April 2008

28 April 2008
Fuel efficiency then and now
Patrick Crozier

Tim Blair has a post up about fuel efficiency.  Seems that it is about the same now as it was forty years ago.  Blair points out that modern cars are quite different, they have all sorts of systems eg air conditioning that use engine power to run them.  They also have far better acceleration.

The funny thing is that I am pretty sure that this phenomenon of efficiency not changing much can be traced back much further.  I seem to remember coming across an article in Autocar from about 1910.  The MPG figures given were remarkably similar to those of today.

Ah, here are some figures for the 1908 Model T and yes, it’s the same.

Of course, the big thing being missed here is engine efficiency as opposed to overall car efficiency.  I suspect engines have made huge gains over the years.

The point is that consumers when given a choice between saving money and greater safety or comfort will choose safety and comfort.

Update

Actually, it would appear that those Ford figures might be a bit dodgy.  But the article confirms (talking about the Lupo) that for consumers fuel economy is far from the only thing.

24 April 2008
Should BAA be broken up?  (v2)
Patrick Crozier

This is a complete rewrite of version 1 which didn’t really cut the mustard.  Ah well.

image
It rather looks like BAA, Britain’s largest airports operator and owner of Heathrow, Glasgow and Stanstead, will be forcibly broken up.  It doesn’t seem to have a lot of friends right now1 and the regulator is starting to beat his “this is a monopoly” drum2.

I can’t say I am exactly thrilled at the prospect.  For two reasons.  First of all, there’s a rather nasty whiff of nationalism here.  I can’t help but notice that things were awfully quiet until a bunch of foreigners bought up BAA.  Secondly, forcibly breaking things up involves, well, force and I am against force3.

I am, of course, all in favour of things being voluntarily broken up, if that is what owners want to do.  Indeed, that is precisely what BAA itself did in the case of Prestwick a few years ago.  They reckoned they couldn’t make a go of it, sold it off to some people who thought they could and, hey Prestwick! (so to speak) within a few years the airport was booming4.

The fact that BAA’s owners (and, for that matter, its owners before that) don’t think the same experiment should be tried with its London airports tends to suggest that they think the airports will make more money if owned by just the one operator.  This argument cuts a lot of ice with me because I think profits are a good thing5.

However, it’s impossible to avoid the complaints.  Personally, I rather like airports, Heathrow included.  But lots of people don’t.  Terminal 5’s teething difficulties6 aside people complain about the queues, the lost luggage and the general state of repair of the buildings.  Airlines have their own range of complaints but I have never been quite able to pin down just what they are.

But let’s assume for argument that BAA is not doing as good as job as it could or is reasonable to expect.  Why’s that?  Because free market theory tends to run along the lines: “Well, if companies attempt to abuse their monopoly position all that will happen is that competitors will enter the market.” And there are examples of this7.  So, if BAA really is doing a crap job it is either because the theory is wrong or something else is going on.

My guess is that it is more or less impossible to enter the market.  Try getting planning permission for a new airport in the South East.  With the current planning laws you can forget it8.  Well, you can but BAA might just be able to what with all its experience and contacts.  And buying up enough contiguous land might also pose difficulties9 even if I think they can be overcome. 

But maybe it’s not.  Maybe, it would indeed be impossible to build another airport in South East England.  But then the appropriate level of competition is not airports but regions.  Maybe a better airport somewhere else would draw in the investment and the people to compete with London (and in the process take BAA down a peg or two).  Of course, to do this developers would need to be able to build the buildings and infrastructure needed which again is impossible under current conditions.  But this just re-iterates the point: as far as we know it is government force that is causing the problem.

Just as an aside one argument that gets dragged up in this debate is the one about how BAA was privatised in the first place.  The argument goes that all our woes are down to the fact that it was privatised in one go.  If only the airports had been sold off one by one… Maybe, maybe, but if it had there would have been nothing (in a free market) to stop one of those airports gobbling up all the others and creating what we see today.  The point is that markets are discovery mechanisms.  Amongst the things they discover is how many companies should exist in a given market.  My guess is that BAA is the size it is because that is the optimum size in the prevailing conditions.  If it wasn’t it would have been broken up by now.

