Tim Harford The Undercover Economist

Articles published in May, 2019

The clash of the two cultures and the challenge of collaboration

May 7 was the 60th anniversary of the delivery of CP Snow’s famous lecture, The Two Cultures and the Scientific Revolution. It is dimly remembered as a lament about the mutual incomprehension between arts and sciences, wrapped up with some pompous anecdotes about Oxbridge high table and airy generalisations about the dynamism of scientists. Some of it is absurd. Snow dismisses George Orwell’s 1984 as pure Luddism, “the strongest possible wish that the future should not exist”. (Orwell old chap, relax and enjoy the fruits of technological progress!) That Snow’s lecture is remembered at all is probably thanks to an acidic rebuttal by the literary critic FR Leavis.

Nevertheless, Snow was on to something important. His message was garbled, in fact, because he was on to several important things at once. The first is the challenge of collaboration. If anything, The Two Cultures understates that. Yes, the classicists need to work with the scientists, but the physicists also need to work with the biologists, the economists must work with the psychologists, and everyone has to work with the statisticians. And the need for collaboration between technical experts has grown over time because, as science advances and problems grow more complex, we increasingly live in a world of specialists.

The economist Benjamin Jones has been studying this issue by examining databases of patents and scientific papers. His data show that successful research now requires larger teams filled with more specialised researchers. Scientific and material progress demands complex collaboration.

Snow appreciated — in a way that many of us still do not — how profound that progress was. The scientist and writer Stephen Jay Gould once mocked Snow’s prediction that “once the trick of getting rich is known, as it now is, the world can’t survive half rich and half poor” and that division would not last to the year 2000. “One of the worst predictions ever printed,” scoffed Gould in a book published posthumously in 2003. Had Gould checked the numbers, he would have seen that between 1960 and 2000, the proportion of people living in extreme poverty had roughly halved, and it has continued to fall sharply since then. Snow’s 40-year forecast was more accurate than Gould’s 40 years of hindsight. Even when we fancy ourselves broadly educated, as Gould did, we may not know what we don’t know. That was one of Snow’s points.

But the deepest point of all — buried a little too deep, perhaps — is a practical problem that remains as pressing today as it was in 1959: how to reconcile technical expertise with the demands of policy and politics. In short — have we really had enough of experts?

The historian Lisa Jardine highlights this sentence in Snow’s argument: “It is the traditional culture, to an extent remarkably little diminished by the emergence of the scientific one, which manages the western world.” We didn’t decide we’d had enough of experts in 2016; we made that decision long ago.

There have never been many scientists in politics. In his 2012 book, The Geek Manifesto, Mark Henderson reckoned there was one scientist among 650 members of the UK parliament. The US Congress is packed with lawyers. We need a little more technical expertise close to the levers of power: pithy quotations from Cicero will not do the trick; nor those from Karl Marx.

As Snow pointed out in a series of lectures he gave at Harvard in 1960, published as Science and Government, grave mistakes can result not only from a vacuum of technical knowledge in politics, but from a monopoly — the single expert, unchallenged. He cited the allied bombing of dense urban areas in Germany during the war, which not only took a terrible toll on civilians, but failed in military terms by sparing industrial targets. The source of the problem was a flawed statistical study by Winston Churchill’s scientific adviser Frederick Lindemann that no one had both the technical skill and the political clout to challenge. It is not enough to give political influence to a physicist or an economist. The corridors of power must ring with scientifically informed debate.

Snow quotes another scientist about losing the argument over area-bombing. “I confess to a haunting sense of personal failure . . . if we had only been more persuasive and had forced people to believe our simple arithmetic . . . might we not have changed this decision?” That is precisely how many economists felt after the Brexit referendum. There is no moral equivalence, but there is an intellectual parallel: we felt that a serious mistake had been made and that it was partly our fault for not being more persuasive.

