The Pin Factory Blog

Travelling to America has, in recent times, become arduous. Increased security due to the threat of terrorism now means the weary traveller is faced with long lines, impersonal questioning, scanning of index fingers and a snapshot of your face. The duty to protect is a core part of national government, but it always seems that the 99 percent of us that travel to the States with lawful and legal intentions are being treated as though we are all criminals. This has turned many away from travelling to the United States, and things don't look set to improve.

We will now be faced with a new challenge: a 10 finger scanner that the Department of Homeland Security is aiming to have at all points of entry in the US by the end of 2008. These scanners are linked directly to the FBI’s criminal database and automatically scan to see if you are wanted or are on any of their lists, be it terrorist or otherwise. (There have already been wrongful arrests relating to this; I expect there to be more over the coming months). We can marvel at the innovation, but surely we must also ask if it is really needed and should so many innocent travellers have to endure it?

Yes, the state must protect its citizens. But the state is also increasingly showing that they have no processes in place that do not tarnish us all with some degree of guilt. The rise in usage of scanners and ID cards is really a government admission that they do not really know how to protect us. It is time for us to ask for protection from someone with better ideas, and an approach that does not invade our privacy, but only invades the lives of those that wish us harm.

Given the jitters across financial markets it is nice to see that an entrepreneurial German airline is offering a nudist flight from Erfurt to the Baltic island of Usedom. A gap in the market if ever there was one. It reminds me of Seneca’s observation that "the good things which belong to prosperity are to be wished, but the good things that belong to adversity are to be admired" (but from a distance, of course). 

Yes, the Revenue's online tax filing system fell over on the last day of the year you could file your tax returns. Try here if you'd like to know why.

Contrary to the statements and assumptions of many, more money does indeed make you happier.

Some very odd statistics from the police. Most odd indeed. 

One possible solution to the problem of unruly classrooms: set them up as an internal capitalist economy. Whether we'd be able to find enough teachers in the UK capable of running a non-inflationary central bank is another matter...the evidence of the macro economy isn't encouraging.

Very long and very geeky: the Director of the CBO sets out what are, and more importantly are not, the problems with US health care. For example, obesity has not been one of the problems. 

A list of what ought to be at the forefront of everbody's minds when designing a tax system: followed by what is at the forefront of politicians' minds when they do so. There's a slight difference of emphasis.

And finally, wisdom from a wife. 

Tim Harford's new book, The Logic of Life is hitting the bookshelves just about now. His essential point is that we are in fact rational beings and that we do act rationally. But this isn't the "hard" version of such a statement. Not all human beings in all situations do so. There are times when we are in the grip of irrational emotions, others when we don't in fact know enough to make a rational decision.

Depending how you look at it this can be used to either attack or defend the Nanny State: if people are rational most of the time then we don't need that much nannying, but if people are ever irrational some would argue that all should be prevented from making such irrational decisions. All prevented all the time by law, that is.

But Harford takes us further: there have been many pieces of experimental economics showing irrational behaviour, something which supports the Statists. But as John List has pointed out, this is precisely because we are putting ordinary people in extraordinary situations:

...by contrast, when you ask an ordinary person to make the kind of decisions he or she makes every day, you will tend to see rational behaviour. 

When we don't have enough information, when we're not au fait with what's going on we can and do make basic errors. Thus there might be good arguments for having reasonably strict regulation (as we do) on, say, pension funds, something we're likely to set up only once in a lifetime. However:

...most shopping is done by experienced shoppers.

That is, by people who do have enough information, who are au fait with what is going on and are thus making rational choices. Which means that we don't in fact need regulation of the salt content, the sugar, in foods, we don't need imposed traffic light signals on every box, we can work perfectly well with a simple listing of ingredients.

That there needs to be regulation in the economy at times is accepted: the argument is about how much of it there should be. This result shows us that such regulation should be extraordinary, at least as far as people's choices are concerned, for it's only required when we are acting potentially irrationally which is, as shown, only in extraordinary times.  

At the beginning of the week the Family, Drug and Alcohol Court opened. It is a £1.3 million pilot scheme being run jointly by three London Boroughs, Westminster, Camden and Islington (part-funded by both the Ministry of Justice and Department for Children, School and Families) that has been set up to attempt to ensure that children remain with their parents despite any addictions the parent might have.

Yet to accomplish anything judicially it has, however, allowed another true cost of the welfare state to be exposed. There are obvious costs to the taxpayer, such as the set up costs shared unevenly between central and local government, but this court has revealed some unwelcome negative externalities created by the welfare state.

Specialist court judge Nick Crichton said, "We are routinely taking into care the fourth, fifth or sixth child from the same birth family" (this in relation to the removal of 14 children into care from one mother). It is not hard to see the perverse logic that the welfare state has created in the minds of these drug users. Despite the drug use, they have recognized a secure income stream that can feed their habit: children. The blame for this culture lies squarely at the doors of government (both shades) for the implementation of child benefit to its current high levels.

The welfare state as the abuser is no surprise. It has distorted incentives since its inception and will continue to do so via its warped perception of 'caring'. The socialist state has turned children into nothing more than inanimate objects, their value being no more than a hit to a drug addict.

