Crushing morale, killing productivity – why do offices put up with meetings?

Simon Jenkins in The Guardian


Just off to a meeting? Stop right now. Turn back. You will be stuck in an overheated room, chained to a table for an absurd length of time and stopped from proper work. Worse, we are now told that just sitting there is a killer. It shortens life. You will die.  

According to Public Health England, we are so addicted to meetings that we don’t realise the threat they pose to ourselves and our organisations. Its chief executive, Duncan Selbie, told this week’s annual meeting that sitting in meetings “haemorrhages productivity”. It slows metabolism and affects the body’s capacity to regulate its sugar and thus blood pressure. This leads to obesity, diabetes, cancer … and death. So don’t do it. Don’t go.

The Get Britain Standing campaign agrees. It says that sedentary office activity is now as dangerous to health as smoking. It takes an hour of exercise to eliminate the toxins built up in one round-table session. Meanwhile, the Columbia University Medical Center this week produced a no less alarming statistic. After tracking 8,000 individuals in all walks of life, it concluded that inactivity for 13 hours a day (including sleep) makes “risk of death” 2.6 times more likely than it is for inactivity of less than 11 hours.

The best meeting is spent walking, like in The West Wing. (The fact that all West Wingers seem on the verge of a heart attack is apparently irrelevant.) Mike Loosemore of the Institute of Sport, Exercise and Health rather desperately advises regularly standing up and getting a glass of water. Neanderthals must be laughing themselves sick at what Homo sapiens has to do just to survive.

While we can take that with a pinch of salt, it feeds a wider meetings malaise. All the revolutions of the internet – Skype, Facebook, Twitter – have not diminished humankind’s craving to gather in tedious conclave. Executives ruthless towards workplace productivity are careless of their own offices. Meetings are the cocaine rush of the corporation. I am told there are scores of executives at the BBC, an institution famously addicted to the meetings culture, who are so high on the stuff that they spend the entire day in meetings, and return home with no one any the wiser, except those who pay their salaries.
It is half a century since C Northcote Parkinson first addressed the meeting as social anthropology, yielding his celebrated “coefficient of inefficiency”. It calculated that a meeting of just five people was “most likely to act with competence, secrecy and speed”. Few such bodies exist because five swiftly expands to nine: and two of the nine tend to be “merely ornamental”, people whom no one has the heart to exclude.

Above nine, said Parkinson, “the organism begins to perish”. Once the meeting reaches 20 people, it may as well go on to 100, since by then most of those present are not contributing. They are spectating, talking to each other, squabbling or forming lobbies. Nowadays many are peering at their phones or tablets – pretending to take notes, or frantic not to fall asleep. All are praying for “any other business”.

Management research on meetings is uniformly hostile, yet like most research it has not the slightest practical effect. A recent study by Microsoft, America Online and Salary.com found that the average person works only three days a week. The rest of working time was regarded as wasted, with “unproductive meetings” heading the list. Workers on average regard a third of any meeting as pointless.

Minnesota University’s “decisions” guru, the psychologist Kathleen Vohs, has shown that most executives have a limited stock of “cognitive resource”. It depletes over time, like physical energy. People get impatient, they tire and take worse decisions. Curiously, they leave feeling exhausted, despite hours spent doing nothing at all. Four-hour board or “strategy” meetings are probably disastrous to the firm, inducing torpor, claustrophobia and misjudgment.

Yet still recruits arrive from management schools and consultancies, brilliant zombies doped to the eyeballs in presentations “delivering strategic solutions going forward by thinking out of the box”. They are like chateau generals, kept well away from the front line, versed in the parlour games of the articulate classes. They are for coffee and biscuits, not the watercooler.

Nothing is likely to cut this flab. The meeting has become the ceremony of executive importance: who calls it, who chairs it, who presents to it, who is invited and who is not. Its status is a classic cause of office “fomo” – fear of missing out. It soon develops its Harlequinade, the bad jokesmith, the unstoppable talker, the maddening interrupter, the toadies, bad-mouthers, extroverts and those who just sit in silent despair. None is producing goods or services. In short the meeting is the office as religion. Its sacraments, creeds and acolytes are found in agendas, minutes and note-takers. Its liturgy is the canticle of the PowerPoint. The modern office even has its ritual sanctuary, the “meeting room”: 11.00 for matins, 2.30 for vespers.

Describing meetings as “secret killers of productivity”, Forbes magazine recently suggested they be simply banned, or held “only on Wednesdays” – all other decisions to be taken in absentia. Anyone who needs to be consulted – the “coordination” role of meetings – will find out soon enough. If not they don’t really need to know. The few brave organisations that have experimented with this drastic step report phenomenal improvements in workrate. One worker who said that if he missed a meeting, “my boss would probably kill me”, was told: “In that case he probably should.”

The number, length and size of meetings must be a sound Parkinsonian indicator of an organisation’s productivity or decay. The FTSE or the government should publish an annual league table of meetings per employee per week. It would illustrate the thesis by economist Joseph Schumpeter that all organisations have a natural lifecycle: they grow, they fatten, they ossify into meetings, and they die – unless funded by the state.

I bet Apple had few meetings in the early Steve Jobs days, but I bet it has thousands now. If so, as Parkinson warned of all who broke his laws, sell the shares. As for that meeting, skip it – and live.

The myths about money that British voters should reject

Ha Joon Chang in The Guardian


Illustration: Nate Kitch


Befitting a surprise election, the manifestos from the main parties contained surprises. Labour is shaking off decades of shyness about nationalisation and tax increases for the rich and for the first time in decades has a policy agenda that is not Tory-lite. The Conservatives, meanwhile, say they are rejecting “the cult of selfish individualism” and “belief in untrammelled free markets”, while adopting the quasi-Marxist idea of an energy price cap.

Despite these significant shifts, myths about the economy refuse to go away and hamper a more productive debate. They concern how the government manages public finances – “tax and spend”, if you will.

The first is that there is an inherent virtue in balancing the books. Conservatives still cling to the idea of eliminating the budget deficit, even if it is with a 10-year delay (2025, as opposed to George Osborne’s original goal of 2015). The budget-balancing myth is so powerful that Labour feels it has to cost its new spending pledges down to the last penny, lest it be accused of fiscal irresponsibility.

However, as Keynes and his followers told us, whether a balanced budget is a good or a bad thing depends on the circumstances. In an overheating economy, deficit spending would be a serious folly. However, in today’s UK economy, whose underlying stagnation has been masked only by the release of excess liquidity on an oceanic scale, some deficit spending may be good – necessary, even.

The second myth is that the UK welfare state is especially large. Conservatives believe that it is bloated out of all proportion and needs to be drastically cut. Even the Labour party partly buys into this idea. Its extra spending pledge on this front is presented as an attempt to reverse the worst of the Tory cuts, rather than as an attempt to expand provision to rebuild the foundation for a decent society.

The reality is the UK welfare state is not large at all. As of 2016, the British welfare state (measured by public social spending) was, at 21.5% of GDP, barely three-quarters of welfare spending in comparably rich countries in Europe – France’s is 31.5% and Denmark’s is 28.7%, for example. The UK welfare state is barely larger than the OECD average (21%), which includes a dozen or so countries such as Mexico, Chile, Turkey and Estonia, which are much poorer and/or have less need for public welfare provision. They have younger populations and stronger extended family networks.

