Steve Hemingway

I have received an invite to Google Wave. I don't know much about this except that it is some kind of real-time collaboration tool. I accepted the invitation and now can provide another seven of you with an invite in turn (You get eight, a lot less than the hundred you used to get with gmail. I have offered one to my son, but he seems less than enthusiastic so I may get it back).

The selling point of Wave is that it is real time, and multi media. Maybe the big downside is that it is real time. Proper work requires undivided concentration. Real time interaction destroys that. Like trying to write a novel while serving at a (possibly not very busy) shop.

I have accounts with ICQ, Yahoo Messenger, MSN Messenger (under its many names), Skype, Google Talk, and probably a few instant messaging services I have forgotten about. I use Pidgin messaging under Linux to sign in to many of these services but hardly ever talk to anyone over them. If people want to get hold of me synchronously they telephone me, or even visit me.

I've been reading Hal Varian's book 'Information Rules'. Its discussion network effects is very good. It seems to me that no IM system, including Google Wave, if that is actually what it is, will reach that critical mass that email and the telephone have reached. Varian is a clever guy, and a lot of people have lost a lot of money by betting against Google, but not everything they back turns to gold. Any members of Orkut out reading this?

The problem with Wave is that it requires people to say something. People seem reluctant to do that. I am not sure why not, but I suspect that it's something to do with the experience most people have of education, of failing exams and having all their mistakes counted against them. I guess that this makes them afraid even to write an email. I'm not quite sure how this squares with the average comment on a Daily Mail article, but I guess that these are made by the 1%.

I was reading that now more than 30% of the population of China is now online. Twice that proportion (surely) are online in the UK. But none of them seem to be from my school or university cohort. If you are in your 50's and are reading this, please comment on this entry to confirm that you are both online and able to write a sentence or two.

Here we go again ... It's the time to send cards with pre-printed season's greetings. It practically the only time of year I send personal correspondence by snail mail, and it just happens to coincide with a terrible delivery performance by the Post Office. Not that our local postman does not work extremely hard, and extremely long hours. It seems to me that we do this purely because of a sort of collective reluctance to be the first to send an electronic substitute.

I agonise over what to write in the card. It's hard to be too effusive when writing to someone you last had contact with a year ago, also via this method so singularly lacking in feedback. I usually stick to writing my name and the name of one or more family members at the bottom of the greeting. I don't feel remotely like including a kind of circular letter. These have dwindled in popularity over the years for fairly obvious reasons. Although we hardly ever send one (we did send one upon returning from spending a number of years working abroad, more than ten years ago), I actually love reading them. The problem is that you can look like a prize prat when your prize-winning son ends up in a Thai jail for drug smuggling.

It's easier to decide who to send cards to. My rule is that I will always send a card to anyone who sends me to, even if I have no idea who they are. If believe yourself to be a counterexample then consider if I might have an out of date address for you, or if, indeed, you have an up-to-date address for me. I know that you might have sent a card or an email around giving your new address, but old addresses have a habit of creeping back into address lists like ground elder, smothering the new ones. I do send to some old friends who I might not receive cards from also.

Most cards I send are to long-standing family members. I send one card on behalf of my family. I therefore have to decide on whether to name all our family members, name just me and my wife, even, sometimes, to name the pets. Former work colleagues and random friends from school and university are much easier. I just don't send cards to you!

I always send rubbish cards. Well, they are not total rubbish, but they are not great. I bought a few thousand as a job lot from eBay, with a vague plan to retail them, which never materialised. I always find it amazing that people will pay one pound fifty for a card in a newsagent when the same card can be bought from eBay for ten pence, but that's how the wonderful world of commerce behaves, and I'm in no position to change it.

Well, having raised expectations so much, let me anticipate non-delivery and non-sending now, and wish you a Merry Christmas and Happy New Year!

The Copenhagen summit on climate change is taking place. There is a lot of discussion about climate change, with a strong message coming out of the summit that there is a consensus that climate change is real (even though, like many assertions of religions it cannot be directly, unambiguously experienced) and that it is caused by man's activities. The conclusion is then drawn that governments will have to take drastic, and very expensive, action to decrease the use of fossil fuels.

