Tim Worstall
The bureaucratic costs of recycling
The bureaucratic costs of recycling
Tim Worstall
The groceries market seems alarmingly ...
The groceries market seems alarmingly competitive to us
Tim Worstall
Pensions - net matters, not gross
Pensions - net matters, not gross
Tim Worstall
Seems perfectly reasonable politics to us
Seems perfectly reasonable politics to us
Tim Worstall
A problem with having a truly democratic economy
A problem with having a truly democratic economy

Virginia Tech in retrospect

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Two years ago today I woke up and walked to my Monday morning class, introduction to macroeconomics, and on the way I was informed by a friend about a tragic situation. In my economics seminar we did not discuss fiscal or monetary policy, not even inflation or unemployment, instead we discussed the unwinding events occurring at a school a few hours south of mine, the Virginia Polytechnic Institute and State University, more commonly known as Virginia Tech. Amongst the students and professor, various topics were thrown around from a need for increased security on college campuses to calls for strict gun control, but the connection that most students made in the discussion was to a similar event that happened on our own campus four months earlier.

On Wednesday December 6 2006 a fleeing criminal fired shots on police officers in the suburbs of Philadelphia, and upon escaping from the police he entered the campus of Villanova University to hide. This happened around 3:15 in the morning, and by 4 the entire campus was under lockdown. As students tried to leave their residence halls for early morning classes they were sent back to their rooms by Resident Assistants. By 10:20 AM the university was cleared and classes went on as scheduled. No one was harmed at the university because swift action was taken in response to a threat.

Although the circumstances surrounding both situations were vastly different, it made me realise that it is quite difficult to predict or fully prevent events such as these from happening. What matters more is how people respond to the situations when they do happen. Fortunately, my university was competent enough to respond to the matter in an effective way. Under similar pressure, Virginia Tech was unable to respond to the first shootings that morning as effectively, failing to prevent 30 additional murders. 

Consequently, because terrorist events happen does that mean students want metal detectors at every university door, security cameras staring down their neck as they walk out of class, or administrators reading their e-mails and message conversations to ensure their safety from attacks? I assure you most students would not desire these measures to be taken. I feel much sorrow for the students who were murdered in the Virginia Tech tragedy, but I do not believe any of the above precautions would have prevented the attack. More likely, those measures would be used to arrest intoxicated students, fine them for dropping trash, invade their privacy, and keep them from getting to class on time.

Following the Virginia Tech incident, my university responded by providing a voluntary service that sends text messages to students’ mobile phones with instructions during emergencies. Since setting up the service, one more shooting occurred near our campus by an outsider, but students were immediately informed [via text] of the location and nothing was harmed, not even our personal liberties.
 

Blog Review 932

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Once again, how to encourage development? Hayek was right it seems (quelle surprise!)

The exciting shenanigans haven´t stopped yet in the financial markets. Goldman´s made a nice profit in the first quarter you will have seen in the newspaper. But where did December go?

Nice to see that some politicians don´t even pretend to understand economics.

Ouch this hurts. Something of a blow to climate science. The models are about as accurate as economic models.

My word, the things that surprise! Taxpayer funded organisation insists more taxpayer funding is necessary.

A glimpse at the intricacies of modern art.

And finally, an installment of not the Business Secretary´s diary.

Mobile phone-tapping

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When our faux-fascist Home Secretary Jacqui Smith proposed that the UK authorities should keep a log of our phone calls, email and internet traffic, just in case we happened to be terrorists (or maybe drug pushers, or speeders, or litter bugs or something), there was a wave of public outrage that forced her to backtrack. Her argument was that the authorities wouldn't actually be recording our calls or snooping into the content of our emails. She and her bumblers in blue just wanted to know who we were corresponding with. They might be terrorists (or maybe drug pushers, or...), after all.

Of course, Jacqui's email and web visit demand has all been overtaken by EU legislation demanding that internet providers keep exactly that information for the authorities to fish through as and when they please. But what about phone calls?

Well, it's remarkably easy to snoop on people's mobile phone conversations. And to monitor, in real time, exactly where they are. You can even programme someone's mobile to record what they are saying. This video shows how bad guys can do this to you.

And what about the good guys? Well, there are all sorts of 'legal safeguards' when the security authorities try such things. But I wonder how many judges actually rule against such phonetaps when the police demand them? And is the division between good and bad guys even clear any more (I cite the recent G20 police-v-protesters footage in evidence).

Eamonn Butler's latest book, The Rotten State of Britain, is available to buy here.

Wanted: Teachers who understand economics

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If there was not already enough reason to worry about the quality of economics teaching in our schools, last week’s call by the National Union of Teachers for a 10% pay rise has provided ample evidence.

At a time when prices are flat, the UK economy is shrinking rapidly and the Bank of England is warning the Government to keep a lid on public sector spending, it might seem to the casual observer – or the student of economics – that this was no time to be increasing the wages of public sector workers at all, let alone by a tenth.

Yet the Times Educational Supplement reports that: "The nut is calling for a pay rise of at least 10 per cent plus a bonus of almost £1,400 for the average teacher, despite the worsening economic conditions. Christine Blower, the union’s acting general secretary, has warned the Government not to use the recession as an “excuse" to offer a low pay package. While the demands of other teaching unions are not quite as exaggerated as those of the NUT, “They are all lobbying for an increase of more than 2.3 per cent this year".

