Unhappy apps, perilous potholes, and raiding Taylor Swift’s swear jar

Morning all,

It’s been an expensive week for HM Treasury. There’s the PM’s pledge to raise defence spending to 2.5 per cent of GDP, putting the peace dividend that has seen military spending shrink from 7 per cent of GDP in 1948 to a bit over 2 per cent today into partial reverse. That dividend is how health spending has risen from 2 to 8 per cent of GDP over the same period, without a tax surge.

The government claims the increase is fully funded, but it’s only funded by the same thing underpinning my ‘retire before 70’ plans: wishful thinking – in this case pretending that already implausibly tight public spending plans for after the next parliament can be made even more implausible by swallowing a chunky rise in defence spending.

At least HMT can tell itself that 2030 is a long way off… more immediately the Chancellor wants to knock another 2p off national insurance pre-election – which costs twice as much as the higher defence spend. The backdrop to this splurge-athon? News that tax revenues aren’t coming in as strongly as hoped in recent months… No-one needs an early election as much as fiscally anxious Treasury officials.

I, however, don’t want one because June and July are already looking mega busy – it’s now only two months until Great Britain? How Do We Get Our Future comes out. I’m excessively excited. We’ll organise a special event just for TOTC readers around the launch and please do pre-order if you’re interested in understanding the hole Britain’s in and, more importantly, how we get out of it.

Have a great weekend.

Torsten

Fiscal freebies. You’ll have seen the never-ending coverage/celebration of 2024 as a big year for democracies – with elections galore. The IMF aren’t celebrating, for the same reason as HMT: elections can be expensive, as incumbents slash taxes/up spending and oppositions promise to. In their latest Fiscal Monitor (decent blog version) they argue that, with global public debt nine percentage points up post-pandemic, it would be nice to avoid the usual pattern that sees “deficits in election years tend to exceed forecasts by 0.4 percentage points of GDP, compared to non-election years.” Good luck with that.

Mobile money. Forget all the oil and gas, Norway’s real advantage is… detailed tax data, making possible studies that we could never replicate in the UK. For an example check out new work using a quarter century of those tax records to examine how much wealth mobility people experience over their lifetimes. The majority (63 per cent) are sticky – staying at top or bottom of the wealth distribution their whole lives. It’s parental wealth that largely predicts who is stuck where. There is a lot more mobility within the middle of the wealth distribution – and that mobility is driven by outcomes in the world of work, with human (rather than parental) capital strongly associated with who does well. Whose downwardly mobile wealth wise? Unsuccessful entrepreneurs.

Pothole politics. Our roads are collapsing. It’s hard to do a focus group on any topic at present without Britain’s one million potholes being raised, as both a daily annoyance and symbol of the country’s decline. So, I’m a big fan of Philip Cowley’s short article for the House Magazine on the politics of potholes. Using analysis from America, it asks whether there are political penalties for pothole proliferation. Yep is the answer provided by the city of San Diego where, in areas of the city whose roads were crumbling the most (judged by the volume of complaints), voters were less likely to support those currently in power. Each pothole complaint knocked 0.2 percentage points off the incumbents vote share. Now in Britain it’s not as clear to punters whether national or local government are to blame, but the sheer scale of the problem points toward a (sorry in advance for this one) bumpy road ahead for incumbents.

Wellness wins. What are we going to do about the state of the nation’s mental health or wellbeing more broadly defined? Not rely on the current fashion for corporate support for individual employees suggests a paper questioning the efficacy of well-being interventions within workplaces. While noting that previous studies of specific interventions have shown small positive impacts, the author uses survey data from 233 organisations and finds that activities/interventions such as mindfulness, time management, coaching and well-being apps have little or no lasting effect on participant wellbeing. Volunteering was the only activity delivering a real wellbeing boost. I’m not sure it should be much of a surprise that the intervention that involved actually doing something, often with other people, is most beneficial. It’s just possible that the answer to all our problems isn’t yet another app…

Sunless season. You know what would perk me up more than a wellness app? Some sodding sunshine. I wasn’t sure if I was factually accurate in venting about this being a particularly gloomy spring, but I’m glad (sad?) to say that the team have found evidence that my moaning is fully justified. New DESNZ (worst department acronym ever…) data (turn to table 7.3) reveals that the first quarter of 2024 has been the second least sunny since 2001, with only 2013 having even greyer days. Then again the sun is out this morning, so maybe better times lie ahead.

Chart of the week

How shall we pay for all the government splurging going on? We’ve got a new, innovative, answer for governments around the world… a raid on Taylor Swift’s massive swear jar. As COTW – courtesy of @stephsmithio – shows, Ms. Swift has become increasingly potty-mouthed in recent years. We haven’t seen this kind of exponential growth since Chris Whitty terrified the nation with his ‘next slide please’. TOTC is a bit worried about where this all ends. Will it be possible to still discern all the wistful warblings of heartbreak on her next album, or will they be lost in a wave of cussing? Now, we wouldn’t be a cutting edge think-tank if we didn’t explore the macro drivers behind Ms. Swift’s bad language. While we await funding for such a project, which will obviously require tickets for all Resolution staff to attend the UK leg of her Eras tour, our initial analysis has found a clear causal link weak correlation with falling life satisfaction in the US. So, not only does Taylor Swift speak for a nation, she swears for one too…