Forcing pub owners (or anyone else) to enforce your preferences is wrong and a thoroughly illiberal idea. It makes the world more homogenous and less interesting. Don’t stand for it.

Nevertheless, as my job now takes me onto an aeroplane more than I before, I’m curious and so I read the summary from the Competition Commission’s provisional report. I’m not sure I’m any the wiser, but there were some interesting facts and statistics embedded within:

• Gatwick’s proportion of business travellers is a mere 18%, far lower than I would imagine (I know it’s not strong on the transfer front, but normally appears to have many terminating flights to useful places, from what I’ve seen). By comparison, Heathrow’s is 40%.
• From the set of BAA-owned airports, only Heathrow and Aberdeen have above 20% of transferring passengers, with 34% and 21% respectively. Heathrow’s reputation as a hub is clearly deserved.
• BAA’s airports account for 60% of UK air passengers, but 90% in south-east England, and 84% in Scotland. Maybe there could be a local monopoly at work here, at least?

It’s interesting that the Competition Commission makes lots of slights about poor service, lack of responsiveness to the market, high prices, and so on. This seems a bit unfair. I’ve often wondered how one can gauge the degree of monopoly exploitation fairly, partly there’s rarely an accurate enough free-market alternative implementation to compare it to. The theory does dictate that a monopoly might happen, given some of the stats above, but saying that there is one is a much bigger stretch. This does make me think that perhaps a bit more laissez-faire might go a long way in keeping things market fair – although, as I think they hint at, a bit less regulation would help even things out too.

These pages have been checked for clarity by Plain Language Commission [sic].

Sometimes I’m ashamed to live in a socialist country.

People with my political opinions often make arguments for the latter based on either practical or moral arguments. Richard and I had a online discussion about this recently. But maybe there’s another, more silly, question that’s missing: which is sexier: business or government? A quick look at the primary US government portal compared to Wal-Mart’s homepage leaves me in no doubt who hired the better web designer, at any rate (and Wal-Mart is hardly an example of glamour). Which corporate body makes you want to interact with them? Anybody who’s spent any time at a UK local council, with their cuppa-and-rich-tea-biscuit image, will know what I mean (that’s an example of non-sexiness, if it’s not clear: not that I have anything against rich tea).

I’m semi-serious, actually – this does matter – it’s an issue of marketing. Clearly a company cannot actually be sexy – only people can be that. But the Virgin family of companies gets pretty close – and not just because of the suggestive naming. It’s an image that has been carefully cultivated by the folk at Virgin. Virgin is a company that you want to like (well, I do, anyway), irrespective of the fact that their trains don’t run on time.

I think the reasoning behind this is simple. Companies have to be sexy – or at least, they have to project an image which is aligned with values their customers want them to have. Sometimes this is sexiness – and Virgin is a prime example of a brand that’s attacked several markets with that technique and won some new custom. Sometimes, to be fair, there’s another image to be conveyed (UPS brown vans and brown uniforms are not alluring; but they do project an image of reliability). Conversely, government has no such motivation to project an image of anything – or at least the vast majority of unelected officials don’t. There’s no requirement to improve, no motivation to act like a marketer, because there’s no competition. Thus, government will always continue to project an image of dull and incompetent, whether that be the case or not. As Seth says, ‘[people] lose their jobs because of boring marketing’ – except in government they don’t, because they rarely lose them at all.

It’s probably not the most pressing problem the world faces right now, but wouldn’t it be nice to stop worrying about global warming for five minutes and think about how to make the institutions we deal with on a daily basis more appealing?

The most important single central fact about a free market is that no exchange takes place unless both parties benefit.

Milton’s son David is also an economist, and continues to promote his ideas on this blog. The Economist has also drawn up an interesting selection of quotes discussing Friedman.

Note: Milton Friedman is unrelated to Thomas Friedman, author of The World is Flat, a book which Roo Reynolds wrote a partial review of recently.

Safeway (now Morrisons) scrapped their loyalty scheme in 2000, citing that it wasn’t worth the money to run it. They may have been right. Nevertheless, Tesco, now the UK’s biggest grocery retailer, still retains their scheme, and as the Economist states, the information goldmine (the only reason the supermarkets run loyalty schemes) is lucrative – although they don’t say exactly how lucrative. Safeway’s decision indicates the margins can be thin. Despite the low return on hassle I mentioned above, though, there are still plenty of takers – empirical evidence would suggest that more shoppers have loyalty cards than don’t.

