The Pin Factory Blog

Easyjet operates a priority boarding system called (predictably) Easy Boarding. You get on ahead of other people, and can therefore select your seat more easily (it's open seating on these budget airlines, which allows for costs to be minimized and a faster turn-around –passengers board quicker if they aren't tring to find a particular seat and making other people move in order to get to it).

As we flew down to Nice this week for an ASI awayday, Stelios – the airline's founder and major shareholder – happened to be on the plane. It was a full flight, and quite a few of those who boarded last could not find seats together. "You should have got Easy Boarding," Stelios told them cheerfully. "It's only £5."

Ah true: but what would happen if everyone took his advice. Then everyone would have Easy Boarding priority and the people at the end would still be at a loss. Then of course there would have to be Really Easy Boarding for another £5! Stelios would have raised the price by a fiver all round! But maybe that's why he's incredibly rich and I'm not. Ho hum.
 

Yes, we really have tested to destruction the idea that throwing money at public services was going to make things better. Excellent, can we now get on with the job of reforming them?

One chart that explains quite how much pressure the Euro is really under.

An offer to take over the Labour Party: no, not entryism, a straight cash offer. Great ideas occur to more than one person at the same time, of course.

Skip over the insults at the beginning here (however righteous) and look at the demographics in the second part. Yes, the "population problem" has already been solved but it's still going to be an interesting world.

Not often pointed out, but one reason for the expense of US health insurance is the lack of a free market.

Might this awards for this and awards for that culture have got just a touch out of hand?

And finally, how do you like your Thought of the Day? Straight, as it comes, or with the real meaning explained?

Over the one sinner that repenteth etc. Stephen Byers seems finally to have grasped what the people around here have been shouting about for years.

An approach that raises personal allowances and takes more people out of paying tax altogether is the best way of helping the working poor.

Yes, quite, now that even Byers and Polly Toynbee agree that the low paid shouldn't be paying income tax can we just get on with it, raising the tax free allowance to, say, £14,000 a year as has been suggested around here? Although, I have to admit, there's a certain wonder here: have we been able to make this case so effectively that people are now agreeing? Or does the often correct test that if people like this are now agreeing with us we might need to rethink matters ourselves? Fortunately for my own sanity, Byers in his second proposal reverts to type:

Second, much more needs to be done to link tax revenues directly to those areas where the public wants to see its money spent. This will mean a significant increase in the amount of taxation that is hypothecated for a particular purpose.

No, this is profoundly silly and that silliness is exactly why the Treasury has been adamant that we should not have anything but the most limited hypothecation of taxation. The reason is that there is no link, none at all, between how much tax one can raise on a specific activity (or even might want to raise, where the tax is to change behaviour as well as raise revenues) and how much you might want to spend on some other, even if closely related, activity. We can and do raise north of £ 8 billion a year on tobacco taxes, smoking creates direct costs for the NHS of some £1.7 billion. If we were to tax smoking only to cover those direct costs then the sin tax should fall. The original supposedly hypothecated tax was national insurance, to pay for pensions, the NHS and unemployment benefits: the NHS alone now spends more than that tax raises, the rest coming from the general fund. Hypothecation simply doesn't work: you should raise the tax where you can, spending what you need. [Click 'Read More' to continue]

According to Shadow Universities Secretary David Willets, the government's new £165 million package of student support will disproportionately benefit middle-class students and do little to help the poor.

As The Times says, the reforms are meant to encourage more working class students into higher education by providing a "means-tested student maintenance grant, which covers living costs but not fees" and which "will be available to students whose parents earn up to £60,000. Previously the cap was £39,305." Willets says that the most affluent families will gain £150m from the scheme, while those from poorer families will only gain £15m.

I can't say whether Willets' sums are right, but I wouldn't be at all surprised if they were. State-financed universities have always represented a particularly perverse kind of redistribution of wealth – from the working poor to the unproductive offspring of the middle and upper classes. Essentially, people on low incomes who didn't go to university (and whose children probably won't either) pay taxes so that better-off kids can lounge around for three years at someone else's expense. The costs of university do not fall only the beneficiaries of higher education, then, but on taxpayers at large.

I'd like to see British higher education given a substantial overhaul. First of all, universities should be freed from state control and allowed to charge fees as they see fit, but helped (through the tax system) to establish endowment funds to support poorer students. 

To meet any gaps in funding, the government-backed student loans system could be expanded, with loans gradually paid back as students become taxpayers. Such a system would ensure that anyone able to go to university could afford to go to university – but knowing they would eventually be footing the bill, young people would be encouraged to work hard and pursue useful degrees that would boost their future earning power. Turning students into paying customers would also make them demand a higher standard of education than they currently settle for.

Introducing these reforms would certainly not be easy, but the benefits would justify the effort.

Researchers at Boeing Phantom have predicted that in twenty years it will be entirely normal to travel to work in plane-car hybrids. The hybrid will be able to travel up to 300 miles and, thanks to a computerised 'flight instructor', it will take minimal skill and concentration.