The third myth is that welfare spending is consumption – that it is a drain on the nation’s productive resources and thus has to be minimised. This myth is what Conservative supporters subscribe to when they say that, despite their negative impact, we have to accept cuts in such things as disability benefit, unemployment benefit, child care and free school meals, because we “can’t afford them”. This myth even tints, although doesn’t define, Labour’s view on the welfare state. For example, Labour argues for an expansion of welfare spending, but promises to finance it with current revenue, thereby implicitly admitting that the money that goes into it is consumption that does not add to future output.

 ‘It is a myth that, despite their negative impact, we have to accept cuts in such things as disability benefit, unemployment benefit, child care and free school meals.’ Photograph: monkeybusinessimages/Getty Images/iStockphoto

However, a lot of welfare spending is investment that pays back more than it costs, through increased productivity in the future. Expenditure on education (especially early learning programmes such as Sure Start), childcare and school meals programmes is an investment in the nation’s future productivity. Unemployment benefit, especially if combined with good publicly funded retraining and job-search programmes, such as in Scandinavia, preserve the human productive capabilities that would otherwise be lost, as we have seen in so many former industrial towns in the UK. Increased spending on disability benefits and care for older people helps carers to have more time and less stress, making them more productive workers.

The last myth is that tax is a burden, which therefore by definition needs to be minimised. The Conservatives are clear about this, proposing to cut corporation tax further to 17%, one of the lowest levels in the rich world. However, even Labour is using the language of “burden” about taxes. In proposing tax increases for the highest income earners and large corporations, Jeremy Corbyn spoke of his belief that “those with the broadest shoulders should bear the greatest burden”.

But would you call the money that you pay for your takeaway curry or Netflix subscription a burden? You wouldn’t, because you recognise that you are getting your curry and TV shows in return. Likewise, you shouldn’t call your taxes a burden because in return you get an array of public services, from education, health and old-age care, through to flood defence and roads to the police and military.

If tax really were a pure burden, all rich individuals and companies would move to Paraguay or Bulgaria, where the top rate of income tax is 10%. Of course, this does not happen because, in those countries, in return for low tax you get poor public services. Conversely, most rich Swedes don’t go into tax exile because of their 60% top income tax rate, because they get a good welfare state and excellent education in return. Japanese and German companies don’t move out of their countries in droves despite some of the highest corporate income tax rates in the world (31% and 30% respectively) because they get good infrastructure, well-educated workers, strong public support for research and development, and well-functioning administrative and legal systems.

Low tax is not in itself a virtue. The question should be whether the government is providing services of satisfactory quality, given the tax receipts, not what the level of tax is.

The British debate on economic policy is finally moving on from the bankrupt neoliberal consensus of the past few decades. But the departure won’t be complete until we do away with the persistent myths about tax and spend.

Populism is the result of global economic failure

Larry Elliott in The Guardian


The rise of populism has rattled the global political establishment. Brexit came as a shock, as did the victory of Donald Trump. Much head-scratching has resulted as leaders seek to work out why large chunks of their electorates are so cross.

The answer seems pretty simple. Populism is the result of economic failure. The 10 years since the financial crisis have shown that the system of economic governance that has held sway for the past four decades is broken. Some call this approach neoliberalism. Perhaps a better description would be unpopulism.

Unpopulism meant tilting the balance of power in the workplace in favour of management and treating people like wage slaves. Unpopulism was rigged to ensure that the fruits of growth went to the few not to the many. Unpopulism decreed that those responsible for the global financial crisis got away with it while those who were innocent bore the brunt of austerity.
Anybody seeking to understand why Trump won the US presidential election should take a look at what has been happening to the division of the economic spoils. The share of national income that went to the bottom 90% of the population held steady at around 66% from 1950 to 1980. It then began a steep decline, falling to just over 50% when the financial crisis broke in 2007.

Similarly, it is no longer the case that everybody benefits when the US economy is doing well. During the business cycle upswing between 1961 and 1969, the bottom 90% of Americans took 67% of the income gains. During the Reagan expansion two decades later they took 20%. During the Greenspan housing bubble of 2001 to 2007, they got just two cents in every extra dollar of national income generated while the richest 10% took the rest.


Those responsible for global financial crisis got away with it while those who were innocent bore the brunt of austerity

The US economist Thomas Palley* says that up until the late 1970s countries operated a virtuous circle growth model in which wages were the engine of demand growth.

“Productivity growth drove wage growth which fueled demand growth. That promoted full employment which provided the incentive to invest, which drove further productivity growth,” he says.

Unpopulism was touted as the antidote to the supposedly-failed policies of the post-war era. It promised higher growth rates, higher investment rates, higher productivity rates and a trickle down of income from rich to poor. It has delivered none of these things.

James Montier and Philip Pilkington of the global investment firm GMO say that the system that arose in the 1970s was characterised by four significant economic policies: the abandonment of full employment and its replacement with inflation targeting; an increase in the globalisation of the flows of people, capital and trade; a focus on shareholder maximisation rather than reinvestment and growth; and the pursuit of flexible labour markets and the disruption of trade unions and workers’ organisations.

To take just the last of these four pillars, the idea was that trade unions and minimum wages were impediments to an efficient labour market. Collective bargaining and statutory pay floors would result in workers being paid more than the market rate, with the result that unemployment would inevitably rise.

Unpopulism decreed that the real value of the US minimum wage should be eroded. But unemployment is higher than it was when the minimum wage was worth more. Nor is there any correlation between trade union membership and unemployment. If anything, international comparisons suggest that those countries with higher trade union density have lower jobless rates. The countries that have higher minimum wages do not have higher unemployment rates.

“Labour market flexibility may sound appealing, but it is based on a theory that runs completely counter to all the evidence we have,” Montier and Pilkington note. “The alternative theory suggests that labour market flexibility is by no means desirable as it results in an economy with a bias to stagnate that can only maintain high rates of employment and economic growth through debt-fuelled bubbles that inevitably blow up, leading to the economy tipping back into stagnation.”

This quest for ever-greater labour-market flexibility has had some unexpected consequences. The bill in the UK for tax credits spiralled quickly once firms realised that they could pay poverty wages and let the state pick up the bill. Access to a global pool of low-cost labour meant there was less of an incentive to invest in productivity-enhancing equipment.

The abysmally-low levels of productivity growth since the crisis have encouraged the belief that this is a recent phenomenon, but as Andy Haldane, the Bank of England’s chief economist, noted last week, the trend started in most advanced countries in the 1970s.

“Certainly, the productivity puzzle is not something which has emerged since the global financial crisis, though it seems to have amplified pre-existing trends,” Haldane said.


Bolshie trade unions certainly can’t be blamed for Britain’s lost productivity decade. The orthodox view in the 1970s was that attempts to make the UK more efficient were being thwarted by shop stewards who modeled themselves on Fred Kite, the character played by Peter Sellers in I’m Alright Jack. Haldane puts the blame elsewhere: on poor management, which has left the UK with a big gap between frontier firms and a long tail of laggards. “Firms which export have systematically higher levels of productivity than domestically-oriented firms, on average by around a third. The same is true, even more dramatically, for foreign-owned firms. Their average productivity is twice that of domestically-oriented firms.”

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Populism is seen as irrational and reprehensible. It is neither. It seems entirely rational for the bottom 90% of the US population to question why they are getting only 2% of income gains. It hardly seems strange that workers in Britain should complain at the weakest decade for real wage growth since the Napoleonic wars.

