51st thing that made the modern economy

Tin can
Invention lies at the heart of industry and economics. The question of what systems best foster innovation and which innovations have the greatest effect on economic welfare have long occupied economists.

Over the last year the author and economist Tim Harford has presented a BBC radio series describing the fifty innovations he believes have ‘made the modern economy’.

Some entries that are less surprising than others. The dynamo, radar, battery and robot feature, but so too, do seller feedback, Ikea’s Billy bookcase, management consultancy and double entry bookkeeping. In making his choice Mr Harford has a preference for ideas that have made an impact in subtle or surprising ways.

Many of the great innovations have to come to fruition through a haphazard and serendipitous process. The final application of a technology is often distant from what its originator had imagined. Ideas build on themselves, in a chaotic and free-market fashion, with countless failures and dead ends along the way. The writer Matt Ridley memorably described this as ‘ideas having sex’.

To conclude his series Mr Harford asked listeners to send in their own additions to his list. Here’s the six entries from the six members of the Economics Team and a short explanation.

The assembly line

The assembly line method has revolutionised manufacturing, enabling complex machinery and goods to be produced more efficiently and at significantly lower cost. Many attribute its birth to the Henry Ford‘s Model T but it existed in less sophisticated versions for centuries before cars came along. As early as the 12th century, workers in the Venetian Arsenal produced ships by moving them down a canal where they were fitted with new parts at each stop. As well as making mass production possible, the assembly line method has led to the birth of specialised parts manufacturers and enabled geographically diverse supply chains. The European tradition of taking holidays in August is another consequence as workers on assembly lines had to go on holiday simultaneously, shutting down entire factories.

Continue reading

Posted on 18/09/2017

Don’t overdo the productivity pessimism

Innovation picture


Economists disagree on lots of things, but on one thing at least there is a consensus. Productivity, or the efficiency of production, is the main driver of human welfare. The data bear this out. Consider that growth in living standards in the UK since the late nineteenth century has been driven entirely by rising productivity. It is not surprising that improving productivity is the Holy Grail of economic policy.

Continue reading

Posted on 12/09/2017

Summer summary

Monday Briefing Summer Summary

With the return to work underway here’s our summary of the key developments in the global economy and in politics over the summer.

On the economic front the mood has been fairly positive, with activity nudging higher led by the euro area, Japan and emerging markets. Unemployment has fallen in Europe, North America and Japan since June. The VIX index, a gauge of financial market uncertainty, is close to a 25 year low. In the last three months global equity prices have risen by 5% and the euro by 4%. The dollar and the pound have continued to soften. Copper and oil prices rose over the summer, the later buoyed by Hurricane Harvey.

Continue reading

Posted on 04/09/2017

Europe’s cheapest housing market – Portugal or a UK region?

Monday Briefing Cityscape
UK house prices have recovered from the slump that followed the financial crisis. According to the Office of National Statistics UK house prices have risen 45% since their trough in March 2009.

Over the same period earnings have risen by just 16% making life tougher for first-time buyers and those trading up in the housing market.

Continue reading

Posted on 29/08/2017

Have older people stolen their children’s future?

MB House
Fairness between generations is a hot topic. There’s a widespread sense that older and retired people have come through the last ten years in better shape economically than younger people.

Some believe older people, and the state, have virtually rigged the system for their benefit. The titles of a recent an influential book by David Willetts, a former Conservative Minister, sums up the mood: “The Pinch: How the Baby Boomers Took Their Children's Future - And Why They Should Give It Back”.

Continue reading

Posted on 21/08/2017

Be happy – pay someone to do your chores

MB Washing machine
Do you have enough leisure and free time?

If the answer’s no, you are not alone. Most of us feel time pressured and, often stressed in our lives.

On the face of it this is surprising. Most us have more free time and work fewer hours than ever.

In 2016 the average UK worker put in 266 fewer hours a year than in 1970, equivalent to reducing the working year by over seven weeks. It’s a similar story across Europe, and working hours have also declined in famously workaholic societies like the US, South Korea and Japan. In many countries, especially in Europe, holiday entitlements have also improved.

Continue reading

Posted on 14/08/2017

Holiday edition

MB Bee
With the summer break upon us here are ten facts to sprinkle into your holiday conversations.

  1. There is a common misconception that for a Brit making a card transaction overseas in sterling is cheaper than using the local currency. Martin Lewis of moneysavingexpert.com    reports that, in fact, it is almost always better to make card transactions in the local currency. Even if the currency conversion provider waives its commission it usually uses an exchange rate with a significant mark-up over that offered by Visa/MasterCard for sterling transactions.

 

Continue reading

Posted on 07/08/2017

Global growth and trade are looking up

Global growth_MB
Growth in world trade has been pretty lacklustre in recent years. Much of this weakness has been due to the hangover from global financial crisis. Political hostility to trade liberalisation, shortages of finance and sluggish growth rates have all weighed on exports.

When we last wrote about this, in late 2015, global trade volumes were growing at the slowest pace ever seen outside a recession.

Continue reading

Posted on 02/08/2017

Why we should worry less about the spectacular stuff

Monday Briefing Risk

The world seems like a much more uncertain place today than it was before the financial crisis. The International Monetary Fund reckons that macroeconomic risk is running at twice the level it was before the failure of Lehman in 2008. The backwash from the crisis, debt-laden governments, low productivity and risk averse businesses and banks, has spelt weaker growth.

Continue reading

Posted on 24/07/2017

Summer reading list

Monday Briefing_Summer reading_flower
With the holiday season almost upon us we are launching our summer reading list. The Economics Team read dozens of articles to come up with our top six picks for summer reading. All are available free and on-line. You can save these articles on your iPhone or iPad's reading list by opening the links on Safari and tapping on the share arrow next to the address bar. To print these articles please use the print icons, where available, on the webpages to ensure the whole article comes out. The Monday Briefing will continue to run throughout the summer.

Continue reading

Posted on 17/07/2017

Post-election dip in UK business confidence

CFO Survey image_Maze
The latest Deloitte survey of UK Chief Financial Officers, released this morning, shows a fall in business optimism in the wake of the General Election on 8th June.

Despite speculation that the result of the election could mean a closer long term relationship between the UK and the EU, CFO concerns about Brexit have risen.

Continue reading

Posted on 10/07/2017