The Pin Factory Blog

Only someone entirely a cynic, hatefully so, could believe that this story from 1907 has anything at all to do with the expansion of the public payroll over the past decade.

Similarly, we would have to be silly to think that there are such examples of rent-seeking here in the UK. 

If we are indeed to do anything about climate change then it's clear that a carbon tax provides the fewest opportunities for such rent-seeking. 

Originally these tariffs were simply rent seeking. But now that 99% of shoes bought in the US are imported, they don't even cover that function, they're simply a particularly nasty regressive tax.

Staying with the US tax system, has it become more or less progressive in recent years do you think? Given that average tax rates for the poorer groups have fallen further than those for the richer, perhaps it has become more progressive? 

Coming soon to an internet near you. The confiscation of any equipment being used to breach copyright. So that's Google's servers running Blogger for chop then, eh?

And finally , in the comments at Guido's, Stanislav, a young polish plumber. Not PC, foul language and very, very funny.

The Sutton Trust has just released a report on the way in which social mobility has been flatlining since 1970. All of the newspapers seem to be taking the same line (with varying degres of stridency, I agree) which is that this shows how ossified society is and isn't it all an outrage, a crying shame. The FT, The Indy, Times, Telegraph. Oddly, it's the Guardian which gives the best report:

The brightest children in Britain's poorest homes are outperformed by the least gifted children from wealthy homes by the age of seven, according to research. It concludes that social class is still the biggest predictor of school achievement, the likelihood of getting a degree and even a child's behaviour, suggesting that the advantages of being born in a privileged home have not changed in 30 years.

For the Sutton Trust hasn't studied social mobility at all. It's studied what is, in the very kindest possible description of it, a weak proxy for it, the liklihood of getting a degree by age 23 (one that I myself would have failed btw). 

I'm entirely willing to believe that coming from a privileged home does indeed increase your chances of succeeding via the education system: given the manifest deficiencies of that system, that anyone without a strong home and family background gets anything at all out of it surprises me.

What I'm much less sure about is that this is in fact a good proxy for social mobility: for a start, we're not actually interested in social mobility at all, we're interested in economic mobility and income and class have never been closely linked in England. The report does acknowledge this in a way:

A key assumption is that, as demonstrated by previous studies, earlier educational and behaviourial outcomes for children are a good (and reasonably constant) predictor of their future earnings as adults.

Given that the graduate premium is falling and has been for a decade or more (to the point that investment in an Arts degree, for men, is thought to now have a negative economic return) that assumption of constancy seems unwarranted. The Sutton Trust has pointed out that the education system, as so many of us have been insisting, isn't very good. But they haven't, as most of the newspaper reports seem to think, found out anything about social or economic mobility, at least, not to a reasonable standard of proof they haven't.

Still that won't worry anyone, will it? "Research" has shown that the UK lags the civilised world in social mobility and that'll be good for a few thousand jeremiads. Just a pity that what the research does show is that the £77 billion a year we spend on the education system isn't being well spent, but then we knew that, didn't we?

A man arrives at the gates of heaven. St. Peter asks, "Religion?"
The man says, "Methodist"
St. Peter looks down his list, and says, "Go to room twenty-eight, but be very quiet as you pass room eight."
Another man arrives at the gates of heaven. "Religion?"
"Baptist"
"Go to room eighteen, but be very quiet as you pass room eight."
A third man arrives at the gates. "Religion?"
"Jewish"
"Go to room eleven, but be very quiet as you pass room eight."
The man replies, "I can understand there being different rooms for different religions, but why must I be quiet when I pass room eight?"
St Peter replies, "The Jehovah's Witnesses are in room eight, and they think they're the only ones here."

The Prime Minister still likes to crow over making the Bank of England independent when he was chancellor. He is keen to take credit for every success, but when the fan gets clogged his McCavity alter ego is assumed. In any case, recent occurrences have shown the Bank's independence to be purely cosmetic: they are culpable when inflation targets are missed, but when they try to avoid moral hazard by not bailing out Northern Rock, the Treasury takes over.

What the Northern Rock debacle has illustrated is the weakness of Brown's tripartite system of financial regulation (divide and rule) where the boundaries are blurred and the Treasury maintains close control. This kind of regulation is a feature of the government's approach to everything from the NHS to quangos – and it doesn't work. Everyone who is anyone in the City knew Northern Rock was in trouble months before it collapsed through the most normal of banking failures: borrowing short and lending long. Why did the situation get so out of hand?

Another failing was highlighted by the Bank of England's decision not to inject liquidity into the markets over the summer, as the European Central Bank and the US Federal Reserve chose to. As James Harding put it in The Times:

Was this because it was not sufficiently in touch with the financial markets? Was it because the Financial Services Authority knew what was needed but, under Gordon Brown’s model of tripartite regulation, did not have the authority to make it happen? Was it because the Bank is mandated to meet inflation targets but, unlike the Fed, does not have an equal responsibility for nurturing growth?

All in all, the former chancellor may deserve more blame than credit for his handling of the country's financial stability. And there may be harder times ahead. As Sir Samuel Brittan wrote last week, stagflation may, once again, be on the horizon.

