The Sharing Economy Debate

12 11 2015

Below is a link to a debate I did on the Sharing Economy at the 2015 Battle of Ideas. Thanks to WORLDwrite for filming the event and to the Battle of Ideas for giving me the platform.

The Sharing Economy: Radical capitalism or high-tech pocket money?

The Sharing Economy-Poverty of Ambition

20 02 2015


It is understandable but surely, at the same time, nonsensical for everybody in a town or city to own their own power tools that are barely used. many of us have far too many books on our shelves, most of which will only be read once. Cars sit on driveways or streets for much of their lives. For some,rooms in their homes remain unused. What a waste!

from The Power of Sharing: A Call to Action for Environmentalists

The Sharing Economy is a description for an amorphous and wide-ranging set of businesses and practices across the world. For the purposes of this discussion I will be looking at the main phenomena associated with the Sharing Economy which have developed over the past ten years or so.
There are three observations I would like to make:
1. A lot of what is called Sharing is not really Sharing.
2. Much of what is claimed to be new about the Sharing Economy is not really new.
3. The Sharing Economy, however defined, is not a solution to the big economic problems we face.

So what aspects of the Sharing economy are not really about sharing. Having friends to stay over on a Saturday night is sharing. Handing them a bill with their breakfast makes me a hotelier. Giving somebody a lift is sharing. Charging them for it makes me a cabbie. Lending somebody a tenner until tomorrow is sharing. Charging them 6% interest for it is usury. None of these things are sharing, they are selling. There is nothing wrong with selling, but I suppose the Selling Economy is a tautology. Indeed, the ultimate form of ‘Sharing’ in this sense would be prostitution, although I do not think the IPO for that is imminent.

Why does the misnomer matter? Because of the moral, environmental and ethical claims that are being made for the Sharing Economy. That somehow it is taking us away from traditional forms of ownership and into a new and more cooperative world. If anything it is taking us in a different direction, towards the monetization of everyday transactions between people and a less communal and more individuated approach to the world, as if we are all involved in a permanent car boot sale of our time, skills and possessions.

What can we say is new about the Sharing Economy? There are undoubtedly some great innovations in consumer services, such as JustParking, which make our lives a little easier. Generally these types of services are the product of the Internet and the capacity for disintermediation that it has brought. But disintermediation is a posh word for cutting out the middle man, and there is nothing very new about that. The Internet has undoubtedly changed things by allowing mass peer to peer connectivity and that has definite consumer benefits. However, the real winners in this have been the pirate capitalists who have moved in and used the technology to break up and disrupt existing industries. This has been and will be the story of capitalism, creative destruction. The Internet driven changes are the latest phase of a centuries old economic system, not the harbinger of a new one.

AirBnB has become hugely successful because it has adopted another old truism of the capitalist economy,sweat your assets, do not leave your house empty. Uber is succeeding partly because it has solved a problem that was fixed a while ago in the heavy transport industry, that is do not have an empty vehicle on the return journey. Peer to Peer lending is a more extensive version of the ‘friends and family’ approach to seed funding entrepreneurs and startups. At present Peer to Peer funding does not appear to be able to address the problem which faces most growing businesses once they have got past the start up phase, the step up funding of 2 to 10 million pounds or more of which there is a huge dearth in this country.

These and other innovations are all largely welcome . But they do not point the way to a different world. They all adapt traditional business methods through the use of new technology,and good luck to them.

Lastly, I would say that however smart and innovative some of these new businesses are, they do not have the potential to solve the big economic problems we face. The Sharing Economy really got going because of the recession and the economic pressures and opportunities it helped to create. But Sharing is operating on the periphery of the global economy, not at its centre. The taxi industry undoubtedly benefited from a one-off productivity increase through Uber and its like. But there appear to be few other major industries which can benefit in the same way from this kind of disruption. Also, in the case of both Uber and AirBnB, they have displaced existing services and therefore not contributed to much extra demand in the broader economy.

There is evidence in the United States, which is more advanced than Europe in the Sharing Economy, that many people have been forced into renting and driving cabs because their wages have stagnated and their living standards fallen. They have been driven, literally in some cases , towards Sharing by austerity. Low productivity in many western economies has led to stagnating wages. Inadequate productive investment by both big businesses and governments has been a major factor in causing low productivity. Until the twin problems of low productivity and inadequate investment are addressed the main sharing that is going on will be sharing out the misery.

