28 December 2008

The Manchester Referendum

A referendum was recently held in Manchester to decide whether or not to introduce a congestion charge and use the revenue to increase expenditure on public transport. We result was 78.8% against the plan.

I was pleased with the outcome of the vote, but for different reasons than a lot of the no voters.

I'm generally supportive of road pricing, so that part wasn't my major objection, although I wasn't happy with the proposed system of electronic tags and cameras, which would only add to the extensive web of state surveillance. There are much less invasive ways of pricing road use which I prefer, such as increasing fuel duty, privatising the operation of the motorways or a distance based "tax disc" system as used in New Zealand.

The part of the bid I really objected to was increased local authority control over the bus network. There are two basic reasons I disliked the idea.

The first is the libertarian freedom of choice argument. If person A is happy to provide a bus service and person B is happy to use it, then it shouldn't be anybody else's business, so long as the normal rules of the road are observed.

The second is the practical matter of heavy regulation not working in practice. It takes control out of the hands of the passenger and puts it in the hands of politicians, so the bus operators become less answerable to the person using the service, making the system less responsive, less efficient and more expensive. Supporters of heavy regulation often point to London as a success story, but when looked at as a complete picture, London's buses receive around £1billion of subsidy per year and are supported by a congestion charge which discourages car use, while Manchester's buses receive a fraction of that level of subsidy, but offer a service which, in my experience, is comparable in terms of quality and price.

Worryingly, there is now talk about how the passenger transport parts of TIF proposal can be advanced without the congestion charge. As far as I'm concerned, they shouldn't. The question in the referendum was "Do you agree with the Transport Innovation Fund proposals?" not "Do you agree with the congestion charge?" The no vote should now mean that all the proposals are scrapped. To push ahead with bus regulation now would be just as unacceptable as pushing ahead with congestion charging.

As an aside, I wasn't a fan of referenda before this vote and it hasn't done anything to change my mind, but I'll talk about that separately.

24 December 2008

The Really Big Ponzi Scheme

While the Ponzi scheme that Bernard Maddoff is alleged to have operated is in the news, I feel it's worth re-iterating a comment I made three months ago - the British housing market is a huge Ponzi scheme.

Like other Ponzi schemes, investments in the housing market don't generally produce anything tangible, they just shuffle money around within the scheme; in fact, an increase in the supply of housing could actually cause the scheme to collapse, by suppressing the increase in house prices.

Like other Ponzi schemes, the viability of the housing market depends on being able to deliver a profit to people who invest in the scheme by getting subsequent investors to put even more money into the scheme, while maintaining the impression that nobody stands to make a loss. Of course, if the profits are significant, at some point the pyramid will collapse.

Gordon Brown's efforts to keep credit flowing into the housing market in order to keep prices inflated is a classic attempt to prop up a failing Ponzi scheme. The money coming into the pyramid from the bottom has started to dry up, threatening a collapse which can only be delayed be creating more debt and feeding it in to the system.

The Ponzi scheme that is the British housing market is far larger than anything Bernard Maddoff is alleged to have created and as the British economy is so heavily fueled by house price growth, it could be argued that Gordon Brown has been running the entire economy as a Ponzi scheme for years.

18 December 2008

A Simplistic Response to Energy Prices

Harriet Harman, filling in during prime minister's questions, said that the law would be changed to force energy companies to pass on lower costs to consumers if they didn't do it voluntarily. It might make for a nice sound-bite, but as a policy it's dangerous and probably counter-productive.

The clear implication is that the costs in question are oil and gas prices, but that ignores the fact there are numerous other costs involved which the government will never be able to adequately monitor or assess. The government could find itself forcing suppliers to cut prices at a time when increasing costs in other areas (such as staffing) are reducing their scope to do it. Even the cost of oil and gas is not as simple as the government likes to imply; many suppliers will undoubtedly enter into forward dated contracts to buy their supplies, which will give them greater security of price, but less scope to benefit from price reductions.

I don't accept the claims UK utility market (with the possible exception of water) is uncompetitive and therefore in need of heavy intervention. The number of salespeople knocking on doors and standing in shopping centres trying to convince people to switch seems to indicate that suppliers are actively competing.

By forcing the suppliers to drop their prices to reflect movements in the price of raw materials, I can see two perverse effects which could occur:

1. Suppliers may increase their prices more severely when prices are increasing, based on the expectation that they will be forced to cut prices later and need to ensure they have the scope to do it.

2. The requirement to cut prices upon government demand could force smaller players out of the market, especially those which focus on more speciality products, such as green tariffs, where price may not be the customer's over-riding concern. By reducing the number of players in the market, it would reduce the one thing which has been shown to improve the way the industry serves its customers - competition.

16 December 2008

IWF and Wikipedia

Having read about the Internet Watch Foundation putting a Wikipedia page on its blacklist while I was traveling, I was intending to post a fairly lengthy article on the subject when I got back. However, I think Cory Doctorow has covered most of the issues in pretty good detail in the Guardian.

If the IWF is blacklisting images of children which it considers to be titillating, rather than sticking to blocking images of actual abuse, it's operating in an area which is driven much more by opinion than fact and that requires much more scope for challenge.

I oppose to the idea of the government censoring the internet, either directly or by applying pressure on ISPs; it's too prone to abuse and corruption, however noble the intention may be. The government should stick to creating laws outlining what is illegal to distribute and then leave it to the courts to prosecute those who transgress.

On the other hand, if an ISP wants to offer an internet connection with certain sites blocked, I'm relatively comfortable with that as part of an open market, so long as the ISP makes it clear what criteria it uses to carry out blocking, it informs the operator of the site (when practical) that it is being blocked, it displays a notice saying that the site has been blocked when somebody tries to access it (not a dishonest 404 message which gives the impression that there is an error at the website's end) and it has an open procedure for challenging its decisions. If an ISP chooses to outsource its blocking decisions to a third party, such as the IWF, they should be obliged to ensure that the third party has procedures which are equivalent to those which would be required of the ISP.

Political Quiz

Via Mark Wadsworth, this political quiz is quite interesting. It gives an assessment of how much you agree with the policies of the Greens, Lib-Dems, Labour, Tories and UKIP.

I agree with Mark that it appears to be biased towards UKIP, but I think the result it gave for me is fairly reasonable given my views:

Labour 29%

Conservative 41%

Greens 65%

LibDem 46%

UKIP 67%

01 December 2008

On My Travels

Sorry for the lack of postings, but I'm currently moving around with infrequent access to the internet. I should be back to a normal posting schedule in a couple of weeks, but until then, here's a view out of my current bedroom window. :-)