It has also become clear that ultra-low interest rates and quantitative easing are merely sticking-plaster solutions. Populism stems from a sense that the economic system is not working, which it clearly isn’t. In any other walk of life, a failed experiment results in change. Drugs that are supposed to provide miracle cures but are proved not to work are quickly abandoned. Businesses that insist on continuing to produce goods that consumers don’t like go bust. That’s how progress happens.

The good news is that the casting around for new ideas has begun. Trump has advocated protectionism. Theresa May is consulting on an industrial strategy. Montier and Pilkington suggest a commitment to full employment, job guarantees, re-industrialisation and a stronger role for trade unions. The bad news is that time is running short. More and more people are noticing that the emperor has no clothes.

Even if the polls are right this time and Marine Le Pen fails to win the French presidency, a full-scale political revolt is only another deep recession away. And that’s easy enough to envisage.

What is productivity and why is the UK's so poor?

Larry Elliot in The Guardian

The shortfall in productivity compared with other developed economies has long been Britain’s economic achilles heel. It is a problem that Conservative and Labour chancellors have been grappling with for decades.

Productivity is a guide to how good a country is at delivering the goods and services that are bought and sold. Technically, it is the rate of output per unit of input, measured per worker or by the number of hours worked. In layman’s terms, it is a measure of what goes in and what comes out.

In some sectors, productivity is easy to measure. A factory that makes 1,000 cars a day with 50 workers is twice as productive as a factory that requires 100 workers to do the same job. In other parts of the economy, assessing whether productivity has improved is harder and less objective.

At face value a fast-food joint that employed the same number of chefs to cook the same number of hamburgers as they did a year earlier would not be showing any increase in productivity. But if the quality of the hamburgers improved, that would be a productivity gain and statisticians would try to capture the improvement in the official figures.

There are a number of ways in which a firm can make itself more productive. It can invest in new machinery that makes the production process more efficient. It can employ more highly skilled staff. It can train workers so that they can fully exploit the equipment they are using.

It is through productivity improvements that living standards rise. For many years, the annual increase in productivity in the UK averaged around 2%, although there were periods when it was lower and periods when it was higher.

Each year since the early 1990s, the Office for National Statistics has published an international comparison of productivity. This showed that UK productivity was 9% lower than the average of the other six members of the G7 (the US, Japan, Germany, France, Italy and Canada) but this gap narrowed to 4% by the time of the 2007 financial crisis.

Since then, however, productivity in the UK has barely grown and the gap with the rest of the G7 has widened to 18%. The gap with Germany is 35% and with the US 30%.

There have been a number of explanations for the dramatic deterioration in productivity: the availability of unskilled cheap labour has deterred firms from investment; the poor quality of UK roads, railways and broadband network; the shrinkage of the financial sector, which had been a source of high-productivity jobs in the boom before the 2007 crisis; and the misallocation of capital to “zombie” firms kept alive by ultra-low interest rates rather than to dynamic new enterprises.

The government’s autumn statement document states that improving productivity is the “central long-term economic challenge” for the UK. Philip Hammond, the chancellor, has identified better infrastructure, technology and skills as the foundations for doing so, which is why he unveiled a new £23bn national productivity investment fund and backed Sir Charlie Mayfield’s productivity council in his autumn statement. But this is a goal that requires long-term investment and commitment.

Is it the Populists who threaten Democracy - or is it the Technocrats?

Mark Blyth - Brown University

Nobel prize winners’ research worked out a theory on worker productivity – then Amazon and Deliveroo proved it wrong

Ben Chu in The Independent


Financial incentives are important. We all know that’s true. If you were offered a job that paid £10 an hour and then someone else came up offering to pay you £11 an hour for identical work, which one would you choose?

Most of us would also accept that well-designed employment contracts can get more out of us. If we could take home more money for working harder (or more effectively), most of us would.

Bengt Holmstrom won the Nobel economics prize this week for his theoretical research on the optimum design for a worker’s contract to encourage the individual to work as productively as possible.

The work of Holmstrom and his fellow Nobel laureate, Oliver Hart, is subtle, recognising that the complexity of the world can cause simplistic piece-rate contracts or bonus systems to yield undesirable results.

For instance, if you pay teachers more based on exam results, you will find they “teach to the test” and neglect other important aspects of children’s education. If you reward CEOs primarily based on the firm’s share price performance you will find that they focus on boosting the short-term share price, rather than investing for the long-term health of the company.

Holmstrom and Hart also grappled with the problem of imperfect information. It is hard to measure an individual worker’s productivity, particularly when they are engaged in complex tasks.

So how can you design a contract based on individual performance? Holmstrom’s answer was that where measurement is impossible, or very difficult, pay contracts should be biased towards a fixed salary rather than variable payment for performance.

Yet when information on an employee’s performance is close to perfect, there can also be problems.

The information problem seems to be on the way to resolution in parts of the low-skill economy. Digital technology allows much closer monitoring of workers’ performance than in the past. Pickers at Amazon’s Swansea warehouse are issued with personal satnav computers which direct them around the giant warehouse on the most efficient routes, telling them which goods to collect and place in their trolleys. The devices also monitor the workers’ productivity in real time – and those that don’t make the required output targets are “released” by the management.

The so-called “gig economy” is at the forefront of what some are labelling “management by algorithm”. The London-founded cycling food delivery service app Deliveroo recently tried to implement a new pay scale for riders. The company’s London boss said this new system based on fees per delivery would increase pay for the most efficient riders. UberEats – Uber's own meal delivery service – attempted something similar.

Yet the digital productivity revolution is encountering some resistance. The proposed changes by UberEats and Deliveroo provoked strikes from their workers. And there is a backlash against Amazon’s treatment of warehouse workers.

It is possible that some of this friction is as much about employment status as contract design and pay rates. One of the complaints of the UberEats and Deliveroo couriers is that they are not treated like employees at all.

It may also reflect the current state of the labour market. If people don’t want to work in inhuman warehouses or for demanding technology companies, why don’t they take a job somewhere else? But if there are not enough jobs in a particular region, people may have no choice. The employment rate is at an all-time high, but there’s still statistical evidence that many workers would like more hours if they could get them.

Yet the new technology does pose tough questions about worker treatment. And there is no reason why these techniques of digital monitoring of employees should be confined to the gig economy or low-skill warehouse jobs.

One US tech firm called Percolata installs sensors in shops that measure the volume of customers and then compare that with the sales per employee. This allows managements to make a statistical adjustment for the fact that different shops have different customer footfall rates – it fills in the old information blanks. The result is a closer reading of an individual shop worker’s productivity.

Workers who do better can be awarded with more hours. “It creates this competitive spirit – if I want more hours, I need to step it up a bit,” Percolata’s boss told the Financial Times.

It’s possible to envisage these kinds of digital monitoring techniques and calculations being rolled out in a host of jobs and bosses making pay decisions on the basis of detailed productivity data. But one doesn’t have to be a neo-Luddite to feel uncomfortable with these trends. It’s not simply the potential for tracking mistakes by the computers and flawed statistical adjustments that is problematic, but the issue of how this could transform the nature of the workspace.

Financial incentives matter, yet there is rather more to the relationship between a worker and employer than a pay cheque. Factors such as trust, respect and a sense of common endeavour matter too – and can be important motivators of effort.