My concern is scientists are portrayed as some kind of homogeneous group, a 'community', like believers in Islam or Wiccan. Apart from a belief that an experiment can falsify a theory, I don't think that scientists really have any shared beliefs. I studied science at university for six years, and worked in a research establishment after leaving university, but I cannot come to any conclusions about the reality of politically important scientific questions which are any more informed than the average voter.

Since scientists agree that CO₂
temperatures might rise by around 2 degrees C, and that this is due to increasing levels of carbon dioxide in the atmosphere, the world's governments must immediately take steps to stop the man-made activity that is causing this.

Politicians sometimes have to take decisions that depend on understanding science. This is very worrying, since the rigour of the physical scientist would seem to call from a quite different character to that which is needed by the politician. Climate change is an area where this is needed. It is important that politicians take the right decision, but they seem worryingly fixated on whether or not scientists agree on whether or not climate change is even real, or certainly caused by the burning of fossil fuels. This would not matter so much except that the decision seems to be to spend an incredible amount of money, both in actual money and, much more importantly in the opportunity cost of lost growth, reducing the effects of burning fossil fuels.

A lot of the justification for this seems to hinge on the assertion that a majority of scientists agree with the Climatic Research Unit at the University of East Anglia. Leaving aside the evidence that the people running this unit are not exactly the dispassionate searchers after truth that we imagine scientists to be, the idea that correctness in scientific theory is dependent on a kind of vote taken amongst the scientific community is, surely, very wrong. When Einstein published his theory of General Relativity, nobody asked botanists for their opinion on the correctness of the theory.

Whenever so much money is involved in policy, as it now is in Climate Change, lots of very strong incentives are created for people to capture some of it, without regard for the future of the planet, or the economic well-being of its inhabitants. Politicians who are hungry for power hijack the scientists work for their own ends (remember Cameron posing with huskies in Greenland a few years back?). Policy gets a momentum of its own, which can result in ruinous policies down the line, always supported by 'independent' reports of experts who happen to produce the kind of recommendations that the government ministers require.

Of course, as the defenestration of Andrew Nutt shows, when politicians find it expedient to ignore science they will always do so.

Obviously, I'm an old cynic. Maybe this time the momentum and the green movement will turn out to have no unintended consequences, will cost much less than initially envisaged, will not divert resources from other less photogenic causes, and really have the effect of increasing productivity and growth and wealth. But I'm not going to hold my breath.

Update: 56 papers are printing an identical editorial. I think that, on the whole, that makes me more inclined to disbelieve its message.

Benjamin Graham, as well as his disciple, Warren Buffett, both strenuously warn against speculating, as opposed to investing, and generally define speculating as any kind of purchase of securities involving leverage. I have always wondered how to square this with the modern portfolio theory view that using leverage is simply a way of moving along the risk-reward frontier. On a fundamental level, if you really know that a stock is going up then you are going to get a bigger return on equity if you gear up. Obviously, on average, you do not, but there doesn't seem anything fundamentally malign about using some borrowed capital to spice up your return. Proprietary traders typically have a performance which is measured on an equity-free position: they have to stand a carry cost of their complete position value.

It was not until I started doing some modest trading myself that I gained a slender insight into the problem of gearing. In my view, it's not the gearing that's bad, but the margin calls. Benjamin Graham talked about a bipolar 'Mr Market' who has extreme mood swings but however crazy is feeling is always willing to trade with you, the investor. In Graham's recipe for trading success the key is to wait for Mr Market to get nearly suicidal and then take some shares off his shaking hands. When Mr Market flips and enters his manic phase, and will pay silly money for any old rubbish, sell the shares he sold you earlier back to him at a handsome profit. Sounds as easy as falling off a log, doesn't it?

