A tale of two high streets

Morning all,

Let me start with two disclaimers. First, I’m not an economist, and, as I may intimate below, I quite like poking fun at economists. Second, I’m on holiday and, being in the South of Spain, and having spent a chunk of Wednesday evening staring at the sky (through eclipse specs, don’t worry) I’m more preoccupied with ‘meaning of life’ issues than ‘cost of living’ concerns.

That being said, alongside some reflection on the relationship between economics and politics, there’s plenty here to get you thinking about everything from immigration to the fate of our high streets (see Chart of the Week) on this small, insignificant planet hidden in a corner of a huge galaxy. Where, happily, we don’t tend to sacrifice economic growth on the altar of fictional elves (keep reading for the download on that Dobby deception).

Have a great weekend,

Anand Menon

Director
UK in a Changing Europe

Telling tales. Economists have one fundamental weakness. Ok, they actually have lots, but we have to start somewhere. This excellent article by Ben Zaranko is as good a place as any – it suggests that economists can’t tell stories. Zaranko makes the case that they should learn from the world of “speculative fiction” to get their case across. It’s worked historically for questions of national defence, from Edwardian invasion thrillers to Annie Jacobsen’s terrifying Nuclear War: A Scenario. So why not economics, a field bursting with slow-burning perils that people find both anxiety-inducing and boring? Zaranko points to Europe 2031, a gripping essay imagining a continent that fumbles the AI transformation and loses control of its own future. His tongue-in-cheek pitch for future econ-bestsellers? Council Tax: A Scenario, in which the sun burns out before our bands get revalued. Storytelling sells – and when it comes to these issues, we really need people to start buying in.

People have had enough of experts. One way to get a clear idea of where economists are failing to get their message across is to find out where public opinion diverges from economic consensus. This read compares how an expert panel and a representative slice of the (US) public differ in their positions on ten thorny statements – e.g. ‘AI will be good for per capita income’ or ‘A windfall tax is a good way of protecting households’. The good news: the gulf in opinions, surprisingly, narrowed in the decade after 2013 (an average “distance” of 0.25, down from 0.35). On some issues – from securing semiconductor supplies to regulating Twitter – experts and the public see eye to eye. But on ‘greedflation’ and ‘price gouging’, they remain worlds apart, with strongly divergent opinions on the impact of corporate greed. With trust in economists already shaky, the authors advise them to be louder on where they agree with the public and communicate better where they don’t (refer back to our previous read for a hint as to how). Economist, explain thyself. Preferably not in Greek.

The policy to votes pipeline. Did the Inflation Reduction Act 2022 win Kamala Harris votes? Early verdicts were bleak, with several papers finding voters were unmoved by billions of clean energy dollars. A new study, however, argues that this was a measurement failure brought about by a focus on counties rather than on congressional districts, and too broad a set of treatment effects. Redo the exercise looking just at places with new manufacturing plants and a pattern emerges: the districts that got a plant recorded 1.5 percentage points more Democratic share on election day 2024, rising by roughly 0.4 percentage points with each extra plant. So, while I stand by my criticism of economists, and while the public might not grasp the complexities of the discipline, it remains the case that bold economic policy (where voters can actually see the difference being made) can have a significant political impact.

Crowded in. The ‘lump of labour fallacy’ is the zombie that economics can’t kill: the belief that there’s a fixed quantity of jobs, so every immigrant arrival must displace somebody. This article goes after it with two decades of US data and a national – rather than local – modelling approach that allows both for natives moving between cities and for them changing how much they work. Two things stand out. First, the composition of immigrants in the US has flipped, with college-educated arrivals becoming the largest share by 2015 while the number without a high school degree has fallen since the 2000s. Second, immigration between 2000 and 2023 raised the wages of less-educated US-born workers by 2.6 to 3.4 per cent, during a period when their real wages otherwise went nowhere. Worth a read before anyone concludes that the way to raise low pay in Britain is to send the workers away.

Elf and safety. But there are debates that are totally divorced from the reality of the economics… You might have seen the story: a Welsh electricity interconnector supposedly relocated because Harry Potter fans objected to the disturbance of “Dobby’s grave” – a pile of stones and socks on Freshwater West beach. Well, Dan Davies went looking for the evidence behind the tale and found none. There was no mention of the site in the consultation responses, the planning committee minutes, or any contemporary press coverage. The cable comes ashore at the opposite end of the beach, won consent quickly and has been running for years. The story was apparently illusory. Mischief managed.

Chart of the week

What with the Government’s commitment to clamp down on vape and betting shops and the Clacton by-election this week, there has been a lot of chat about the decline of high streets. So, when the TOTC elves brought me this week’s Chart, I immediately loved it. Well, obviously I don’t love it, it’s extremely depressing, but I think it’s really interesting nonetheless. Our chart (made using nifty data from this Health Equity North report) depicts the prevalence of different shops and services across English high streets. The blue bars show those in the least deprived fifth of local areas, and the red bars the most deprived fifth. When it comes to ‘health reducing’ amenities such as takeaways, off-licences, betting and vape shops, the poorest parts of the country have roughly three times the level of provision as the richest parts. Meanwhile, they’re lacking in public toilets when compared with more prosperous areas, but inch ahead on pharmacies. As I said, pretty hideous stuff. It’s not news that there’s a link between prosperity and health, and if the Government is to meet its goal of halving the gap in healthy life expectancy between the richest and poorest regions, then creating policy to shape healthier high streets isn’t a bad place to start. Anyway, Friday night takeaway, anyone?