The Pin Factory Blog

On Tuesday evening we held the latest in our Shaping the Future series of events. The theme this time was The Future of Regulation. Tim Ambler, of the London Business School, was in the chair, and John Redwood MP and Professor Stephen Littlechild were the speakers. Tim opened the seminar with a question: "Who thinks we have too much regulation?" Every hand in the house went up.

Stephen Littlechild, who was head of the Office of Electricity Regulation from 1989-98, spoke first. His argument was that a direct relationship between consumers and producers could be far more effective and more sensitive than regulation alone, and he offered numerous international examples of this in practice. Someone in the audience made the point that this is how non-broadcast advertising is regulated in the UK. The industry self-regulates based on complaints and feedback from the consumer – and it seems to work rather well.

John Redwood MP – who headed the Conservatives' recent economic competitiveness taskforce – spoke next. He opened up his talk with an analogy I rather liked.

Think of a pair of trousers. Everyone is concerned that their trousers stay up – that's why we have belts, braces, zips and buttons. In the regulation context, the free market provides all of these things to protect the consumer: the belt represents the decency of producers, who generally want to do a good job; the braces represent the producer's brand, the maintenance of which is vital to their success; the civil law provides the zips; the criminal law provides the buttons. Adding regulation to this mix is like trussing your trousers up with string – it ruins the trousers and adds very little to their safety.

Redwood also outlined the approach the Tories would take to deregulation if elected. There would be a requirement for the government to decrease its regulatory budget by 3.7 percent every year, and an annual Deregulation Bill (much like the annual Finance Bill) to help them accomplish it. Sounds like a good idea to me.

First, a little lesson in how newspapers hint at things. Not that they would admit as much, of course. A further explanation here.

Sometimes people haven't quite grasped the point or meaning of these political donation things. 

It would appear that however correct they are, not all of Bjorn Lomborg's ideas are entirely new. 

Some climate change news that you might have missed. 

An update on the "success" of the biofuels campaign in Nebraska. 

Fortunately, as Hans Martin Tillack has finally found out, dissing the EU is not in fact a crime. Although, sadly, there seem to be those who think it ought to be. 

And finally, on yesterday's great Guardian scoop about Northern Rock. Err, yes, the SIV benefits a charity, umm, as it is supposed to. If you ask HMRC nicely, they'll even send you a CD on how it works. 

Alistair Buchanan, head of the UK's electricity and gas regulator was our Power Lunch guest this week.

Nice man, and he answered all our questions fully and frankly. But I still think he should pull his finger out. When electricity was privatized, it took a while to build up competition. Then for a while, competition was very active. But is it now? I don't think so, and neither did some of our experts round the table.

Too many political issues I guess. Government's desire to be seen to 'do' something - on insulating ourselves from Putin's gas, carbon reduction, more cuddly windfarms, 'sustainability' - has given us an energy market driven by rules, not competition.

Meanwhile, if you really want to make money in this sector, don't try to generate electricity cheaply. Build a wind farm and pocket the subsidies.

The party funding scandal that has engulfed the government will undoubtedly be used as an excuse for more regulation and more state funding of political parties. This is a mistake. The Labour Party is in trouble precisely because it has broken existing laws and been found out, not because there was not enough regulation to guide their conduct.

Indeed, what this new scandal should show us is that placing restrictions on party funding doesn't really work. More regulation does not produce better ethics, just as more state funding would not reduce political corruption – it would just make the taxpayer foot the bill.

In any case, British politics is not an industry awash with money, and all parties are under pressure to make ends meet. So why not go for a more straightforward approach and say: “Let them get it where they can”. The role of the law should limited to insisting on transparency.

The usual argument posed against this approach is that it would enable a few rich people to dictate the policy agenda. But political parties are ultimately driven by a desire to win power, and thus it is the will of the people that dictates policy (for better or worse). A rich man’s money is no good if it is conditional on the implementation of a programme no one wants to vote for.

It is also generally unfair to ascribe sinister motives to party donors. Like most people in politics their desire is to make the world a better place (as they see it), rather than to pursue a purely instrumental agenda. And when 'influence' is sought, it usually only takes the form of after dinner speeches or informal 'face time' with politicians.

