The Pin Factory Blog

My true love sent to me: five gold rings. It probably means the first five books of the Old Testament, but to me five rings means the Olympics, which are coming to London in 2012.

Well, they say that. But it's a typical government-led project, so who knows? The London bid for the games put the cost at £3,375m, but in March this year Tessa Jowell revealed that the cost had risen to £9,300m - a tripling of the costs in just a few months. Something of a black hole, which the hole-vaulting Culture Secretary explained as due to VAT, inflation, and a whopping £2,700m 'just in case things go wrong' fund (a figure larger than that the original estimate for building the entire Olympic Park. As the bulldozers move in, it cannot give much confidence to their operators that the costs of all this, including their wages, are still being calculated.

The Scottish Parliament building started with an estimate of £40m and ended up costing £400m. Still, we taxpayers can afford it, can't we?

One day, Uncle Joe got fired from his construction job. His nephew asked him what happened.
"You know what a foreman is?" he asked. "The one who stands around and watches the other men work?"
"What's that got to do with it?" he asked.
"Well, he just got jealous of me," Uncle Joe explained. "Everyone thought I was the foreman."

One of the perks of this wonk land stuff is being sent books before their publication date so that we terribly important people can tell you what to think about them before you read them. As with the upcoming "Power and Plenty" which bills itself as an economic history of the past thousand years. I found it fascinating and it'll provide me with all sorts of wondrous arguments to deploy in times to come, some of which I'll sketch out in the next few days here (no, don't worry, I'm not going to try a comprehensive review of such a complex book in a blog post).

One of the things I like about it is the way that little factoids pop up which explain, make clear in a simple manner, quite complex situations. At one point we're told that the Mongols commanded the services of 50% of the world's horses. At a time when the animal was both the transport to the battlefield and the tank equivalent once there this rather explains some of their success, doesn't it? Another is

...the number of operative hours to process 100 lb of cotton was over 50,000 for spinning by hand in India. In England it was cut to only 2,000 by the 1779 invention of Crompton's mule, and fell to 300 by 1795 and 135 by 1825, compared with 40 in 1972.... 

That after two centuries only 0.1% or less of the man hours are required to do the same thing as before rather explains why our cupboards are filled with a multiplicity of clothes while our forefathers had, if they were lucky, two outfits, daily and Sunday best.

The excellent point is also made that such technological advance really rather required international trade: without it, the domestic market would quickly have become flooded and the economies of scale would never have appeared. 

Opponents of enhanced parental choice [in education], such as Mr Balls [the Schools Secretary], say what most parents want is for their local school to be a good school. That is the ideal situation but, as Lib Dem education spokesman David Laws has noted, that is an aspiration, not a policy. A policy requires a mechanism for making it happen. Parental choice through a voucher scheme is precisely such a mechanism. A continuation of commandments from Mr Balls is not.

- Patrick O'Flynn hits the nail on the head in the Daily Express.

Excellent advice for those who would understand either American politics or economics in general. Read PJ O'Rourke. Greg Mankiw (who teaches the ec.10 course at Harvard) has been known to add him to his reading lists.

For those who would go a little deeper, another recomendation. Hernando de Soto manages to explain more about why some places grow and others don't.

Gary Becker explains something about the sub prime crisis:  it can't have been a plot by predatory lenders, as it's the lenders who are losing the money (unless said lenders were in fact insanely stupid which would be a rather different problem).

(Sweary alert) We have the usual sight of politicians being generous with our money, not so much with their own.

A thought on social democracies and their high tax rates :  how do you keep them (both the taxes and the citizens subject to them) when emigration becomes ever easier?

One way the net is changing the world: making the oddest of hobbies easier. 

And finally , Bah Hecate! to the whole Christmas thing. 

My true love sent to me: four calling (or colly) birds, which in A Partridge in a Pear Tree are said represent the four gospels or the four evangelists, Matthew, Mark, Luke, and John.

Emvironmentalists have been very agitated of late by the government's plans to build a barrage over the estuary of the River Severn, in order to generate power from tidal movements. The argument is that the estuary is home to many species of wading and migrating birds, who could no longer survive there.