If only the politicians were forced to live with the unintended consequences of their actions, they might rethink some of their most damaging policies.

The Project Better Place is a joint venture by Israeli-American entrepreneur Shai Agassi and the Israeli government. With the aim to reduce significantly Israels dependence on foreign oil from undemocratic regimes, a nationwide network of electric cars will be available by 2011 if everything runs on schedule. Nissan and Renault will build the cars and the government will offer tax incentives to purchasers.

The innovative model, developed by Agassi, would provide consumers with inexpensive cars, and they would pay a monthly fee for expected mileage, like minutes on a cellphone plan. Project Better Place will provide infrastructure including parking meter-like plugs on city streets or service stations along highways at which batteries can be replaced.

This annoucement coincides with a rebirth of electric vehicles, thanks to a breakthourgh in energy storage based on nanotechnology. New Lithium batteries are developed from a family of different chemical combinations and have enabled new features such as charging cycles in excess of 20,000 while still retaining 85 percent of their capacity. The time required for recharing has been cut down to only 10 minutes, instead of many hours previously. Most importantly, the new batteries can store four times more electric energy than conventional ones and operate safely from -50° C to 75° C. With 3,000 charging cycles a battery would provide enough energy for a car to do 150,000 miles at 80 percent capacity.

Two years ago a Japanese team built a car called Eliica, short for Electric Lithium-Ion battery Car. This eight-wheeled, 600kW rocket served as proof that electric cars can be fast and fun. It boasts a neck-snapping 0-100kmh time of just four seconds and a 0-160kmh time of seven seconds - faster than a Porsche 911 Turbo. And for our American readers, the attractive new Teslasports car, built in Northern California, is now being marketed for $100k.

I was on BBC radio on Thursday, commenting on the record profits announced by Shell. I said it was very good news because it meant the thousands of jobs which Shell sustains in Britain are safe. It's also good to see a world class British company doing so well. I pointed out that Shell is devoting huge resources to the development of cleaner technologies and alternative fuels, which it can afford to do thanks to its healthy profits. I said we should all be celebrating the good news. 

Just who is paying whom and for what? Giudo finds a journalist defending Ken Livingstone who had worked on a writing project that Ken Livingstone disbursed the taxpayer's money for. As, Netsmith recalls, did Polly T get £7,000 for such a project.

It really does seem that no one has thought this ID card idea through as yet. Some will have to pay £ thousands to travel just to get their barcodes. 

On which subject, the Freedom of Information Act seems to obscure more than it reveals. 

Danny Finkelstein really doesn't get the modern order. Yes, of course it's only left whingers who are allowed to have insights. Tsk, it's obvious, isn't it?

EU news: The EU Parliament won't have to worry about pesky journalists for much longer, they're going to report on themselves. Futher, yes, they did vote to ban patio heaters today. 

Someone's found a new mapping tool. Here, changes in the distribution of the world population. 

And finally, just what would Hugo Chavez' Facebook page look like? 

The arbitrariness of the Home Office work permit system is exposed by the decision to deny the footballer Nashat Akram the chance to play for Manchester City. The rejection came because Nashat is Iraqi, and Iraq is rated 72nd in the world rankings. Permits are only given to players from international teams in the top 70. This decision was made despite Nashat's remarkable performances in Iraq's surprise triumph in the Asia Cup, all the more remarkable given the disorder in his home country.

It is also not the first time the Home Office has been in the news over footballer's work permits. Jason Scotland (Trinidad and Tobago) and Mark González (Chile) were both denied permits, with latter being a deal worth £2.35 million. Perhaps the government is best left out of such decisions; at least until the mandarins at the Home Office can meet the fan's demand by scoring goals like Akram (see here and here).

As it would happen, Philippe Legrain, author of "Immigrants: Your Country Needs Them" will be arguing along these lines tonight at the Adam Smith Institute. If you would like to come, please contact Steve at steve@adamsmith.org or us call on 020 7222 4995.

22. "The free market is unfair because we do not all have equal votes as we do in a democracy."

The argument is that people with more resources unfairly have more market power than others, whereas in a democracy everyone counts equally. We would think it absurd if everyone voted on what kind of MP3 player people should have, and everyone received the one which gained the majority vote; yet this is how democracies work.

In a market we can all choose what type of MP3 player we want, and receive the one we choose, even if it is not the one preferred by a majority. This makes the market a source of greater freedom than a democracy. In a democracy we have to settle for the majority choice on a large package of issue taken together. In a market we can pick and choose to satisfy our preferences on individual items. We can take Apple for some products and Sony for others. We cannot in our government choose different parties for different policy areas.

People do not have the same buying power. Some people can offer goods and services worth more than those of other people. Older people might have more savings or command higher salaries than younger people. Those with more education and skills might become wealthier than others as a result, and the same applies to those with special talents, such as footballers, musicians, or entrepreneurs.

It means that some people can afford more or better goods and services in their market choices. This is because they offer more valuable service to others, and it is what spurs others to try and do likewise. If the rewards were allocated by equal votes, a majority could vote themselves a large share of the total, and make entrepreneurial activity no longer worthwhile. The economy would stagnate and no-one would benefit. This is not the kind of "fairness" that is worth having.