There have been other issues; for example, loyalty cards came under fire from David Blunkett in 2004 in a fairly obvious attempt to draw away attention away from the problems surrounding the ID card debate:

Mr Blunkett said the cards produced key details about people’s shopping habits but were accepted because they were run by private firms. People should not distrust ID cards because they are a state idea, he said.

…

Holding up a Nectar card, he said people voluntarily signed up to allow such details to be collected through such loyalty cards by private firms. “There is a real issue about how that should be overseen and supervised,” said Mr Blunkett.

Mr. Blunkett presumably ignored the fact that voluntarily signing up to handing over data about tomato-buying preferences was a more respectable practice than being forced to hand over more medical information to travel. Fortunately, his illiberal idea didn’t seem to gain much traction. In all fairness, though, it’s quite likely than many folks don’t know that their data is used in this way; for that, The Guardian deserves some praise for educating the public.

Maybe reward cards will die out eventually. It’s hard to back that up with public data, although I’m sure Tesco have a hard time quantifying the exact benefit they get from theirs (how do you measure repeat custom accurately – with and without the card?). If I’m right, though, I hope they die because they don’t make business sense – not because the government regulates a harmless practice out of existence. Interestingly, Wikipedia alleges that this has already happened in California.

It’ll be interesting to see where the reward industry is in five years time.

However, the upside is often overlooked. Travel is pleasurable. Some of the best experiences in my life have involved travelling, and I’m far from the only one. Quality of life does have value. Perhaps even more importantly, transport enables you to get stuff more cheaply. Trade is mostly beneficial, and the wider the scope of a market, the more beneficial it is (because of the greater likelihood that you’ll find large extremes of want and produce a large profit). Fast, cheap, reliable transport increases the efficiency of markets and is good for humankind.

Don’t feel bad next time you hop on a jet, and please don’t waste your money on offsetting carbon. Recycling is a whole ‘nother story.

There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40% of our national income.

Update: The New York Times has a detailed story and biography.

But accordingly, I would like to politely request that Hampshire Police remove the following signs across the county, which I find offensive:

• ‘Please wash before exiting rest room’ (the facilities in my office)
• ‘Baby on board’ (still seen on the occasional car)
• ‘Defacing council property will result in the police being called’ (Job Centre, Winchester)
• ‘We will not sell Eggs or Flour to under-18s’ (seen in Sainsbury’s, see attached photo)

I hope Hampshire police get cracking with this; there’s nothing like a muted, inoffensive society to inspire us to greater wealth and knowledge.

Anyway, enough frothing at the mouth – I’m beginning to sound like The Devil’s Kitchen, with a little less of the adult language. Time for a Valium, perhaps.

Incidentally, any particular reason we can’t have a free market here? I’d happily pay less for less ‘security’.

I was listening to a podcast by Bruce Schneier the other day on the topic of privacy. I found his speaking to be a little less powerful than his blog. However, although I didn’t always agree with his proposed economic or legal solutions to problems, primarily because we have a differing political perspective, he is good at explaining security principles and how they apply to real life.

If you’re like me, when discussing privacy with people, you sometimes get frustrated by people who use the mantra ‘What are you scared of? I have nothing to hide.’, or some variation. I find this a hard argument to win. Bruce gave a simple reply which I’m betting is 90% effective.

If you genuinely feel you’ve got nothing to hide, please append your salary and your name as a comment to this posting. If you don’t (and I suspect you won’t), it probably means you have something to hide. This doesn’t mean you are a bad person. It doesn’t mean you’ve committed a crime. It just means you have good reasons not to fully disclose everything about your life. This is what privacy is about, and is why some people get upset when it’s taken away.

1. Developed countries will suffer from increasing inequality if the current trend of outsourcing increases. Creative ‘knowledge’ work is becoming the province of a large proportion of the population in places such as the US and the UK. However, there are still fundamental limitations on transport and technology that mean that labour-intensive jobs, from train driving to fruit stacking in Tesco, aren’t going away any time soon. A gap in the middle will begin to form, where the medium-skill jobs once were, that are now being increasingly fulfilled by folks in India and other places. This is probably inevitable. Maybe this seems like an obvious point to some people, but I think it is crucially important to keep this in mind to evaluate the promises of those who would like to be in the position to form public policy (in short, election candidates). Whether income inequality is a problem is a question for another time.
2. Dr. Coyle asserted that she was a centrist, and was suspicious of those with ‘extreme’ political views (I suspect that by her definition, that includes me). This was because, apparently, we tend to ignore evidence that disagrees with our views. I would agree with her that it is human nature to do this (as I’ve briefly discussed before). I’m not convinced that being centrist and moderate means that one is immune to such problems, though, and it brings a host of problems itself (in particular, the danger of compromising on important points). However, there is a more fundamental problem – many ‘extreme’ people, like libertarians such as myself, hold our views for moral reasons, not just practical ones. I, like other libertarians, believe that taxes are essentially theft. For myself, this normally overrides practical concerns such as whether they are spent well and have the desired effect (although, for the record, I also believe taxes and large government suffer from practical problems too). Some people don’t believe morality should override practicality in this way, but this is an arbitrary judgement, and in some way is also a manifestation of one’s moral beliefs. Dr. Coyle didn’t seem to acknowledge this fact.