Birds aren't actually as dim as we think, and if they lose one habitat I've no doubt that they will fly off and find another. But the barrage idea is pretty bird-brained in that the amount of power that it would actually generate is tiny in relation to its cost, including the largely unknowable costs of maintenance. An even more bird-brained plan emerged last week - a massive programme to build offshore wind farms that might produce up to 20% of the UK's electricity within just a few years. When you look at the sums it means building and installing two generators the size of the London Eye every day, but politicians were never very good at questions of feasibility (or cost - remember the Scottish Parliament).

Frankly, these renewable energy sources are viable only because of the £1bn or so electricity customers are forced to stump up for the 'renewables obligation'. Though I'm not sure whether marine installations will ever be viable (how do you even get to them when they need a spot of oil? And who's going to pay for strengthening the grid to take all this extra power they're supposed to generate. And when we've all got our turkeys in the oven and the wind isn't blowing, what then?). We'd be better, cheaper and cleaner building new nuclear power stations. There - I've said it. Otherwise, a light near you will be going out soon.

Six year old Angie and her four year old brother Joel were sitting
together in church. Joel giggled, sang, and talked out loud. Finally,
his big sister had had enough.
"You're not supposed to talk out loud in church," she hissed at Joel.
"Why? Who's going to stop me?" Joel shot back.
Angie pointed to the back of the church and said, "See those two men standing by the door?"
Joel nodded.
"They're hushers."

The Tax Justice Network have a nice little graph here . Their contention is simple: the more of GDP that the government takes in tax then the lower the rate of child poverty. We can thus justify massively higher taxes because we're doing it for the children. I questioned their US figure of 22% of children in poverty because the usual one (US Census) is 12% or so. Here's the definition of poverty that they are using:

Share of children 17 years and under living in households with equivalized disposable income less than 50% of median income; Society at a Glance: OECD Social Indicators, 2005, p.57.

This, of course, is not a measure of poverty, this is one of inequality (or relative poverty, if you prefer). As long as we remember this crucial distinction, the TJN are of course quite correct. The outcomes from the market allocation of incomes can strike some as unfair and different societies seem to have different takes on how much of this they wish to remedy. That remedying done by greater taxation on higher income earners and the single, the money being given to lower income earners with children. This lowers the number of children living in such relative poverty. All of this is, I would hope, obvious, along with the corollary that the less redistribution the closer to the market allocation of incomes we shall be.

All of which means that what the TJN graph actually shows us is that in places where you have less redistributive taxation and spending then you have less redistributive taxation and spending. Something which isn't, if I might be frank with you, a finding which is either surprising or shocking.

Iain Dale has a listing of those who are said to be the most influential 50 "LGB" people in British politics. Shows quite how far we've come for in the lifetimes of many listed there homosexuality was illegal. Another example of how the good old days are in fact now.

On the other hand, not everything is getting better. The bureaucrats are still getting both more stupid and vicious. 

You'll have to think very hard if you want to contribute to this project. A list of the achievements of the European Union. 

It's true that both the US and the UK had tariffs: proving that they aided growth is a great more difficult. 

Peter Luff MP is rather taken down a peg or two in this conversation culled from a comments section. 

So many of the things we are urged to do "for the environment" are simply symbolic acts, of no real merit at all. 

And finally, things you might not know about Bruce Schneier. This is especially good: "Bruce Schneier knows the state of Schroedinger's Cat."

My true love sent to me: three french hens, which in the song apparently represent the theological virtues of faith, hope, and charity. I'm not sure there is much of any of them around today, though.

On the faith side, well, you're not allowed to show it any more - wearing a cross or having a school nativity play - in case it upsets other religions. Hope: well, I don't hold out much hope for the UK or US economies having a boom next year, so that's not exactly cheering. And charity: it's remarkable how many things that should be done through charity are in fact done through coercion as government takes money out of our pockets to do them. And then take the credit, of course.

The trouble is, that when governments intervene, private funding dries up. The Royal National Lifeboat Institution found that in the 1800s, when it started to accept government money. It found that for every £1 it took from the government, it lost £1.40 in private donations. People couldn't see why they should fund something that the government was paying for. Now the RNLI proudly refuses all government money. Bravo!