Of course, it's hard to judge Mr Market's mood exactly in relation to his mood tomorrow or a year or ten from now. What may seem like a deep depression might prove to be a relatively sunny period compared to later. However, one this is certain. If you are forced to sell when the market has tanked there is no way you are going to do anything but lose money. This happens when you get that unpleasant email called a margin call. This means that the equity you've posted with your broker has evaporated and that further falls (or rises) in the value of your positions will result in him being fully exposed to the risk of you going broke. If you can't post further margin he will sell your position. I can absolutely guarantee that if you let him do this he will chose the exact moment when the market bounces right back and you will have lost everything.

So leverage is very dangerous, and there is no way of entirely avoiding the risk, but at the very least some kind protection should be put in place, whether buying options, overcollateralising, getting to a market neutral position or whatever. None of these strategies is perfect, but doing none of them is probably going to end in tears.

I have been letting property for over a decade now, and have dealt with a lot of tenants in a range of properties. For a time I even ran a letting agency. I feel that I have a reasonable judgement when it comes to judging new tenants.

About six months ago someone responded to an advertisement I had place in the London edition of Gumtree.com. She was HK Chinese, spoke good English and sounded plausible. After the place was checked out I carried out a credit check on her, which she passed, and produced a contract which she signed and gave me a deposit in exchange for a set of keys.

I normally ask potential tenants to send me a scan of the photo page of their passport, but she failed to do this but said she would bring it along when she signed the contract. She failed to do this but promised to send a scan promptly.

In the following months the rent was sometimes a bit late, paid directly into my account by depositing cash. To be honest I was glad to see the rent flowing.

After six months it was time for the gas safety check to be done. It was always fairly hard to contact the tenant and I eventually turned up at the property with a gas engineer hoping to do it. A guy, living there, said that I could not go in, because the place was too messy. I said that this didn't matter, but I couldn't win the argument and I agreed to come back later. I was then told that this was impossible, but that the safety check would be done by a gas engineer engaged by the tenants.

This did not happen and so I told the tenant that she had to leave the property within one month. She agreed, although negotiated an extension of 9 days, and scheduled a date for the checkout. The night before they day scheduled for the checkout I heard that the property had been raided by the police as it had been found to be a factory (greenhouse?) where cannabis had been cultivated.

I will write a separate entry about the modifications to the property, but I can say here that it was left in a bit of a mess. The conclusion I have drawn from this experience is that it is absolutely critical to get a scan of photo ID, as much as possible (e.g. passport and NI number and driving licence) before even getting a credit check. Credit checks have let me down in the past. Seeing a real passport or driving licence with a photo, at the first viewing, or at least before accepting an offer, would have saved me a lot of trouble and expense. You can be sure I will insist on this in future.

I spent a lot of my working life as a contract programmer. I was a hired hand brought in to develop specific pieces of code. I was paid a fee agreed at the beginning of the contract. At other times in my career I worked as an employee. One of the biggest disadvantages of being an employee, as far as I was concerned, was having to submit myself to appraisals. It also was fairly galling that my pay could not reflect the shortage of my specific technical skills.

I found the whole appraisal project slightly surreal. I had, essentially, done the same job as a contractor as I was doing as a 'permi' but now some box ticking exercise would, in theory, determine how much I was paid. Even worse, when I briefly became a manager rather than a developer, I had to give appraisals. The whole process seemed as fake to me as a manager as it had seemed to be to be fake as one who was managed.

The good thing about being part of a pay-setting discussion was the final incontrovertible proof that the appraisal numbers played no part in setting pay increases but was, at best, a fig leaf for denying a decent increase to someone who was not highly regarded by me, or more importantly, my own boss.

Well, now I have put all that behind me, and will probably never have to suffer it again. There are some compensations to getting old and past it.

We do most things instinctively. We don't think we do, but that's because we don't notice them. We do them ... by instinct. Some hard cognitive things are done by instinct. We do an immense amount of clever processing on raw visual and auditory signals that our eyes and ears receive, but effortlessly. It is simply not the case that our eye is like a camera, and the retina like a film (or, I suppose, a CCD, these days); it is a whole image processing system.

