WeWork wobbles as Warren woos workers

Top of the Charts

Afternoon all,

Tory/Labour conferences* are done. Brexit is not. But you have to take what closure you can get. Labour had a lot of policy, but not a lot of unity, while the Tories managed unity on Brexit and not a lot of policy (a higher minimum wage was the big exception).

Just like journalists and lobbyists desperate to get back home after the fortnight of bad hotels and bad booze, TOTC is glad to be back on its home turf of interesting reads from around the world of economics and politics. This week we’ve got some valuable (and not so valuable) tech, a plan to boost unions and our call for some 21st Century fiscal rules in Chart of the Week.

Finally, some extremely valuable personal advice – there are some cracking job opportunities going at RF. What’s more, there’ll be more coming up shortly. Bookmark this page and get applying.

Have a good weekend,

Torsten Bell,
Chief Executive,
Resolution Foundation

* for those that can’t get enough of party conferences the SNP are kicking off conference-wise on the 13th.

Warren for Workers. Elizabeth Warren loves a bit of wonkery. This week she set out her manifesto to increase worker power (summary). If you want to settle down to read it don’t even think about just having a cup of tea – you’re going to need the whole pot. There are plans to extend employment rights, tackle firms falsely classifying employees as ‘independent contractors’, put workers on boards and tackle anti-union laws and practices. The plan also shares with the UK Labour Party a very big, but very vague, commitment to wages being determined via sectoral collective bargaining. The Democratic primary has a long way to run but Warren seems intent on maintaining the policy shock and awe from start to finish.

Banking on Women. I hadn’t seen this 1964 Bank of England booklet entitled “A CAREER FOR WOMEN” before. It’s well worth a read as an insight into life five decades back, with some lessons for today. It includes the promise that “In recent years far-reaching changes have been made in the conditions of service for women in the Bank which are gradually opening the whole field of work to them, enabling them to enter into competition with men for the higher posts”. Wind forward to 2019 and how does the Bank’s Monetary Policy Committee look? 8 men. 1 woman. It’s slow, this progress thing.

Despondent activists. If you don’t ask, you don’t get. That’s the theory behind a recent study from Alice Evans at King’s College London, which argues that a lack of radical reform for an extended period creates a vicious cycle in which activists lower their expectations, campaign for less ambitious outcomes, and reinforce the lack of major progress. They fall into what the author calls the despondency trap. In contrast, when hopes are raised by other ground-breaking reforms (e.g. in another country), more radical campaigns become the norm and potentially bigger reforms follow. The study here uses the example of recent French legislation imposing liability on businesses unless they reduce risks of human rights and environmental abuses in their global supply chains. Its cause was France-specific, but it has inspired similarly radical campaigns across Europe.

Liking Facebook. Facebook is free (we just suck up the ads), but what would people pay for it? $67 (just over £54) for a week is the ludicrously high answer from a field experiment of 1,765 people (or, more accurately, university students). For a sector where regulation is coming (see this interesting new paper) this is a reminder of why it’s hard – the public wants protecting, but also values the product a lot. The study goes further to look at the impact on our news consumption and wellbeing. On the plus side for Facebook, it shows that if you switch off the app for a week we not only consume less news but also do a worse job of recognising politically-skewed news. Less welcome probably is the finding that using Facebook induced feelings of depression. Our Intergenerational Centre will be exploring this issue among many others in a new series of events.

We (don’t) work. You’ve probably heard something about the unravelling of tech giant/co-worker space pioneer WeWork and its attempt at a massive IPO. But it’s hard to stay on top of all the gory details of how its $47bn valuation crashed to earth. This great long read lays them out in painful detail – including the company’s prospectus claims that “Our mission is to elevate the world’s consciousness”. Given that its mission was actually to provide a fairly expensive desk, this degree of guff should have been a warning sign long ago….

Chart of the Week

In politics the public finances get a lot of attention (though less than they did a few years back). In particular economists, commentators and government focus on the level of government deficit (how much we borrow each year) and debt (our total stock of borrowing built up over the years).

But there’s a strong case for reconsidering this approach given changing economics and politics. On the politics side it doesn’t really work for a world in which John McDonnell wants big nationalisations and Sajid Javid is desperate to announce as many infrastructure projects as possible. Properly thinking about these policies means focusing on the value of what’s being bought and built, alongside the debt increase to buy or build it. Otherwise we just focus on the mortgage and not enough on what the house is worth. On the economics side it doesn’t do justice to the explosion in our government balance sheet in recent years, as this week’s chart spells out. A narrow focus on debt misses a lot of the real action – ignoring many assets (RBS shares, hospitals, and roads) and wider liabilities (PFI, pensions, and environmental clean-up costs).

In a new RF report, we argue it’s time for some 21st Century fiscal rules that take all of this into account. In pubs up and down the country people are should be saying “it’s time to talk balance sheets, guys”.