The Pin Factory Blog

Far be it for Junksmith to intrude into party politics, but I derive some wry pleasure from the #KerryOut campaign. Labour's 'Twitter Tsar' Kerry McCarthy (MP for Bristol East) has made enemies of a good portion of the blogosphere for various reasons, including making defamatory online remarks about Tory Bear (Harry Cole) and Iain Dale, and then blocking their replies.

Kerry (as she is now universally known among the blogerati, was completely undistinguished as an MP, following the whip on every occasion. Ironically, her only taste of fame – her fatuous 'Twitter Tsar' appointment – could well be her undoing. Iain Dale has put her top of his list of 'Labour MPs I'd like to see kicked out of Parliament', and Tory Bear and others are sinking the snowboots in too.

As a result of the #KerryOut campaign, which Kerry has brought on herself, the Tory candidate for Bristol East, Adeela Shafi, has raised over £1,600 in donations in just a few days. I am sure her £2,000 target will be exceeded soon. It should all remind politicians – particularly pompous politicians who proclaim that they know how to handle the new media – that the blogosphere is not to be messed with.

During the Labour party conference Home Secretary Alan Johnson revealed yet another reason to boot the party out at the next election.

Renewing Labour’s pledge to ‘clampdown on crime’ (read: creating more punishments and bureaucracy under the pretence of ‘action’), he has unveiled plans to bar alleged wife beaters from their homes through the Domestic Violence Protection Order. “Go" Orders can be placed on suspects, banning them from their homes for up to two weeks, while allowing victims of abuse time to consider legal action.

Apparently, this has been dreamt up to close a ‘loophole’ in legislation whereby the Police can only ‘protect’ a victim of domestic violence if a suspect has been charged with a crime. This ‘loophole’ sounds horribly similar to the long-standing practice in the UK of no-one having their liberty infringed upon without sufficient evidence to suggest it is in the public interest to do so.

If the police cannot prove a crime has been committed and an alleged suspect has not been charged, let alone convicted of an act, then that suspect has every right to be treated as a law-abiding citizen. It is inevitable that some of those banned from their own home will be guiltless and that some people affected by this order will not have charges brought against them. These people would be seriously wronged by such measure.

The breaking of a “Go" Order could land you in the magistrates for Contempt of Court and risking imprisonment. In practise, Johnson is stating that someone who has not even been charged with a crime could face a spell in jail, simply for breaking an order that was imposed without evidence and without justification.

Whilst in power New Labour has continually undermined a major right in the UK legal system: the presumption of the accused’s innocence until proven guilty. They have treated those yet to be tried as convicts through the use of Control Orders and treated those proven innocent as guilty through the retention of details on the DNA database. They are now seeking to treat as guilty those who are yet to be even charged with a crime.

Milton Friedman on self-interest and the profit motive

The video above is a nice snippet of FA Hayek's view of "social justice". Hayek wrote that, "To discover the meaning of what is called 'social justice' has been one of my chief preoccupations for more than 10 years. I have failed in this endeavour — or rather, have reached the conclusion that, with reference to society of free men, the phrase has no meaning whatever." Just so.

Libertarian academic John Tomasi disagrees and, indeed, has attempted to reconcile Hayek's ideas with the principle of "social justice" in a new book, Free Market Fairness, which has been remarkably well-received. I'm sceptical, but am looking forward to (maybe) having my mind changed: Tomasi will be speaking on his ideas at the ASI on May the 3rd. The event is open to all, so come along and see what he's got to say.

On Thursday, Liam Byrne MP, Chief Secretary to the Treasury illustrated his failure to grasp basic economics. He claimed on the Today programme that "when National Insurance has gone up in the past, actually, employment has risen". This is probably true. It is entirely possible that employment can rise despite the cost of employment increasing - the reasons for this may include strong and steady economic growth. Whilst the cost of employment rises, the increasing profits of employers mean that they can afford to absorb these costs and continue creating new jobs, or at least not get rid of existing ones.

However, Byrne then claimed "there isn't an automatic link between raising National Insurance and unemployment". When prompted not once, but twice as to an explanation for this, he simply cited his "observation" that past NI increases had been followed by increases in employment. This is astounding. To even imply that an increase in the cost of employment can lead to an increase in employment is beyond belief, but to rule out the opposite correlation between the two without acknowledging any other factors is senseless.

Anyone with an ounce of sense, let alone the entrepreneurs and business leaders so frequently cited in the recent National Insurance debate can tell you why an increase in National Insurance, by increasing the cost of employment, damages the chances of creating new jobs at the best of times, and may even put existing jobs at risk when the economy is shaky. For a Labour party nominally committed to jobs and economic recovery, this is either hypocrisy of the worst kind or sheer stupidity.

It was a note left by the departing Chief Secretary to the Treasury as a joke (and quite a funny one), but the words have come to express the truth about Britain’s economic position. Now Warwick Lightfoot, himself a former Treasury Special Adviser, has written a book under that title.

The problem, in a nutshell, is too large a public sector. While the author stresses the benefits of some public sector activities, he concludes that there comes a point when its costs and the damage it does outweighs those benefits. The rough figure at which this happens in a developed economy comes when it exceeds 30–35 percent of the economy. Britain passed this figure in the 1960s, and has been in negative benefit territory since then. The New Labour splurge pushed it to nearly 48 percent, with little commensurate improvement in output.

