The Pin Factory Blog

"Why has the London election, which seemed a few weeks ago to be on the point of capturing the public imagination, degenerated into a dull Punch and Judy show that even London's local papers can scarcely bring themselves to report?"

That's how Anatole Kaletsky began an excellent article in Thursday's Times. It's a good question to ask. Is it down to the cynicism of the media, who are only interested in "the personalities of the candidates and their gaffes?" Well, perhaps. The Newsnight 'debate' was appallingly handled by Jeremy Paxman, who seemed entirely uninterested in getting the candidates to set out their stall, preferring to provoke constant interruptions and arguments. The same criticism can be levelled at much of the coverage.

But there's more to it than that. As Kaletsky points out, the London Mayor's areas of responsibility – transport and congestion; crime and policing; pollution, housing and urban planning – are things voters really care about. So you would expect a lot more interest in the election than there is. Kaletsky diagnoses the cause of this apathy correctly: Britain'se endemic over-centralization.

The London Mayor is really only an agent of central government. His job basically comes down to spending a big budget, and nothing more. It doesn’t matter who wins – they will still be dependent on the national government for any major policy shifts. That's why so many people just don't seem to care.

I'd like to see a radical decentralization of political power. London and the English counties could have the same responsibilities as the Scottish Parliament, and raise all the money they spend themselves. Greater accountability to voters would be one advantage. Competition between local government areas would be another: there would be more experimentation in public policy and the 'exit option' (people could move if they didn't like their area's services or tax rates) would serve to drive standards up and taxes down.

It's a win-win, in my opinion. But it will take a brave national politician to give up that much control.
 

We've been holding regular events with bloggers and print journalists for about five years now. Since then I have detected a marked change in the fortunes of each side:

Year 1: The bloggers sat at the back and the print journalists asked who they were.

Year 2: The print journalists told us that blogging was utterly insignificant.

Year 3: The print journalists admitted that blogging had spread but it was all rubbish.

Year 4: The print journalists agreed that yes, blogging was becoming important.

Year 5: The print journalists sat at the back and the bloggers asked who they were.

Ronald Reagan really did have it right about government. The banks here seem to have gone through the whole cycle in only seven years.

An example of the government's expertise at creating value added regulation.

The costs and benefits of climate change: do we really want to go back to1988?

Guido's not to blame: the fake and leaked emails have come from another source and wouldn't it be interesting to know who and why?

Today's statistical games are to do with drinking and breast cancer risks. If all women in the country ceased drinking completely there would be very little reduction in deaths.

More on the effects of immigration: what effect that there is on reducing wages seems to occur to the previous generation or wave of immigrants.

And finally, something of a blunder from the BBC.

Despite the obvious monetary-induced stresses that have emerged since mid-2007, few economics commentators have questioned the role that monetary policy has played in causing this situation. In fact, monetary policy has everything to do with where we are today. The low levels of interest rates that were maintained on both sides of the Atlantic between 2002 and 2004 are the main reason why there was a surge in debt-financed activity, undertaken by financial businesses, households and government.

In the UK, inflation targeting has failed to create the conditions necessary for sustainable growth. Indeed, it has more than failed; it has actually been a significant cause of the credit boom. The problem with all static policy targets, whether they are for monetary variables, the currency or inflation, is that they work only so long as they remain consistent with longer-term equilibrium between supply and demand. Inevitably, however, they are framed by politicians and civil servants looking into the rear-view mirror.

Had it been in place earlier, inflation targeting inflation might have prevented some previous acts of economic vandalism. But it is hard to establish a rigid policy framework capable of accommodating future changes in the economic environment. Worse than that: the goal of monetary policy becomes solely to achieve the target; policy makers become blind to other evidence that suggests a change of course might be appropriate. The problem in the UK has been that the inflation target was not designed to accommodate a situation in which there was excess domestic demand at the same time as significant downwards pressure on inflation.

Because the policy framework established by Gordon Brown in 1997 was so narrow, the MPC was encouraged, if not mandated, to ignore obvious signs of overheating in the economy. The result was that the policy signal became stuck on Go.

The MPC should be given a broader remit. This may still have inflation at its heart, but it should also be made clear that policy must be formulated to ensure that the UK is on a sustainable growth path. Sometimes this may mean that inflation deviates from an explicit target – but on the basis that this is consistent with a wider balance being maintained in the economy.

Richard Jeffrey is Head of Securities at Ingenious and is a member of the ASI's regulatory action group.

94. "Business doesn't care about consumer safety, and cuts corners by economizing on safe conditions for its workers."

What private business wants most of all are satisfied customers who will not only come back, but tell their friends. A reputation for unsafe products is the last thing a business needs. A toy company with a reputation for products which injure children is not going to sell many toys. An airline with a bad crash record tends to be avoided by travellers, as does a railway company, state or private, which kills its passengers.

It is often a good thing to have industry-wide safety standards. They help impart general confidence and inform on how safety is best maintained. Best practice can become the norm. The industry itself should be consulted on this, however, because they know better than any outside inspector can. In many cases a voluntary code policed by the industry itself is satisfactory. In others, legislation incorporating their advice may be needed. But the notion that they don't care about product safety is profoundly wrong. And the notion that some bureaucrat sitting in Whitehall or Brussels with no knowledge of the industry is the best person to lay down rules for product safety is equally wrong.

