A personal view from Ian Stewart, Deloitte’s Chief Economist in the UK. To subscribe and/or view previous editions just google ‘Deloitte Monday Briefing’.
With the holiday season upon us this week’s Briefing provides a list of articles and podcasts designed to offer a change of theme during your summer break. Our choices below are free, although some websites may have restrictions on how many articles can be read without charge.
June Huh dropped out of school at 16 to become a poet. He later took six years to finish his bachelor’s degree. Now, he’s won the Fields Medal – the highest honour in mathematics. This article from Quanta Magazine tells the story of one of the most prolific mathematicians of our time and his unique working style, which involves just three hours of focused work every day.
The western world is experiencing a bout of unusually high inflation. In the UK, it is expected to peak at 13% this winter and drive the sharpest squeeze on disposable incomes in 70 years. Now, consider life in Argentina, where inflation has averaged over 100% and the currency has changed five times in the last 100 years. This New York Times article brings to life the effects of chronically high inflation on how people spend, save and think, creating a truly peculiar economy.
Oil has been extracted from the ground in East Texas since the turn of the 20th century. This Wired article explains how entrepreneurs in the area are now betting on storing carbon in those same rocks in order to combat climate change. Carbon capture, which scientists say is essential if we are to hit net zero goals, involves hoovering up carbon from the atmosphere, compressing it into liquid form and injecting it back into the ground to store it permanently.
The success story of the internet is usually told through the achievements of Google, Facebook and Amazon. But, as one of the first successful ‘platform’ companies, which organised its community of users into a market, eBay laid the foundations for the transformation of the internet into one of the most important marketplaces today. This Guardian article tells the story of eBay and how it survived the dot-com crash.
In 1970, 92% of American 30-year-olds earned more than their parents had done at that age. By recent estimates, that figure now stands at 50%. Why has social and intergenerational mobility slowed so sharply in the US? According to Harvard economist Raj Chetty, it is due to the growing impact of social capital on incomes and other determinants of living standards. In this podcast, he explains how just moving families with young children from impoverished to mixed income areas can have a dramatic effect on health, education, employment and incomes in adulthood.
The vibrance and economic benefits of living in modern cities are well documented. But densely populated urban areas were once seen as a sign of unhealthiness and poverty. This article outlines the history of our perception of cities, from earlier stigmatisation to their reimagination as hubs for art and cultural activity. In doing so it highlights the enduring appeal of city life.
Germany’s dependence on Russian gas leaves it dangerously exposed to the prevailing mood in the Kremlin. This Guardian article identifies policy misjudgements stretching back 50 years that have contributed to Germany’s vulnerability today. A number of these policies, such as the ‘Ostpolitik’, a détente with Soviet-bloc countries initiated by Willy Brandt in the 1960s, were based on the idea that authoritarian regimes can be transformed through trade.
A hundred years ago, Sadie Alexander became the first African American woman to earn a PhD in economics. She subsequently trained as a lawyer and became a leading opponent of racial discrimination. This podcast from The Economist looks at her economic thinking and how it influenced her work as a campaigner and her role as a member of the President’s Committee on Civil Rights established by Harry Truman.
P.S. One of the most pressing decisions facing Britain’s new prime minister next month will be on countering the impact of soaring energy prices on UK households. The £15bn government package of cash payments announced last May was generous at the time but looks wholly inadequate given the subsequent rise in energy prices. As well as the sort of cash payments seen in May’s UK package, governments elsewhere in Europe are trying a variety of approaches: Germany is rationing energy this winter; France has nationalised the remaining part of the energy company EDF which was in private ownership; Spain and Italy have set limits for air conditioning in some venues while Spain and Portugal imposed wholesale gas price caps. The IMF, and many economists, believe that rising energy prices should be allowed to feed through to consumers, so creating incentives for conservation, with consumers being provided with extra support to meet higher costs. Focusing help on lower income households through benefits is cost-effective, though could miss those outside the benefit system on ‘middling’ incomes who also face a severe squeeze. If any new support package delivers a significant boost to overall demand the Bank of England could react by raising interest rates even more aggressively – creating an unusual situation in which fiscal and monetary policy are pulling in opposite directions.