Warwick Lightfoot suggests that the coalition’s strategy of reducing the public sector to 40 percent of GDP “will resolve the UK government’s borrowing problem but is insufficient to deal with its medium and longer-term structural public expenditure problems.” It should be taken down to 35 percent, he suggests. He claims that 2 percent can be taken from public sector pay and pensions, and another 2 percent from the social security bill, and that the performance of the economy will yield an added bonus as it improves as a result.

The book is well argued and packed with supporting detail. Lightfoot makes a powerful, but reasoned, case that we have been living beyond our means at a level that has damaged the ability of the private economy to generate wealth. Cut back the public sector to a manageable level, and our wealth-generating capacity will increase.

One can only say “Yes, please!” and hope that Coalition ministers have copies of this book on their desk.

"Sorry, We Have No Money – Britain's Economic Problem" by Warwick Lightfoot is published by Searching Finance and is available now.

California is at it again. This time it is trying to ban trans fat from all restaurants in the state. Forget that these restaurants are privately owned. Forget that costumers buy and eat food of their own free will and volition. Forget that doing so carries no externalities that would endanger the health of those who do not eat trans fats. The nanny is saying no.

As Assemblyman Chuck DeVore said, "For gosh sakes, this is taking government power to an absurd extreme."

For gosh sakes, is true. Many restaurants now voluntarily use trans fat free substitutes because consumers are increasingly aware of products that cause obesity and heart disease. But some restaurants cannot use substitutes without compromising the quality of their food. According to the California Restaurant Association:

Ethnic-food restaurants could be hit particularly hard by a ban on trans fats, because some of their entrees are difficult to prepare with substitutes... The particular oil used in a food affects product taste, appearance, texture, performance and stability.

Let restaurants and consumers decide. Children have mothers, and adults generally have enough brain capacity to decide what kind of food to eat.

The legislature approved the bill, which is now awaiting the Governator's approval or veto. For freedom's sake, let us hope Arnold Schwarzenegger terminates it.
 

The Lib Dem conference offered some excellent ideas yesterday. The best was to raise the income tax threshold to £12,500; this will make employment more profitable than benefits; it will go a long way towards enriching the poorest; it will be a significant removal of government from the lives of millions of people.

Then in his next sentence Danny Alexander said that if we are all in this together then those with the broadest shoulders ought to bear the greatest burden. But we are 95th in the World Economic Forum’s low tax rankings; down from 4th in 1997. We already pay a lot of tax: the Lib Dems are looking for rhetoric that avoids Wilson’s mantra – tax the rich until the pips squeak – but that is increasingly what it looks like they want to do.

In a recent article, Allister Heath outlines some vital facts for this discussion:

A huge share of the tax take and hence of the money used to fund the NHS, schools and welfare is accounted for by a tiny minority on high incomes. The top one per cent of taxpayers (roughly speaking, those on £150k and above) will pay a record 27.7 per cent of the total income tax take in 2011-12, according to HMRC (they earned 12.6 per cent of total income, down from 13.4 per cent five years ago). This has increased from 26.6 per cent the previous year, 21.3 per cent in 1999-2000, 14 per cent in 1986-87 and 11 per cent in 1981-2. History tells us that cuts to the top rate actually increase the share of tax paid for by the rich; there was no need for Gordon Brown’s raid.

The rich already bear the greatest burden. And it isn’t just those people labouring for the £150,000 a year. The very rich make the biggest contribution:

The 14,000 people on £1m a year or more will pay £14.2bn in income tax this year. They will contribute almost as much to the exchequer as the total paid by the 13.93m people earning up to £20,000 a year, who will fork out £14.9bn. Those on £1m or more now pay 45.5 per cent of their income in income tax, up from 35.7 per cent in 2008-09.

Howe cut the top rate from 80% to 60%; Regan from 70% to 28%. These were successful policies. We are already taxing the rich too much.

More sinister than this was Alexander’s plan to catch tax avoiders. There are 2,500 extra jobs in HMRC; he is promising to collect £7 billion more in tax this year. All that money could be used productively, but instead it is going to be stolen to keep Lib Dem delegates clapping. This new team is going to focus on the top 40,000 taxpayers and, in his own words, the government are going to find them and their money. But look up at the figures from Alister Heath: 14,000 rich people already give as much as 14,000,000 not rich people. Disincentivising those 14,000 could cost the 14,000,000 dear.

When so much which is said, written and done in the name of climate change mitigation is tinged with a zealotry which insists that drastic action must be taken, despite the improbability of it happening, it is particularly refreshing to see a remarkably sensible new report from the University of Oxford and LSE.

How to Get Climate Change Back on Course clearly and concisely demolishes the myth that the Kyoto protocol and any successor which might possibly emerge from the Copenhagen conference later this year will have the claimed effect on emissions. It also highlights the ludicrously ambitious targets of the UK Climate Change Act, which would require a sustained rate of decarbonisation over twice that ever seen. That Kyoto places binding obligations on Annex 1 countries and the Climate Change Act targets are legally enforceable is meaningless: no sactions can force compliance.

The authors of the report all subscribe to the view that carbon dioxide is the primary driver of climate change. These are not sceptics. However, they are realists, capable of independent thought and recognising that the current hypothesis may turn out to be false. They propose a policy which is lower cost, efficient and - most importantly - directly addresses the key issue of carbon intensity: a low, ring-fenced carbon tax to fund innovation policies. This is based on the simple truth that clean energy will only begin to dominate when it is cheaper to supply at the point of use than conventional sources. Such a carbon tax may turn out to be unnecessary, but it certainly beats the unholy mess of emissions control. This report should be required reading for all politicians.

For more detail, see the latest Scientific Alliance newsletter.