None of this is to assert the superiority of a technical education over a classical, literary or vocational one, although Snow sometimes seemed to yield to that temptation. We don’t need a parliament full of chemists any more than we need one full of classicists. We need a mix. Like scientific research, good policymaking is now a team effort. It requires different perspectives and a range of specialist expertise. We all must learn to work with people who see the world very differently. That wasn’t easy to do in 1959. It is no easier today.

 

Written for and first published in the Financial Times on 3 May 2019.

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Range, misinformation and the fine line between stupid and clever

Over the past couple of week’s I’ve been enjoying David Epstein’s Range – about the value of being a generalist. As I may have mentioned it’s in sympathy with my latest TED talk, which cites Epstein. I had the pleasure of seeing Epstein dig up a lot of interesting new research that supports some of what I argued in Messy – about the virtues of moving between fields, switching contexts and improvising. (It felt a bit like an out-of-sample check of my expectations.) Epstein skillfully blends stories with argument and evidence, and he makes it look easy (it isn’t).

Also impressed by The Misinformation Age by Cailin O’Connor and James Owen Weatherall (he also wrote the very nice Physics of Wall Street). O’Connor and Weatherall cover the territory very well – again, some nice stories, many of which I hadn’t heard – and they use a lot of network analysis to show how true and false ideas can spread or be propagated by various devious pieces of propaganda. Fairly nerdy but easy and fun to read.

 

Next on the pile, The Intelligence Trap: Why Smart People Make Dumb Mistakes by David Robson. This comes recommended to me but I have not yet cracked the spine. Looks v. interesting, though.

(While I’m here, I should mention that I just bought a new Moto G7 Play phone for £130 and I’m delighted with it. Seems to be a heck of a lot of phone for not a lot of money.)

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24th of May, 2019ResourcesComments off

Why going on holiday gives us more memories

Lucky me. I’ve just returned from a family holiday in that most exotic of countries, Japan. So many fresh sights and strange tastes: from flower gardens, temples and communal baths to robots, bullet trains and the Kawaii Monster Café. Although we were there barely more than a week, it’s hard to believe we packed so much in.

While on an adventurous holiday, many people experience that strange sense of time having slowed down in the most pleasurable way, and of conversations that begin, “Was it really only yesterday that we . . . ?”

Ten days in a far-off land produces a richer treasury of detailed memories than 10 weeks back home. But what is behind this phenomenon? And does it teach us something about living a full life?

One answer comes from Claude Shannon, a titan of computer science still under-appreciated outside his field. In 1948, Shannon published one of his two profound contributions, A Mathematical Theory of Communication.

One of the implications of Shannon’s theory is that a message can be compressed to the extent that it is predictable. Anyone who has played the guessing game of Hangman knows that once a few letters are in place, the remainder are usually easy to guess. Similarly: sntnces wth vwls rmvd sty cmprhsbl. Ritualised conversations (“How are you?” “Very well, thank you. How are you?”) can be heavily compressed; poetry, perhaps, less so.

A movie can be compressed because, between cuts, each frame tends to resemble the previous one. A compression algorithm can start with the first frame after the cut and store a series of “diffs” — changes from the previous frame. The faster and more dramatic the movement or transitions, the harder a video is to compress, because the diffs are almost as big as the original frames.

Although the parallel is not exact, much the same thing seems to be going on with our memories of life. The brain is not a video recorder; we recall the gist. Sometimes the gist is very brief. If I get up in the morning at the usual time, eat my customary breakfast and catch my usual train to the office, why should my brain trouble itself to remember this day two weeks after the fact? The diffs are barely worth bothering with. In contrast, fresh experiences defy compression: the diffs are too big.

We could expand this idea to other aspects of life, maximising information content by keeping things unpredictable. Brian Christian, author of The Most Human Human, a book about conversations between humans and computers, speculates that if we’re seeking advice we should ask the person of whose answer we are least certain. If we want to understand a person, we should ask them the question to which we are least sure of their answer.

