The Pin Factory Blog

The basic problem with pay as you go pension schemes (whether Social Security or National Insurance) is that they operate in the same manner as Ponzi schemes.

It's really rather difficult to describe as illiberal something which the great liberals of the past have actually defended. It mjihgt or might not be wrong, but illiberal it isn't.

If you'd like to know why there's a shortage of maths teachers there's some clues here.

Passport to Pimlico, confirming your faith in human nature or aiding and abetting? Possibly all three?

Testing the Coasean concepts of transaction costs. Why, reflecting different production costs, do some things change in price while others remain static in price but change in quantity?

The joys of this intertubes thing. How people respond to what they see as a silly newspaper column.

And finally, yes, sadly, politics can be like this.

The liberties which preserve between them the rule of law and the rights of individuals have been systematically eroded by recent governments. This government has been the most recent to attack them, and has also been the most determined. It has cited what seem plausible reasons for each action, but the cumulative effect has been to subvert the rules which protect us.

The ASI will point to the fundamental principles which have been abandoned or critically weakened. David Davis was correct to highlight this insidious trend, and courageous to make a stand against it. The Westminster journalists who try to trivialize this diminish themselves by doing so.

The first of these eroded liberties we identify is the presumption of innocence. It has been weakened to catch serious fraud cases. Now individuals may be required to prove that they made their money legitimately, rather than having the state required to prove they broke the law. We should not have to justify our actions to the state unless and until it does that. The erosion of this right crucially alters the burden of proof which should be required to threaten a person’s liberty. The rule which should be restored is that a person is innocent until found guilty.

A million people in the UK have petitioned Downing Street against polyclinics – the 'super-surgeries' that will absorb or replace many existing family doctor practices – the so-called general practitioners or GPs.That's almost as many who petitioned against road congestion charging. Given that they are both so unpopular, can we conclude that these ideas are both pretty daft?

Well, road charging is a sensible idea. It allows you to charge on the basis of use, and on the basis of the costs that road users cause to others when they all decide to come into town at the busiest times. People reject it because they know politicians too well: they fear it will be an extra charge, not one which replaces existing motoring taxes.

Polyclinics aren't a bad idea either. There's strong evidence that indiividual GP surgeries have poorer medical outcomes than group practices, where doctors can share administrative and nursing backup, can share patient loads, and can specialize to a certain extent. Making them even bigger, allowing diagnostics and even some surgical procedures to be done at the same site – saving patients from going back and forth to hospital – seems an obvious extension of this.

But now patients are saying they rather like their local GPs. They like to see the same doctor every time. They like the fact that their doctor is near to where they live. And NHS experts too worry that they are just going to duplicate what hospitals already do.

Again, it's the fact that the existing setup is state-run. That means there is no market information to tell the provider (the government) what people actually want. I suspect that in a market healthcare system, people would rather like small-scale medical services near where they live. Or maybe better, something near their work that was open on their way in and out, and at lunchtime. And probably they would like smaller (dare one say 'cottage') hospitals or clinics near where they live, in preference to the huge district hospitals that 1970s state giantism gave us. And they'd like more downline tests, consultations and monitoring, rather than having to turn up in person all the time.

But that's only a guess. Without the preference information that we get from having a market, we can't know. Which means that whatever the government does, it's bound to get wrong, and upset a lot of people in the process.

As I've mentioned here before those elusive free lunch things really do exist. Liam Halligan tells us that the high oil price is being driven by the fundamentals:

In 2007, the review shows, global oil demand was 85.2m barrels a day, up from 84.2m the year before. Global production, meanwhile, fell from 81.7m barrels daily, to 81.5m. So, global oil use is accelerating just as production is coming down.

Such price-boosting trends will almost certainly continue. On the consumption side - as is well-know - the relentless demands of China, India, Indonesia and the other "emerging giants" are unlikely to abate soon. As these countries continue getting richer, their rapid population growth and escalating fuel use per head will keep global oil demand spiralling upward.

Well, yes, as far as Liam goes, that's true. However, there is one thing more we might want to add:

The International Energy Agency has estimated that oil subsidies in China, India and the Middle East totaled about $55 billion in 2007.

So we actually have a global situation whereby we rich countries are busily whacking taxes onto oil in order to reduce demand for climate change reasons and poor countries are at the same time gleefully subsidising the use of the same product. Plus, of course, those subsidies also drive up demand for that subsidised resource, thus raising the global price still further.

So there is our elusive free lunch: whether we want to talk about it in terms of the global price of oil, or for climate change reasons we'd prefer to concentrate on emissions, we could actually improve both matters simply by getting those poor countries to stop subsidising their consumers.

As I mentioned before, there are indeed free lunches out there, almost always when we manage to stop governments doing some damn foolish thing they've taken it upon themselves to do.

