The Pin Factory Blog

A clash of titans: In corner one, we have Google. The company was founded in 1998 by two Phd students at Stanford University. The initial investment was $1.1 million and the company was launched in a private garage. Eight years later, at its first public offering, it was worth more than $23 billion. In corner two, we have the French Government. France invested £75 million in 23 different technology companies for their QUAERO project, aimed at creating a European Google-Killer.

Who will win the battle? Turns out, this clash of the titans is little more than a scrawny schoolboy trying to compete with seasoned professionals. As Business Weekly recently reported, the project "will swallow £75 million of European taxpayers' cash and vanish."

The French Government will learn the sad lesson once again: government cannot take the place of private industry and entrepreneurship. An introductory book to economics or a quick glance at history would have saved Europeans £75m and the French Government a lot of embarrassment. At least we can thank France for providing further proof that free-market economics is the best way for industry and commerce to function.
 

So Gordon Ramsay seems to think that Africans are expendable. How kind of him.

Especially when he is calling for regulations and fines against something which the market patrols and punishes already.

Guido wins an award and some are not happy. Good, nice to upset the right group of people, isn't it?

The effects of the crazed drive to ethanol in the US: consuming 31% of the entire US maize crop!

An elegant way of looking at it: the euro is great for the UK just as long as we stay out of it.

Yes, it's true: recycling is based on the slave (ie, unpaid and mandatory) labour of the citizenry.

And finally, perhaps not the best marketing offer ever. Three for two on shoes?

Apparently Boris Johnson had just one glass of champagne at his victory celebration, and spent most of the night with advisers planning his first hundred days. It's good that Johnson knows he has to hit the ground running, because being London Mayor from 2008-2012 is not going to be the simplest job in the world.

The new mayor has two major projects to oversee. The first is preparing for the 2012 London Olympics. The budget has already spiralled from £2.4bn to over £9bn, but officials are said to be working to a £12bn target.* Johnson will need to do everything he can to control spending and ensure that Londoners do not end up shouldering more of the burden than was originally agreed (£300m). He is also going to have to make sure that London's dodgy transport system is ready for the influx of visitors.

The second big project is Crossrail, the long-awaited train line linking Heathrow with the City and the Southeast, for which the Mayor has direct responsibility through Transport for London. Keeping Crossrail on time and on budget is going to be a major challenge.

Apart from good management, voters are going to want Johnson to deliver tangible benefits in their everyday lives. More police on the streets and a reduction in violent crime, so people feel safer. Less delays and disruption on the tube and less congestion on the roads, so people can get around more easily. More housing so that London life becomes a little more affordable.

All of this is possible with the right policies (and Johnson has some good ones) but it won't be easy – especially when the new Mayor's every move is going to be scrutinized by a hostile central government who would love to see him slip up. London is going to be seen as a testing ground for Conservative government, so the stakes are undeniably high.

* Is it too late to send it to Paris?
 

With all the bankruptcies in the airline industry over the last few years, companies blame high fuel prices, the war in Iraq, the industrialization of China and India, and several other factors for their difficulties. But Southwest Airlines, based in Dallas, Texas, took a different approach that is paying dividends as oil prices rise. In 2000, the company realized fuel prices could rise dramatically and hedged their gas price.

As Moira Herbst wrote,

For 2008, 70% of its fuel needs are hedged at $51 a barrel. That means that while competitors have to contend with spot prices hovering around $120 a barrel, Southwest can buy oil at less than half that... For 2009, the company is covered about 55% at $51 a barrel; for 2010, 30% at $53 per barrel; and for 2011 and 2012, at more than 15% at $64 and $63 per barrel, respectively.

Although continuing this strategy will prove more expensive as fuel prices continue to go up, Southwest has continued to make profits while other airlines have failed. Former CEO of American discount airline JetBlue David Neeleman hoped to follow a similar strategy, but the company rejected his Idea.

As airlines continue to fail and the number of bankruptcies continues to rise, it is not difficult to imagine the Federal Government following the same path it did in the 1980s with Chrysler and recently with Bear Stearns. But Southwest proves that innovative thinking and sound strategy can carry a company through the most difficult times. Government intervention allow less wise companies to unfairly take away Southwest's business, once again rewarding incompetence and penalizing intelligence.
 

THINK TANK OFFERS $15,000 PRIZE FOR JOURNALISTS

London, 1 April 2008 – For the seventh year, International Policy Network (IPN), a London-based think tank, is accepting submissions for its annual Bastiat Prize for Journalism.

The $15,000 prize fund will be divided among First, Second and Third placed authors. The Prize is open to writers anywhere in the world whose published articles eloquently and wittily explain, promote and defend the principles of the free society, including property rights, free markets, sound science, limited government and the rule of law.

