Declutter your cupboard if you want, but it won’t save the planet

This article was written by Professor Frank Trentmann from Birkbeck’s Department of History, Classics and Archaeology. It was originally published on The Guardian

clutterIs this the year we finally get to grips with all our stuff? If so, it has been a long time coming. Forecasters and commentators say we have entered a new era where people prefer to share rather than own, and prize experiences over possessions. Retailers worry about the implications for them of a public sated on “peak stuff”. Official figures suggest that Britons are consuming ever fewer resources. And witness the worldwide success of the rationalisation bible, Marie Kondo’s The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organising.

It’s an encouraging thesis with which to start a new year. If only it were true. The talk is of the sharing economy, but the reality is that very little is being done on a large-scale level to reduce our high-consumption lifestyles. While it might feel virtuous to Marie Kondo your wardrobe, we urgently need to address the vast amount of often unseen resources that support our modern way of life.

To be fair, there are some signs of hope. The first repair café opened in Amsterdam in 2009. Since then, a thousand of these places have sprung up across Europe and North America, giving people a chance to share tools, materials and knowledge.

The bulk of the so-called sharing economy, however, follows a different model. On New Year’s Eve more than half a million people on the planet stayed in a home rented via Airbnb. Much of this is not about sharing but about renting and profit. It increases the demand for resources, rather than reducing it. Hotels earn less, but hosts earn more – which they spend on additional holidays. Lodgers save on cheaper accommodation and take more mini-breaks to Florence and Barcelona. Meanwhile, the total number of people owning second homes (and a second set of domestic appliances) steadily rises.

Car clubs have become a common sight. But let’s put it in perspective. In the UK, Zipcar has 1,500 cars. At the same time, Britons bought more than 2.7m new cars last year, more than ever before. Yes, perhaps, young people are less car-oriented today, but it might also just be a lag – housing costs and university fees have gone up and mean that cars are bought at 30, not at 20.

Sharing is not some new paradigm. Modern societies have done it for a long time – from the cooperatives to municipal baths and playgrounds. While growing in some commercial sectors, we are seeing it being chopped down in others, such as public libraries.

The story of “from stuff to fluff” is a similar mix of hopeful thinking and bad history. Visits to film and music festivals have sky-rocketed in the last decade. But let’s remember that more than 12,000 people flocked to the rehearsal of Handel’s Fireworks in 1749 in Vauxhall Gardens, causing a three-hour-long traffic jam on London Bridge. Experiences have been an essential ingredient in the rise of consumption over the last 500 years, from pleasure gardens to football stadiums. Nor is it wise to think of possessions and experiences as separate: since the 17th century, shopping for pleasure has been about making purchase a sensation.

Commentators have been complaining of people accumulating too many possessions since the sumptuary laws of the 15th and 16th centuries. In ancient Rome, Seneca warned the young were being corrupted by the pursuit of things and leisure, and before him so did Plato.

Today, services make up a bigger share of the world economy than ever – more than 40% in value-added terms, compared with 30% in 2008. But this does not mean the volume of goods and merchandise has fallen. It has grown in total, just a bit less fast than services. Since 1998, merchandise trade has more than doubled. More than four times as many containers travelled back and forth between Europe and Asia in 2013 as in 1995.

And a lot of leisure and other “experiential” services depend on material and resources. Zip-wiring in a jungle might feel more virtuous than buying a designer handbag, but you do not get there by teletransportation. In 2007, the French travelled 42bn kilometres to pursue their hobbies and another 12bn to eat out. That takes a lot of fuel.

A hybrid Toyota Prius might save petrol, but it eats up valuable rare-earth elements.

A hybrid Toyota Prius might save petrol, but it eats up valuable rare-earth elements.

Our love of digital services often leads to the idea that these somehow must be ethereal. But behind virtual communication there lurks a lot of physical matter: power stations, data centres, cables, batteries and cooling systems. Our mobile phones and headphones would not work without lanthanides. A hybrid Toyota Prius might save petrol but it also needs 9kg (20lb) of rare-earth elements, and that’s just for its battery. Information and communications technology already account for 15% of the service sector’s electricity consumption in France.

Adam Smith, the great moral philosopher and economist, noted in his 1759 Theory of Moral Sentiments that people spent more and more on “trinkets” and “little conveniences” and then designed new pockets in order to carry a greater number. Today, you can buy magic jackets with a dozen, even 20 pockets, to accommodate a tablet, phone and other digital devices.

We are not dealing here with a peculiarly Anglo-Saxon phenomenon. Contrary to popular image, Scandinavians are not that austere either. In Stockholm, for example, the number of electronic appliances tripled between 1995 and 2014.

