The Pin Factory Blog

We are delighted to announce that the first twelve blogs in our 'Common Errors' series are now available in Spanish, on a dedicated website run by fellow free-marketeer Ramón Mier. Click here to see the 'Errores Communes'.

On our online bookstore this week, take a look at a book just out, Privacy Wars: Who Holds Information on You and What They Do with it by Rob Hamadi (£10.44+pp).

Governments want our biometric data and the police want our Google records; banks track our spending and our movements. We are caught on CCTV cameras 300 times a day. Who exactly holds data on you – and why?  With interviews with the leading warriors on every side, including Interpol, the DoJ, Equifax and Microsoft, Privacy Wars gives a first-hand account of how the battle is going.

Buy it here from the ASI bookstore. 

Today is E-Day. The day on which we all help to save Gaia by turning off unnecessary and unused gadetry to save electricity. There is some amusement. At the time of writing the collective effect of urging people to save electricity has been to raise consumption by 1%.

Another example of eco-not very sensibleness. 

Remembering Bill Buckley: some bad ideas along the way and some very good ones.

Explaining Cameron's change: there's a public upchuck at the machinations of politicians. 

Not all that much of a surprise when they're making suggestions as inane as this. 

Or the staff are spending so much time altering Wikipedia that whole departmental systems get banned from the site. 

And finally, how many obsolete skills do you possess? 

48. "A university or college education is a public good that society should pay for."

There's truth in the first part of this. Most of us prefer a society with educated people in it, and benefit from it. Educated people can provide services for us, and create the jobs and wealth for the future. They often also add a certain civility which enhances the lives of others.

But they already have access to the rewards of their own education. The main beneficiary of education is the recipient, directly and in measurable ways. The university or college graduate has access to a greater range of fulfilling career opportunities, and has access to much better paying jobs than their uneducated or untrained counterpart. Those who pay towards their education make one of life's very best investments – it repays them many times over in money as well as opportunity.

Someone has to pay for tertiary education. Lecturers have to be paid, buildings and facilities maintained. If this is paid out of taxation, it means that taxpayers in general pay for it, rather than just the beneficiaries of it. It means that the person who leaves school to become a casual labourer is paying higher taxes so that someone who is already better intellectually endowed will have access to better jobs and a higher income for life.

UK university education used to be "free". No tuition was charged and students were given a living allowance to support them. It was a luxury product that could only be given to one in twenty of the age group. Now students have to support themselves with the help of loans, and contribute to the costs of their education. It is much less of a luxury, and one that nearly half the age group can have access to. Education is indeed a good, and should be as widely available as possible.

A year ago, a leading article in The Economist remarked, "Tax havens are an unavoidable part of globalisation and, ultimately, a healthy one". Now tax havens are back in the public eye, with the news that HM Revenue & Customs paid £100,000 for the (stolen) bank details of wealthy Britons with cash stashed in Liechtenstein. Leaving aside the questionable ethics of purchasing illegally obtained information, are HMRC right to go on the offensive against tax havens? After all, don't tax havens cost the Treasury vast sums of money, and force the rest of us to pay more?

Well, yes and no. Certainly, HMRC has a duty to prevent the illegal non-payment of UK taxes and it's probably true that substantial sums of money are indeed being squirreled away overseas. But I still agree with The Economist's sentiment that tax havens and the tax competition they engender is a good thing. And the reason is that competition drives governments towards better tax policy.

The reason that wealthy individuals are able to hide money in tax havens is the British tax law has become overly complex (to put it mildly) and correspondingly full of loopholes for the well-advised individual to take advantage of. Tax competition should therefore drive governments to simplify the tax system, making it fairer, more transparent and cheaper to administer as a result.

Tax competition also helps to keep tax rates low. In a globalized world economy, where companies, capital and high-income individuals are increasingly mobile governments can only raise taxes so much before it becomes obvious that they are losing out. Tax competition helps to keep government lean and encourage them to provide more value for money.

If you believe in high taxes and ever-growing government and public spending all this is, needless to say, rather horrifying and requires urgent international efforts to co-ordinate tax regimes. If, on the other hand, you believe in small government and low taxes, then it's time to give three cheers for tax havens!

Kit Malthouse had a fascinating article in The Times on Tuesday, urging us make greater use of the tunnels under London. A couple of the most appealing ideas in the piece were as follows:

We could, for instance, drop the dual carriageway that currently blights the north side of the Thames into a tunnel below, replacing it with a four-mile long riverside park from Blackfriars to Battersea Bridge. Bypassing Parliament Square at the same time would allow it to be pedestrianised on two sides.