If technology meant we could design employment contracts whereby every single worker was paid exactly according to his or her individual productivity, it would not follow that we necessarily should.

Why the economic consensus on Brexit is flawed

Ashoka Mody in The Independent

Consensus amongst economists quickly unravels. In April 1999, “Britain’s top academic economists” voted strongly in favour of switching from the pound to the euro. Mercifully, the government had better sense.

In August 2008, Olivier Blanchard, then a professor at Massachusetts Institute of Technology, reported that economists shared a common vision of macroeconomics “because”, he said, “facts do not go away.” But in 2014, reflecting on the failures of macroeconomics, Blanchard conceded that economists were “fooled” because they were not looking at the right facts.

In the past few weeks, virtually all official agencies have insisted that leaving the European Union — a British exit or “Brexit” — will impose enormous costs on the British. Indeed, these agencies have competed with each other in escalating the cost estimates.

Christine Lagarde, Managing Director of the International Monetary Fund (IMF), pithily summarised the consensus: the consequences of Brexit, she said, would be “pretty bad to very, very bad”.

The UK Treasury, the Organisation for Economic Cooperation and Development (OECD) and the IMF say it is a “fact” that Britain will be permanently poorer because it will trade less with the EU. In a terrifying warning, the Bank of England added that financial markets will panic and create senseless havoc.

Adding comic relief, George Osborne predicts that house prices will fall by 18 percent. Not to be outdone, G7 leaders say that the world economic system, as we now know it, will fall apart if Britain exits the EU.

Michael Mussa, my first boss at the IMF, used to say that a number must pass the “smell test” if it is to be used for making decisions. Conducting a “smell test” requires going back to core principles. When we do that, we reach a humbler conclusion: economics is neutral on whether to leave or remain. The battle for Brexit must be fought on other grounds.

All economists – not just the current protagonists – agree that a country gains by increasing its overall international trade. Greater trade makes it possible to produce more of and export what the country does best (its comparative advantage) and import what it does less well. Everyone gains.

But there is no gain in exporting to Germany, Spain and Poland rather than to the United States, Korea and China. In fact, if preferential access diverts trade away from the United States to Germany, then departure from the country’s comparative advantage hurts rather than helps, as Columbia University’s trade theorist Jagdish Bhagwati has long argued.

So the claim that Brexit will impose a huge cost rests on the twin beliefs that British trade with Germany will go down sharply and trade with the United States will not increase. Is that reasonable?

First, British trade with Germany will not decline significantly. As economists have long known, trade is embedded in business and social networks into which partners invest enormous social capital. Studies repeatedly show that businesses make accommodations in profit margins to retain the benefits of trust and reliability.

For this reason, all productive trading relationships will remain intact. For this reason too, German Finance Minister Wolfgang Schaeuble’s threat that renegotiation of Britain’s trade arrangements with the EU would be “most difficult” and “poisonous” is bluster. Germans run a trade surplus with Britain. Mr Schaeuble can humiliate the IMF, but he dare not hurt the interests of his exporters (or his importers).

And even if British trade with the EU falls, trade with other regions will undoubtedly increase. Because Europe has been growing at a slower pace than the rest of the world, trade has been shifting away from Europe for years.

With Europe rapidly aging and struggling to revive productivity growth, the shift to non-European markets is bound to continue. Most firms already sell to multiple markets and Brexit will prompt them to strengthen their non-European networks.

What about costs of transition? Britain exports 13 percent of its GDP to the EU. Say about a quarter of those export products – about 3 percent of GDP – have to eventually be sold either in Britain or outside Europe.

If the adjustment each year costs somewhere between one-tenth and one-fifth of 3 percent of GDP, it is possible that GDP will be lower by about half-a-percent in the peak transition year. Thus the costs will be modest and short-lived.

So how do the Treasury, OECD and the IMF conclude that Brexit could reduce GDP by between 6 and 10 percent forever? The vast bulk of those large estimates come from the further assumption that reduced trade will shrink British productivity growth. This is disingenuous. There is simply no evidence that less trade lowers productivity growth – and there is not even a logical connection between productivity growth and a shift in trade from Germany to the United States.

More trade has been associated with higher productivity growth when countries have emerged from economic isolation. But for the sophisticated British economy, this possibility should be completely dismissed.

The Bank of England’s claims are the most outrageous of all. The Bank says that fear of Brexit is holding investment back and, thus, causing growth to slow down in anticipation. How can it know that? British GDP is slowing for so many reasons.

The economy has moved faithfully with the magnitude of fiscal austerity: gratuitous austerity delayed recovery from the Great Recession, brief fiscal easing in 2014 helped achieve a short-lived rebound, and now the IMF projects more austerity in the pipeline and slower growth. Meanwhile, the world economy is slowing: the United States had a weak first quarter, China is struggling and world trade is barely crawling forward. The Bank of England is cynically exploiting its authority by claiming to detect Brexit-induced anxiety in the cloud of short-term data.

But more outrageous is the Bank’s warning of mayhem if Britain votes to leave. Nobel Laureates George Akerlof and Robert Shiller have explained that people act in accordance with the narratives they live. The Bank is, in effect, building a narrative of panic, which could become self-fulfilling. The central bank’s proper role is to reassure and stand-by to stem panic.

Since 2010, official agencies have repeatedly promised global recovery. The forecasts fail because they all disregard inconvenient evidence. Now, the official consensus on the economic costs of Brexit has crossed the line into groupthink. A numerical illusion is masquerading as a “fact.” And when those in authority distort facts, they also subvert the cause of democracy.

Making things matters. This is what Britain forgot

Ha-Joon Chang in The Guardian

The neglect of manufacturing and over-development of the financial sector is the cause of the economy’s decline, not fear of leaving the EU.

 

The production line at the Rolls-Royce factory in Derby. Photograph: Bloomberg via Getty Images

It’s being blamed on the Brexit jitters. But the weakness in the UK economy that the latest figures reveal is actually a symptom of a much deeper malaise. Britain has never properly recovered from the 2008 financial crisis. At the end of 2015, inflation-adjusted income per capita in the UK was only 0.2% higher than its 2007 peak. This translates into an annual growth rate of 0.025% per year. How pathetic this performance is can be put into perspective by recalling that Japan’s per capita income during its so-called “lost two decades” between 1990 and 2010 grew at 1% a year.

At the root of this inability to stage a real recovery is the serious imbalance that has developed in the past few decades – namely, the over-development of the UK financial sector and the atrophy of manufacturing. Right after the 2008 financial crisis there was a widespread recognition that the ballooning financial sector needed to be reined in. Even George Osborne talked excitedly for a while about the “march of the makers”. That march never materialised, however, and the share of the manufacturing sector has stagnated at around 10% of GDP.

This is remarkable, given that the value of sterling has fallen by around 30% since the crisis. In any other country a currency devaluation of this magnitude would have generated an export boom in manufactured goods, leading to an expansion of the sector.

Unfortunately manufacturing had been so weakened since the 1980s that it didn’t have a hope of staging any such revival. Even with a whopping 30% devaluation, the UK’s trade balance in manufacturing goods (that is, manufacturing exports minus imports) as a proportion of GDP has hardly budged. The weakness of manufacturing is the main reason for the UK’s ever-growing deficit, which stood at 5.2% of GDP in 2015.