The idea of peak stuff rests in part on distorted and inadequate numbers. At the Office of National Statistics’ latest count (2016), the average Briton consumed 10 tonnes of raw materials and products in 2013, down from 15 tonnes in 2001. That looks heart-warming, but is a bit of an optical illusion. For it only counts the materials used in the UK. We are considered to have used more fossil fuel and minerals if we make a car in Luton with British coal and iron and steel than if we import a car made in Brazil or Poland. We really need to know about all the materials used. In effect, since the 1980s, Britain has off-shored the environmental consequences of its own consumption.

What’s needed is a level of thinking and a scale of action commensurate to the problem. By all means, buy fewer gifts next Christmas, but don’t fool yourself that this will accomplish much. Shopping is part of it, but our entire lifestyle is using up resources at unsustainable levels. Consumers carry a big, heavy “ecological rucksack” on their shoulders full of all the materials needed to service their lifestyle. It amounts to between 45 and 85 tonnes a year per person, depending on where you are in the rich world. This includes leisure, travel and comfy homes with central heating.

Changing that lifestyle must be the fundamental focus. This is not impossible; modern history is one rich story of successive lifestyle changes. But these have rarely been the result of individual choices. States and social movements played critical roles, harnessing the power and moral authority of collective opinion. If we are to bridge the gap between aspiration and achievement, this must be their task again.

Further information:

. Reply . Category: Social Sciences History and Philosophy . Tags: , , ,

Did the London 2012 Olympics boost the British economy and make us all happier?

This blog was contributed by Mark Panton, a researcher from the Department of Management at Birkbeck, in reaction to a recent publication by the ONS, which links GDP to special historical events. Mark tweets at @MarkLPanton

olympics-227178_640As a researcher of the use of sport events and stadiums in regeneration projects I was interested in a   recent graphical representation of how special events are linked to UK Gross Domestic Product (GDP) put out by the Office for National statistics (ONS). The representation showed a sharp spike in GDP at the time of the London 2012 Olympics and Paralympics.

There has been a long-running debate within sport management about whether or not hosting major sporting events can have an impact on local or even national economies.  At first sight this ONS graphic, together with its accompanying text, sets out a very positive case for the 2012 Olympics.  The highest growth for nearly seven years in the UK was recorded in the third quarter of 2012 when it increased by 1.1% over the previous quarter.   This included increased output in the food and beverages industries, accommodation, employment agencies and creative arts and entertainments.  Was this conclusive evidence for the economic impact of a major sporting event?

Further explanatory details were provided by a separate ONS document.  Due to an additional day of holiday in June for the Queen’s Diamond Jubilee, there was one fewer working day than usual in the second quarter.  This was estimated to have shaved 0.4% off growth in that period with a ‘bounce-back’ of the same amount in the third quarter.  Another relevant aspect was that the sales of Olympic and Paralympic tickets, clocked up over a long period before the start of the Olympics and totalling £580 million, were all allocated to the third quarter of 2012.  This figure contributed 0.2 percentage points to overall growth.  It should also be noted that the same document details a drop in tourism in this quarter, with a significant dip in numbers visiting London.  Far from the conclusive evidence that might have been imagined from the graphical representation.

However, there was some good news for those looking to stage major events and the local communities. A detailed report by Oxford Economics on the impact of the London Olympics suggested the event may increase residents’ happiness, which could translate into increased consumer spending. This claim was based in part on research linked to the 1996 Euro Championships in England. The report acknowledges that the evidence for such effects is mixed and no figures for increased spending around the London Olympics based on happiness have been found.

Researchers from the LSE did find that Londoners were significantly happier during the Games compared to Parisians and Berliners, but that levels of happiness returned to normal the following year. More critically, researchers in the USA have argued against the use of “psychic income” (emotional and psychological benefits for residents related to sporting events) to support public subsidies for stadiums or events, with the concept being used as the “new frontier in subsidy apologias”. The arguments over the economic and psychic benefits of holding major sporting events are likely to continue.

Listen to Mark in a discussion on Sports stadiums on the Birkbeck Voices podcast.

. Reply . Category: Business Economics and Informatics . Tags: , , , ,

National Living Wage: From Classroom to Newsroom

How teaching from a Birkbeck BSc Economics module ended up in the FT

mouse and ftOn 1 April, 2016 The Financial Times reported the results of a survey of UK economists on whether the government’s new national living wage would do Britain “more harm than good” (against) or “more good than harm” (for).

Professor Stephen Wright, of Birkbeck’s Department of Economics, Mathematics and Statistics, was one of four UK economists whose views were quoted at some length in the article. He has since published his comments in full on his personal web page.

“It was good timing” said Professor Wright. “When I got the email from the FT, a few weeks back, it was the day after I’d delivered a lecture on exactly this topic, so I had all the material to hand”.