A large majority of the presentation was dedicated to a speech by Clinton, with the remainder being pre-vetted questions. My heart sank when I saw what appeared to be some Powerpoint slides ready and waiting as I entered the hall, but fortunately he didn’t use the projector. He appeared to being using some notes, which was a surprise, but they didn’t intrude too much into the presentation. He was a clear orator, and delivered plenty of soundbite-worthy phrases – his eloquence and fluency wasn’t quite up to the standard of a legend, however.

His speech focused around four main questions:

1. What is the fundamental nature of the 21st century?
2. How would you like to change the 21st century?
3. What steps are necessary to move from (1) to (2)?
4. Who’s supposed to do it?

Each of these questions had detailed answers, and it was here that I began to deviate from the president’s view. His basic premise was sound – the world is increasingly interdependent, and this has both good and bad effects. He focused a lot on security, however, and appears to believe in the current worldview of terrorism (large, complex networks with vast power), whereas I am doubtful (and of course am in the minority). As some compensation, though, it’s good to see him recommending the use of intelligence agencies as the primary weapon against this problem, as Bruce Schneier has recommended many times in the past. Clinton is obviously in favour of income redistribution, and made it sound impressively appealing to me, despite my moral objection. He’s obviously also a competent businessman – his discussion of the return on investment of war, and his wry observation about a country’s budget being controlled by what it spent last year (as is the case in most organisations) betrays his business knowledge. He spoke with admiration about a recent initiative to teach entrepreneurship in Scottish schools – I also believe this should be encouraged.

Clinton’s answer to the fourth question, ‘Who’s supposed to do it?’, was where we deviated most. It’s clear he thinks everyone has a duty to act through democracies, NGOs, and so on, to make the changes they believe are necessary for the world. Irrespective of whether you believe this is an effective method (I think its success is less than overwhelming), this has shades of Kennedy‘s famous quote: ‘Ask not what your country can do for you – ask what you can do for your country’, but with the USA replaced with the world. As Milton Friedman explains in his introduction to Capitalism and Freedom, this is hardly the rallying cry of someone pro-freedom. Although I don’t think it’s fair to accuse Clinton of being illberal, I drew the conclusion from this and other comments that he cares more about equality than freedom.

It was quite obvious that Clinton now feels that he is able to speak his mind, having left his presidency. He was asked at one point which world leaders he had met whom he admired, and his passion about three of them (Nelson Mandela, Yitzhak Rabin, and King Hussein) was plain to see. He does seem to be as honest a man as one could reasonably expect in such a position, and I admire him, even if I don’t agree with him.

It’s interesting how the power of the market might surprise even Friedman himself, however – given that the book was originally written in 1962. On page 30 Friedman discusses the use of tolls on roads, and how they are ineffective in the general case, because of the high costs of administering them on most roads. This is an example of a ‘neighborhood effect’, one of only two types of market failure he identifies. From this, the implication is that a petrol tax is an effective solution.

However, it seems obvious that a technological solution to this problem is not too far away, despite probably being unforeseeable in 1962: it will soon be possible to track people’s exact road usage for a reasonable cost, probably using some radio-based system. Such systems already exist in some restricted areas.

This still doesn’t overcome the local monopoly problem that Friedman also identifies (what happens when there is only one reasonable route from A to B?), but it could certainly shift the balance in favour of some road-use charging, which interestingly even the sluggish UK goverment is investigating.

There is also the potential that this may hurt those with the self-discipline to keep our accounts in order. Inside Money hypothesizes that this may result in banks imposing general charges for banking, essentially meaning that those who don’t keep their accounts in order will subsidise those who do. Perhaps it isn’t an area in which it’s healthy for government regulation to intervene. Unfortunately, the law in question here is not specific to banking, but seems to cover contracts in general. I would guess it might be some time before this will change.