It is also true that a contented, motivated workforce tends to be more productive and less prone to disruption. It is not in the interest of business to have casualties among its workers. Again, it is good to have the industry's input into safety standards, because they know the conditions. As the economy becomes more prosperous, and as technology advances, it becomes possible to achieve and insist upon ever higher safety standards.

State industries in the UK and abroad are not safer for customers or employees than are private businesses. If anything, it is the prosperous private industries which can afford better safety standards, just as it is the rich economies which can do so.
 

I'm suffering from an overdose of headlines again.

This time, the scare is vitamin tablets. A Copenhagen University among 230,000 people, we're told, says that taking vitamin pills might not do you any good and might actually do you positive harm. Really?

Well, I'm no biochemist, and not even in the pay of any pill producers. But the headline sounded pretty daft to me. And I've never really trusted Danish science after the way they beat up Bjorn Lomborg so mercilessly instead of getting to grips with his arguments. Yet the story was so well-spun by its promoters that I had to read quite a long way down the coverage before I could get a balanced picture.

It took a lot of reading to discover that even the spinners of this story aren't saying that a daily multivitamin pill will do you any harm. They're talking about people taking really big doses of a single supplement - Vitamin A, E, C, Beta-Carotene and Selenium. I discovered that the researchers had started by reviewing 815 (some reports say just 467) clinical trials. But a lot of these were studies on very sick people, whose experience is probably not very relevant to the rest of us. Then, it seems, the reviewers eliminated all but 68 because they showed no deaths. Yes, well that would skew things a bit, wouldn't it? By the time they had eliminated the Selenium studies (which showed a reduction in deaths), they were down to less than half a dozen studies, on which the scary headlines are based.

Well, scary headlines sell newspapers and a balanced appraisal of complicated science doesn't. Ask Bjorn Lomborg.

As simple an explanation of the work life balance as you're likely to find: the important point being that it is different for different people (although those nervous of strong language might want to skip the last paragraph).

Another one of these happiness things. Marriage raises happiness: children decrease it. But you'd have to have 19 children to reduce happiness to the single childless state. Although, to be fair here, if your wife likes you enough to bear you 19 children, even that might not be true.

How odd. The bank that the Government owns isn't passing on the fall in base rates to borrowers either.

Now this is science, even climate science. Following the results and publishing them, even if they contradict your own previously held opinions.

And this isn't science. A list of things that might make you an "altie" (technically defined as one well on the way to "woo woo" status).

Businesses are starting to leave the country due to the tax and regulatory burden. No, not good news.

And finally, it's amazing the things you can win in magazine competitions. Even a divorce.

While the proximate cause for the rising distaste for the Beijing Olympics is the way that China treats Tibet, I think there’s something else. My local market stallholder expressed it the other day as "all those Chinese in rows and ranks of uniforms – makes me shiver".

What he pictured was an old cliché of Maoist uniformity. I rather liked the “rows and ranks" which I think was expressed tautologically, but actually captured the sinister uniformity and hierarchical inequality of communist China rather well. Today, the cultural mores of post Mao capitalistic China are quite different, with the creative chaos of Western clothes and accessories prevalent. But he did bring back to me the scene when London’s 2012 Olympics were announced. The British delegation leapt in delight and hugged and wept, but what struck me then was the contrast of their individual abandon with their corporate uniformity. If my memory serves me right they were all uniformly dressed in formal business suits in a rather drab beige.

For me, this is the lurking cultural mistake behind the Olympics. Sports people suffer from some of the blind intensity of totalitarians. Sure, they celebrate excellence, but it is not a spontaneous excellence, rather a planned excellence that is generated by a rigorous collective effort. This deliberate construction of performance has strong echoes to the way it is achieved through the controlled statist methods of the communist regime. As such, it becomes culturally unreal, a freak show that ordinary mortals see through.

All over Britain teenagers – most between 15 and 20 - are being recruited into our Olympic effort for 2012. These half-formed athletes will be sponsored and trained up to excel on our behalf in the Stratford wasteland. What a contrast with the ideal of individual self-discovered excellence – spontaneous achievement by those who take part because they have found that they can excel. [Click read more to continue]

93. "Some businesses deliberately build obsolescence into their products to force people to buy more when they wear out."

Some might economize on longevity where there's a demand for a cheaper product. If people want durability, they pay for it. If you recognize that fashions change and technology advances, you might opt for a cheaper product with a shorter life span. The pace of innovation is accelerating, and most customers seem to want the latest product. It depends on what you're buying.

There are products, such as houses, which people expect to last. Builders do not deliberately build houses which will fall down after a few years to force people to buy new ones. Instead they recognize that the market there is for durability.

For mobile phones and iPods, on the other hand, most customers would not want a product to last for decades. They prefer not to pay the extra costs of achieving this quality, and settle for one which will last them until they are ready to move on to a more up-to-date version.

There's a sort of urban myth that companies spend millions designing products that will fall apart or otherwise cease to function just three days after their warranty expires. This would cost extra, be difficult to achieve, and would probably result in customers buying a rival's product next time because the first one turned out to be no good.

More commonly there's a trade-off between durability and price; you can pay more for a product that will last longer, but you might not want to. Attics and garages are full of junk that people don't use any more. Waist high fax machines and desk top calculators are museum pieces now. Businesses don't deliberately equip their products with termination dates or auto-destruct mechanisms. They want them to last about as long as people expect them to. And for some of today's products, this is not very long.