We make most decisions by instinct. We are utterly unaware of this and rationalise our decisions by putting forward rational reasons. But we are simply deluding ourselves. Our powers of intellect are just too feeble to attempt to make more than a tiny percentage of the day' decisions by anything other than instinct. Philosophy is all about thinking hard about things, but only to justify our gut reactions about them. (Phil Lovell pointed this out to me a very long time ago.)

Acting instinctively causes many problems when it comes to being fair, and being seen to be fair. We now have many laws framed as if we never behaved instinctively. Quite correctly, we cannot legally discriminate against people who we may instinctively recoil against. However this puts the law into conflict with our human behaviour.

The other crutch we use to avoid thinking things through is memory. This is actually much better than we imagine, although we have all experienced many examples of it letting us down. It is much easier to solve a problem by remembering how we solved a similar one than by working out the solution from first principles. It's hard to make a clear-cut distinction, but I assert that no examination ever set by a school or university examining board has ever absolutely required any kind of pure analytical thought.

In work we are guided by tradition, memory, habit and sheer momentum. It's not surprising that our workplaces are so ineffective at delivering results in spite of centuries of evolution.

We've been setting up vacation messages on our email servers for a long time. We give some fixed message to our correspondents that we're away and will not be able to respond for a while. Sometimes we will set up some rules, for example that we will send the message only to people who are already in our address book.

This idea could be taken a lot further. I seem to spend more and more time telling people and computers my date of birth, my mother's maiden name, the name of my first pet, my first motor car and a whole raft of other personal identity, allegedly for my own security, but clearly to make it easier for others to pay out if my money is stolen. It would be fairly easy for me to build up a comprehensive (within the universe of questions asked by banks) database of answers which some automated system could reveal to those with suitable credentials.

This kind of thing could be extended further with access control lists for part of the information controlling access from others, maybe family or friends. The great thing about this is that these questions could keep being answered after my death. Perhaps the set of questions and answers could be extended to those related to my wishes for how my funeral should be arranged, who should be invited, and who should not.

It will be quite tedious to write all this information in a rigid format, but a general computer analysis of my writings and statements could be used to infer my answers to all sorts of questions, even to the extent of my voting preferences. A virtual me could be constructed that would be almost as good as the real thing, although this virtual me would not be of much practical help when it comes to DIY or giving lifts. I'm sure the system could be designed to answer questions in my distinctive, if not literary, style of English. I'm not sure how the system would cope when I've expressed diametrically-opposed views in the past. Maybe some kind of time decay could be incorporated, giving more weight to recent assertions. These are mere technical details!

Currently we try to specify rules for financial arrangements after death. We might specify some rules for the management of trusts and bequests. Writing this in paper form will give rise to lots of problems of interpretation. Some format capable of being analysed by machine, like a programming language, would surely be preferable. Perhaps computers will, at last, provide us with life after death, if only in a limited way.

HM the Queen famously asked academics at the London School of Economics why nobody saw the credit crunch coming. In fact, if the Queen took an interest in these things, she would have realised that professional economic forecasters are often spectacularly bad at forecasting big changes in GDP growth, exchange rates and practically any other macroeconomic parameter you can think of.

Medical doctors, abdominal specialists, are worse at their job of diagnosing illness than a simple algorithm based on Bayes's Theorem. Professional clinical psychologists are worse at predicting patients' behaviour than their secretaries. Political pundits are no better at forecasting political developments than the average lay-reader of the Economist, and both are much worse than a simple linear model [see Expert Political Judgement]. The voting patterns of the Supreme Court of the United States are better predicted by a simple statical program than by legal experts. Monkeys throwing darts at the FT pick better-performing stock portfolios than professional fund managers.

We know all these things, but we still look up to experts to tell us what to do, whether we are an individual investor, or Gordon Brown asking what to do about those troublesome banks. Given the problems experts have predicting the future, how can we possibly be confident that their recommendations for influencing the future will remotely reliable?

I was taken to this church fairly regularly by my mother a very long time ago. It looks just the same now. I'm not sure that the devil really does have all the best tunes.

