Poor neighbourhoods, powerful firms and missing research on race Top of the Charts 28 May 2021 Torsten Bell Afternoon all, Heavily emotionally conflicted this week. On the plus side is the news that the sun does in fact exist. But the combination of self-isolating after a Covid contact (tests all negative fear not) and Dominic Cummings’ omni-dumping on the Government inevitably drags you back to the traumas of last year – before the vaccine triumph encouraged our collective amnesia about staggering numbers of deaths to kick in. Overall, while the filtering of his evidence to the select committee through personal bile is deeply unedifying, encouraging some reflection and remembering is very far from a bad thing – as COTW shows, the costs of our failure is not something to be swept under the ancient history carpet. Now I’m off camping/bike-packing with the kids next week, so TOTCs will be taking a break. But I have total confidence in your self-control to space this week’s reads out over the fortnight. If the last year has taught us anything it’s patience. Enjoy the sunshine everyone, Torsten Bell Chief Executive Resolution Foundation Interesting interest. It’s got more expensive for government to borrow since the start of the year (the interest rate on 10-year UK gilts is up 65 basis points). Should we be worried? Not so much is the answer from the Bank of England’s Gertjan Vlieghe in a thoughtful speech this week. Partly that’s because the increase is 1) relatively small, and 2) just undoing the falls during the pandemic as recovery optimism arrives. On the current hot debate about inflation, Jan notes that the increase in inflation expectations is largely short-term (and larger in the US than here) – and that it would be signs of people expecting lastingly high inflation which would be the main cause for concern. Level locally? The ONS has got a treat for data visualisation fans this week, with an impressive release on neighbourhood level income deprivation. It does something unusual – focusing on inequality between neighbourhoods that are close to each other rather than the gaps between different regions that tend to get the headlines. One important reminder you’ll get which is missing from the whole “cities are paved with gold” nonsense currently out there: it’s our cities and poorer parts of the coast where income deprivation is most concentrated. Look up your own neighbourhood and enjoy the ONS’ homage to the famous maps of poverty around the turn of the 20th century from Charles Booth’s of London to Seebohm Rowntree’s of York. Grey wall. Labour’s problem is older voters, is the argument in a thoughtful blog post from FlipchartRick. Now at one level this is obvious (age has been the growing divide in UK politics for some time) but it does seem to get lost in the commentary claiming the Tories are getting loads of working class votes. While the traditional role of class or income in determining voting behaviour has weakened, the idea it’s flipped into lower income workers voting Conservatives is nonsense. Across the population as a whole income makes little difference to voting patterns (except for the very richest and very poorest being more and less likely to vote Conservative respectively). But take out retired voters and, while Labour’s vote share is still fairly flat by income, Conservative support rises steeply with income (those earning over £150k are more than twice as likely to vote Tory as those earning under £10k). Labour may no-longer be the party of the working poor, but the Conservatives certainly aren’t either: they are the party of the old. Researching race. This week marks the anniversary of George Floyd’s death, after a year in which his murder by a White police officer sparked global conversations and protests about racial injustice. Against that background, new research encourages some self-reflection in the world of economics. We’ve touched before on the question of who economists are, but the focus here is on what they do. The article shows that the proportion of race-related research in economics is low: political science journals publish double, and sociological journals six times, the research on race that their economics equivalents do. And 90 per cent of economists think that more research is being done on race than is actually taking place (the true figure is just under 2 per cent of economic research since the 1970s). What the article doesn’t tell us, but we need to know, is why issues of race receive so little attention. Which market? Are our economies becoming more dominated by a few large firms? Yes is the answer given by the bulk of recent (US focused) research, which finds that the market shares of the biggest domestic firms have grown. Our own work on the UK finds similar results, at least when it comes to the very biggest firms. These results are often taken to mean that competition has reduced. But a new study fills in an important gap in research – asking whether competition on this measure has actually fallen once we take into account that not all firms are domestic (i.e. imports are competition for domestic producers). It finds that overall market concentration was actually flat between 1992 and 2012 in the US, as more foreign firms entered the market. Of course, the findings of these studies are consistent: modern capitalism hasn’t necessarily made our product markets less competitive, but globalisation has increased the average size of the biggest firms that are able to succeed in the bigger global marketplace. Chart of the Week Ignore all the personal score settling, the main takeaway from Dominic Cumming’s seven-hour testimony is an important truth that “tens of thousands of people died, who didn’t need to die.” While some feel that is an unreasonable conclusion about the decisions regarding the first lockdown, it is unquestionably true taking the pandemic as a whole. We’ve previously shown how delays to the second hard lockdown alone may have led to over 20,000 additional deaths. And the deaths that followed our failures to lockdown early enough were far from equally felt. The old of course were most at risk. But the concentration of deaths in the poorest areas is shocking: the death rates in the most deprived parts of the country are around four times higher than in the least deprived areas, as this week chart spells out. That fact is an indictment of our unequal country, and our collective wish to forget that the last year ever happened.
