regulation to get us through the right five bar gate. You know the sort of thing, maybe the collie dog will bark at us, perhaps even nip our heels, but we won't be forcibly beaten into our pens.

Glen Whitman has been looking at the holes in this argument and this particular one looks to me like a corker. One of the major thoughts about why we do make bad decisions is that we're subject to hyperbolic discounting. We're OK weighing up the pros and cons of something that's going to happen soonish but we're bad at working out the cons of things which might happen in the far future. Smoking is pleasurable now but we don't put enough weight on dying painfully of lung cancer in 40 years' time. Doughnuts are yummy but we underestimate the cost of a new wardrobe in 3 years' time. Being warm this winter is wondrous but we underestimate the costs of drowning Bangladesh in 2,500 AD. Similarly, a pension fund is nice but we underestimate the benefits of a decent pension in 40 years' time and put too little into it now.

So we should be shepherded to the right decisions by those wise enough to know what the correct, non-hyperbolic, discount rates are. That's basically the libertarian paternalism for you right there. And as Whitman points out, that's just great but who are the people who will be taking these decisions about what is the correct discount rate?

Yup, politicians. And do politicians take decisions based upon the correct discount rates or are they also subject to this hyperbolic discounting? Was that howls of laughter I could hear? Splutters of indignation perhaps? For yes, of course, when we look at how politicians actually run any of the long term schemes which they currently have power over we see that they're vastly worse at this than we little sheep are. Look at civil service pensions, roaring out of control as far as the eye can see into the future because years ago it was easier to buy political support or buy off industrial unrest by promising what could never be afforded. The untold off-balance sheet promises that have been made that will impoverish our grandchildren just to get one politico or another through a difficult election. The hocking of the future in that every few year electoral scramble to get the right bums on the right benches at Westminster.

For the failure of this libertarian paternalism, the hole in this argument about hyperbolic discounting, is that we as individual humans may well be imperfect: but those who would rule us are worse by this measure. I know of no adult who lives their life with a final horizon of only the next election and I know of no politican with a horizon of longer than that next election.

In short, we're better than the politicians but then we all knew that anyway, didn't we?

[Gladstone] declared at Edinburgh (29 November, 1874):

“It is the mark of a chicken-hearted Chancellor when he shrinks from upholding economy in detail… He is not worth his salt if he is not ready to save what are meant by candle-ends and cheese-parings in the cause of the country."

Gladstone’s long-term object was to raise the moral standards and the ideals of the people by improving their material conditions. He had no trust in the efficacy of State action to achieve that end. His method was to remove all restrictions upon trade, and to extend its area. All taxation, in his view, operated in restraint of trade, and therefore, in order to reduce prices, and to secure full employment, it was necessary to keep taxation and public expenditure to a minimum.

It seems to me that the extract above, from Philip Magnus’s 1954 biography of William Gladstone, encapsulates precisely the qualities that the next Chancellor of the Exchequer will need to exhibit if he is to sort out Britain’s public finances and get the economy going again. George Osborne could do worse than to buy a copy and take notes.

Of course, reducing public spending is more difficult these days than it was in the Victorian era. In the days before the welfare state, those who profited from the government's largesse were, generally speaking, the upper classes. Public sector employment was a matter of who you knew, and not what you knew. As such, cutting public spending could be a populist measure, with great appeal to the masses. Now, with more than six million people employed by the state, and another six million entirely dependent on state handouts, it’s a trickier matter.

But the fact that it will be difficult to cut spending is no excuse for not doing it. The British state currently borrows more than £20m per hour, twenty-four hours a day, seven days a week. Our budget deficit, at 14 percent of GDP, is the largest of any OECD country. Put simply, this cannot go on. Our next Chancellor must bite the bullet, and implement substantial spending cuts as soon as he takes office.

He should also remember that however unpopular that makes him in certain quarters, there are still plenty of hard-working taxpayers out there who will thank him for it.

I do wish that these various think tanks on the lefty side of the street would just try and keep up with even the basics of the (few) true things that other lefties have managed to devise.

A study by the Centre for Regional Economic Research said it counterproductive to try to crackdown on the middle-aged jobless when unemployment was rising. Instead they should be left on benefits in order to concentrate on the young unemployed who had more chance of finding long term work.

No, absolutely not and the person who pointed this out was the impeccably left liberal M'Lord Layard.

As Milton Friedman pointed out the Phillips Curve (that there's a trade off between the inflation and unemployment rates) doesn't really work. For we might think that we can just move along the curve and trade higher inflation for lower unemployment: but once inflationary expectations get built in this no longer works. What Layard went on to point out though is that it is still possible to shift the curve.

Those people who are on the dole are trying to get jobs (no, stop sniggering at the back there, of course they are). In trying to get jobs, in being part of the potential labour force even if they're not actively in the labour force they produce a downward pressure on wages. If there's five people knocking on the door for every available job then wage rises aren't going to happen, are they? And yes, wage rises do have at least something to do with inflation.

However, the long term unemployed (in Layard's work) or here those shuffled into incapacity benefit don't produce that downward pressure on wage settlements. For they're not trying to get jobs and thus aren't even potentially part of the labour force. They're still there of course, rotting on the fringes of society, but we're not even getting the constraint of inflation out of their misery. If we insist that they at least attempt to compete for jobs then some (however few) will of course get some but we'll also have lower wage rises: and we all know what lower wage rises mean, don't we? Yes, labour is more affordable in relation to its production and other things being equal we'll have both more people employed and a lower rate of inflation for that level of unemployment. For that reserve army of the unemployed is putting pressure on wages rather than simply being shunted into the byway of societal obsolescence.

