Feels like being a student, going to 3 lectures (by other people) in one week. A very adept short lunchtime lecture to a packed Darwin Theatre by Allan Penn on Who enjoys shopping in Ikea? Good fun and surprisingly critical of how IKEA is manipulating its users. Anyone keen to get an instant intro to space syntax would enjoy this and it is online here (audio streaming only). The video is here: http://www.youtube.com/watch?v=NkePRXxH9D4 and the relevant paper is here:
Then two events at LSE, one good, one trivial. In their Monday afternoon series on London (which is both a public event and a class) Ian Gordon reported some work in progress on the ‘escalator effect’ in the London labour market. I don’t recall major surprises but it was dense with interest on just who and how, through moving to the London region and being very aspirational, do better in their material careers, money wages etc, even if they subsequently moved elsewhere in UK. (Moves abroad lost I think). To do it, people need what he called ‘ambition’, perhaps a mixture of nerve and ability and energy. Strong correlation with family class position measured by parent’s (or was it father’s) position. Bad news for poor in all regions, including London. Watch out for text and/or slides on the LSE web site http://www.lse.ac.uk/collections/LSELondon/ Quite good discussion, including the conclusion that displacing the poor from London was essential to make room for more of these escalator-people . Apart from that, however, nothing, on rent/land/assets which I’m sure soak up much of the “benefit”. This affects how one talks about policy implications: if all the benefits go to the workers concerned or to their employers then it’s (in conventional terms of maximising national income) a Good Thing from a national point of view. But if some or all of the benefits are converted into rent and much of that capitalised as asset value growth then it’s not. I guess I’m talking like Ricardo on the Corn Laws. Ian and I had this subsequent exchange:
Dear Ian, Very enjoyable talk and I shall watch out for the slides appearing on the web site.
I had a strong feeling of uneasiness, however, about your policy interpretations but couldn’t crystallise the feeling in time to express it.
I feel a bit clearer after a night’s sleep. My concern is this (and it rather echoes the concern I had about the Working Capital analysis a decade ago, which you’ll remember).
It’s about the omission of the property markets from the analysis and of rent from the analysis of real and money income generation, productivity and so on.
This enormous concentration of personal self-improvement, of ambition-oriented employees and employers in the GSE is inextricable from the fuelling of rental growth in the GSE (residential and non-residential). And there is a two-way process in which the asset value growth in the latter process channels economic power upwards in the wealth distribution and also away from employers towards the owners of commercial property.
This has an important bearing on the policy implications of what you are finding. What appear to be productivity / output gains from agglomeration may just flow to (in general) rentiers.
Anyhow I’ll follow it with interest, Michael
He replied nicely: Thanks for coming and for the response. I think a large part of the point of doing such presentations is actually to get stimulating (and frustrated) responses from you, to make me think – even if rather slowly. I’m sure that, somewhere deep down, Andrew B-P must think the same – or at least John Lett does.
Many thanks for the final statements to the EiP [ link ] – sorry I did not contribute more actively, but (however little gets changed) Just Space is something to be proud of, and build on – as more people will recognise next Monday night.
As far as ‘policy interpretations’ in last night’s presentation went, I think that (at best) they were stretching points, in the interest of trying to suggest relevance. There are clearly connections to the rather crude strategic choices I mentioned, even though nothing particular about them follows from what we actually know at present. I am, however, trying to sell the ‘life chances’ version of people not places matter – for which I had a first stab at generating some simple relevant numbers in the attached conference paper, which I’m fairly sure I’ve not tried on you before (I like the hint that equilibration might be quite effective for a range of positive outcomes, but not for the most negative ones). And, I would like to push the question of how/how far we can distinguish between productivity and opportunity structure explanations.
On your continuing attempt to educate me about property factors/processes (where I am especially weak), I should say that I have no problem, conceptually, with the notion that all the benefits of place-specific increments to productivity accrue to property owners (big and small) – or, though I find it harder to grasp, with the likelihood that some investment interests manage to acquire property assets that will appreciate most in consequence, in advance of ‘the market’ noticing. In relation to acquisition of human/social capital, I am less clear, but I guess that I believe that most of the rewards for increases in this accrues to its owners, at least where they have a mobility option, but that any greater effectiveness of efforts at personal advancement made possible by the London context (higher place-specific productivity in the self-advancement process) ought also to accrue to the property-owning class, via higher ‘rents’ which have to be paid by all non-owners, including the great majority of workers who won’t be moving far up the escalator.
This all sounds very neo-classical, but is it coming close to what you are looking to say ? or are there quite other factors/arguments that need to be brought in ?
M.E. No. I think your summary very fair. I tend to view it as a modernised kind of class struggle, though, in which the people on the down escalator and stuck at the bottom do get screwed. The trouble with LSE is that the sections don’t connect. Paul Cheshire would contribute a lot on this because he’s always emphasising the damaging effects of “rent-seeking behaviour”. He’s no marxist but he does see how property markets work.
Time to see another dissertation student, but I look forward to continuing my slow acquisition of more usable knowledge via enjoyable interactions (maybe next time with some alcoholic assistance). Ian END
The third lecture was the first in what is supposed to be a high-profile LSE series, complete with usherettes in red teeshirts [who put up banners which blocked the screen and couldn’t retrieve the screen when it suddenly rolled itself away in mid-lecture]. It was a talk by the head of the new Spatial Economics group, a Prof Henry Overman: How did London Get Away With it? The Recession and the North-south Divide. It was a jocular and rather superficial canter through some reasons why standard measures of London’s (and the wider region’s) economic health had been quite buoyant through the recession, despite the pessimistic prognostications of most economists back in ’07. The flavour was a bit as though inter-regional competition were, literally, a competition, like the football premiership (to which there was a witty reference) in which “we” have avoided relegation. It was a rather triumphalist talk, and appreciated by much of the audience which, as the speaker said, were presumably the kinds of people who had survived or done well. Only in the very last slide, about which he said virtually nothing, was any reference made to the loosers. The most interesting part of the talk was where he reported an estimate of the effective subsidy to the banks (over and above the bail-outs and nationalisations) of the de-facto government guarantee of the Big 5 (too big to fail) banks. This guarantee acts by way of lowering their borrowing costs and I think he quantified it at a further £110bn, with beneficiaries rather concentrated in London and the South East.
There was some good discussion, including some raising of the moral tone from Alex Jones (Centre for Cities) and of the intellectual tone from Ian Gordon. There was a good deal of dissatisfaction in the room. The effects on loosers and on other regions did begin to get some attention, but it was a bit hopeless. I felt too daunted by the weight of orthodoxy and complacency in the hall to speak up.
My own hunch at the moment is that, for many (half?) Londoners the worst is yet to come. I’ve been insisting since 07 that it will be a double-dip recession at UK level and perhaps I’ll prove wrong about that, because capital’s capacity to bounce back and make money (tho not necessarily jobs) out of adversity is so remarkable. But the big attack on the social wage, coming on top of the falling real wages of most people and on top of growing unemployment are really going to be severe, and it will be spread over three years if the coalition hangs on. That’s what some of us wanted the London Plan Examination in Public to re-consider on its last day. But they refused. [ Link ]