(This is a version of a speech delivered to PWC on 19 February 2015)

Selfish Whining Monkeys

16 07 2014

Selfish Whining Monkeys by journalist Rod Liddle has had a good duffing-up by reviewers and commentators. Some of his harshest critics are, unsurprisingly, the sort of people Liddle blames in his book for many of the ills of modern life. David Aaronovitch, Will Self and Julie Burchill are among those who have lined up to put the boot in.

Why has Selfish Whining Monkeys, which, in style and content, is very much like Liddle’s popular column in The Sunday Times, had such a hostile response? Liddle could see this as proof that he has hit his target, as most of the hostile reviewers are part of what he characterises as the ‘faux left’, the metropolitan elite who ‘consider themselves left, or leftish, but whose views are either wholly irrelevant to the poorest indigenous sections of our society, or positively hostile towards them’.

And there you have the nub of why Self et al have attacked this book so viciously. The claim against Liddle is that his championing of the white working class, his opposition to immigration and his nostalgia for an overwhelmingly white, prelapsarian 1950s Britain (Liddle cites the decline of organised religion as one of the reasons for our current social malaise) automatically make him a racist. The critics do not prove this claim, preferring, as Aaronovitch does, to notice ‘the sly references to racial characteristics’. Self is subtle enough to suggest that Liddle may be suffering from a kind of false consciousness, that Liddle ‘thinks he believes’ he is not a racist but really he is, as evidenced by his use of words such as ‘tribe’ to describe the Muslim community.

If this sounds familiar it is because it is the same charge that has been made against the UK Independence Party (UKIP) and its supporters over the past year. In many ways, Selfish Whining Monkeys could be a manifesto for UKIP. Each chapter is its own furious polemic against an aspect of modern life – schools, the class system, the aforementioned faux left, the EU, the free market, London. Like UKIP, Liddle professes to give a voice to those who have been disenfranchised by the congelation of political life into a ‘New Establishment’. In his column for The Times, Hugo Rifkind helpfully summed up what this New Establishment stands for:

‘I find myself perhaps belatedly realising, I am a man of strong establishment views. I am broadly Europhile and certainly unionist. That’s only half of it, though. I am also politically correct, feminist, environmentalist and avowedly multiculturalist. It’s a bit of a shock to realise these are all now establishment views; they certainly never used to be.’
Liddle’s crime, in the eyes of the New Establishment, is to claim to speak for those who feel they have been left behind by modern life. These days, as we saw with the media’s relentless campaign against UKIP leader Nigel Farage, this is enough to turn him into a pariah.

But his book is more than a simple Farage-style saloon-bar rant. Like his columns, it is also often very funny, self-deprecating and quick to notice the absurdities of modern life. He reflects on the aftermath of his Spectator column, ‘Dr Liddle’s Casebook’, in which he panned the claims that ME is a physical disease. Among those who wanted him prosecuted for hate crimes against ME sufferers was a woman who, Liddle recounts, was told by police ‘that the man [Liddle] was a well-known arsehole and it was best to ignore him’. ‘So common sense still exists in at least one constabulary, then’, is Liddle’s witty aside.

Liddle’s crime, in the eyes of the New Establishment, is to claim to speak for those who feel they have been left behind by modern life. He also picks up on other, less populist aspects of modern life which he finds distressing, such as the intrusion of the judiciary into political life, the rise of censorship and intolerance (he defends Muslims who burn Remembrance Day poppies in public), and the false ‘choices’ we are offered in public services. In defending democratic rights, especially free speech, he is firmly on the side of the democrats (with the egregious exception of his opposition to freedom of movement).

Liddle’s instinct is that of a satirist. Part of the cause of the vitriol hurled at him is that nobody likes being mocked. But I think what has really infuriated reviewers is that, in the process of mocking, Liddle often transgresses the New Establishment’s most stringent rule: You Can’t Say That.

Selfish Whining Monkeys: How we Ended Up Greedy, Narcissistic and Unhappy, by Rod Liddle, is published by Fourth Estate. (Buy this book from Amazon(UK).)

This review first appeared in Spiked

Iraq-a primer for your children

17 06 2014

thGather around children and I will explain what is happening in Iraq today.

It all began a long time ago when the goodies (us, we are always the goodies, unlike others who sometimes are good and sometimes bad or just always bad) invaded Iraq to get rid of the baddies. Some of the baddies were Al quida(the unspellable), who had begun as goodies in Afghanistan and then became baddies. We thought that if we got rid of King Saddam ‘the weaponless’ of Iraq, Al Queda would be beaten too even although Saddam was an enemy of Al Qieda (go figure).