Regular readers will know that an investment property of mine was used for growing cannabis. You can read the post again here. After a week being jerked around by Scottish and Southern (the electricity supplier) who repeatedly told me that 're-energizing' my property was a matter of hours away, I have now been told that, actually, they can't re-connect my property at all, but that I will have to apply for a connection just as if the property was a new build.

The company that is responsible for this is EDF Energy (Eastern). These at least answer the phone promptly, if you want to order a new supply. Unfortunately, they charge an arbitrary and enormous charge for connecting a property to the network. I was quoted 'up to two and a half thousand pounds' for the job. This involves connecting two core cables which are currently separated by about an inch of air. The time it will take to do this is 'up to ten weeks'. I suppose they are very busy, what with all the thousands of new houses going up all around Hertfordshire recently.

Of course they could charge me five thousand pounds, and I'd still pay, because I can't go anywhere else. This shows the power that comes from being a monopoly provider of a good or service. Supposedly regulators and government supervision tempers the tendency of monopolies to abuse their power, but it is an irresistible temptation. I heard the other day that if you want the Immigration and Nationality Directorate to transfer a work permit or other stamp from your old (foreign) passport to your new one, they will charge you five hundred pounds. This clearly bears no relation to the cost of performing the action, but is, presumably, judged to be about as high as they will get away with, just like my re-connection charge.

What angers me about this episode is that it was all so unnecessary. Sure, electricity was being stolen, but digging up the drive and cutting into the underground armoured cable was a totally disproportionate response, which the police and EDF Energy must have know would saddle the owner with huge delays and costs. Moreover, they must have known that the person who would bear the cost would the unwitting, and duped, owner, not the criminal gang that was running the operation.

As you probably will have guessed, this is not covered by my house insurance. I will blog about that another day.

Well, yet another G[n] summit has come and gone, leaving nothing of any consequence. The Climate Change Summit was, as the headline writers had spotted a long time ago, likely to produce nothing more than a lot of hot air.

Many years ago Bjorn Lomborg predicted that governments, having made impressive sounding promises for delivery long into the future, would quietly forget about them as the time for delivery approached and the true cost of these promises became apparent. The Chinese know what cutting carbon is going to cost their country in terms of lost growth, and they are not prepared to pay that price. They are hard-headed pragmatists and know that running their economies on 'free' renewable power sources is actually going to be cripplingly expensive, whatever Greenpeace claims.

We are told that (i) we have hit 'peak oil' and will run out of fossil fuels any day now, and (ii) we are pumping ever-increasing quantities of carbon into the atmosphere with dire consequences for the climate. Why is it that no politician seems to be able to understand that both of these assertions cannot be true at the same time. It seems to me that increasing oil prices are just the kind of signal that is needed to make us reduce our production of CO2 naturally.

Environmental fashions come and go. Perennially we are running out of oil, poisoning the trees in Scandinavia with acid rain, killing ourselves with mercury or lead, destroying the ozone layer with CFCs, turning all male animals into females with oestrogen-mimicking plasticizers, creating dustbowls through monoculture, killing birds of prey with DDT... the list is endless. Perhaps, actually, we don't need to panic quite so much.

If you haven't heard of the real Copenhagen Consensus you should check out
this link.

Goldman Sachs is "Doing God's work" according to this interview in The Times*. By this he means that GS is allocating capital in society, to the most productive uses, presumably.

I don't know exactly what is meant by this. Nature, and its wonders, is often thought to be God's work, by those religiously inclined. It is arguable that in fact evolution is God's work, or at least design, to save him too much work in designing lots of individual organs and organisms.

The problem, though, is that, actually, GS doesn't allocate much capital as such. Most of its revenue comes from trading, exploiting the bid-ask spread without taking significant positions, together with fees from traditional investment bank operations: mergers and acquisitions, together with IPO's.

Whether or not asset allocation is God's work, it should not be done by GS itself. The most it can do is produce good analysis and advice for the 'buy side': the principal investors. In fact that is not the way investment banks work. They are all income-driven, i.e. seeking to maximise the product of the average percentage fee (or bid-offer spread, expressed the same way) and total value of transactions.