This is all quite apart from the ghastliness of turning to someone in middle age and proclaiming their life over: "there's nothing productive you can do you know". It's about making sure that we at least get something from those unemployed, if only a constraint on wages which will make a rise in employment more likely.

Getting ready the other morning, a radio advert caught my ear. It featured a spaced-out child telling us that he’s “always there" following the life of a father, because “I’m the boy he killed 5 years ago". A tragedy that apparently took place because he was speeding." Scare tactics iarea key government weapon against the British public, which they are very keen to use.

Most of these campaigns have an annoying tendency to sensationalize the ‘bad’ habits of the public. Only recently, the department for climate change suggested that our carbon footprint would cause dogs to drown. Cigarette packets scream “smoking kills" instead of the more accurate “smoking can kill". We are told that if we are fat or drink more than a couple of pints a week, we will get diabetes, suffer a heart attack, bankrupt the NHS, and then die. The product of government pressure and interference is everywhere: on the TV, cinema, airwaves and billboards, in the age restrictions plastered across shops, and on the breakdown of my saturated fat ration staring at me from my sandwich.

The government often laments that despite lavish ‘public awareness’ campaigns, we simply aren’t adjusting our behavior. Their response is to create even more adverts, leaflets and initiatives. What they fail to grasp is that the constant bombardment of propaganda creates a ‘lecture fatigue’, where people simply tune out to the meaning of any message being put across.

Maybe, just maybe, there are issues that the government would do well to highlight. But to make these problems stand out, they need to stop casting a pall over all and sundry, so they can be taken seriously.

It is common parlance to hear that we should be free to speak, excepting of course if we incite violence. This has been especially common in the case of Islam4uk, where their defense rests principally upon the fact they have not been involved in promoting violence. Despite its ubiquity, I have never been entirely convinced by this position.

I would suggest that the promotion of violence is arguably not a valid excuse with which governments should be allowed to infringe upon someone’s freedom of association and speech. My objection is both deontological and based on the consequences of banning these freedoms. It is objectionable on deontological grounds because in a free society, people should simply be free to associate and speak freely. Instead of pulling people up for the possible results of their actions, their active part in or association with real violence against others should be the litmus test for infringing upon their liberty.

However, not everyone desires a free society, so perhaps my consequentialist objections could carry more weight. Firstly, it far from clear that there is less violence as a result of people being banned from inciting violence. This might seem counter-intuitive, but by forcing views (however abhorrent) underground, it is possible that more violence might result. It would thus be illogical to ban such groups. Secondly, as history teaches us, there are occasions where violence (particularly against those in political power) was morally defensible. As such, inciting violence is not always morally wrong and it is perhaps best left out of the hands of politicians to decide when it is and isn't.

This is difficult issue, so I would be interested to hear any thought for or against this position.

Whether you believe in man made climate change or not, you probably think that energy efficiency is a good thing. And luckily in this respect, the goals of most climate change fanatics (a couple of Guardian columnists excepting) are compatible withd the interests of businesses. However, most tend to ignore this fact and go on advocating for sanctions on businesses, despite the fact that the primary goal of both interest groups is best met in another way.

So how can this goal be achieved? One solution which has been tried  is to hold a meeting between the world's political leaders and let them 'almost' come to an agreement committing them to strangle their domestic industries in order to achieve some arbitrary goal in the reduction of CO2.

The other solution is for governments to let businesses use their profits to invent and invest in technological improvements through a more business friendly tax system. Would all of the profit then go to technological progress? A great deal would, because it is a core interest of companies to develop more efficient ways of using energy to stay ahead.

The current tax levels force companies to stay inefficient because they either can’t afford to innovate. Giving companies an incentive to survive by letting them compete in the global market would lead to more efficient ways of producing goods and would drive less efficient producers out of the market. This would lead to lower energy usage, which is essentially the common goal. Thus competition, not cooperation is the key to decreasing energy use.

So what are these government leaders waiting for? The answer is that many leaders (particularly in the West) have bought into the idea that businesses are essentially evil. We have a saying in Denmark that is fitting: 'It’s hard to escape if you have painted yourself into a corner while painting the floor'. It looses something in the translation, but I hope you get the point.

As of today, Islam4Uk and its various guises have become illegal organizations, thanks to the discretion of Alan Johnson and 2000 Terrorism Act. Johnson’s justification for proscription is that that the group “unlawfully glorify the commission or preparation of acts of terrorism." In essence, the group openly takes a positive view of terrorism. Although members of the group’s previous incarnations have gone on to commit acts of terrorism, no member of Islam4Uk itself has been linked to any crimes of this sort.

The group’s main wrongdoing, and the justification for their proscription, has been to hold particular beliefs and to express them in such a way that the extreme majority of the UK are shocked, offended and appalled by them.

This should not be a crime. "If the group or individuals break the law, they should be prosecuted; but to proscribe the group as a preventive measure flies in the face of free speech. If we were able to ban organizations simply because we didn’t like their professed end goals, surely enough support could see the Labour party driven underground. Besides, banning an organization does nothing to change the attitude of its members.

An alternative way to deal with Isalm4Uk would have been to remove the income support that a number of the group appeared to live off, namely welfare. This would make sure that less public money was put towards enabling the group to have the time and means to propagate views that the vast majority of the nation find repugnant.