UK trade deficit with EU hits new record



Some play down the concerns; the UK, we hear, is still the seventh or eighth biggest manufacturing nation in the world – after the US, China, Japan, Germany, South Korea, France and Italy. But it only gets this ranking because it has a large population. In terms of per capita output, it ranks somewhere between 20th and 25th in the world. In other words, saying that we need not worry about the UK’s manufacturing sector because it is still one of the largest is like saying that a poor family with lots of its members working at low wages need not worry about money because their total income is bigger than that of another family with fewer, high-earning members.

Another argument is that we now live in a post-industrial knowledge economy, in which “making things” no longer matters. The proponents of this argument wheel out Switzerland, which has more than twice the per capita income of the UK, despite – or rather because of – its reliance on finance and tourism.

However Switzerland is actually the most industrialised country in the world, measured by manufacturing output per head. In 2013, that manufacturing output was nearly twice the US’s and nearly three times the UK’s. The discourse of post-industrial knowledge economy fundamentally misunderstands the role of manufacturing in economic prosperity.

First of all, despite the relative increase in the importance of services, the manufacturing sector is still – and will always be – the main source of productivity growth and economic prosperity. It is a sector that is most open to the use of machines and chemical processes, which raises productivity. It is also where most research and development, which generates new technologies, is done. Moreover, it is a sector that produces inputs that raise productivity in other sectors. For example, the recent rise in productivity in the service sector has happened mainly because it is using more advanced inputs produced in the manufacturing sector – computers, fibre-optic cables, routers, GPS machines, more fuel-efficient cars, mechanised warehouses and so on.

Second, many knowledge-intensive services, such as research, engineering and design, that are supposed to be new have always been there. Most of them used to be conducted by manufacturing firms themselves and have become more “visible” recently largely because they have been “spun off” or “outsourced”. We should not confuse the changes in firms’ organisation with the changes in the nature of economic activities.

All of those supposedly knowledge-intensive services sell mostly to manufacturing firms, so their success depends on manufacturing success. It is not because the Americans invented superior financial techniques that the world’s financial centre moved from London to New York in the mid-20th century. It is because the US became the leading industrial nation.

The weakness of manufacturing is at the heart of the UK’s economic problems. Reversing three and a half decades of neglect will not be easy but, unless the country provides its industrial sector with more capital, stronger public support for R&D and better-trained workers, it will not be able to build the balanced and sustainable economy that it so desperately needs.

Stunted growth: the mystery of the UK’s productivity crisis

Duncan Weldon in The Guardian

Without it the future is bleak, but despite a bewildering array of theories for why this key economic driver has dropped there is no clear answer

 

Illustration: Robert G Fresson




Our economic future isn’t what it used to be. In March the Office for Budget Responsibility (OBR) revised down its growth estimates for each of the next five years. The chancellor was quick to blame a weakening world economy but the true driver lies closer to home. The problem isn’t a loud global economic crash but something much quieter: engine trouble. Productivity growth, the long-term motor of rising living standards, is slowing. The fact that this appears to be happening across the globe offers scant consolation.

What’s worse is that no one is entirely sure what is causing the problem or how to fix it. And it is coming at about the worst time imaginable: global demographics are changing, with the supply of new workers set to slow and the older share of the population rising. The future is of course inherently unknowable, but the reasons for longer-term pessimism on economic growth are starting to stack up.

Productivity – the amount of output produced for each hour worked – rose at a fairly steady annual rate of about 2.2% in the UK for decades before the recession. Since the crisis though, that annual growth rate has collapsed to under 0.5%. The OBR has decided to revise down its future assumption on productivity from that pre-crisis 2.2% to a lower 2%. That small revision was enough to give the chancellor a large fiscal headache in his latest budget, but it still assumes a big rebound in productivity growth from its current level. What if that rebound doesn’t come?

The near death of the British steel industry is a tragedy. But for all the political heat it has generated, its long-term consequences wouldn’t be as serious as the wider crisis. For while closing mills are highly visible, slipping productivity is not.

Looking at the global picture shows that while there are of course national nuances, the overall impression is grim and dates back to before the 2008 crash. Everywhere from the “dynamic” United States to “sclerotic” France, productivity growth has dropped considerably in recent years. The UK is an outlier with a bigger fall than many, but not by much.

Some of this could be explained by measurement issues. To use every economist’s favourite example, it is straightforward to measure the inputs, the outputs – and hence the productivity – of a widget factory, even if no one is really sure what a widget is. It is harder to do the same with an online widget brand manager. But the mismeasurement would have to be on an unprecedented scale to explain away the problem.

What we are left with is a bewildering array of theories as to what has driven the fall but no clear answer. We know the productivity slowdown is broad based and happening across most sectors of the economy. Lower corporate and public investment than in the past almost certainly explains some of the shortfall. Weaker labour bargaining power than in previous decades might also be playing a role. Low wages are allowing low-skill, low-productivity business models to expand and deincentivising corporate spending on new kit. Why spend on expensive labour-saving technology when labour itself is cheap?

But if you think you’ve found the full answer, you probably need to read more. There almost certainly isn’t a single explanation. It’s still perfectly possible to argue that productivity pessimism is overdone, that we are still suffering the lingering after-effects of the financial crisis that will eventually end. But with each passing year that becomes more difficult. A good strategy is to hope for the best but prepare for the worst. And the worst is pretty bad.

George Osborne at the Airbus factory in Filton, Bristol. Photograph: Andrew Matthews/PA

Productivity growth is more than just a financial concept, it’s a balm that can soothe class conflicts and take some of the sting out of distributional politics. If a worker’s output rises by 2% without an increase in their hours, then giving that worker a 2% pay rise is relatively straightforward. If their productivity is flat then a 2% pay rise results in either a fall in profits or a rise in prices. A world of lower productivity is a world of more intense fighting over the more meagre divisions of economic growth.

Productivity is one of two key factors determining the trend growth rate of an economy; the speed limit at which a country can expand without pushing up prices. The other is population. Falling birth rates across the advanced economies created a demographic “sweet spot” that lasted from the late 70s until fairly recently. Fewer children meant a rising share of the population was of working age. But fewer children in the past means fewer workers today and rising longevity means a rising share of the population who are retired. Across the west, the amount of workers for each retired person is heading in the wrong direction. Increasing the retirement age and more immigration are both theoretical fixes, but the scale of both required to fundamentally change the picture is almost certainly politically impossible.

Slowing population growth and weaker expected productivity growth have led the US Congressional Budget Office to revise down its estimate of US trend growth from north of 3% in the 1990s and 2000s to closer to 2%. In the UK, policymakers once thought trend growth was 2.75% and have now cut that to 2.2%. Without a productivity bounce that could fall to closer to 1-1.5% in the coming years.

UK's productivity plan is ‘vague collection of existing policies’


Japan is the usual cautionary tale of what happens when growth slows. A country that had a financial bust, made policy mistakes in the aftermath and then experienced an ageing society. But at least productivity growth didn’t collapse. Headline economic growth was weak and the government’s debt burden has soared, but real incomes and employment held up well. Japanese demographic transition at the same time as a productivity crunch is the worrying possibility facing the west.

So what are policymakers to do? They could accept lower growth and concentrate on distribution. Of course the politics of redistribution are much easier when resources are growing. Lower growth also means that the public and private debt piles built up across the west in anticipation of a brighter future would be much harder to deal with. The obvious answer is to increase public investment. This alone wouldn’t solve the productivity crisis but it could help, and certainly wouldn’t hurt. At a time when government borrowing costs are near historical lows this is about as close to a free lunch as economic policy ever gets.

