Dark histories and happy hipsters Top of the Charts 1 May 2020 Torsten Bell Afternoon all, Happy international workers day to you – although obviously it’s not a very happy one with this quarter probably seeing more workers not working than at any time in our history. There’s a reason food bank use is up 80 per cent, despite unprecedented government support for firms and families. The job of the next few years is going to be getting unemployment back down, and food banks ideally eliminated entirely. But the job for the weekend is to make sure you get some good reading in – on which note this week’s selection hopefully helps. Have a good weekend, Torsten Chief Executive Resolution Foundation Whose lockdown? Gender is a big deal in this crisis (see COTW). In the world of academia there’s emerging evidence that the lockdown is having very different effects on men and women. Some journals are reporting that men are submitting up to 50 per cent more than they usually would during the lockdown (article), while less than 14 per cent of economics papers on COVID-19 published on the most respected sites have come from women. In a shock move, the impact of attempting to work from home with the kids may not be falling equally. In more positive “it’s not the 1950s” news, let’s congratulate Melissa Dell – the most recent recipient of the Clark Medal (one step down from a Nobel Prize). Dell has produced lots of work reminding us that economic history casts a very long shadow – check out this summary of her contributions. A highlight: Dell finds that families are 20-30 per cent poorer in parts of Peru and Bolivia where the Spanish coerced local labour into silver and mercury mining. That impact is despite that practice having been abolished over 300 years ago… Lockdown (social) security. One of the defining features of this crisis is its speed – turning off lots of your economy means a much faster economic hit than a normal recession. That’s why we’ve seen 1.5 million claims to Universal Credit in a matter of weeks. But that speed also makes it harder to track people’s experience of the benefits system. So it’s good to see the Work and Pensions Select Committee survey over 6,000 respondents on social security in lockdown. There’s deserved praise to DWP staff for how well they have adapted their operations. But there’s also the big problem that three quarters of respondents do not think the level of support will be enough to cover basic living costs. And for those of you keen to raise your sights from the UK, this interesting piece shows how the Bangladeshi government built a new social safety net in a crisis – a short-term subsidy delivered in two weeks to five million people. Wealth of the Wealthy. Pre-corona the wealth of the top 0.1 per cent was the talk of the town. How we measure that wealth is going to matter after the crisis too given proposals for wealth taxes. The latest update in this never-ending battle among US academics argues that the increase in wealth among the 0.1 per cent is half as large as others have estimated. The paper’s definitely not arguing that the top haven’t done very well indeed – it concludes that the top 1 per cent hold nearly as much wealth as the bottom 90 per cent. But it does argue that those worried about the rich running away should focus on huge gaps in labour income, not just who’s lucky enough to have some capital. Whatever you think about the technical US arguments, this conclusion is certainly true for the UK: our richest households aren’t all 19th Century style capitalists – they’re lawyers and bankers. Hipsters vs. Geeks. Hipsters need geeks, but geeks need hipsters too. This most heart-warming of takeaways comes from interesting new research (£ but free version). Innovation policy for cities often seems to be torn between competing camps arguing for a focus on scientific activity (think Graphene in Manchester) or creativity (think the most annoying bits of Shoreditch). With recent evidence suggesting that what really matters within firms is some combination of the two, this paper asks whether that is also true at the city level. First off it appears the presence of STEM workers is more important a driver than creative ones. But the most innovative cities are precisely those with a combination of STEM and creative activities. An important conclusion for policy: it takes two to tango. Guaranteed difficulty. Our economic response to the pandemic-required lockdown has been to attempt to take the hit away from families and firms, and onto the state. The job retention scheme and loans to firms have been radical and hard to implement – but this is actually the easy phase of this crisis, policy-wise. Much more difficult is what comes next, as we try to set policy for a long phase in which we are not in total lockdown (where it makes sense to offer unprecedented support to almost any firm that needs it), but are far from fully reopened (when we can switch support off). That’s the big argument that comes through from an interesting new paper on how the Treasury should support firms from Giles Wilkes. Policy prescriptions are: don’t offer 100 per cent guaranteed loans (which the government have just done), but do think about going beyond loans to grants/equity stakes. Chart of the Week The current economic crisis is affecting everyone in some way – from swapping the office for the kitchen, and the school-run for BBC Bitesize. More directly, RF research this week found that around eight million key workers face the biggest health risks, while around six million are bearing the brunt of the economic pain during this shutdown. As this week’s chart shows, these health and economic risks are not being borne equally. Our lowest-paid workers face the highest risks on both the health and economic side of things. But the research also highlighted that women are twice as likely as men to be doing essential roles with health risks at present. These realities must not be forgotten when we emerge from the crisis. The labour market is going to look very different – and that difference should include better pay and security for low-paid workers, and for critical – but criminally undervalued – roles, such as care work.
