Blog RSS

The Pin Factory Blog

"Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice" - Adam Smith

Blog Review 596

Written by Netsmith | Tuesday 13 May 2008

Yet more evidence that the government doesn't seem to have got the hang of this tax reform thing  yet. You're supposed to be making it simpler!

Can you say "producer capture of the regulators"?

Something of a turn up for the books: someone has found something useful to do with all those CCTV cameras.

A film recommendation, or, what two South Asian stoners can tell us about the American ideal.

It's an interesting question: if unions really do increase productivity and or profits, then why don't companies welcome them with open arms?

Of interest perhaps only to rugger buggers: Richard Hill has played his last first class game.

And finally, some clue as to what is wrong with the education system.


View comments

Why the 10p tax might speed up welfare reform

Written by Phil Stevens | Tuesday 13 May 2008

When Gordon Brown decided to abolish the 10p tax rate, he was calculating that there wouldn’t be much of a political fuss.

After all, a large part of the workforce that benefited from the 10p tax rate were immigrants working in low-paid, unskilled jobs: factory workers, farm hands, restaurant staff and so on. These workers are conveniently unable to vote in parliamentary elections, and lack much political clout.

They are also increasingly important to the UK economy: it is estimated that 40% of EU migrants to the UK work in unskilled jobs – 96,000 EU immigrants took up unskilled jobs in 2006 alone.

While the rest of the country seemed oblivious to Mr Brown’s 10p tax reform following the 2007 budget, migrants from the EU appear to have been quietly taking note. According to research from the IPPR, about half of EU migrants have now left the UK, increasingly unimpressed by the economic opportunities offered by Britain. This trend is set to accelerate.

However, before Migrationwatch get too excited, this exodus of unskilled labour could bring with it a host of new problems: a tighter labour market, with increased upward pressure on wages and consequently greater general inflation.

As we know, inflation clobbers the lowest earners in particular, as essentials such as food become more expensive. So yet again, it will be Labour’s core voters that bear the brunt.

Fortunately, there are some 1.1 million people of working age on incapacity benefit who could feasibly be working. These people could fill the gaps left by our vanishing migrants, thereby easing inflationary pressures.

Time to put those welfare reforms at the top of the in-tray, Prime Minister?

View comments

Is it a disease, or not?

Written by Dr Fred Hansen | Tuesday 13 May 2008

For a very long time doctors who worked with drug addicts have stated that addiction to illicit drugs like heroin is not stronger than that to legal drugs like cigarettes. But this message has not reached the public and has therefore not prevented the emergence of a huge therapeutic bureaucracy, which ironically – at least according to my experience in Germany – has provided jobs for ex-junkies.

Theodore Dalrymple analyses this therapeutic community in his new book Junk Medicine: Doctors, Lies and the Addiction Bureaucracy, which is dedicated to the war against withdrawal symptoms. He thoroughly debunks the disease model of addiction claiming that we should be really talking about a moral and spiritual problem requiring changes in behaviour. Based on U.S. government survey data among others the book provides plenty of examples contradicting the prevailing wisdom about addiction:

  • Just as with smokers the vast majority of people who try heroin either never use it again, use it just a few times, or only use it intermittently.
  • Even among heroin users, the heroin addict is the exception.
  • Experiments have shown that withdrawal symptoms were eliminated with placebo injections of saline solution.
  • Histrionic addicts…who complain of horrible discomfort in the presence of doctors…to obtain narcotics but act normally both before the visit and after.
  • Patients who repeatedly receive large doses of narcotics for pain... rarely become addicted.

Dalrymple has plenty of experience in this field since he had been working as a prison doctor in northern England. Dalrymple’s book offers some hope and a good opportunity to rethink our hugely expensive, mostly unsuccessful therapeutic addiction regimes.


If you buy Junk Medicine here from our online bookshop, you can get it for just £11 – £4 off the retail price.

View comments


Written by Dr Eamonn Butler | Tuesday 13 May 2008

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.

View comments

Quote of the day

Written by Wordsmith | Tuesday 13 May 2008

We don't have a budget crisis. We have a spending crisis.

Jonathan Hill, Citizens for a Sound Economy

View comments

Blog Review 595

Written by Netsmith | Monday 12 May 2008

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?


View comments

There is more joy in heaven

Written by Tim Worstall | Monday 12 May 2008

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]

View comments

Paying for higher education

Written by Tom Clougherty | Monday 12 May 2008

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.

View comments

Want to get high?

Written by Philip Salter | Monday 12 May 2008

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.

View comments

The ASI in Nice

Written by Dr Madsen Pirie | Monday 12 May 2008

Some of us went over to Nice to sample the seafood at an ASI dinner.  We went to La Maison de Marie and Le Grand Bleu while we discussed the possible agenda of what might be a new UK administration in a couple of years' time.  We flew out by easyJet and were honoured to be on the same plane as Stelios himself, the company's founder.  His business card describes him as a "serial entrepreneur", which is entirely correct.  One of our tasks will be to make sure that the conditions are right to provide space and opportunity for many more like him.

View comments


About the Institute

The Adam Smith Institute is the UK’s leading libertarian think tank...

Read more