Sex, subtitles and specialist cities

Afternoon all,

I’ve been thinking this week about one question I used to ask in interviews: “How do you persuade the public (and politicians) of the risks of higher borrowing?”. To be honest, it always felt a bit harsh as no one has yet figured out a great answer. But two people passed the test this week: Giles Wilkes for his excellent blog and Richard Hughes who the TSC agreed should be reappointed.

Have a great weekend,

Ruth
Chief Executive
Resolution Foundation

Desperately seeking sex. Contender for raciest ever TOTC read? It boldly posits that marriage and sex work constitute the same system of “sexual exchanges”, modelling how peoples’ choices – whether they’re seeking sex, selling sex or getting married – are shaped by income, relational skills, and social norms. This model predicts how economic opportunity and relational skills interact to explain why predominantly women sell and men buy in the sexual marketplace. The study even suggests that the global fertility slowdown may be down to new tech making virtual (and real) sexual encounters easier to convene, reducing the cost (physical risk and social stigma) of selling sex. Whether or not the baby bust is down to the rise of Only Fans freelancers, the authors aren’t the first to draw a connection between the rise of digital content and the decline in coupling up.

Rent controls, meet chainsaw. Argentina’s eccentric leader is chuffed with the 40 per cent fall in Buenos Aires rental prices (alongside a 300 per cent increase in supply), allegedly resulting from his abolition of rent controls. So, what’s going on? According to this substack, those numbers *do* accurately reflect the prices and listings on the Argentinian version of Zoopla. But sustained double digit inflation and stringent rent controls had already pushed the rental market largely under the table when Milei revved his chainsaw – half of all renters were on an informal lease in 2023. So, abolishing rent controls probably did increase supply and reduce prices, but other macroeconomic factors also played a big role, and relying on the figures for the formal market is pretty misleading.

Subbing vs. Dubbing. Remember that learning doesn’t need to stop with the end of the school year! But for parents dreading the summer holidays it’s good to know TV really can help. This interesting paper assesses how subtitling (as opposed to dubbing) English-language-media in non-English speaking countries influences language acquisition. The study compares actual and predicted English skills in 36 non-English speaking European countries. Subbing indubitably comes out on top, creating “large positive effects on country populations’ proficiency in English”. They estimate that countries like Austria, Germany or Poland could boost their English skills to the proficiency levels of Scandinavian countries if they switched from dubs to subs.

Great British Decline. Now for something a little closer to home. This long-term historical analysis goes back to the start of the 19th century to consider the shifting shape of British cities. It finds that metropoles specialising in a small number of industries were more vulnerable to decline. Unlike cities with a mix of industries, they didn’t benefit from “dynamic externalities” – which is to say, the mix of conditions across sectors that improve productivity, driving continued growth. Instead, they experienced more deprivation when their specialist industries went bust. These economic crunches don’t happen in a vacuum either. This paper on economic shocks and populism in the US argues that the level of a populist backlash after an economic crunch is shaped by how easy it is for people to move between rich and poor communities. As jobs dry up, many residents may relocate to cities with more vacancies. But when high housing costs can make those moves hard, it can lead to increased discontent with the political status quo.

Something for the weekend? | All rise

Next Tuesday, the House of Commons will go into summer recess, with no legislation being passed until 1st September – barring extraordinary circumstances. (Those hard-working peers stay a few days longer). So, let’s peek ahead to Bills that are still wending their way through the corridors of power.

• The Government’s much-maligned and much-watered-down Welfare Bill will have its third reading in the Lords on Tuesday – so any parliamentary ping-pong will need to be conducted at lightning speed so the commons can complete the Bill before the house rises.

• Another biggie – The UK Employment Rights Bill stands poised to transform the working lives of Britain’s lowest earners with the right to regular working hours, sick pay and greater protection from unfair dismissal. But some thorny questions remain, including who *counts* as a worker.

• The assisted dying Bill has made it to the House of Lords. It’s notable as a private members’ bill – the Government has not whipped their MPs and all the main parties are divided on the topic. This one will remain fraught – expect more debate in the Autumn.

• The Government’s Planning and infrastructure Bill is a cornerstone of their growth agenda. It remains in committee stage in the Lords, where we’re likely to see environment-focused amendments proposed – despite the fact that some already think it hasn’t gone far enough.

• Meanwhile, the Pension Schemes Bill aims to reshape pensions – simplifying and digitising the system for DC scheme members and encouraging large schemes to invest in British businesses. It should improve living standards for low earners, but cross-party opposition due to worries about the impact on pension scheme performance may slow this down.
• Dont forget! The Tobacco & Vapes Bill which continues Rishi Sunak’s promise to create a smoke-free generation, the Bill to abolish Hereditary peers, and giving the vote to 16 and 17 year-olds.

Chart of the week

It’s not been a great week living standards-wise. Inflation came in above expectations, employment is falling, and private rents are still outpacing wages. Payrolled jobs have fallen by 143,000 since last October. But, as COTW shows, this fall has not been uniform. Hospitality has fallen by almost four per cent, six times the fall across the rest of the economy, with retail faring badly as well. Inevitably, young people – who are concentrated in these sectors – are at the sharp end. The blame is being laid squarely on the rise in employer National Insurance. Our research has found that this tax rise, coinciding with big rises in minimum wage rates, disproportionately impacted low-paid work. The cost of employing someone on £50,000 has risen by 2 per cent, but the cost of employing someone part-time on the minimum wage has increased by 14 per cent (or 16 per cent if aged 18 to 20) – hence low-paying sectors lying at the heart of this jobs downturn. There is *some* good news though – employment is up in finance – let’s hope the chancellor is right that a ” financial sector that is fighting fit and thriving ” is key to growth.