Finding ways to boost corporate investment is trickier, as there isn’t much in the way of direct policy levers open to government. Reforming corporate governance to encourage more long-term decision-making could help. And while economists tend to assume that productivity growth leads to wage growth, there could be circumstances in which the relationship is inverted. The government’s new national living wage may act as a spur to improve productivity as businesses see their cost-base rise.

But if productivity remains low then difficult choices lie ahead. We’ll need either a substantially smaller state with less generous social security, or higher tax revenues as a share of the economy. That means raising the kind of taxes that bring in substantial sums – VAT, national insurance and income tax.

Neither a smaller state nor higher taxes are likely to prove popular. But governing in a lower-growth world was never going to be easy.

Britain's free market economy isn't working

Larry Elliott in The Guardian

Last week should have been a good one for George Osborne. The first day of April marked the day when the ”national living wage” came into force. The idea was championed by the chancellor in his 2015 summer budget when he said it was time to “give Britain a pay rise”.

Unfortunately for the chancellor, the 50p an hour increase in the pay floor for workers over 25 was completely overshadowed by the existential threat to the steel industry posed by Tata’s decision to sell its UK plants.

Instead of being acclaimed by a grateful nation, Osborne found his handling of the economy under fire. The fact that official figures showed that Britain has the highest current account deficit since modern records began in 1948 did not help.

At one level, all seems well with the economy. Growth was revised up for the fourth quarter of 2015 to 0.6% and is running at an annual rate of just over 2% – close to its long-term average and higher than in Germany, France or Italy.

Two of three key sectors of the economy are struggling, though. Industrial production and construction have yet to recover the ground lost in the recession of 2008-09, leaving the economy dependent on services, which accounts for three-quarters of national output.

Digging beneath the surface glitter shows just how unbalanced and unsustainable the economy has become.

Growth is far too biased towards consumer spending. Borrowing is going up and imports are being sucked in. An enormous current account deficit and a collapse in the household saving ratio are usually consistent with the economy in the last stages of a wild boom rather than one trundling along at 2%.

A little extra digging provides the explanation, with some alarming structural flaws quickly emerging.

Here are two pieces of evidence. The first, relevant to the debate about the future of the steel industry, comes from an investigation by the left of centre thinktank,the IPPR, into the state of Britain’s foundation industries.

Foundation industries supply the basic goods – such as metal and chemicals – used by other industries. They have been having a tough time of it across the developed world, but the decline has been especially pronounced in the UK. Since 2000, the share of GDP accounted for by foundation industries has fallen by 21% across the rich nations that belong to the Organisation for Economic Cooperation and Development but by 43% in Britain. At the end of the 1990s, imports accounted for 40% of UK demand for basic metals; import penetration is now at 90%. Clearly, this trend will become even more marked if the Tata steel plants close.

The second piece of evidence comes from a joint piece of research from the innovation foundation Nesta and the National Institute for Economic and Social Research being published on Monday. This found that productivity weaknesses are common across the sectors of the UK economy, but particularly marked among newly formed companies. Fledgling firms tend to be less efficient on average, but the report said that in the years since the recession performance had been unusually poor among startups.

Since the economy emerged from recession, the growth of highly productive companies has been curbed and there has also been a slowdown in the number of under-performing businesses contracting in size. This helps explain why Britain has an 18% productivity gap with the other members of the G7 group of industrial nations.

According to the economic orthodoxy that has prevailed for the past four decades, none of this should be happening. The theory was that a good, solid dose of market forces would clear out the dead wood from the manufacturing sector; financial deregulation would ensure that funding was provided to young, thrusting startup firms; and free trade would ensure that British industry remained on its toes. Industrial policy would no longer be about “picking winners” but involve an open door to inward investment and low corporate taxes.

This approach has proved a complete dud. Successive UK governments have allowed good companies to go to the wall for the sake of their free market principles. They have squandered the once-in-a-lifetime opportunity provided by North Sea oil to modernise and re-equip the manufacturing sector. They have sat back and watched as the economy has stumbled from one housing-driven boom-bust to another. They have now arrived at the stage where house price inflation is running at 10% a year; the current account deficit in the latest quarter was 7% a year; and manufacturing is in recession.

The UK has been here before, although this time the numbers are scarier. Traditionally, what happens next is a sharp fall in the value of the pound, which helps rebalance the economy by making exports cheaper and imports dearer.Consumer spending takes a hit because goods cost more in the shops while manufacturers get a boost because their products are more competitive on world markets.

Such a depreciation would almost certainly be triggered by a decision to leave the EU in the referendum on 23 June. The assumption is that this would be a bad thing; in truth, a cheaper currency would be one of the benefits of Brexit.

But only in the right circumstances. There is more to rebalancing the economy and solving the UK’s deep-seated problems than simply devaluing the pound. If it was as easy as that, Britain would be a world beater by now. Getting the right level for the pound is a necessary but not sufficient factor in putting the economy right.

There is no shortage of ideas. Help for steel would be provided if procurement rules were tightened up so that contractors had to show they were sourcing sustainably, with the test being the impact on the environment and on local communities. The IPPR has a range of ideas for boosting foundation industries, including building stronger supply chains with advanced manufacturing and using the regional growth fund to provide more patient finance.

Nesta said its research shows the need for better targeted support for new companies rather than blanket measures such as cuts in business rates.

A new paper for the Fabian Society by the former Labour MP and leadership contender Bryan Gould believes there should be a twin-tracked approach: a 30% depreciation of the currency accompanied by a focus on credit creation for investment. This, he argues, could happen either through the existing banking system under the direction of the Bank of England or, if necessary, through a national investment bank. Gould says this is not about “picking winners” but about setting the parameters for possible good investment opportunities.

What links all these ideas is the belief that Britain needs a proper long-term industrial strategy. The prerequisite for that is an admission that the current model – low investment and competing on cost rather than quality – has failed, is failing and will continue to fail.

Emails can be a curse, but don’t blame them for the failings of company culture

Andre Spicer in The Guardian

If you ask anyone what the worst part of their job is, they are likely to respond with one word: email. Over the weekend, the inventor of this contemporary curse, Ray Tomlinson, died. Tomlinson came up with the idea while developing the Arpanet – the predecessor of today’s internet – in 1971. He and his colleagues were scratching their heads about what to do with their new invention, wherein one application eventually became email. “Don’t tell anyone!” he told a colleague. “This isn’t what we’re supposed to be working on.”

How did email grow from messages between academics to a global epidemic?



Today, email is part of the fabric of our lives. A recent survey of US employees found that they spent 3.2 hours a day dealing with work emails alone. Often the first thing we do in the morning is scan through our emails. Smartphones have made matters much worse. One study that tracked the introduction of BlackBerrys a decade ago found employees would compulsively monitor the device, often waking up in the middle of the night to check emails. When the researchers asked people why they did this, they said they wanted to appear professional and didn’t want to miss anything. A decade later, we check our smartphones on average 221 times a day.

Email is a huge source of distraction at work. One study found that when people check their email, it takes them an average of 64 seconds to switch their attention back to their original task. Workers in the study were distracted this way an average of 96 times a day. This means they spent more than 100 minutes every day being distracted by emails. Another study recorded even more disturbing results. After observing employees closely over a two-week period, it found that after checking their emails, people would do on average 2.3 other tasks before getting back to the activity they were originally working on.