The lecture Professor Wright had just given was for the module, “Current Economic Problems”, given to 1st year undergraduates on Birkbeck’s new BSc Economics programme, which admitted its first students in 2015/16. Students receive a lecture on a particular economic problem one week, and then, the following week, are required to give a presentation on some aspect of the problem, speaking on one side of a debate.

As well as helping to improve students’ communications skills, the module is also intended to show students that the economics they learn from textbooks and in lectures can be applied to practical problems faced by policymakers. Other topics covered in the module this year include immigration, “Nudge”, inequality and the gender pay gap – but topics will change every year depending on what is in the news.

Prof. Wright concluded that, on balance, the national living wage could prove harmful – but with the caveat “that the harm may well be as much from muddying the water as from the actual economic damage done.”

Predicting the impact

Working under the premise that the Chancellor of the Exchequer, George Osborne, believes the corporate sector (or more precisely, the low wage corporate sector) should share some of the burden of mitigating poverty, Prof. Wright concluded that basic economic analysis suggests it unlikely to work as advertised: that“…ultimately consumers of goods and services produced by the low wage economy will pay.”

He argued that the most optimistic perspective you can put on this outcome is that such consumers are possibly less likely to come from the lower end of the income distribution, thus if there was zero impact on employment in the low wage sector, the policy would be mildly redistributive. However, if unemployment in the low wage/low productivity sector increases, this effect would be offset.

Acknowledging that the evidence for adverse employment effects of minimum wages is “pretty muddy”, Prof. Wright goes on to explain that, on the basis of standard textbook models, the extent of any employment losses in the low wage sectors will depend on the elasticity of demand for their goods and services. Indirectly the evidence seems to be quite strong that in the long term these effects can be quite large (viz, for example, the steady fall in the number of pubs in the UK, as drinking in pubs becomes progressively more expensive relative to competing activities).

“If the existing low wage sector contracts it is not clear where those working in it (who typically have low productivity and skills to match their low wages) will go to work instead. But just as important I believe, is that these policies muddy the water. Wages are a very blunt instrument to tackle poverty.”

Case study: The London Living Wage

To demonstrate this, Prof. Wright cites the Greater London Authority (GLA)’s calculations of the London Living Wage (“A Fairer London: The 2015 Living Wage in London”). When the GLA calculated living wages ‘bottom-up’ by looking at the consumption needs of different household types, they got very different answers for different households. Indeed, the small print of the GLA calculations show that, given the current system of benefits, their calculated living wage for a family of two working parents is actually below the current minimum wage.

Drawing from this, the FT quoted Prof. Wright’s key conclusion, that “…a single Living Wage, built up from consumption needs, is not a logical construct: if it had any basis at all it should be a set of living wages, for different household types (but with the bizarre implication that, in the current benefit regime, having children would result in a reduction in the relevant Living Wage).”

“My personal view is that poverty reduction for those in work can be, should be, and already is carried out by government benefit policies. The tax credit system was one of the great unacknowledged success stories of Gordon Brown, and I’m pretty sure that it has been the primary factor behind our sustained low unemployment rate, and the resilience of employment during the recession. It seems a shame to start to throw this away just as it has really proved its value.”

Birkbeck is known to provide the highest quality teaching, which can be applied to the workplace. For BSc Economics students on this occasion, what Prof. Stephen Wright was teaching them went from their classroom to a highly respected media publication.

All enrolled students in the School of Business, Economics and Informatics at Birkbeck, University of London can subscribe to FT.com for free through the Birkbeck e-Library.

Further Links:

. Reply . Category: Business Economics and Informatics, Uncategorized . Tags: , , , ,

Chile election: young Chileans have voted for a radical change of direction

This post was contributed by Dr Oscar Guardiola-Rivera of Birkbeck’s School of Law. It originally appeared on The Guardian.

Sunday’s elections in Chile will prove significant, regionally and globally. The centre-left candidate, Michelle Bachelet won nearly twice as many votes as her closest rival, Evelyn Matthei, of the governing rightwing Alliance for Chile. Bachelet, Chile’s president from 2006 to 2010, will have to go through a second-round runoff in December but is expected to win. Meanwhile, a new generation of student leaders – most notably, 25-year-old Camila Vallejo, who helped lead Chile’s student uprising in 2011 – has been elected to Congress as part of Bachelet’s coalition. It is this younger generation that is set to radically transform the direction of the country. In doing so, they’re breaking apart the dominant myths concerning the relation between politics and economics in the region – and in the world at large.