After a long time and lots of deaths of men, women and children which we regret every one of, the goodies won. When the goodies had won we put another goodie in charge and left. Meanwhile in another part of the forest another baddie, King Assad, was in charge of Syria. This baddie too was against Al kuida when they were fighting him but for them when they were fighting the goodies in Syria. This time we just encouraged the goodies in Syria to get rid of the baddies themselves, with our money plus guns from Saudi Arabia (see below). Lots of men, women and children died which we regret every one of, but this time it was not the we goodies but the they goodies (and the baddies of course) that did it, so phew.

Then the goodies from Syria did a bad, bad thing. Some of them became baddies because they were joined up with Saudi Arabia, which is a goodie that sometimes does BAD things (but not a baddie oh no). Some of these baddies were so bad that the baddie Al queida thought they were too bad even for them. Then these worse baddies crossed over into Iraq and became the new baddies there. It did not help that the goodie we had put in charge of Iraq turned out to be a bit of a baddie himself (you cannot trust these Arabs). Then we goodies went to another  (President ‘evil axis’ Rouhani of Iran) and said, we know you are a baddie, but would you help us with some worse baddies, who are even worse than the ones we thought were the baddies in the first place(Al Quiada). Which is sort of like joining the Evil Axis but not really as we cannot be evil only good (see line 1)

And then we thought, it would be a good idea if the baddies in Syria( Bad king Assad) got rid of the worse baddies in Iraq so that the remaining goodies in Syria (Whom we know well from many agreeable lunches in the Edgware Road) could then get on with beating the baddies in Syria (Bad King Assad) along with the help of the baddies in Iran ( who will help us beat the worse baddies in Syria until we win and then they will go back to just being the baddies in Iran). For our part, we will go to the office and rain down good bombs on everybody’s heads from our drone consoles and many men, women and children will die of which we regret everyone.

And then a strange thing happened.

We began to wonder if maybe King Saddam’the weaponless’ and Bad King Assad had not been so bad after all, and were a bit like the Pharoah Sisi in Egypt, a necessary evil. And even , even that so bad were the worse baddies in Syria and Iraq that Al queeda (who we wanted to get rid of by invading Iraq, see line 1) seemed like not quite so bad in comparison to the worse baddies.….but we are still thinking that one over.

So you see, children, the lesson is that sometimes it is hard to exactly draw the line between good and bad (except when it is us (see line 1)) and sometimes we take up to 5 minutes of thought to decide who is good and who is bad before we wreck countries and create failed states.

Next week’s lesson: Afghanistan, dizzy with success

Why unpaid internship is not slave labour

17 10 2011

MY COMPANY is currently looking for an intern (don’t all apply at once). The reason is simple. We have a job that needs doing that we cannot get our clients to pay us for and, in the current climate, we cannot afford to pay an experienced person to do it. The work we want doing would involve supervision by a senior manager and would involve learning a set of skills that is very saleable in the labour market. Now, if we accept the argument that unpaid internships are wrong then this work will go undone, to the minor detriment of our business, and nobody will get that valuable experience. Who benefits from that?

There have been angry voices raised against internships recently from people who feel that they are badly treated and exploited. I am not going to defend every unpaid internship, as I am sure that there are bad employers of interns as well as good ones (welcome to the world of work). However, in principle, internship can play a useful role for some people in some circumstances. So what are the objectors saying and how should we assess internships?

Some people claim that internship is a form of slave labour, yet there is nothing compulsory about it. Young people make a rational choice to become interns. The calculation is that if you are prepared to invest some time and effort there may be a big pay-off further down the road, through access into highly competitive and popular trades or professions.

Internships don’t replace paid employment. The interns are too inexperienced to be worth paying in most cases. It is a kind of informal modern apprenticeship where it is recognised that most of the value in the relationship is gained by the apprentice rather than the master. One factor which actually deters businesses taking on more interns is that to be of any use they require time spent on showing them what to do and managing them, which amounts to a hidden cost.

Interns gain real benefits from creating contacts and getting experience that would probably not be open to them otherwise. The time invested by businesses on training them, however little it may be, is not necessarily repaid – once interns have some experience, they are more likely to get a job, and not necessarily in the place where they have interned.

Employers are able to gain assessments of young people before committing to taking them on, and vice versa, lessening the chances of mistaken commitments on both sides. Employers can assess the worth of individuals and interns can decide relatively informally whether the particular industry, business or boss is really for them.