To my mind, this explains why so much trading activity destroys value. The parable of the Gotrocks clan explains a lot. Buffett is always careful to avoid being too nasty to GS as they do act for him in some transactions, but it is clear to me that he regards them as fairly parasitic, if not exactly a giant vampire squid wrapped around the face of humanity.

The problem is that we, the population at large, are the Gotrocks, and we are losing out a lot to GS and their ilk. Unfortunately we rarely manage our savings directly (our pensions are almost always managed 'professionally') and we cannot choose to follow Buffett's example and avoid almost anything to do with trading.

*

I don't know how long the link to The Times article will work, as Rupert Murdoch has stated that he plans to charge for all content. A quick search should throw up the essential facts of the interview.

If I am ever asked a question that begins "Are you sure that..." I always want to answer "I'm not even sure of my own name or place of birth, so I'm fairly unsure about the answer to that." The problem is that I take things literally. When I was in Standard 1 (about 8 or 9 years of age) the kids in the class that I was in was told to read a story and re-tell it in their own words. I asked what this term meant, and I was told that I must not use the words that had been used by the original author.

Everyone else (as far as I was aware) found no problem doing this, but I was very distressed. It must have been a fairly strong feeling as I can remember it clearly now, four decades later. The problem I had was that I just just couldn't think how I could find synonyms for the prepositions, conjunctions, pronouns, articles and auxiliary verbs that permeate English text.

In this sort of situation, in which I find myself fairly regularly, still, people will just tell me "oh, it doesn't mean avoid the use of literally every word that appears in the original story", as if there is some kind of meta information, available to everyone but me, specifying the set of words that may be re-used while complying with the original instruction. I suppose there is some kind of reasonableness test that is implicitly applied to relax the strict meaning of the original instruction.

Well, by now you are either wholeheartedly sympathising with me because you recognise exactly the problem, or simply cannot understand how there is a problem. I would guess that the latter reaction is going to be somewhat more likely. If you are in this larger group, spare a thought for those of us who find the fuzziness and imprecision of ordinary life distressing and confusing.

Chocolate-coated brazil nuts, mince pies, stollen bread, Christmas pudding, turkey, bread sauce, sage and onion stuffing. Some of the foods that we seem to consume at this time of year only. How much better they taste after a year of abstinence. I am sure that Melvyn Bragg enjoys his wine much more for abstaining for six months of the year. Perhaps we should go back to taking Lent much more seriously.

Even fairly disgusting food (bread sauce is my bete blanc noir) can be enjoyable if it is consumed rarely enough. My preference would be for twice in a lifetime.

There is something about tastes and smells that trigger memories so much more strongly than images or verbal descriptions. It's something to do with the sense of smell being better connected to our primitive lizard brain, I dimly recall. Whatever the biological explanation, it's really not Christmas unless you've had at least a couple of turkey dinners, no matter how dry and awful turkey meat is, objectively speaking.

And the great thing is that, actually, the food and drink I eat now is of very high quality compared to what we had to put up with in the sixties and seventies, my formative years. Cookers are more efficient, their thermostats more accurate, and recipes instantly available for nothing on the internet, but most importantly there is much more competition between distribution channels. We rarely buy our turkeys from butchers now, but deal direct with the farmer, again, mainly, because the Internet makes it easy to reach the public directly.

But the best thing of all about Christmas food is that, because everyone thinks that it should be cooked as well as possible, nobody asks me to cook it, so I am free to relax, write blog entries, and most importantly, eat, drink and be merry!

Happy Christmas Everyone!

Many years ago, when I was still a student, a friend of mine, Pete Moss, was using a relatively complex corkscrew to open a bottle of wine. The corkscrew broke as he used it to pull the cork from the bottle. Far from being annoyed by this, he was delighted. He explained that this was a cheap and poorly-made corkscrew, but a triumph for the engineer who designed it. He said that it was the goal of all engineers to have all the components of a machine that they design wear out simultaneously. In this case this had literally happened.