At the national level, the rightwing government of Sebastián Piñera is struggling to understand how, after four years of high growth, fiscal discipline and low inflation – which many would argue are the very measures of success – Chileans failed to award his party another term in office. Some commentators are already beating their chests at the apparent scandal of “irresponsible” Chileans voting the wrong way. Others argue that the conservatives “couldn’t transform a successful government into political success”.

The right’s resounding defeat, however, isn’t simply a case of its inability to tap into middle-class frustration. For some time now, many Chileans have been rejecting the very economic model that Piñera, Matthei and their supporters around the world continue to praise: that there may be change – a transition to democracy, the implementation of human rights, and so on – but only insofar as the “model” stays as it was before.

The “model” is what Chileans call both the economic and paternalistic establishment that emerged under Pinochet’s dictatorship and the myth that underpins it – that nothing can change. The myth is based on the terror and violence following the violent overthrow of Salvador Allende in 1973, and the attempt to erase history and hope from minds and hearts.

Chileans, especially the young, have realised this. They have blown apart the message of good cheer, that if the economy is well, all is well. Their reasoning is clear: the economic model produces wealth for the benefit of the few and widespread unhappiness. In Chile, the wealthiest 5% earn 257 times more than the poorest 5%. Higher education is private and expensive. Parents are left with huge debts, and their children face impossible odds to start a family or envisage a hopeful future.

The Chilean youth have an agenda: free higher education and replacing the Pinochet-era constitution through a self-appointed popular assembly. Some also want renationalisation. However, the rebellion that exploded in Santiago in 2011 is not simply against this or that policy. This is a rebellion against historical compulsion – the idea that no matter what you do, nothing changes.

Vallejo has warned that this will not be a repeat of the same compromise-prone Concertación government, which won every election from the end of military rule in 1990 until Piñera came to power in 2010. A considerable percentage of voters responded to the students’ call for a constitutional assembly. As the new generation of politicians is swept to power, the next step towards reform is given radical legitimacy.

For the region this means that just as the first wave of leftism may be reaching an impasse in Argentina and Venezuela, a second, more profound one is beginning in unexpected parts of Latin America: conservative Chile, ultra-conservative Colombia and moderate Brazil. For the world, this spells the end of the dogma that the economy determines people’s consent rather than the other way around. It is the time of the people once again.

. Reply . Category: Law . Tags: , , , , , ,

Defence policy for an independent Scotland

This post was contributed by Ron Smith, Professor of Applied Economics in the Department of Economic, Mathematics and Statistics.

Scottish independence is a low probability event, but low probability events like the break-up of the Soviet Union or of Czechoslovakia do happen, so it is sensible to do some contingency planning. The Scottish Affairs Committee of the House of Commons has been examining the defence policy for an independent Scotland as part of its enquiry into The Referendum on Separation for Scotland. Together with Professor Malcolm Chalmers of the Royal United Services Institute I gave evidence to the Committee on January 23.

The Scottish National Party, SNP, has suggested a defence budget for an independent Scotland of around £2.5 billion with armed forces of 15,000 personnel. A comparison with other small countries with populations of around 5m, like Ireland, Norway, Denmark or New Zealand suggests that these are reasonable numbers for steady state spending and armed forces. However, the transition to steady state is likely to be difficult.

The sort of equipment that Scotland might inherit from the UK is unlikely to be appropriate for an independent Scotland. The obvious example is the Trident nuclear deterrent, which is located in Scotland on the Clyde, on which the Scottish Affairs Committee has already reported.

Scotland is likely to follow those other small countries which inherited nuclear weapons on separation. Belarus, Ukraine & Kazakhstan all denuclearised, and that is SNP policy.  They had aid under the US Nunn-Lugar Cooperative Threat Reduction program to help them repatriate the weapons to Russia. How one would repatriate Scottish nuclear weapons would be a central issue.

A major problem in the transition is that the military or defence civil servants that Scotland inherits from the UK are likely to have UK preconceptions and a mindset that is inappropriate for a small country like Scotland. They would face the same problems that somebody leaving a large company for a small firm faces. Some of the suggestions that have been made for a possible Scottish force structure reflect that mindset.

Because of the SNP’s commitment to the traditional Scottish regiments, their proposed structure is rather infantry heavy, whereas it is likely that naval and air assets for protection of fisheries and oil fields will be more useful. However the ships and aircraft they might inherit from the UK are not likely to be suitable, so they would need to buy new equipment appropriate for a small country.  Heavy investments in infrastructure may also be needed to provide for command and control, training and intelligence.

My suggestion would be that an independent Scotland should follow the example of the appointment of a Canadian as Bank of England Governor and hire a foreigner. Scotland should bring in a defence planner from somewhere like Ireland, Denmark or New Zealand, who understands how to run the defence of a small country.

. 1 comment . Category: Business Economics and Informatics . Tags: , , , ,