Powered by electricity and or batteries, it will run on relatively clean technology. However, given the freedom and fun that the hybrid will introduce, I'm sure the ecofascists will find a way of criticising the enterprise.

With green extremists still intent on prophesising doomsday visions of future, it is good to see the normally complicit BBC report on how technology can improve the environment. After all, technological innovation has meant that most humans no longer consider dying at thirty to be normal.

Boeing's vision is entirely likely. A Slovenian company, Pipistrel, will be delivering the first commercially produced two-seater electric aircraft, it runs on a lithium-polymer battery which can be recharged in the time it will take as long as a mobile phone.

As the work Positive Environmentalism from the Globalisation Institute clearly argues, technology offers the surest way to protect the environment. Surely it is about time that this was acknowledged by politicians, the media and society at large.

A long but fascinating paper on the changes in inequality in the US in recent decades. Quite the most detailed look at the subject yet done. Something for all sides to argue about in there.

Theory again: recessions and the associated hard times help to make firms more efficient: but they don't have the same effect on public bureaucracies.

Oh dear: our ideological compatriots across the pond have started comparing compassionate conservatism with LBJ's Great Society rhetoric.

Can a university simply up sticks and move if it thinks its endowment is about to be taxed? Should it?

Linux development isn't full of freewheeling vounteers as some thing: might it be better regarded as the Coase's ideas on contracting costs and the firm in action?

What is it that children really want? And would that some of those shouting about the life/work balance would actually listen.

And finally, one of the differences between the two sides of the pond.

Here in the modern world we have the likes of Naomi Klein telling us that brands are simply tools of mind control, the way in which the eeevil multi-nationals brainwash us into buying their over-priced products. And of course the difference between one sugar water advertised with the aid of orthodontically corrected youths playing sport and another with orthodontically corrected youths wishing to teach us to sing is indeed pretty small. But that's not where brands came from in the first place and not why they have value, as this paper shows.

In medieval Europe, manufacturers sold durable goods to anonymous consumers in distant markets, this essay argues, by making products with conspicuous characteristics. Examples of these unique, observable traits included cloth of distinctive colors, fabric with unmistakable weaves, and pewter that resonated at a particular pitch. These attributes identified merchandise because consumers could observe them readily, but counterfeiters could copy them only at great cost, if at all. Conspicuous characteristics fulfilled many of the functions that patents, trademarks, and brand names do today. The words that referred to products with conspicuous characteristics served as brand names in the Middle Ages.

Brands were the market of quality, the mark of the Real Thing (umm, sorry, sugar water again). And as such they acted as a very powerful incentive for producers to regulate the quality of the goods they were selling. In a distant market, after goods had passed through many hands, it was that brand alone which allowed premium prices to be charged: a price that consumers were obviously happy to pay given the assurance of quality that they were getting.

There's no difference between this and the brand of tomato soup, baked beans or of sports shoes that you or others covet today. It's a guarantee of quality: for once that link between the brand and quality is broken it's very difficult to restore, thus great effort is expended in keeping it.

There is of course an amusement to be had from the way in which the book decrying all of this, No Logo, turned Ms. Klein into a brand herself. If only she had paid more attention to the point and value of such brands, she might have avoided the degrading of her own.

A leader in last week's Economist summed up the case against farm subsidies perfectly. It started by noting the absurdity of farmers using world foot shortages – and consequent high prices – as an excuse.

For years the farm lobby have justified their subsidies on the grounds that low food prices meant farmers couldn't make a living and that the countryside would be left to ruin without government money (ignoring that fact that their "subsidized overproduction" was partly responsible for low prices).

But now prices are high, the same farm lobbies say they need subsidies to ensure 'food security'. Which is nonsense. The point of rising prices is to encourage higher production, so that supply catches up with demand. Indeed, as The Economist notes, high food prices present a perfect opportunity for subsidies to be removed – any hardship for rich-world farmers will be far less keenly felt. But it's not going to happen. Franco-German pressure means the EU's common agricultural policy (CAP) is here to stay:

This is bad news for European consumers and taxpayers, who were promised a proper debate on CAP reform later this year. They will have to continue paying (€55 billion last year) for this wasteful and wicked system. It is terrible for poor-country farmers, who have long suffered from being shut out of rich-world markets, and having rich-world products dumped on them. Now they can hear the gates of fortress Europe clanging shut just when world prices should be triggering an export boom. And it is dreadful news for the hungry poor, because restricting trade in food exacerbates shortages.

Frankly, I don't see any real chance of reforming the CAP – EU politics is too dominated by special interests for that. This doesn’t mean we should stop trying, but the UK needs to be ready to take matters into its own hands. If we have to, we should unilaterally abolish agricultural subsidies and tariffs, and withhold part of our EU budget contribution – encouraging other trade-friendly countries to do the same.

Certainly, Old Europe would make a fuss, but what's the worst that could happen?