Perhaps the best newspaper columnist is the one whose columns are the least predictable? That may be going too far: too much novelty is exhausting, and we need an anchor for our expectations. But I well recall a friend saying that her favourite newspaper pandered to her preconceptions so much she didn’t really need to bother reading it; she could just think hard about everything she already held true. We scribblers should hope to do better.

One would not want a life of endless novelty, if only because that would mean a procession of superficial impressions and comparisons. Static, surprisingly, is impossible to compress without losing information, because its randomness makes prediction or interpolation impossible. Yet static is also meaningless. Too many random novelties, too fast, produces a lived experience not unlike static.

One of the virtues of experience is that it can attune us to subtle details and deep connections: “a world in a grain of sand, and a heaven in a wild flower”. (It may also allow us to draw out meaning from a brief allusion to a larger body of work.) But if repeated experience becomes humdrum, and we do not look for the depths, our days will be thin and forgettable.

So if you want a full life, rich with memories, keep searching for new experiences. That is far easier for the young than the old, but it should be possible for anyone. Surprising conversations are always there for the having and, while a holiday on the other side of the world is a costly (if reliable) source of vivid experiences, novelty is affordable for almost anyone in the form of new music, books, even walking an unfamiliar path through your own home town. It is always worth seeking out whatever is excellent — but for vivid memories, the same old excellence is not quite enough. Freshness matters, too.

I suspect that we all know this, yet we fall back on familiar routines. I often eat the same lunch in the same lunch spot, have a favourite library desk, and enjoy particular genres of film and book. In the moment, these habits are convenient and comforting. In the future, they will result in a life more easily compressed in the memory.

In Japan, it was hard to avoid eye-opening sights and attention-grabbing situations. Now I’m resolved to seek out the new and challenging in the UK, just as we did when far from home.

 

 

 
Written for and first published in the Financial Times on 26 April 2019.

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The art of time well spent

I’ve been reading James Wallman’s Time And How To Spend It – which, intriguingly, he described to me as “How to Kondo Time”, which I don’t think it is. I’ve learned a few things worth knowing, though.

Wallman recommends seven rules for spending your time wisely:

  • Story
  • Transformation
  • Outside & Offline
  • Relationships
  • Intensity
  • Extraordinary
  • Status & Significance

(They spell “stories”. Nice, eh?) Actually the first chapter – “story” – was the most surprising to me. Wallman reminds us of classic story arcs (particularly Vonnegut’s “Man in a hole”) and suggests that we think about our time in that way. Does your plan for the next hour, day, month look like it would make for a good story? Would you encounter challenges and meet allies and experience personal transformation? It’s an intriguing approach to trying to spend your time in a more satisfying way – or, sometimes, to reframe the time you’ve already spent.

Much of the rest of the book is more straightforward: there is no harm in being reminded that most of us could do more to cultivate relationships, and that going for a walk is better for your mental health than hunching over a screen – obvious, yes, but true and worth repeating.

 

An alternative – or, perhaps, a complement – is Cal Newport’s Digital Minimalism, which really is “how to Kondo time”. I’ve written before about Newport’s book, which I found bracingly direct, challenging and practical. Newport’s basic theme: we fell into our habits of using phones, social media, email, web-browsing etc without making conscious decisions about what our priorities were. His practical challenge is to think about your priorities – for instance, a need to be connected to friends – and then weigh up how best to achieve those priorities. Is it really through Facebook? If so, how exactly? And if not, what alternative do you have planned?

It’s really a very powerful book. Strongly recommended.

 

You might also pick up a copy of Robert Twigger’s Micromastery, a charming little book, and an original one. Twigger argues that you should try new things (learn to cook, learn to swim, to play the guitar, to haggle) but in particular that you should find some small sub-set of the relevant skill and focus on that. You then get a skill worth having in its own right (eg learning to cook an omelette) while also gaining motivation to make progress on the broader task. Clever little idea. (NB Twigger wrote Angry White Pyjamas, which is an absolutely perfect book about what happens when a poet bumming around in Japan decides to spend a year on the toughest martial arts course in Japan.)