This distractive quality of emails is worrying. Our ability to focus on a task not only determines whether we get things done at work, but also helps to influence whether we feel good about what we do. A recent study by researchers at Harvard Business School asked hundreds of people what they did at work, and whether they felt they had a good day. They found that the days people felt good about their work were those when they had an uninterrupted block of time to make progress on a task that they saw as important. Unsurprisingly, the constant stream of emails is often the biggest interruption to this goal.


Many of the problems we blame on email are not really down to the inbox

Some people have suggested that you can avoid feeling overwhelmed by email with the help of a few small changes. A typical piece of advice is to only check your emails a few times a day and turn off notifications. Unfortunately, some studies suggest email management techniques don’t decrease stress. If you get a lot of emails, then you are likely to be stressed out by the sight of a bulging inbox no matter how you manage it.

It might be easy to think if we got rid of emails, our workplaces would be much happier. Some firms stop you logging into your emails after hours. Others have started deleting emails that are sent while someone is on holiday. Although dreams of an email-free workplace might seem appealing, the reality would be unlikely to create miracles. Many of the problems we blame on email are not really down to the inbox. They are actually the result of the increasingly fragmented, highly pressured and insecure patterns of work.
A recent study by researchers at Stanford found that people who spend more time working on emails were in fact not always more overloaded and stressed. Instead, people confused emails with other work issues. They saw email as a source of stress, but they did not consider other more important issues in their working lives, such as long hours or a stressful company culture. This had a dangerous consequence. A few “productivity hacks” were seen as magic keys to reducing overload, but the reality is that only changing wider working practices would help.

This NHS crisis is not economic. It's political

Aditya Chakrabortty in The Guardian


As the health services endures its biggest squeeze, talk of it being unviable is wide of the mark. We cannot afford to do without it

 

Patients wait for spaces in A&E at Royal Stoke university hospital in Stoke-on-Trent. A&E waiting time targets have been watered down in recent years. Photograph: Alicia Canter for the Guardian


How many times have you read that the NHS is bust? No need for answers on a postcard: I can tell you.

Over 2015, the number of national newspaper headlines featuring “NHS” alongside the words bust, deficit, meltdown or financial crisis came to a grand total of 80. Call this the NHS panic index – a measure of public anxiety over the viability of our health service. Using a database of all national newspapers, our librarians added up the number of such headlines for each year. The index shows that panic over the sustainability of our healthcare isn’t just on the rise ­– it has begun to soar.


During the whole of 2009, just two pieces appeared warning of financial crisis in the NHS. By 2012 that had nudged up a bit, to 12. Then came liftoff: the bust headlines more than doubled to 30 in 2013, before nearly tripling to 82 in 2014. Newspapers such as this one now regularly carry warnings that our entire system of healthcare could go bankrupt – unless, that is, radical change ­are made. For David Prior, the then chair of the health watchdog the Care Quality Commission - and now health minister, that means giving more of the system to private companies.

This means that the press and political classes are now discussing a theoretical impossibility. Think about it for a moment, and you realise the NHS can’t go broke. It’s not an endowment with a set pot of cash, but a giant service with a yearly budget. Unlike a business, it doesn’t need to raise money from sales – as taxpayers and voters, we have the final say over how much funding it gets. This panic isn’t economic at all, but politically created.

The balance to be struck with the NHS, as with all public services, is between how much cash we sink into it and how much we expect in return. Give the NHS less money, get less healthcare. Give it more, and the opposite happens. As Rowena Crawford at the Institute for Fiscal Studies says: “Financial stability just requires that healthcare demand and expectations are constrained to match the available funding.”

And that right there is the rub. Because the NHS is enduring the sharpest and most prolonged spending squeeze in its history – even while the government pretends no such thing is happening and the public expect the same service. Our health service is where all the paradoxes of austerity come home to roost.

This may seem an odd thing to say. Isn’t the NHS one of the very few parts of the public realm to be sheltered from this decade’s cuts? Didn’t David Cameron promise before the last general election to “protect the NHS budget and continue to invest more”?

  David Cameron addresses the Tory conference in October 2014. Photograph: Facundo Arrizabalaga/EPA

The figures suggest otherwise. True, the NHS is seeing a rise in its funding. Between 2010 and 2014, health spending went up 0.8% each year, adjusting for inflation. A plus sign in front, granted, but a teeny-tiny one – since its creation in 1948, the health service has never had it so bad. Over this decade as a whole, that allocation will amount to 1.2% a year, which is way down on the average 3.7% that health spending grew each year between 1949 and 1979. And, coming after the 6.7% extra that Gordon Brown was shovelling in annually by the time of the banking crash, it feels like a recession.

So on the one hand, you have a healthcare system that can cause even the most secular of Brits to get religion, that can drive Telegraph-reading colonels to channel their inner Nye Bevan – hell, that even beats Justin Bieber to a Christmas No 1. And on the other you have a Tory prime minister who wants to cut public spending but knows that harming the NHS will be electoral poison.

Put the two together and what do you get? A dangerous muddle of overspending, frontline service cuts and political self-denial.

Cameron pretends the NHS isn’t on austerity rations and expects it to do the same work to pretty much the same targets. The various parts of the NHS try to do just that with a budget smaller than they need, with the result that they begin missing targets and making cuts even while breaking their budgets.

Take the A&E waiting times. Under Labour, the old rule was that 98% of patients must be seen within four hours. Soon after Cameron moved into Downing Street in 2010, the target was watered down to 95% of patients – even so it is now routinely missed. The number of patients stuck on trolleys in A&E, while staff try to find them beds is now at levels that “no civilised society should tolerate”, according to the Royal College of Emergency Medicine .

Even while falling short, arm after arm of the NHS is now in the red: 95% of hospital and other acute care providers in England plunged into deficit in the first half of the financial year starting in April, joining 80% of ambulance providers and 46% of those in mental health.

Demoralised staff can resign, go on an agency book, pick their shifts and earn more

You might treat all this as argument for NHS staff to be more productive. Except that, as John Appleby of the King’s Fund thinktank argues, they are. He calculates that, had NHS activity only gone up in line with government money, between 2010 and 2015 it would have treated 3.7 million fewer outpatients and 4.5 million fewer A&E patients than actually got seen.

This is productivity as doing more with less, which is almost always unsustainable. A real increase in productivity would come from doing things differently. There’s certainly scope to do that – by doing more phone consultations with GPs, perhaps, or upgrading technology. One joke among NHS professionals runs that, in all of China, there’s but one factory left still making fax machines, and that its only client is the NHS. But this sort of change is never going to come in an organisation now in a frenzy of cost-cutting.

One example of NHS austerity’s screwy logic is its sudden reliance on expensive agency staff. This, says Anita Charlesworth of the Health Foundation charity, is a direct result of staff pay freezes and overwork: “If you’re a permanent member of staff and you’ve had no pay rise and you’re demoralised and disengaged you can resign from the NHS, you can go on an agency book, you can pick your shifts, you can pick your wards and you earn more.”

The result is that agency staff costs are rising at over 25% a year.


Meanwhile, NHS England pretends it can cap hospital deficits for the year at £2.2bn – even though in the first six months alone that had already hit £1.6bn . Some of Britain’s biggest and most renowned hospitals are now actively planning on ending the year in the red. And Appleby points out that everything from patient time with doctors and nurses to repairs of your local hospital’s roof is being sacrificed in order to do the same work with less money.