A weakness of internships is that they are often restricted to those whose families have prior contacts in certain professions. If internships were formalised and legalised then there would be more opportunities for young people who may be currently excluded because they are outside the current networks of friends and families. A nationwide internship/apprenticeship scheme would be far preferable to young people going straight from school or college onto benefits.

Some of the criticism of internships has come through the widespread practice of using unpaid labour in the creative and media industries, especially in London. I am afraid that far more young people think they can pursue a glamorous career in fields like journalism than can ever be the case. In effect, the mass of wannabe media stars has created a situation where employers in these industries are inundated with talented youth who are willing to work for nothing. It would be helpful to the UK economy, as well as to the young people themselves, if more of them were prepared to learn skills in engineering, technology and science.

I also believe that there is a value to young people in having to accept that life can be a bit of a struggle. The years from 18 to, say, 24 should be a little tough. After all, most kids in our society have been sheltered until then from having to earn a living. If you are a student, that can carry on into your early twenties. There is a whiff of over-entitlement from some of those who complain about internships. I think it is a mistake, for the same reason, to enable young people to leave school and go straight onto the dole. It would be better for them to have no access to dole money until they reach 24.

Of course, with youth unemployment running at record highs, more jobs need to be created for young people – and for all of us, in fact. But this is a different argument involving investment and economic growth, not the use of internships.

(This article appeared in City AM

What is the role of business in society today

22 09 2011

(speech given at PWC in debate with Stefan Stern,Vicky Pryce, Michael Green and David Phillips)

Keynes famously said that practical men are usually the slaves of defunct economists. I am going to prove how practical I am by quoting from two of that ilk.  First Adam Smith in the section of the ‘Wealth of Nations’ in which he discusses the hidden hand of the market, went on in the same passage to say of a businessman:

‘By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.I have never known much good done by those who affected to trade for the public good.’

Karl Marx, when asking himself what was the principal function of capitalists, answered:

Accumulate,accumulate. That is Moses and the prophets!

Now it looks as if we are at the onset of the deepest global slump since the 1930s. Surely the question of this debate, ‘What is the role of business today?’ should be a rhetorical one.  The role of business people in society  today is to grow their companies and through this grow the economy.  Businesses in the UK have around £60b in cash sitting on their balance sheets doing nothing useful. They should be investing more of this in research and innovation than the pitiful amounts they currently are; they should be taking more advantage of the huge new consumer markets in the emerging economies; they should be trying to grow, to create jobs and to raise living standards here and elsewhere. All the wealth of society is created by businesses. Jobs are created not only for those who work in those businesses but also the taxation that pays for education, health and the other public services. A focus on growth and the creation of surplus, or profit; that should be the role of business in society today.

But business has become too cautious to play this role to its full potential. Business today has more cash on its collective balance sheet than anybody can remember, but instead of looking for productive ways to invest it is playing the financial casinos, investing in arcane financial instruments in the vain hope that it can find a safe haven for its cash.

Perhaps it is not surprising that businesses find it diffiulct to focus on their core fucntion.It sometimes seems the main role of business today is to be the whipping boy for every special interest group in society. Business has to be seen to be environmentally aware, morally conscious of its obligations to the developing world, an active force for racial and sexual equality, careful about what it researches into and particular about its use of scientific breakthroughs and new technologies. It seems to have taken on the doctors’ mantra, first do no harm. This is damaging for innovation and growth. These days’ businesses are expected to avoid making a mess in the process of making anything. They seem to have forgotten what the purpose of business is first and foremost making things and developing services. It’s a terrible cliché, but you really cannot make an omelette without breaking eggs.

 If you read the mission statements of many large corporations they will mention their main business in passing before going through a long list of all the ways they are making the world a better place through their corporate social responsibility agendas. You may think that some if not all of these issues are ones that society in general should be in favour of, I may too for that matter. But I fear that this concentration on broader social issues that fall under the CSR area are the wrong ones for business to be focused on.

If you look at some of the corporate disasters of recent years one wonders how much of the damage could have been avoided if businesses were completely focussed on their core business. Would BP have been more careful in the Gulf of Mexico if they had not been simultaneously trying to convince us they were Beyond Petroleum? Would UBS managers have been more likely to have spotted its rogue trader had they not been busy engaged in human rights, the environment and empowerment, all key objectives
according to their website. Not to mention producing a 44 page document on the proper way to dress for business. I remember sitting through an address about how wonderful Toyotas’ environmental policy was at the precise time its cars were accelerating off the road while their terrified drivers were helpless.

