French fears and WFH Anglo-Saxons

Top of the Charts

Afternoon all,

Turns out by-elections are just like sports days at ‘woke’ primary schools – everyone gets to win something. Uxbridge was clearly a bit of a surprise, but Conservative politicos of an optimistic bent should probably take more heart from this week’s inflation news than the west London result.

I’m no soothsayer, but it’s unlikely Sadiq Khan will roll-out ULEZ to the rest of England just in time for a 2024 election, whereas every constituency has mortgagors/parents of mortgagors. The UK looking less like an inflation basket case after the bigger than expected fall (from 8.7 to 7.9 per cent in June) is the real news this week given the implications for how high interest rates go and stay.

Scrap that – the real news is that this is the 250th edition of TOTCs. Not sure I can quite believe we’ve been writing these emails for over 5 years but thanks to all of you for reading/suggesting reads/offering encouragement – and to the Resolution team, all of whom have contributed at various points.

I recommend celebrating this crucial anniversary by having a great weekend.



Final furlough. The final evaluation of the furlough/Coronavirus Job Retention Scheme (CJRS) is out. I’m obviously biased, having made the case for it, but it’s pretty positive. The CJRS supported nearly 12 million workers at a gross cost of £70bn, but the net cost was lower at £25bn. There was deadweight (£3.3bn went to employers who didn’t need the support) and fraud (estimated at £3.5bn) but the overall cost benefit analysis comes in at a £50bn gain – not just via protecting the incomes of those furloughed but from preventing 250,000 firms closing. The critics’ claims that furlough drove the recent rise in labour market inactivity is debunked: those who were furloughed aren’t more likely to be inactive afterwards. There’s praise for HMT/HMRC for the speed of delivery given the complete lack of a pre-existing infrastructure, but the report is too soft on the failure to have put in place that infrastructure (which we’ve known we needed since financial crisis). That would have allowed government support to be more targeted (something that cost us dear again with energy bills support). So celebrate the past but plan for the future.

Celebrating change. While we’re celebrating… have a quick read of this reminder from ex-RFer Sophie Metcalfe of the social progress in the decade since same-sex marriage became law. When the change was first considered by the coalition government it had minority support from the British population, but this had risen to 57 per cent support by the time of the first same-sex marriage, and now stands at 78 per cent (the lazy can just check out You Gov’s chart which makes the point). Sophie gives the politicians quite a bit of credit for leading public opinion, whereas I’d mainly say politics has responded to the surprisingly fast shifts in public opinion. But either way the result is a better Britain.

Pondering paint. I know Rishi hates rip-off degrees but TOTC is taking the risk to our future earnings of getting artsy. I reckon we’ll be okay because this study links art to economics. The authors algorithmically analyse approximately one million paintings created since 14th Century, codifying them by emotion and then examining whether there’s any relationship with historical economic/political patterns. It appears depictions of ‘excitement’ seem to correlate closely with GDP per capita over the centuries (I’d be pretty excited if the UK could manage some). Art is also influenced by uncertainty and inequality, plus shorter-term changes: the Napoleonic Wars saw a precipitous rise in depictions of ‘fear’ in French paintings, not seen in British art. Which is all rather interesting, but how useful is it? The authors argue this technology could shed more light on the geographic spread of economic progress through history where hard data is missing. I’m just worried about what it would make of all your Instagram feeds.

Robots recruiting. For a nice counter to the AI-is-coming-to-steal-my-job panic read this ECB report on new technologies and jobs in Europe, focused on what’s happened to employment in occupations highlighted as being most exposed to AI-related automation. Far from shrinking, it finds they’ve actually seen their share of employment rise during the 2010s (there’s no clear evidence of an impact on wages). The jobs growth is driven by younger/higher skilled workers – which is what you would expect if technological change shifts labour demand towards those with more (or more recently acquired) human capital. So no need to panic about AI when it comes to the recent past. The future of course is another question entirely.

Hiding home. The WFH revolution is here – particularly if ‘here’ means an anglophone country. Nick Bloom and his co-authors have done loads of valuable research on the post-pandemic growth in home working (even if he’s much more unambiguously positive about it than I’d be). The latest includes a global survey of WFH patterns. If nothing else check out the very first chart: on average full-time employees work just under one day a week at home but this is much higher in English speaking countries than elsewhere (averaging 1.4 days a week vs well under 1 in the rest of Europe or Asia). Only the Canadians (1.7 days) are doing more home working than us (1.5). Rees-Mogg will be furious.

Chart of the week

The Uxbridge ULEZ result has prompted a lot of debate today. So we’ve got a COTW that highlights both why this kind of policy is needed, and why it’s difficult. The background here for those not paying attention to transport wars in the capital, is that ULEZ is a daily charge on those driving old diesel cars, and really old petrol cars, which contribute disproportionately to the city’s frequent illegally high levels of air pollution. It is being extended into outer London. The case for action here is that air pollution levels aren’t just high, their impact is unequal: as the blue bars in COTW show it’s kids in deprived parts of the capital that would be the big winners from ULEZ (Nitrogen oxide levels around primary schools are 12 per cent higher than the London average in deprived areas). But why is this hard? That’s where the red bars come in, which show that among London households with a car it’s the poorest who are much more likely to own an old one (ie incur a charge for driving into ULEZ areas, or face the cost of replacing their car). Progress on environmental objectives will be central to 21st Century politics, but more will have to be done to protect those on lower incomes from the costs involved. And if you think the politics of cleaner cars is difficult now, I’ve got two words for you: heat pumps. Decarbonising our home heating is when the rubber is really going to hit the road on this front.