It seems that Ms. Blower and her union friends could use an economics lesson.

In a free society, wages – like any other price - would be determined by supply and demand. Parents (who are ultimately the paying customers) would bid up wages until a sufficient quality and quantity of teachers were available to teach their children, while would-be teachers would bid each other down until there were no more would-be teachers of sufficient quality than there was parental demand. Thus, one would know whether wages were at the right level by examining whether supply and demand were in equilibrium: if the number of would-be teachers was falling it would suggest that prices were too low; if applications for teacher training courses in England have risen by 10% this year (as reported by the Training and Development Agency) then it would suggest that wages were (more than) sufficient.

Unfortunately, neither parents nor teachers are given such freedom. But in the absence of market mechanisms, the government can use overall rates of wage and price changes as a proxy. Thus, government should freeze public sector pay if money and prices are stable, and reduce wages if money and prices fall.

Indeed, falling wages are essential if unemployment is to be kept down. It stands to reason that if there is less money in the economy and if there is less money for government to spend, then there must be either lower wages or fewer waged. What is more, if prices are falling, wages can fall without undermining workers’ standards of living.

Sadly, the NUT and the other teaching unions still believe that they can apply political pressure to squeeze extra money out of government at the expense of other workers all across the UK, whose own wages are falling and whose jobs are in peril.

Even more sadly, there is a reason for this. All too often, they have been proved right.

Expenses give MPs multi-millionaire lifestyle

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MPs’ generous expenses, index-linked pensions and second-home allowances give them a multi-millionaire lifestyle that their constituents could scarcely dream of, shock figures reveal today.

The effective income of the average MP is £319,165 – nearly 18 times the pay of the average voter, according to Bournemouth University tax expert Richard Teather, who has also produced a ‘fat-cat ranking’ for each of our Westminster representatives.

In his report, fTeather takes MPs’ basic salaries – ranging from £64,766 for backbenchers to £194,000 for the Prime Minister – and adds in their pension rights, another £17,357 for backbenchers, up to £52,059 for Gordon Brown.

But what is the value of all those expenses claims – from barbecues to bathplugs – that the rest of us would never have a hope of getting through our employers, never mind Her Majesty’s Revenue and Customs? Teather says that to pocket what the average MP claims in expenses, free of tax and National Insurance, the rest of us would have to earn £228,215.

It all amounts to a total pay package worth £319,165 – and that is just the average. Welsh Secretary Paul Murphy tops the league table with a package of pay, pensions, and expenses worth £423,932 a year. That is more than 28 times the average income of his Torfaen constituents.

On the best interest rate currently available – 1.83% from Birmingham Midshires, you would need over £23 million (£23,165,683) to get an income matching Paul Murphy’s annual £423,932. You would need over £17 million (£17,440,710) to earn in interest what the average MP earns from Westminster.

To read the highlights of Richard Teather's research, click here

To read the coverage in the Mail, click here

Rockonomics

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While browsing the excellent free-market website Division of Labour, I stumbled upon an interesting page called From ABBA to Zeppelin: Using Music to Teach Economics. In order to teach fundamental aspects of economics, lyrics from selected popular tunes are examined with an economic assignment for the listener. The lessons range from using Oasis’ “Cigarettes and Alcohol" as an example of the discouraged unemployed to rebutting Alvin Lee’s cries for income distribution in Ten Years After’s “I’d Love to Change the World." Although slightly gimmicky in nature, the lessons are well thought out and range various topics in economics while the lyrics cover enough genres to hold a sixth-form or college student’s interest. One of my favourite lessons uses “Thousands are Sailing" by The Pogues to tackle the topic of immigration:

The island it is silent now
But the ghosts still haunt the waves
And the torch lights up a famished man
Who fortune could not save

Did you work upon the railroad
Did you rid the streets of crime
Were your dollars from the white house
Were they from the five and dime

Did the old songs taunt or cheer you
And did they still make you cry
Did you count the months and years
Or did your teardrops quickly dry

Assignment: What is the effect of emigration on the country of origin? What is the effect of immigration on the host country? Do you think most immigrants work (for example on the railroad, or as police officers) or do you think they take government assistance (dollars from the White House)? How quickly do immigrants assimilate into a new country: is it “months and years" or do their teardrops quickly dry?

Who said economics has to be the “dull science?" I’ll be waiting for the lesson where they explore fluctuations in commodity prices using The Rolling Stones’ 1971 hit “Brown Sugar." Or wait, maybe that song is about something else…

Blog Review 931

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Just a couple more on Draper, Guido and the emails. Should a physiothereapist be describing someone as nuts? And what does the professional body think of that? Ohters think it's all just part of the Westminster bubble.

Continuing with politicians: cap and trade is in theory more desirable than a cabon tax it's just that, well, politicians would have to be involved in designing cap and trade.

And of course there would be lobbyists too: perhaps the most lucrative investment known, paying politicians to write the law your way.

Where our (rather than the bribery) money goes: on layer after layer of bureacuracy.

And then there's the things where instead of taking our money they decide to take our time. The oxymoronic compulsory voluntary service. Which apparently won't apply in Gordon Brown's own (Scottish) constituency.

Given the technological choices being made it is now certain that the national ID card scheme will not be secure. So why bother to have it?

And finally, the present for the man who no longer has everything.