Directors and managers, like all of us, have limited attention spans and limitations to what they can concentrate on. I would like to see more businesses sticking to their knitting. Now some might say that all the CSR is superficial, pandering to an external agenda, a kind of box ticking exercise. If that is true then CSR is just a cynical PR exercise, if it is not then it takes up management attention that would be better spent on its core business. Either way it is wrong. Let the politicians and the campaign groups argue for and legislate for a better society, business should get on with business.

Those who are really interested in global wellbeing should consider this: the average global wage is around £5000 per annum. In order to bring that average up to £25,000, the average wage in the UK, the global economy would have to grow by a factor of 5. This growth is what would make the real difference to the people we aspire to help in underdeveloped parts of the world.

By the way, it would also be a good idea if politicians and others laid off those dynamic sectors of our economy, pharmaceuticals, bio engineering, energy and aerospace for example which are often treated as if they are the spawn of the devil. Without these progressive industries we will be truly condemned to a desolate economic future.

Business has become far too risk-averse in every way, too cautious to take chances with innovation, too scared to make risky investments in case of upsetting interests groups, too distracted and too cowardly all round. It has lost the confidence to say that the business of business is business.It is going to take an enormous amount of risk taking and innovation to get this economy  out of its slump, caution and risk aversion are standing in the way.

Happiness is (about to be) overrated

11 01 2011

I have to be careful here. A few years ago I spoke at a discussion on happiness and passed the flippant comment that I had not been happy since 1963 (a reference to Philip Larkin as I am sure you all know). After the discussion I was approached by a man who,  identifying himself as a therapist,  offered to help me with my ‘problem’ of unhappiness.

So to be clear, this piece is not about my own state of mind, which those who know me well will confirm is that of a sunny optimist who can only see the bright side of life. It is rather about the intention of the UK government and others to find a new and better way of measuring the wealth of nations, not through the present measure of growth, GDP, but by adding in some as yet undefined way of assessing the happiness or state of well-being of the nation.

Tim Harford, in his excellent summary of the current discussion, makes the point that all of the information that the government purports to want to find out in its new ‘happiness’ initiative is already available from numerous other official surveys. So, if the information already exists, why has the government decided to make a public issue of surveying ‘happiness’ at this moment in time?

The ‘happiness’ debate is a product of the coming together of two different but connected social phenomena. One is the pervasive sense of ‘limits’ which imbues much of contemporary society, the idea that we are reaching the end of the road of exploitation of the earth’s natural resources, that we need to learn to be more sustainable and less dependent on material growth.

The second is the recession and  the very real impact on our lives, here in the west, of the cutbacks in living standards which we are beginning to experience. When we face a future of stagnant  growth and financial pain how tempting it must be for those in government to try to convince us that growth is not what we need, or indeed that it may even be a hindrance to our happiness and well-being.

I am not suggesting that this is simply a cynical ploy by Cameron and others. They undoubtedly have been influenced, as have many people in our society, by the idea that the value of material wealth is overstated and that we should all be looking to other aspects of our life for solace. (Although, I  doubt that this will lead Cameron and his wealthy chums to forswear their own vast riches along the path to a supposed happier existence.)

It would also be wrong to dogmatically assert that all that matters in life is money. Of course, there are many aspects of our daily life which give us pleasure and a degree of contentment that do not depend on money. Most of us get a sense of well-being from achievement and a feeling of control over our lives. But I am opposed to a happiness index precisely because  those kind of things are not measurable in any meaningful way, they are mainly subjective and often temporary and individualised.

The importance of economic growth and its measurement, in GDP, is that it is measurable. It gives an approximation of how dynamic a society is, how much wealth is being created, how productive its people are being.  Wealth creates possibilities which do not exist otherwise. If you look at the world today the nations which have the most human longevity and the best health are the most developed ones. Generally speaking those countries also have the most stable and democratic institutions and the most flourishing cultural activities. This is because wealth creates spare time and spare cash, time and money which can be used to pursue other things than the mere struggle for subsistence that occupies much of the world’s population even now. Economic development  transforms the nature of work from being dangerous, long and tedious to safer, better remunerated and less time-consuming.

The development of a bandwagon around the ‘happiness’ debate at this time is a tacit recognition by the ruling elites in the west that they have lost faith both in their belief in economic development and in their ability to maintain economically dynamic societies. They would like us all to stop pushing for more, to accept austerity and to learn to love it. It is an acquiescence to stagnation at every level in western society. They would like to encourage us not only to accept this stagnation but to call it happiness.