An interesting thought: changes in petrol prices will change the relative values of land: the further from the centre of a city, the less expensive it will become, other things being equal. This might then change, say, US cities, make them more European perhaps?

That Irish Referendum was the so called "Plan D". The next step will probably be the plan with no name, for none will admit to it.

This is certainly true: while it might be some of the same people who worry about, say, the EU and civil liberties, that doesn't mean that a campaign about civil liberties has to have anything to do with the EU.

There really is something rather odd about the American newspaper industry. Very odd indeed.

So who is it that makes those windfall profits which should thus be subject to windfall taxes?

Do the Greens really want to drive us back to this lifestyle?

And finally, good news for first husbands, perhaps not for first wives.

We tend to take international statistics as being both fair and true: those nice international bureaucrats are not subject to the stresses and strains of our nasty, brutish domestic politics after all. So if the OECD says that we should do something about poverty, or the UN Human Rights Commission says we must be more careful, then that's taken almost as being a statement which cannot be argued with in any way. That the OECD at times defines poverty as relative and thus they might be talking about inequality, or the UNHRC might be talking about positive liberties rather than negative, both of which subjects are very much part of our domestic political debate, seems to pass many by.

Glenn Whitman has done a lot of work looking at one of these particular pronuciamentoes by such an international bureaucracy: the WHO's rankings of various health care systems. A brief overview here, the full paper here. These rankings are the ones that, for example, say that the US, for all the money it spends on health care, only ranks 37th in the world. France is rated best and our own dear NHS at 18th (that's from the 2000 version). The problem, as he explains it, is that the rankings are making a number of highly questionable value judgements rather than actually measuring anything so simple as the quality of the health care system at delivering treatment.

The most obvious bias is that 62.5% of their weighting concerns not quality of service but equality. In other words, the rankings are less concerned with the ability of a health system to make sick people better than they are with the political consideration of achieving equal access and implementing state-controlled funding systems.

The US does indeed have inequalites of access and of funding: but that's what this ranking method is measuring, not whether it makes sick people better or not.

It's not much of a surprise really, when an index which is designed to make egalitarian systems look good makes inegalitarian ones look bad, now is it?

But the really alarming thing is, our own dear NHS ticks all of the right boxes about equality of financing and of access. All and every one of them. So how come it's only 18th on the list? Is the actual service it provides really that appallingly bad by international standards? Sadly, I think we do have to say yes there.

“Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety."

- Benjamin Franklin

Without undermining the importance of national security or the danger of radical jihadists, politicians in the United States and Europe need to keep a sound perspective on the costs and benefits of exchanging our liberties for a little temporary safety. At the moment, many of our anti-terror laws are so vague that they give law enforcement agencies the ability to intrude on or detain individuals with no ill intentions.

The Magna Carta, the U.S. Constitution, and several British laws guarantee Habeas Corpus. The 42-days law, which passed this week, and the Patriot Act, suspend this "essential liberty" for supposed "temporary safety." The solution is not difficult: if you are going to arrest them, do so with enough evidence to charge the suspect.

It remains to be seen whether or not the law passed yesterday is the result of horse-trading. But, as Lord Goldsmith said,

My fear is that this particular issue over the period of detention without charge has become a symbol of political virility.

This is precisely the problem with the issue of terrorism. It is not a matter of public safety or national interest. It is an issue that politicians use to bolster their own popularity. With Gordon Brown fighting to keep his head above water, it seems he is trying to prove he still matters.

Among the major perverse incentives that distort the US health care market are the tax breaks for immobile employers rather than mobile employees, and for non-profit hospitals instead of patients. Both tax subsidies are partly to blame for spiralling health care expenditures, making non-profit hospitals richer than their for-profit counterparts in the process.

The majority (60%) of the 3,400 US hospitals are not for profit. The 50 largest of them have increased their net income eight-fold between 2001 and 2006 to $4.27 billion, and the 25 richest earn more than $250 million per year. Originally set up to serve the poor, today poor or uninsured patients are billed the highest charges because they don’t benefit from discounts granted to privately insured and Medicaid or Medicare patients. One non-profit hospital group, Ascension Health, has piled up reserves of $7.4 billion, more than many large publicly traded companies. These tax breaks are ‘drawing fire’.

Nonprofits …are faring even better than their for-profit counterparts: 77 percent of the 2,033 US non-profit hospitals are in the black, while just 61 percent of for-profit hospitals are profitable, according to the American Hospital Directory data. The growing gap between many non-profit hospitals wealth and what they give back to their communities is raising questions about the billions of dollars in tax exemptions they receive.

The exact number for 2006 is estimated by the Congressional Budget Office $12.6 billion in tax exemptions plus subsidies from different government levels worth $35 billion for the whole hospital industry. These numbers show better than anything else what damage is caused when third parties instead of consumers run health care. It also shows a high degree of noble cause corruption: 'non-profits serving the poor'.