 

 

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21st of May, 2019MarginaliaResourcesComments off

Is Thanos a good model for economists? On balance, no

In a few days’ time, Avengers: Endgame will hit the cinemas, and the universe’s mightiest heroes will resume their battle against the supervillain Thanos. Thanos fascinates me not only because he’s the best bad guy since Darth Vader — but because the muscular utilitarian is an economist on steroids.

Thanos’s claim to the economists’ hall of fame lies in his interest in scarce resources, his faith in the power of logical analysis, and a strong commitment to policy action — specifically, to eliminate half of all life in the universe, chosen at random. He collects some magical bling enabling him to do this with a snap of his fingers.

“It’s a simple calculus,” he explains. “This universe is finite, its resources, finite . . . if life is left unchecked, life will cease to exist. It needs correcting.”

I think it’s fair to say that since Thanos first took centre stage in Avengers: Infinity War, he has become the most popular economist around. People love his logic and his utilitarian commitment to maximising happiness. Many were delighted that Thanos succeeded. They accepted his argument that the alternative to the swift, dispassionate and fair-minded elimination of half the universe was the slow and choking death-by-overpopulation of everybody. A discussion board on Reddit, “Thanos Did Nothing Wrong”, acquired hundreds of thousands of members before beginning a mass purge of half of them — randomly chosen, of course.

It seems unlikely that Thanos has ever heard of Robert Malthus, but one suspects his scriptwriters have. Malthus was an English clergyman and economist who published, in 1798, an argument observing that exponential population growth could far outstrip any linear improvement in food production.

Malthus’s “simple calculus” works the same way as that of Thanos, but Malthus was not a believer in catastrophe. While Thanos claims the universe is out of balance, Malthus thought that population was tragically self-balancing, thanks to “a strong and constantly operating check on population from the difficulty of subsistence”. Whenever living standards looked like improving, he argued, population would increase to consume the spare resources, and everyone would be back at subsistence levels once again. Thanos predicts that overpopulation would lead to catastrophe, while Malthus saw population growth as a reliable source of everyday misery.

The two men also differ in their policy recommendations. While Thanos kills trillions, Malthus baulked at the sin of birth control. Yet I feel that Thanos offers us a cautionary tale. His tragedy is that he hasn’t fully thought through the likely consequences of his favoured policy.

Thanos, observing that there were too many people, decided to kill half of them. But this is curiously short-sighted for a man regarded by many as a policy prophet. Any exponential population growth process will soon replace the lost people: that is why exponential growth is such a headache in the first place. For example, if an economy’s resource footprint grows exponentially at a rate of 7 per cent, it doubles in just ten years — meaning that in less time than has elapsed since the first Iron Man movie, we could be back where we started.

The only lasting solution is an economy that uses resources at a sustainable rate. Malthus’s qualms notwithstanding, contraception has been a very good start. The world population growth rate is steadily approaching a very sustainable-sounding zero.

Thanos has convinced himself that’s he’s seen something nobody else can quite understand. The truth is that he sorely needs peer review. Like many powerful people, he regards himself as above his critics, not to mention every sapient being in the universe. He views humans less as free-willed agents capable of solving their own problems, and more like overbreeding rabbits, needing a cull for their own good.

We puny economists lack the snapocalyptic power of Thanos, but some of us share his lack of humility. A friend of mine once invented a Thanos-esque supervillain called “Socio-economist Man” (definitely a man) who would deliberately cause traffic jams, provoke accidents or even plant deadly bombs, because he calculated that the indirect consequences of these actions would promote the greatest happiness of the greatest number.

