Soumaya Keynes reports on the final day of discussions at Talking Economics and the Bristol Festival of Economics. Topics included what to do about the gender pay gap, rising inflation, learning losses among the young, and climate change.
What is the duty of economists when it comes to climate change? Responding to this question from Eshe Nelson (New York Times), Diane Coyle (University of Cambridge and a lead editor of the Economics Observatory) said that economists had lots to offer, though they would be wise to reject the view that solutions should be led by free markets rather than government intervention.
Dimitri Zenghelis (London School of Economics) was less polite. ‘If economists sit there telling everybody it’s going to be prohibitively expensive to save the planet, then everybody behaves as if it is’, he complained, warning that this pessimism could block the kinds of investments needed to deliver innovation. Put another way, economists’ duty is to cheer up.
On the third and final day of the Talking Economics event in Bristol, cheer wasn’t exactly thick on the ground. Karis McIntyre, a student climate activist from Salisbury, said that just 4% of students felt that they knew enough about the climate crisis. Dimitri himself argued that individual action would only go so far in tackling it. Cutting back on holidays or gas-guzzling vehicles might drive prices lower. That could encourage others to increase their consumption and carbon emissions.
Still, there were some smatterings of optimism. When asked what could make companies value their natural capital, the panellists cited the digital advances making it easier for companies to monitor their supply chains. Pushed by regulatory changes or even just reputational risk, companies could start making their suppliers compete over whose supply chain is greenest. And harnessed by the right regulatory framework, market forces could do good.
Private investors are increasingly saying that they would rather not park their cash in dirty assets that could be worthless in the future as they fall on the wrong side of environmental regulation. Anna Valero (Centre for Economic Performance at the LSE) cited evidence that companies that are doing well on sustainability metrics are already being seen as more attractive places to work and getting more job applications.
At a different session on the topic of post-pandemic education, the panellists warned that without action, Covid-19 would leave deep scars. Gill Wyness (University College London) said that children were around 2.2 months behind in maths and 0.9 months behind in reading in primary schools, and even more so in secondary schools. Alice Towle, one of Bristol’s youth mayors, complained about the ‘catch-up work that has not actually caught us up’.
Andrea Arlidge of Futura Learning Partnership, a multi-academy trust in the West of England, said that they were seeing widening gaps in outcomes between children from richer and poorer backgrounds. As boys seem to have found it more difficult to engage with remote learning, the gap in attainment between girls and boys has widened too. Simon Burgess (University of Bristol) attached numbers to the losses, explaining that a year of schooling contributed around 10% to an individual’s lifetime earnings. Assuming children lost around a third of a year of school, only partly made up for with home learning, that could translate into a hit to lifetime earnings of 2-3%.
From the government’s perspective, there are huge potential returns to investing in children now to make up for these lost skills, not least because they are future taxpayers. And they are a big group; from the mid-2030s onwards, the generation whose schooling has been disrupted by the pandemic will account for between a quarter and a third of the labour force.
The next session explored a different sort of scarring, and how working life might be reshaped by the pandemic. Expectations of where people should work have shifted, but not settled.
Henry Overman (CEP) noted that workers tend to say that they want to come into the office between zero and one day a week, whereas employers perfer attendance on four or five days. If workers win, and ties between where people work and live get looser, that could generate fundamental social change. The likes of Bristol, Birmingham and London could benefit if offices concentrate in big cities to which employees can travel two or three times a week. Smaller cities that are more convenient for more frequent commuting from the suburbs could lose out.
The implications of home working could go beyond inter-city competition. Helen Tanner of Data Cubed, a start-up helping small businesses with data, confirmed that workers were getting fussier about work arrangements, in some cases turning down jobs that are not flexible enough. But if people do not want to go to the office, then she could recruit from anywhere – and not just from within the UK.