Ultimately, if we try to regulate the finances of political parties, we are only setting ourselves up for disappointment. Letting the market do its thing is the only sensible way forward.

A man was lying in the cinema, was sprawled out over 3 seats. The usher came over and told him to move. The guy mumbled but didn't answer. The usher went and got the manager. The manager said to the man, "Sir, if you don't move, I'll call the police to have you removed." The guy mumbled, but didn't answer.
So the manager called the police and a cop came over. The cop said to the man, "Hey mister. What's your name?" The man said,"Pete." The cop asked,"Where ya from, Pete?" He said, "The balcony."

I really do love this piece in The Guardian about solar power. Almost all of it is an interesting overview of where the science is now and thus where the technology will be in a decade or so. It's all very encouraging indeed: the scientists seem confident that they'll be able to get generation costs from solar down to around and about the same as that from fossil fuels.

Something which will, of course, make a lot of the worries about climate change go away. Of course, this being The Guardian there's the note of doom as well:

But waiting around for the science to become technology isn't an option, says Martyn Williams, senior parliamentary campaigner at Friends of the Earth. "We are aware of moves to find new ways to generate electricity from solar power. We have to move faster than that because every tonne of carbon we pump out is adding to the problem."

So Williams' idea is that we should spend a lot of money now on bad technology now rather than wait for the technology which actually works. That is, we should make ourselves vastly poorer now than we need to be, reducing what we can spend upon the technology when it is ready.

But what really fascinates me about all of this is that if you go back and read Bjorn Lomborg's Skeptical Environmentalist again, his argument about climate change rested upon the following. Somewhere in the 2030-2040 time span, solar power will become cheaper than generation using fossil fuels. At that point we'll all naturally switch: and none of the models used by the IPCC acknowledge this fact (well, prediction perhaps). So all of the predictions of future emissions are too high (again, possibly).

Now as you might recall, Lomborg got a lot of stick for this argument, and it does look like he was wrong. Too pessimistic that is, not too optimistic, for that magic price moment looks like it might appear before 2020.

While there are an awful lot of people who say they like solar power, I have a feeling that if this comes to pass there'll be a few at least who won't be happy. Cheap renewable power will allow the whole capitalist/consumerist juggernaut to carry on which isn't the point at all for some people.

It would appear that the one major industrialised nation that has consistently refused to sign up to the Kyoto Protocol is also the one....where emissions fell. As far as Netsmith knows the only one.

The same country has a less enviable record on extraditions and prosecutions: perhaps we should be demanding some evidence before people are shipped off there? 

Some unintended consequences here. Subsidy of university fees would most likely increase inequality. 

HMRC seems to be conducting some customer surveys. Is this so that they can say that, despite odd discs going missing, people are largely satisfied with them? At least they're getting around to trying to hire some security experts.

The Performing Rights Society does seem to have become a tad more grasping of late. 

Something of a milestone: sometime yesterday there were 3.3 billion mobile phones on the planet, enough for one in two of the entire population. Not bad for a technology, what, 30 years old, if that? 

And finally, yes, a useful phrase to add to "Ugandan discussions and "tired and emotional". "Administrative error", to mean "deliberate cover up for as long as I think I can get away with it".

There's something sad about the readers of this blog. Election-night News and the Projection Puzzle became (albeit briefly) one of the best sellers on our online bookstore. It's about American election forecasts, of course: an odd science, since once the first vote is cast in New Hampshire, the result's usually known, and everyone in California might as well go home. Hanging chads notwithstanding. But you US-poll fanatics might find it interesting.

If, however, you're a mainstream reader looking for a good stocking-filler for your political geek friends, I would recommend Politipedia: A Compendium of Useful and Curious Facts about British Politics by Nick Inman (£6.49+pp). It's the ultimate quirky reference book for students of the Westminster village. It covers backbench revolts, cliches, Downing Street, techniques for saying nothing in interviews, nicknames, quangos, think tanks, and Yes Minister.

Click on the links to go to the Adam Smtih Institute bookshop.