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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.
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.
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.
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.
By about 9am last Friday my capacity for surprise had been almost exhausted by the Labour Party’s stunning performance in the General Election. Still, I was a bit puzzled by the phlegmatic reaction of financial markets to the news of a hung parliament.
There was no panicky sell off as we saw last year following the Brexit vote. The fall in the pound was a fraction of that seen last June. The FTSE100 equity index was down over 3% on the Brexit news a year ago; last Friday it rose 1%.
In the wake of the financial crisis the West has witnessed a rise in radical politics of the right and left. One explanation is that the crisis has exacerbated the effects of more longstanding social and economic change.
Two seminal research papers by Nobel Laureate Angus Deaton and Princeton economist Anne Case shed new light on this phenomenon. In a quite remarkable piece of research Deaton and Case examine the effect of adverse economic change, poor education and low social capital on white, working-class Americans.
It is just seven weeks until the UK General Election due on 8th June. Much has changed in the nine months since the UK voted 52% to 48% to leave the EU.
Conservatives and Labour campaigned to remain in the EU but the outcome of the referendum has changed everything. That surprise vote illustrates the power of John Maynard Keynes’, maxim: “When the facts change, I change my mind. What do you do Sir?”.
The polarisation of politics in the Western world has created new challenges to existing political norms. Declining support for established political parties has been paralleled by a growth of alternative, more extreme, parties and politicians. This week we take a look at what voters in the US, UK and Europe are telling pollsters on the big issues.
Mr Trump won a remarkable victory, but he entered office with an approval rating of 45%, a record low for an incoming US President. His rating now stands at 40% compared with an average of 61% for previous Presidents at this stage in their administration.
Gross Domestic Product (GDP) is the broadest and most ubiquitous measure of economic performance. But as a gauge of human welfare it is wanting. Many factors which contribute to welfare fall entirely or partially outside GDP.
Worse still, many things which contribute to unhappiness - such as crime, pollution or poor health - can raise GDP, at least in the short term.
The summer break provides a welcome escape from Brexit and an opportunity to spend some time catching up on reading. Our summer reading list provides six readable, thought-provoking articles to ponder on the beach or by the pool. All are available free and online.
You can save these articles on your 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.