Not every social scientist has such ruthless confidence in their models. At best, we’ve learned that the economy is a complicated system and unintended consequences abound. But once the data are gathered and the graphs plotted, it can be all too easy to convince ourselves that we understand the system well enough to improve it with drastic changes. We don’t.

The best economist, then, recognises the importance of scarcity and of painful trade-offs, like Thanos. But unlike Thanos, she doesn’t treat everyone as pawns on a chessboard and instead seeks out constructive criticism and advocates gradual action, avoiding irreversible moves. The snapocalypse, by contrast, is not gradual. Neither is it reversible — unless the Avengers have anything to do with it.

 

Written for and first published in the Financial Times on 19 April 2019.

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How to be more creative

I was on the TED Radio Hour this week; they were kind enough to give me both the first and the last word on the subject of kickstarting creativity.

If you’d like to read more on the subject I would – of course – recommend my book, Messy, which gave me the research base for both of the TED talks and the interviews around them.

But what else?

Perhaps David Epstein’s new book, Range, which sings the praises of broadening your horizons. I’m a couple of chapters in and enjoying it very much: good stories, well-researched. Epstein, an experienced and thoughtful sports writer, points out that what works in sport is actually not a very good guide to what works in life, because in life the rules are unclear, feedback can be patchy, and in general we need the widest possible base of experience. Recommended.

A very different book is A Mind At Play by Soni and Goodman – the first biography of Claude Shannon, one of the pioneers of modern computer science and the creator of information theory. Shannon’s an interesting subject in part because he’s still underappreciated outside his own field, and in part because his creative arc was complex and frustrating. He seems to spend an awful lot of time goofing around and wasting his talent. Was it wasted time? Or was it fundamental to the process? I’m not sure myself. I’ll write more about this sometime.

And I must recommend (again) Twyla Tharp’s The Creative Habit, a wonderful practical guide to creativity for anyone in any field at any stage of their career.

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13th of May, 2019MarginaliaResourcesComments off

Why the world needs a carbon tax

You can’t please everyone, it seems. Royal Dutch Shell has announced plans to plant trees in order to absorb some of the carbon dioxide produced when we burn the fossil fuels it sells. What’s more, it plans to invite motorists to chip in at the pump by buying “carbon offsets”: a clever way to help the planet, raise cash, and spread the blame around. Environmental campaigners are sceptical. So am I.

I admit an interest here. I once worked for Shell (with the love-hate relationship that might imply), met my wife at Shell, and have occasionally been paid to return to Shell and dispense pearls of wisdom. Yet, despite a grudging affection for Big Oil that very few people share, I think climate change is far too important a challenge to entrust to oil companies.

The issue is not whether they have benevolent intentions. (I assume Shell’s motives are mixed. Whose aren’t?) It’s that the dramatic reduction in carbon emissions we need isn’t something that is within an oil company’s gift. We’re all involved. If you drive a conventional car, use a gas cooker or boiler, or — green tariff or no — are plugged into a national electricity grid, then you, like me, are part of the problem.

Our instinctive reaction is to guilt-trip each other and big companies into doing something. That is understandable, but falls short. Guilt is too feeble a tool and it is often applied in the wrong place.

Our intuitions about how our daily activities warm the planet are unreliable. Which breakfast contributes most to greenhouse gas emissions: fresh berries flown in from Kenya, toast browned in a toaster powered by coal-fired electricity, or cereal drenched in milk from methane-belching cows? Even if you know the right answer, it’s absurd to expect many others to know — and even more absurd to expect enough of them to care. Voluntarism is not enough to solve climate change.

One response, then, is to demand an ambitious programme of government investment and regulation — the most prominent of which is the Green New Deal, advanced in the US by Ed Markey and Alexandria Ocasio-Cortez, two prominent Democrats. The exciting thing about the Green New Deal is that it has serious political momentum focused at addressing climate change. Yet this momentum has come at a price. The details have deliberately been left vague, and grand aims often win more support than hard practicalities. (See also: Brexit.)