Since 2002, the Prize has been inspired by the 19th-century French philosopher Frédéric Bastiat and his compelling defence of liberty. Bastiat's brilliant use of satire and allegory enabled him to relate complex economic issues to a general audience. In keeping with his legacy, Bastiat Prize entries are judged on the intellectual content of each article, the wit, eloquence and persuasiveness of the language used, the type of publication in which it appeared and the location of the author.

Last year, the competition attracted over 280 entrants from more than 60 different countries.

Previous judges have included Lady Thatcher, James Buchanan and Milton Friedman. This year's panel includes the former British Chancellor of the Exchequer, Lord Lawson of Blaby, and Amity Shlaes, syndicated Bloomberg columnist, a senior fellow at the Council on Foreign Relations and a previous Bastiat Prize winner.

Submissions – in English – will be accepted from 1 April until 30 June 2008. (Postal entries must be postmarked 30 June or before). Submissions must be in the form of up to three articles totalling no more than 4,500 words, published between 1 July 2007 and 30 June 2008 in recognized news publications. Finalists will be invited to a ceremony in New York in October 2008, where winners will be announced.

Last year’s Bastiat Prize winner was Amit Varma, an editorial columnist for Mint (a joint venture between the Wall Street Journal and India’s Hindustan Times). Second and third prizes went to Clive Crook, senior editor of the Atlantic Monthly, and Jonah Goldberg, Contributing Editor to National Review and a syndicated columnist. Previous winners include Robert Guest of The Economist, Brian Carney of The Wall Street Journal and Sauvik Chakraverti of the Economic Times (India).

An online submission form, rules, judging criteria, and articles written by previous winners can be found at IPN's Bastiat Prize website: www.bastiatprize.org.

Queries to Marc Sidwell, Bastiat Prize Administrator: telephone +44 207 836 0750 or email info@bastiatprize.org.

What with the Home Secretary's announcement about cannabis a little story of what happens when you pursue the War on Drugs in this manner. As so often in social trends, the US is only a decade ahead of us.

Getting that Burmese cyclone in context: yes, it's horrific.

Again, the unintended consequences of regulation: in this case, reducing the knoweldge of the population.

An economic conundrum solved. Why haven't US wages risen with productivity? Answer, they have.

It can be amazing how the newspapers miss the background to a story, In this case, all of them missed the basic point about the Post Office and Royal Mail story.

Quite possibly the best video of the election season so far.

And finally, why is a bunch of Spaniards speaking Spanish on a football field different from a bunch of Latin Americans speaking Spanish on....?

Politicians complain that politics is being devalued, with the populace disenchanted with the political process. One could retort that this cultural shift is to be expected in a free society where the affluent can largely look after themselves, but perhaps the politicians need to look at their own culture a little more closely.

Where government is limited, politicians can restrict themselves to matters of principle, to the standards and constraints that govern the actions of the people. When government becomes a vast social work department, all the paradoxes and imponderables of constructing the public "good" come into play. In particular, politicians become slaves to a mismatch between idealised objectives and their own interests.

The debacle over the ten percent income tax rate highlights the contrast. Technically, a single rate of income tax is a good idea, it smoothes out marginal tax rates and helps remove the high barriers to escaping welfare. But the headline interest of politicians is not to be seen to be punishing the less well off. Retaining a 10 percent rate "for the poor" is a simpler message than removing a 70 percent marginal rate as the poor try to get less poor. Equally, the obvious route of cutting income tax to 10 percent for everyone is seen to be "helping the rich".

Politicians, in concert with the media, regress in these complex circumstances to a slanging match about whose incompetence was it that led to the mix-up in the first place. The Whitehall Village bellows to itself in its glass box thinking it is addressing the policy issue; while the public see weird people indulging in weird antics to protect their interests. Is it any wonder that so many of us respond by saying "frankly, my dears, we don't care a damn".
 

From an usually funny email I received this week:

Research has led to the discovery of the heaviest element yet known to science.

The new element, Governmentium  (Gv), has one neutron, 25 assistant neutrons, 88 deputy neutrons, and 198 assistant deputy neutrons, giving it an atomic mass of 312.

These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lepton-like particles called peons.

Since Governmentium has no electrons, it is inert; however, it can be detected because it impedes every reaction with which it comes into contact.

A minute amount of Governmentium can cause a reaction that would normally take less than a second to take from four days to four years to complete.

Governmentium has a normal half-life of 2- to 6 years; it does not decay, but instead undergoes a reorganization in which a portion of the assistant neutrons and deputy neutrons exchange places.

 In fact, Governmentium's mass will actually increase over time, since each reorganization will cause more morons to become neutrons, forming isodopes.

This characteristic of moron promotion leads some scientists to believe that Governmentium is formed whenever morons reach a critical concentration. This hypothetical quantity is referred to as critical
morass.

When catalysed with money, Governmentium becomes Administratium, an element that radiates just as much energy as Governmentium since it has half as many peons but twice as many morons.