Similarly a tunnel could take traffic from the Edgware Road under Hyde Park and the gardens of Buckingham Palace and allow it to emerge south of Victoria station, where most of it is heading in any event.

The entire Hyde Park Corner interchange could be dropped below ground, and the three great parks of Central London could be united. You could walk from Parliament Square to Queensway, about three miles, without crossing a road. Park Lane would be freed up for redevelopment, and a grand new public square could be created at Marble Arch.

Malthouse's ideas sound good to me. As usual though, the ASI was there first. As we said in our 1994 publication 20-20 Vision:

There are many tunnels under London, and even Underground stations, obsolete for existing use. It should be one of our priorities to investigate how many of these tunnels could be restored and extended for use as urban tollways. They would offer motorists the opportunity to cross under London at various points, paying a toll to miss some of the surface congestion.

A place or country can look wealthy and not be: it depends upon whetther it was wealthy at some point or not. This helps to explain the Argentine debt default, so it is said.

A similar point made here about Zimbabwe. 

Opposing government action is not the same thing as opposing the goals of the well-meaning advocates of such government action. 

That surge in American house prices in recent years: not so much about an increase in mortgage affordability, more an increase in mortgage availability. 

To segue to Northern Rock: yes, we taxpayers will be making the contributions to the Northern Rock Foundation. My, there are a lot of Labour Party MPs in the North East, aren't there? 

Gaining links by the day: correcting Nick Clegg on a matter of corporate accountancy.  

And finally, this might be going a little far, even for theocrats. 

David Mundell MP – Conservative shadow Scottish Secretary – was our guest at a Power Lunch in Westminster this week, where the Highland Spring was flowing freely. Naturally, much of the discussion focused on the Scottish Parliament, whether Alex Salmond can continue to succeed so spectacularly while having only a minority of MSPs, what might happen in the event of a Conservative victory in Westminster, and other issues of great interest to politicos.

David reminded us that Alex Salmond – I was at university with him – is a politician of national skill and status, well versed in the workings of Westminster, and how the lobby system and national political reporting works. Many other MSPs have never been involved in politics outside Scotland. So Salmond's touch can be a lot surer on a number of key issues. Perhaps it is why he has been able to identify and play up a number of issues – like the future of the Lockerbie bombers – where Westminster has seemed to push ahead without apparently realizing that its actions can cause offence and resentment North of the border.

There's certainly a case that the Labour party, having spawned the Scottish Parliament as a way of entrenching Labour rule in Soctland for all time, is rather flummoxed now that it's not actually running things there. Some Labour stalwarts seem to be going off the whole idea of a Scottish Parliament, if the Scots are uncharitable enough to vote in another party to run it.

Still, the chance of policy changing much seems slim. Some 54% of the population get their living from the public sector, so why should they vote for lower spending? It needs a national debate on how money is raised, not just (as at present) how it is spent. If Scotland had financial autonomy, that debate might happen. It might even go down the low-tax route that did so well for Ireland two decades ago. But there's not much sign of it right now.

47. "A national minimum wage prevents the exploitation of young workers."

Many young people make less useful employees than those with a few years experience. They may have enthusiasm and energy, but have yet to learn the habits of work, and the preferred ways of doing things. They have to be trained, and to learn, and this costs time and attention. This disadvantage is made up by the lower wages generally paid to young employees; they may not yet be worth as much as older ones, but this is compensated for because they don't cost as much.

When the state sets a minimum wage, it is legislating to have young employees paid more than the market rate. In some sectors this is not a problem, but in others employers might find it not worthwhile to employ any at the required rate. The result in the US has been that whenever Congress has raised the minimum wage, there has been an increase in youth unemployment, worst for ethnic minorities.

It's like fixing the price of anything. You can't make it worth more than it actually is, but legislators can alter the supply, in this case of jobs. The UK minimum wage recognizes this by setting a lower rate for younger employees. Low wage campaigners don't like this, but it has ameliorated the youth unemployment that a standard minimum wage would have caused. If employers have to pay young people the same rate as more useful employees, they are less likely to hire them. However, young people have an economic advantage when they cost less; it gives them a selling point when they might otherwise have none.

The great majority of top CEOs in the US started employment in a low wage job. If those jobs had been priced out of existence by high minimum wages, many of them might never have got that vital first start. Far from preventing the exploitation of young people, minimum wages can seriously damage their prospects.