Moss was not an engineer, or even an engineering student, and neither am I. But I think that he was on to something in this remark. Certainly I think of his comments whenever I am put in that most difficult position of deciding whether to give the go-ahead for a replacement big end, or gearbox, or front suspension, or welding of sills, for a car of mine that has broken down or failed its MoT. I read somewhere that Henry Ford used to send out his engineers into local scrapyards to pick up expired Ford cars in order examine them to see if any component was not near to expiry. I have a feeling that early crankshafts tended to be 'over-engineered'.

Sadly, evolution has ensured that animal bodies, and specifically human bodies, are designed on good engineering principles. Although this is not done perfectly, it seems to me unlikely that current extrapolations of human life expectancy will prove to be correct. None of our major organs were designed to last for ever.

The more general lesson, for engineers, is that proportionate resources should be invested in the different elements of a product. The British Dreadnought battleships were designed with super-strength armour so they could withstand a hit from the biggest German guns. Unfortunately, the extra weight meant that they were sitting targets for lighter-armoured but well-armed enemy ships and were not at all the success that they Navy hoped for.

Headmasters have targets. One of the many targets is to minimise the number of pupils' unauthorised absences. This seems fairly desirable. The problem is that when there is a snowfall and public transport grinds to a halt, lots of pupils decide to give up the unequal struggle and simply not turn up at school. This causes a problem for the head teacher, since if only 25% of pupils are likely not to turn up for a day or three, the impact on unauthorised absences will be severe.

There is a solution to this problem, however: close the school. This eliminates all unauthorised absences during the period the school is closed and improves the stats enormously. Of course it does nothing to improve the quantity or quality of education delivered. The problem could be solved, I suppose, by having another target for minimising school closures.

The problem is that this approach leads to an exponential increase in targets which, inevitably, have less and less to do with the core objectives of the organisation. The alternative way of delivering education is simply to let anyone start a school and let pupils and parents decide which ones work best. This is an approach that politicians instinctively recoil against. Before you decide to agree with them, think about whether you are happier about the education received by you or your children and compare it with the transport experience you get from your car, or the entertainment experience you get from your TV, or the food experience you get from your supermarket.

Libertarians absorb the lessons of the story of the Bootleggers and Baptists with their mothers' milk. You can read an excellent account in Wikipedia. It is a kind of parable for our time. It shows how policies supported by good people are presented as good for the community but are in fact driven by a narrow sectional interest.

The current enthusiasm for scrappage schemes put me in mind of this parable. The car scrappage scheme is presented as a way to save the planet, but you can be sure that the lobbyists pushing the government to enact it are paid by the car industry. Similarly for the boiler scrappage scheme. The recent Digital Britain report was presented to the press as a noble scheme to roll out cheap broadband connections to remote rural locations (although I'm not quite sure why people who have the not inconsiderable benefits of living in a rural idyll should have the added benefit of the rest of us subsidizing their internet connections). In fact the main impact of the scheme seems to be to punish illegal filesharers, an outcome strongly desired by the music recording industry.

Perhaps I am an old cynic. Perhaps I'm just a realist.

This podcast is extremely thought-provoking. It is an interview with Clifford Winston who did some research into the question of what really happens when governments act to correct what they perceive as market failure.

Our own prime minister sees market failure everywhere and is hyperactive in creating new laws and taxes to correct this market failure. Interestingly there is not much evidenced-based analysis of the outcomes of this intervention. Perhaps you will not be surprised to hear that Winston, whose book can be downloaded free from the American Enterprise Institute for Public Policy Research Regulated Markets website, concludes that intervention usually is not justified in economic terms.

What you might be surprised to hear is his conclusion that he can find no example of cases where regulation had a positive payoff. Before you dismiss this conclusion out of hand, at least listen to his interview with Russ Roberts to hear his evidence.

Various types of market-failure correcting interventions are examined, but the one that sticks in my mind is the anti-trust legislation. As Dr Winston points out, recent high-profile cases brought under this were aimed at Microsoft and Intel. If they have true monopoly power, it sure doesn't seem to be reflected in above average performance of share price!

If you follow the Econtalk link you will find a link to the downloadable version of the book. I had some trouble following this link in Google Chrome and I have not read the book. It does sound as though it is worth a look.