The Green New Deal is also expansive. The resolution not only wants to act against climate change, but to “promote justice and equity . . . repairing historic oppression of indigenous peoples, communities of colour, migrant communities, deindustrialised communities” and many others. Worthy goals these may be, but in mobilising the US government to take action on every imaginable progressive goal, the whole project may become derailed by its own utopianism.

The other risk of a huge centrally planned response to climate change is that of a huge centrally planned response to anything: clumsy megaprojects chosen for their political or bureaucratic acceptability rather than because they deliver the biggest results for the lowest cost.

A planned response to climate change isn’t hopeless, because there are some obvious big wins — tightening rules on the energy efficiency of new buildings, and replacing coal-fired power with renewable alternatives. Yet the best case for the Green New Deal is that even a clumsy response may still be better than none at all.

But there is a better way: a carbon tax (or its close sibling, a carbon permit auction). A broad-based tax on carbon dioxide and other greenhouse gases would be far less expensive than a Green New Deal is likely to be, yet it could motivate action on a scale that is both grander and more precise. Every part of the economy and each decision we make would be shaped by such a tax. A carbon tax would pull billions of different levers in an economy that is both complex and saturated in fossil fuels.

Each one of the billions of different products on sale can be designed, produced, transported and consumed in a way that might increase or reduce carbon emissions. A carbon tax nudges the energy mix to shift in favour of renewables, but also pushes fossil fuels from coal towards gas. It encourages efficiency in the design of cars, homes, any light bulb or any motor, but it also rewards frugality. A lump-sum subsidy can encourage the uptake of electric cars — but a carbon tax will also reward those who cycle instead of driving. Our modern economy reflects countless choices, made by billions of people all over the world. A broad-based carbon price influences them all. Nothing else can.

I fear that, like Buridan’s Ass, the American political system may continue to do nothing rather than choose between different plans for dealing with climate change. I would rather a Green New Deal than inaction, and a carbon tax alone is not the ideal response. But such a tax is the long-overdue, all-embracing response to climate change that America, and the world, badly needs. Everyone who cares about climate change should be advocating for it.

Written for and first published in the Financial Times on 12 April 2019.

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What I’ve been reading

Mark Bostridge, Florence Nightingale – a thorough biography of a remarkable woman, less well-known for her work as a statistician, data-visualisation pioneer and public health campaigner than she should be. One of the founders of evidence-based medicine, she is nevertheless more celebrated for being “the lady with the lamp”. Draw your own conclusions. Good book.

James Reason, Human Error – Reason’s work on industrial accidents is fantastic. This book reviews very ways in which human cognition fails us, with much more emphasis on (for example) potentially-lethal slips and bouts of absent-mindedness than the behavioural economists’ focus on biases and heuristics. More technical than I remember. Next up is The Human Contribution which has more stories and is a little more upbeat.

Jordan Frith A Billion Little Pieces – a sociologist writes about radio-frequency identification tags (RFID). I learned a lot, although would have preferred more reflection on the economic impacts of the technology.

On my pile are Safi Bahcall’s Loonshots, a book about long-shot innovation, a topic that has interested me for years. Also David Epstein’s Range – about the value of being a generalist. Much in sympathy with my latest TED talk, which in fact cites Epstein. Looking forward to reading both books.

 

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8th of May, 2019MarginaliaResourcesComments off

Counting the economic cost and the economic causes of Brexit

“The economy, stupid.” Pinned to the wall, this motto famously reminded Bill Clinton’s campaign staff to stay on message as he ran for the US presidency in 1992. Somebody may want to pin it up in the UK Conservative party’s headquarters, because the party has instead managed to involve the entire country in its bitter little civil war over Europe. But economies can survive some rough handling by politicians. Amid the Westminster turmoil, how is the UK economy doing?