Notes

1.  Hey, even the libertarians at Samizdata don’t have much time for it.  Or, even Jeff Randall at the Telegraph.

2.  See Gatwick and Stansted are targets as BAA break-up looms, Telegraph, 23 April 2008

3.  See What I believe, InstaPatrick.

4.  See David Farrar’s article, Freedom and Whisky, 29 May 2003.

5.  See Profits in a Market Economy, Art Carden, Ludwig von Mises Institute, 18 January 2008, in which the author makes the point that profits are good and losses bad.

6.  At least, I hope they’re teething.

7.  See Against competition regulation, InstaPatrick.  Another short one

8.  Another reason to be against planning.  For some more, see Against Planning, InstaPatrick.

9.  I am, of course, against compulsory purchase.  See Against compulsory purchase, InstaPatrick.

I still don’t think that BAA should be broken up
Patrick Crozier

Earlier this week I heard (or did I read, or both?) that some commission or other (the Monopolies commission, perhaps?) had written a report saying that Britain’s biggest airport operator, BAA which owns Heathrow, Gatwick and Stanstead should be broken up.  It’s stifling competition or something, apparently.

This has met with almost universal approval1.  But, I don’t care, I’m still against it2.

Notes

1.  See Situation Normal, All F**ked Up by Johnathan Pearce on Samizdata.
2.  See:

Should BAA be broken up? in which I argue that, no, it shouldn’t.

The ASI was wrong in which I argue that monopolies aren’t a problem so long as you have free markets.

Against competition regulation.  This is an InstaPatrick article and is woefully short but it makes many of the same points.

What do you mean by a monopoly? in which I argue that everything has some competition.

22 April 2008
Daft restrictions on young drivers
Rob Fisher

It’s threatening to go beyond nods and winks.  “One of Stormont’s youngest politicians” has made some proposals:

  • Total alcohol ban for newly qualified drivers;
  • a curfew that would stop young motorists from driving at night;
  • a ban on them carrying teenage passengers.

This is just the usual ill-thought-out posturing that’s difficult to argue against because everyone can agree that one teenage road death is one too many, so any measures to reduce deaths are justified.  It’s not true because if you think about it, some risk is acceptable, or else we wouldn’t drive at all or we’d have universal 5mph speed limits.

And if you think about it, there are some obvious problems with this scheme:  A total alcohol ban doesn’t make any more sense with young drivers than it does with older ones, it just punishes innocent people who have drunk a harmless amount.  What happens when a young motorist is stranded in a remote location past the curfew?  How are young motorists to get experience of night driving?  And the passenger ban has been tried elsewhere.  It just results in more cars on the road with teenage drivers.

But proposals like these are about the politics of beeing seen do be doing something to protect the children.  They don’t have to make any sense.

08 April 2008
Libertarian Transport Policy
Rob Fisher

The new UK Libertarian Party has a transport section in their manifesto.  It’s something of a living document and may change over time, but there are some interesting ideas.  This one could be controversial, it’s a bit like what the Australians are trying but perhaps the truckers will be placated by the abolition of income tax:

We will end the indirect subsidy of road freight. This may require retention of a form of distance-based road pricing for HGVs, which in 38-tonne form, do 10,000 times more damage to roads than a 1 tonne car.

I like this bit best:

Motorists and riders should have the right to make their own choices on their use of safety equipment; insurance companies should have the right to charge additional premiums (or decline cover) to those who do.

These parts sound like a good opportunity to properly privatise rail, although I don’t fully understand the current situation (does anybody?)

Disband the cartel of the rolling stock leasing arrangements.  Resolve geographic monopoly that is the rail tendering mechanism.