I'm pleased to see that Ross Clark's witty exposee of the ridiculous rules and regulations we live by – How to Label a Goat – has gone into a well-deserved second edition printing.

Buy it here, from the ASI bookshop.

On a more worthy front, though, this week I'm recommending William Wilberforce, the new biography of the great anti-slavery campaigner, written by former Conservative leader (and fellow Yorkshireman) William Hague MP. It documents well the parliamentary tribulations he had to go to, which of course the author understands, being in the business himself. Wilberforce's campaign really was the work of a lifetime.

Click here to order it. 

Yes, I was rather surprised , someone sensible praising a Johann Hari article. Fortunately, reconsideration and thus good sense prevails in the comments.

Wat Tyler with another explanation of why we don't want Government spending our money. This time it's the Thames Gateway plans, but the reason is the same, they're simply not very good at getting anything for the spending. 

More tax news from the US : it's a surprisingly progressive tax system they have, much more so than many assume.

Perhaps a little Panglossian but war is set to be eradicated by liberal capitalism? 

Greg Mankiw laid out what he sees as the areas of disagreement between left and right in economics. Here's the Austrian counter . 

Dan Hannan and EU Referendum on the events in the European Parliament yesterday. At least one person's private film of the episode was attempted to be confiscated: apparently dissention cannot be shown publically.

And finally , this is a very British indeed manner of showing displeasure with Johnny Foreigner. 

Matthew D'Ancona had a piece in The Guardian about political blogs and blogging earlier in the week and he asks the interesting question of whether, as, if and when there's a Tory government again whether the current (perceived perhaps) success of the right-wing blogs will give way to one of the left-wing such. The point being that it is both easier (and more fun!) to oppose and also that when in opposition anything which bashes the rulers is helpful, rather than the more controlled message necessary if you're in power and want to stay there.

If we confine ourselves to the nakedly party political blogs I think he might well be right, that there will at least be attempts to control the message. Unlike D'Ancona I think such attempts at control will probably succeed, too, if we again confine ourselves to the nakedly party political blogs. For those who run them are indeed party political animals and will continue to work, as they do now, for the success of their "tribe".

Where I think his ultimate conclusion, that blogs won't be controlled is correct, is with respect to those that lie outside such party limits. For example, Samizdata make no bones about their virulent dislike of Tories, of social authoritarians just as much as economic ones. I've been known to make the same point myself. It's most unlikely that this blog will roll over to have its belly rubbed just because the blue rosettes got into Number 10 either.

For I think there's a fault line that runs through "political blogging" which isn't in fact properly appreciated. There are those who blog for a specific group, for a party, for their tribe. And there are those who blog in support of certain ideas, or ideals. The former group will indeed be liable to capture by the centre ("don't rock the boat old boy, not now we've got back into power again") and the latter will continue to scream for their cherished goals whichever party is in power.

In a way, I think that might be one of the ways in which blogging has and will in fact change politics: it used to be that if you had a cause you had to join a party, a coalition, even for that cause to get a hearing. Now all and any causes can get that hearing which rather diminishes the importance of party politics itself. 

The following was recently voted the funniest joke in Belgium:

Why do ducks have webbed feet?

To stamp out fires.

Why do elephants have flat feet?

To stamp out burning ducks.

Do you think something got lost in translation?

Newcastle's Professor Ian Fells was our guest at a Power Lunch here yesterday. As an engineer and energy expert, he's flabbergasted at this week's announcement from the government that every home in Britain will be fed by wind energy by 2020, thanks to a new 25-gigawatt wave of offshore wind turbines. Fells points out that most government announcements on energy since around 2000 have been - well, confused, to put it politely.

Quite so. The chance of the UK reaching their targets of 20 percent renewable energy by 2020, or a 60 percent cut in CO2 by 2050 are roughly zero. Presently we have about 1500 wind turbines generating just 1 percent of our electricity. You will need a lot of new turbines to increase that significantly. And when you do build them, remember that you will also have to strengthen parts of the national grid to cope. And planing authorities don't much like the idea of lots of new pylons crossing the landscape.

When it comes to offshore wind power, the costs are largely unknown, and the kit needed to build on that scale doesn't exist. The trouble with wind power is that quite often, the wind isn't blowing; and when it is, it isn't blowing hard enough to make turbines work at peak efficiency. So you need more turbines than you think to generate the power you need. Fells reckons it means erecting ten turbines a day to meet the government targets, and he can't see how that is feasible. After all, they are each bigger than the London Eye, and that took years to build.

Turbines are great for pumping water in Australia, or charging your batteries in Antarctica. But as a power source for an industrialized country that is completely dependent on electricity – the computers, the waterworks, the tills, the rail signals and just about everything else goes off when the power fails – it's hardly something we can rely on. So why are we making such grand commitments? Well, politicians want to seem green. And with nine different energy ministers in the last decade, it's probably that none of them really understand the costings and engineering. So they throw £1bn of our money each year on renewables that wouldn't exist without that largesse. We should concentrate on security of supply (and new nuclear capacity is probably the cheapest way of doing that) - then the rest will follow.

Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying the wrong remedies.

– Groucho Marx