Discussions just before lunch can falter, as minds drift from the conversation at hand to the sandwich offering. Jagjit Chadha, director of the National Institute of Economic and Social Research (and a lead editor of the Observatory) and Huw Pill, the new chief economist at the Bank of England, held the audience's attention by explaining why now is such a tricky time for central bankers.
Huw told the audience how for most of the past 15 years, the Bank of England’s job has been a straightforward one: persuading the world that the economy would get the support it needed. But now, as the need for super-low interest rates ebbs, things are much trickier. He said that he genuinely did not know how he would vote at the next meeting of the Monetary Policy Committee, which sets interest rates.
Jagjit accepted the presence of huge uncertainties, but said that the Bank of England should outline their own view on where monetary policy was headed over the medium term. (America’s central bank, the Federal Reserve, does this.) But Huw wasn’t keen, saying he didn’t think it would be possible to do it in a way that was honest or transparent about the uncertainty around future monetary policy.
After lunch, the discussion turned to debt. Kate Collyer (Financial Conduct Authority reassured the audience that during the pandemic household debt had mostly been protected and that household savings actually increased – from 9% before the pandemic to nearly 26% more recently. But beneath that rosy headline, a greater share of households reported feeling that they lacked financial resilience.
Gemma Tetlow of the Institute for Government also offered some comfort by explaining why the enormous increase in government debt over the pandemic does not need to be repaid any time soon. The government is not a household, and will live forever, so can smooth out repayments over time. And economic growth should make those easier to deal with in future.
Arun Advani (University of Warwick) agreed that although the pandemic should not prompt significant tax increases, the country's ageing population would. In response to an audience member asking whether there should be a debt jubilee, he pointed out that would mean losses for holders of that debt, including, say, pension funds. Any debt cancellation would mean working out how the pensioners expecting those funds were going to live.
Next was former BBC technology correspondent Rory Cellan-Jones, talking about Always On, his new book about the smartphone era. He reminded the audience how transformational new technologies could be – and how some could be oversold. He recalled holding up the first iPhone – the single most profitable product in history – in a report for the BBC, and being called a medieval French peasant with a piece of the one true cross.
He also remembered paying half a bitcoin (now worth tens of thousands of pounds) for a pizza. Considering future technologies, he seemed most cheery about health tech. But when asked about blockchain, he said he had been waiting for firm evidence that it would change everything, and it had been the coming thing for ‘quite a while’.
The penultimate session of the day zoomed out to the international conflict between America and China. Meredith Crowley (University of Cambridge) framed the tensions as the result of a disagreement about international economic institutions, like the World Trade Organization.
George Magnus (University of Oxford) described them as the result of liberal-leaning democracies having values, standards and beliefs under threat. He warned that too often companies put profit before principle, and that more generally the world should watch out for problems associated with the country's enormous debt, stalling productivity growth and rapidly ageing population.
The Bristol festival of economics closed with a discussion of the division of household labour, a topic that Sonia Oreffice (University of Exeter) reported has only relatively recently become respected within economics. Mary Ann Sieghart offered an indication of its importance, saying that on average men do £167 of unpaid work a week, compared with £260 among women, which adds up to a difference of almost £5,000 per year. Economists often measure the gender pay gap with reference to cash earnings. If they accounted for unpaid household labour, the difference would be even bigger.
The question, of course, is why. Although some economists have historically taken the view that the gap is because of men and women efficiently specialising in paid and unpaid work, Sarah Smith (University of Bristol and a lead editor of the Observatory) suggested that norms around the roles of men and women could be more important. That would help to explain the experience of many during the pandemic, when furloughed fathers in particular spent more time caring for children, while mothers tended to do more child care regardless of their furlough status.
Mary Ann noted that we had spent the past few decades working out how to get more women into paid work. Now the question is how to get more men into the unpaid sort.
From fixing climate change, to squashing the gap in pay between men and women, one might reflect that Talking Economics highlighted the world’s biggest and toughest problems. Or perhaps it showed how much ambition there is to fix them.