“I can see another Jennifer’s ear coming,” Appleby says, referring to the five-year-old with glue ear who waited a year for a simple operation and ended up being used by Neil Kinnock to attack John Major on health spending. “Only this time it probably won’t be something as innocuous as glue ear. It might be a child who dies of cancer because their medical care has been so drastically cut.”

As societies get richer and older, they spend more on healthcare. Compared with nearly everyone else in western Europe, the UK spends much less of its national income on health. By the end of this decade, we will be even further behind. Meanwhile, pundits will continue to claim the entire system is unaffordably expensive, even while the public still want and need doctors and nurses, their medicines and operations.

This is the paradox of austerity: pretending that you can scrap and scrimp on the services and institutions that make you a civilised country, without making your country less civilised.

If trade helps improve human rights, it's about time we let North Korea and Isis run some of our industries

Mark Steel in The Independent


Xi Jinping and David Cameron attend a joint press conference in 10 Downing Street Suzanne Plunkett - WPA Pool/Getty Images


I expect the Government is worried after the state visit from the President of China that we weren’t quite grovelling enough. George Osborne must be fretting – “We should have let him win Strictly Come Dancing” – while Cameron shakes his head and says, “My idea was to give him Joanna Lumley as a present.

“In return they might have agreed to buy the New Forest, instead we didn’t get so much as a panda.”

Iain Duncan Smith will demand that next time, instead of giving him a length of red carpet, we nail Tibetan monks to the floor so he can walk on them.

Theresa May will complain the premier should have been allowed to partner Wayne Rooney up front against Manchester City, and Jeremy Hunt probably wishes he’d read out the poem he’d written specially, that starts “O President Xi, even your wee, is wine finer than Jesus’s from Galilee.”

Sajid Javid and China's Gao Hucheng sign an agreement in 10 Downing Street while David Cameron and Xi Jinping look on

As usual the person who tried to really spoil the occasion was Jeremy Corbyn, who’s such an extremist communist that he insisted on complaining about the behaviour of communist China.

If he was a sensible moderate of the centre ground, he’d have donated his beard as a gift to the Chinese Communist Party and ignored the habit of sentencing people to death at mass rallies. Those rallies are a sign that China is becoming more liberal – it’s a nice touch to allow the masses to be involved, making the occasion a people’s execution.

According to Amnesty International, China executes more people than the rest of the world put together. And that’s just the sort of efficiency and high rates of productivity we need to aspire to if we’re to make British industry great again.

For too long the West has been prepared to trudge along, wiping out prisoners one at a time on Death Row with (eventually) lethal injections and cumbersome hangings, but the Chinese Communist Party have set a new standard, zapping them away dozens at a time, with a "can-do" spirit that makes them ideal for building our nuclear power plants.

They’re so imaginative with new technology that while constructing this power station they may develop a new efficient method of providing energy, which is to use the heat from all the Tibetan monks that set themselves alight in protest at the Chinese occupation.

Cameron insists he did discuss human rights in private with President Xi, and I’m sure he was very influential. He probably made such an impression that the President persuaded Cameron to execute people by firing squad, then send the family a bill for the bullet, so who says there’s no meaningful dialogue?

The Prime Minister explained how these discussions work: “The more we trade, the better placed we are to discuss human rights.” In that case we should try this method everywhere. To start with we can ask North Korea to run a couple of our industries – small ones to get started, such as water and the Premier League – and then we’ll be in an ideal position to chat to Supreme Leader Kim Jong-un about the way he starves people to death.

Then we can start a lively sword deal with Isis. If that goes well we can invite them to run our banks, which will make us suitably placed to point out we take a very dim view of their policy on massacring Christians.

This is one more example of how the Tories have occupied the centre ground of politics. They’ve become such pacifists that Cameron will surprise us in the debate about Syria by saying: “What they all need over there is some love. So I’ve invited all the factions to tea with the Duke and Duchess of Cambridge, then we’ll ask them all to present their business plan on Dragon’s Den and see if we can get a bit of trade started so we’ll be better placed to discuss human rights.”

To be fair to President Xi, he did say his government’s record on human rights leaves “room for improvement.” As he displayed such self-awareness, I hope Cameron said to him, “Oh Mr President, please don’t be so hard on yourself.”

Because it’s not the President’s fault if the laws in China leave room for improvement. 

Geroge Osborne and China's Xu Shaoshi shake hands after signing an agreement

Hundreds of the country’s lawyers have just been put in jail for criticising the regime, so there’s a distinct shortage of expert advice for him to draw on. Cameron also insisted the Chinese government is becoming more liberal. One example of this growing political correctness is they’ve removed all mentions of democracy from text books in schools, with a directive to “Never allow statements that attack and slander party leaders and malign socialism to be heard in classrooms.”

Because when a teacher has to shout “WHAT have I told you about maligning socialism in the corridor?” things are moving in the right direction.

But there is, of course, still “room for improvement”. So hopefully the questions in maths lessons will soon include the following: what percentage of Guiyang province was rightfully jailed for slandering the Sports and General Fitness Secretary of Chenzhou North-West Region Communist Party’?

Not everyone will understand the benefits of this state visit - not least if they’re a steelworker about to be put out of work. But as the Prime Minister explained, the way to create employment is to ensure we have a strong economy.

And if we allow our industry to shut down, that will strengthen our economy beautifully, which will mean we have more jobs.

The best thing we can do, in fact, is close down the entire country. Then we could all agree to work in clothes shops in China for 18 hours a day for 90 pence a week. We’ll all be extremely well off, and if any of us are jailed for slandering a party leader we’ll be perfectly placed to discuss our human rights.

Sweden introduces six-hour work day

Hardeep Matharu in The Independent

Sweden is moving to a six-hour working day in a bid to increase productivity and make people happier.

Employers across the country have already made the change, according to the Science Alert website, which said the aim was to get more done in a shorter amount of time and ensure people had the energy to enjoy their private lives.

Toyota centres in Gothenburg, Sweden’s second largest city, made the switch 13 years ago, with the company reporting happier staff, a lower turnover rate, and an increase in profits in that time.

Filimundus, an app developer based in the capital Stockholm, introduced the six-hour day last year.

“The eight-hour work day is not as effective as one would think," Linus Feldt, the company’s CEO told Fast Company.

"To stay focused on a specific work task for eight hours is a huge challenge. In order to cope, we mix in things and pauses to make the work day more endurable. At the same time, we are having it hard to manage our private life outside of work."

Mr Feldt has said staff members are not allowed on social media, meetings are kept to a minimum, and that other distractions during the day are eliminated - but the aim is that staff will be more motivated to work more intensely while in the office.

He said the new work day would ensure people have enough energy to pursue their private lives when they leave work – something which can be difficult with eight-hour days.

“My impression now is that it is easier to focus more intensely on the work that needs to be done and you have the stamina to do it and still have the energy left when leaving the office,” Mr Feldt added.

According to Science Alert, doctors and nurses in some hospitals in the country have even made the move to the six-hour day.

A retirement home in Gothenburg made the six-hour switch earlier this year and is conducting an experiment, until the end of 2016, to determine whether the cost of hiring new staff members to cover the hours lost is worth the improvements to patient care and boosting of employees’ morale.