Profit Motives

Nick Clegg has derided the profit motive when it comes to the market for education. He is implicitly and explicitly arguing that the profit motive will hurt standards and social mobility.

Perhaps he should read this report, compiled by the Adam Smith Institute.

From the report’s author, James Croft:

It’s widely held that business-led educational ventures maximise profit at the expense of pupil outcomes. This is one of those myths that has arisen because of misleading (and often politically motivated) press coverage of occasional instances of things going wrong blown out of all proportion. The truth is that in contrast to other ownership models proprietorial school businesses, whether directly accountable to their owners or to shareholders, are tightly managed and rarely engage in the sort of profiteering that compromises quality for short-term gain. They know their markets and they are keenly aware of the expectations of their customers.

My study found that of the 489 proprietorial schools operating in England in 2010, 87 educate their pupils for less than the ‘revenue only’ maintenance figure of £5,320 (33 of which by £1,000 or more), at the same time apparently able to make a modest profit. A further 71 were doing so for less than the combined revenue and capital figure of £6,240. In addition, according to a third benchmark, allowing for total fee remissions of up to 10 per cent,154 a further 41 were found to be educating their pupils on fees less than £6,864, on a comparable basis to that of schools in the state-maintained sector. This represents 41% of all proprietorial schools. As a group they outperformed equivalent trust schools on key teaching and learning related criteria by a significant margin (on all criteria for those inspected by Ofsted, and 3/5 for ISI). There is widespread evidence of generous bursary provision for the disadvantaged too – something I hope to be able to detail more fully in a forthcoming study.

Bang goes the theory that for-profits are interested in only one thing.


I’m Still Not Sure

The Leader of the Labour Party, Ed Miliband, made it quite clear that he thinks that public sector strikes over pensions were wrong “at a time when negotiations are still ongoing”. Indeed, he gave virtually identical answers along those lines to six very different questions asked by Max Farquar.


It would seem, though, that Mr Miliband still isn’t convinced that he managed to put his message across. In his keynote address to the Trades Union Congress, he said:

But while negotiations were going on, I do believe it was a mistake for strikes to happen.

I think we might have grasped what you’re getting at this time, Ed.

Career Progression

I think it is fair to say very few support teachers ever receive a promotion of a similar scale to that of Mohamed Ibrahim, who is moving from Newman Catholic College to Mogadishu to take on the role of Deputy Prime Minister and Minister of Foreign Affairs in Somalia’s embattled Transitional Federal Government.

The Cost of 9/11

Each square represents $1 billion.

FlowingData has an excellent visualization of an article from the New York Times on the cost to the United States of the attacks that took place on September 11, 2001.

Al Qaeda spent roughly half a million dollars to destroy the World Trade Center and cripple the Pentagon. What has been the cost to the United States? In a survey of estimates by The New York Times, the answer is $3.3 trillion, or about $7 million for every dollar Al Qaeda spent planning and executing the attacks. While not all of the costs have been borne by the government — and some are still to come — this total equals one-fifth of the current national debt. All figures are shown in today’s dollars.

The chart is sobering, but it perhaps serves to illustrate that the best response to a terrorist attack is not to launch a campaign of global imperialism. As well as the diversion of $3.3 trillion away from private, productive investment to public destruction, American interventionism has served to alienate and radicalize groups of young Muslims around the globe, who rightly believe that bombing groups of innocent civilians is wrong. They may be misguided, but no one could dispute they have a point.

It is also worth noting that in the end, Osama bin-Laden was killed by two dozen Navy SEALs and four helicopters.

Patents Harm Consumers

A German court has ruled that Apple has a legitimately enforceable patent on tablet computer designs that are “minimalist [and] modern”, and in doing so has forbidden Samsung to sell one of its newest, most popular products – the Galaxy Tab 10.1 – to the consumer. Should it attempt to so willingly satisfy the desires of the public by producing a touch-screen device the front of which is dominated by a, well, touch-screen, it will be subject to fines and forced to pay damages because Apple somehow “own” the rights to that design.

Whilst it would be tempting to blame the presiding judge, Johanna Brueckner-Hoffmann, such a move would too easily absolve of blame the German patent authorities who are actively harming consumer choice by granting patents that are by virtually any measure too broad.

Bring Out the Shovels!

The enormous fiscal stimulus passed by the United States government in 2009 failed, even by its own standards – unemployment has remained higher than the administration’s worst-case predictions and placed an enormous burden on future generations of American taxpayers. Not to be derailed by the evidence, of course, President Obama has announced more Keynesian stimulus spending in an attempt to “create” jobs.

You would have thought that someone in the White House would have realised by now that taking money from the private sector and spending it in the public sector will not create employment, nor solve the underlying structural issues in the US economy.

On stimulus, Cafe Hayek has this excellent letter to the Weekly Standard.

An Addiction to Regulation

It hardly takes a D.Phil in economics to realise that many regulations can be harmful to business and free trade, particularly small enterprise. Philip Greenspun, who runs a single-man helicopter company – has a brilliant example of how absurd the government web of rules and directives has become:

I’m subject to the same drug testing requirements as United Airlines. I am the drug testing coordinator for our company, so I am responsible for scheduling drug tests and surprising employees when it is their turn to be tested. As it happens, I’m also the only “safety-sensitive employee” subject to drug testing, so basically I’m responsible for periodically surprising myself with a random drug test. As a supervisor, I need to take training so that I can recognize when an employee is on drugs. But I’m also the only employee, so really this is training so that I can figure out if I myself am on drugs. As an employee, I need to take a second training course so that I learn about all of the ways that my employer might surprise me with a random drug test and find out about drug use. But I’m also the employer so really I’m learning about how I might trap myself.