Lower rents, fewer babies and absent asparagus

Top of the Charts

Afternoon all,

It’s always nice to wake up to government advice not to leave your home. It’s like the good old lockdown days, with a major productivity shock thrown in for good measure (the kids came back from Yorkshire a day early yesterday).

At least it’s some light relief from Britain’s leading institutions getting themselves investigated by the Met one-by-one. The police should be giving Prince Charles/Boris Johnson a break anyway, because I bring news of a much bigger crime that needs prosecuting: Resolution only came in 91st in this ludicrously biased ranking of think tank logos. We’ll be appealing to the International Olympic Committee, or anyone else that’ll listen.

Once you’ve survived the shock of that news, and the storm, have a great weekend.

Torsten Bell,
Chief Executive
Resolution Foundation

Falling fertility. In late January the ONS kicked off the latest round of “there aren’t any babies” panic, with the news that “women born in 1990 [were] the first cohort where half of the women remained childless by their 30th birthday” vs. 18 per cent of women born in 1941. Now fewer kids helps climate change-wise, and as Chris Giles points out fewer kids = closing schools = (short term) good news for the Treasury. But it’s not great if people are having fewer children than they’d like. The right traditionally dominates pro-natalism, but there’s a progressive version building up a head of steam. Jeremy Driver has one of the better versions arguing that life is quite good for children in the developed world and fewer kids being born in the developed world = fewer new ideas and the slow death of liberal democracy. Policy-wise the progressive answers aren’t marriage/kids tax breaks, but lower housing and childcare costs so those who want to have kids can do so (and those who don’t can have better holidays). We’ll see more of this in the years ahead.

Restricting rents. On the subject of reducing housing costs, check out a new paper evaluating the implementation of rent controls in some (but crucially not all) municipalities in Catalonia. Long-term rent controls have significant challenges (on the allocation of properties and black markets) but the paper shows the short-term effect was positive, with rents down six per cent and no evidence of a housing supply hit (i.e. falls in new tenancy agreements). The authors note the Catalonian case included effective enforcement, which helps with any policy. The paper is far from conclusive, covering short-term effects during a period of lower rent rises (thanks to Covid), but it’s food for thought.

Independent Ireland. We try to do justice to economic history in TOTCs, and this week we’ve got a great blog (drawing on this paper) on Ireland’s economic performance over its 100 years of independence. Most of us are fairly myopic, seeing Ireland as an economic success story based on our recent experience (with notionally the second highest GDP per capita in the EU). But the authors argue the defining feature of its economy over the century as a whole is volatility. The ups include the Economic War with Britain in the 1930s (which may have actually benefitted Ireland due to a sizeable chunk of their debt being written off), its entry into the European Communities in 1973 and, famously, low corporation tax attracting foreign investment. Weak points include falling living standards post-War; macroeconomic policy failures in the 1950s, 1980s and 2000s. Oh and the 18 per cent GDP fall between 2007 and 2012. Want more big picture economic history? Over a glass of wine? Come along to our event this Wednesday evening discussing how economic and political change has shaped our world with Professor Helen Thompson, the author of new book Disorder.

Connections and capital. Over the past two years the interweb has done an amazing job (or an okay one if we deduct points for Zoom quizzes) in keeping us connected. But its longer-term effect connectiveness-wise is less straightforward, concludes an article that examines the UK’s broadband rollout. The basic argument is that as internet speeds go up, civic engagement goes down.  Not all social capital is affected (it doesn’t trash our close relationships with friends and family), but the effects are large. Between 2005 and 2017, the research concludes that broadband drove a 19 per cent reduction in the chance of being involved in a political party, and a 10 per cent fall in volunteering. So, stop fiddling with Wordle and get out volunteering.

Wellbeing works. Digital tech isn’t all bad. Against all my deeply held priors, it appears these wellbeing app things might actually have some benefits (beyond making money for someone). A new evaluation of a mindfulness meditation app (Headspace) finds it leads to improvements to mental health, productivity, and decision taking. The effects are surprisingly large – not far off those associated with well-established treatments (i.e. cognitive behavioural therapy). The effect also seems to last at least a while after app usage, which is lucky because people’s use of the app doesn’t.

Chart of the Week

This is one of my favourite COTWs, and the first in almost 200 to cover asparagus. Earlier this week we published a report (Conservative Home article here) arguing that our new migration regime (which is likely to mean fewer people coming here for work) will not fundamentally transform the macroeconomics of the UK economy – for better or worse.  But as this week’s chart shows, immigration can have big microeconomic effects – and has done recently for agriculture. Prior to EU expansion in 2004, labour-intensive farming was declining in the UK – we imported soft fruits and used farmland for less labour-intensive agriculture. Post-2004 it was all change – readily available labour meant the amount of land used for growing asparagus trebled in a little over a decade. No wonder the trendy parts of London are pro-migration. So, if the government sticks to its guns on reducing low-paid immigration, the result will be a smaller and different food sector. That’s perfectly survivable (we’ll produce less/differently and import more). But spare me the moral outrage when people find out the strawberries they’re eating at Wimbledon don’t come from Kent…