Bouncy floors, sticky ceilings and why you should watch what you search for

Afternoon all,

It’s the knockout stage. In or out. The tension is unbearable. Or just mildly irritating depending on your degree of perspective…. Today’s Brexit showdown at Chequers is set to expose splits in the government and country, but tomorrow’s England game will bring us all back together so it’ll all be fine – right?

To provide some relief from instant Chequers/football takes over the next 48 hours, this week’s reading is biased towards the optimistic and includes thoughtful thinking on British social mobility and some beautiful Swedish charts on how the world is a better place whatever the football result. But we also bring news that if you ever want to get a loan – you better watch out what you do online….

Have a good weekend,

Torsten

Director, Resolution Foundation

Bouncy floors and sticky ceilings. Most political punditry sees the world as one big social mobility disaster. The title of the OECD’s recent and impressively comprehensive report A Broken Social Elevator gave a clue to the preferred narrative. But is the view that everything is getting worse really true for Britain? Former RF Chief Exec Gavin Kelly blogged yesterday with his interpretation of the report, including a finding that has largely been missed: since the 1990s the chance of a low income Brit still being in the lowest income 20 per cent of the population four years later fell significantly. In fact it fell by a greater amount than anywhere else in the OECD. Now it’s not all good news: income volatility can clearly be a bad thing and we’ve shown before that lots of people temporarily move out of low pay but fail to escape permanently. Plus the rich have done even better at staying put at the top – our ceiling got more sticky. But the new evidence is a reminder that we need to think hard, not only about what is actually happening in 21^st Century Britain, but what kind of mobility we care about.

Digital footprints. There’s increasing concern around the uses and abuses of our online ‘footprints’ – from unwise social media impacting on your chance of getting a job, to our browsing history allowing companies to discriminate against us. Now we learn from a great paper that it might matter for our chance of getting a loan in future. It shows that the average person’s online fingerprint does a better job of predicting who will/won’t pay a loan back than the average credit score. Now before we get all technoparanoid, this is good as well as bad news: good because it might help ‘unbanked’ people get access to credit, but potentially bad if this data is used unfairly to discriminate (whether or not that’s deliberate). Remember those suggestions in the winter that people with Hotmail addresses paid more for insurance than Gmail users…

Equal Europe? Inequality across the whole EU has reached its lowest level since 1989. That’s the good news headline from an interesting recent pair of Bruegel blogs (original and recent follow-up).  Before everyone decides this is down to inequality falls in individual countries though – pause. Most of the work is being done by some of the poorer parts of the EU (think Poland) catching up with the higher income levels of Northern and Western Europe. Post-communist states have also begun to undo some of the inequality surge they saw after the collapse of the Berlin wall, but inequality across the older EU members (including the UK) is broadly flat and remains near record highs. The blogs also provides your regular reminder that when it comes to inequality, the US is a basket case…

PS – if you like comparative studies of inequality then we have a book launch event for you.

Things can get better. Here at Resolution we love a good data-viz. Few in the world are better at it than the late Swedish epidemiologist Hans Rosling, whose wonderful book Factfulness is a corrective to many of society’s preconceptions about how much global living standards have improved even in the last quarter-century. Rosling’s website – Gapminder – which is now run by his daughter and son-in-law, has some excellent animated charts like this one which shows how life expectancy and average GDP per capita have improved in the past 200 years. If you need an antidote to the geopolitical doom and gloom in the news, or just love an enthusiastic Swede, the website is well worth a look around.

Chart of the week

One of the big debates taking place in Britain today is about the state of our capitalism. Everyone’s busy questioning it, from John McDonnell to Michael Gove, with a lot of the focus being on whether some big firms simply have too much power. So far (as is rather too common) much of that debate is fuelled by what is happening in the US. Across the Atlantic there is firm evidence that some big “superstar firms” have done well, with implications for competition and even wages. As the chart below from the Economist shows, big firms have come to dominate a bigger share of the US economy over the last twenty years. But what has happened here in the UK? The truth is no-one has looked since the early 2000s – so we’ll be answering that question with a new report out this Wednesday. Watch this space…