The stiff-upper-lip response is that it’s fine. There were some grim forecasts of the short-term impact of a referendum vote to leave the EU, most prominently a shock scenario presented by the Treasury under George Osborne, and they did not come to pass. The UK economy sailed through the surprise result, demonstrating that Project Fear was nothing more than scaremongering — right?

The truth is not so rosy. As independent experts predicted, the economy has been disappointing since the vote to leave. By “disappointing” I mean relative to pre-referendum forecasts that assumed a vote to remain, relative to other leading economies, to “what-if?” models, and to historical trends.

Alone, each of these comparisons is open to question. Put them all together and they start to look persuasive to anyone with an open mind. The unpredictable Brexit process has created enormous ambiguity for any business dependent on investment or trade across borders, and knock-on uncertainty for other businesses that work with them.

One index of UK policy-related economic uncertainty has a baseline of 100. It hit 500 after the referendum and has exceeded 300 again this year. But we don’t need an index to tell us that the outlook is unclear. This lack of clarity matters. Some businesses are delaying investments while they wait for the fog to lift. Others are choosing countries where things seem more predictable.

Further trouble awaits. Agreeing a variant of prime minister Theresa May’s deal now would resolve uncertainty at the cost of isolating the UK’s service economy from the single market; a long delay offers the hope of stronger connections with the huge European economy, but prolongs the confusion; leaving without a deal would not only cause short-term disruption, it would restart the interminable process of negotiation as we try to figure out the ground rules on pretty much everything.

Yet, like Boris Johnson when foreign secretary, one might simply declare: “f**k business”. Who cares about disloyal corporations when our concern is with ordinary, hardworking citizens? The trouble is that while UK residents are indeed hardworking — the employment rate and the unemployment rate are both breaking the right kind of records — they are not seeing much income in return for their hard work.

As the Resolution Foundation think-tank concluded in February, Brexit has hit living standards even harder than it has hit growth. Annual household labour income has been falling for two years and is around £1,500 lower than it was projected to be before the referendum. (Memorious readers will recall that during the referendum campaign the Treasury predicted that a vote for Brexit would lower household incomes by £4,300 a year by 2030. In this respect, at least, Brexit is slightly ahead of schedule.) Not all the disappointment can be attributed to Brexit, but much of it has been caused by higher inflation as a result of the Brexit-induced drop in the value of the pound.

We should remember that all of this occurred while the international economy has been buoyant. The consensus now is that the world is due some sort of slowdown. That isn’t going to help, except perhaps to make the UK look a little better by comparison. Alas “better by comparison” does not pay the bills.

Of course, the news hasn’t all been bad. The UK’s jobs market remains genuinely impressive. Given what we know about the depressing effect of unemployment, even low-paid, low-productivity jobs are better than no jobs at all.

Another bright spot has been the public finances: the deficit is under control and tax receipts have outperformed (modest) expectations, albeit because of a surge in the incomes of the richest 0.1 per cent of taxpayers. It is worrying that inequality may be starting to increase. Still, revenues are revenues, as well as being a reminder that high earners do have their uses.

The awkward truth that Remainers and Leavers alike need to face is that the UK’s economic performance was disappointing long before the referendum. Measured by gross domestic product per head, many regions were worse off in 2015 than in 2007. London’s growth, while modest, was far better than the slump in Wales, the north of England, and particularly Northern Ireland.

And overall, in the wake of the financial crisis, the UK suffered a decade without growth in average earnings — the worst performance since the 1860s, according to Paul Johnson of the Institute for Fiscal Studies.

In brief, then: the chicken of economic weakness produced the Brexit egg, from which further economic woe is hatching. As problematic breakfasts go, this one is the Full English.

 

 

Written for and first published in the Financial Times on 5 April 2019.

My book “Fifty Things That Made the Modern Economy” (UK) / “Fifty Inventions That Shaped The Modern Economy” (US) is out now in paperback – feel free to order online or through your local bookshop.

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3rd of May, 2019Undercover EconomistComments off

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