Tuesday 25 April 2023

Policies for the Young that will never happen

The older you are, the more likely you are to vote. Young people simply don't turn up for elections. This relationship seems to hold across countries and time. 

It isn't so clear why this is. One idea is that once people get used to voting, they continue to vote for the rest of their life. Sadly, this relationship makes the rest of this blog completely redundant: what political party in their right mind would target the young? 

So here is a non-exhaustive list that I will edit if anyone has any additional policies or suggested improvements. I wouldn't think to hard about it though, these policies are like deciding on the colour of the curtains... once we have colonised mars.

Policies for the Young

1. Rebrand/Abolish Tuition Fees.

Tuition fees annoy me because so many people misunderstand them. Firstly, the £9k figure only covers half of educating home students - the rest is funded by the taxpayer.

Students loans are not like normal loans. You can't go bankrupt if don't pay it back. You only start paying it back if and when you earn over £27k.*

Saying that students should be put off put off by this "debt" is like saying they would be put off by a progressive graduate tax - which essentially this is.** As a start, I would simply rebrand the current system as a "graduate tax".

If I were to go further, it would be to give young people that don't go to university access to funds for education and training . This way it would strengthen the argument to fund post-18 education through general taxation (and not have to complicate things with graduate taxes etc).

Finally, I would also have an independent body that provides accurate information on pay and destination of graduates for each course/university. Yes, there is more to university than jobs and money, but preventing potential students from seeing this information feels unfair.

2. Get Married Wherever You Want

I got married in the gardens of Durham castle on a lovely sunny day in summer 2019. Well, technically, I didn't get married there. 

In England marriage licences not only have to be given out by specific people, but specific places as well. This means either you have to spend money lugging your guests around from registry offices to other venues or pay a fortune to somewhere that has managed to get a licence and a suitable venue at the same time.

There isn't a good reason why you can't get married in your own garden or your local pub. It would make weddings cheaper and more enjoyable.

On my wedding day we had to repeat our vows inside the castle itself, about 100m away from where we said our vows for the first time, in front of the very same people. The garden didn't have a licence but the main hall of the castle did. We actually had to repeat our vows for a 3rd time as they were not sure if that particular part of the hall had the licence!

3. Digital IDs

Every few years Tony Blair comes out of the woodwork to propose ID cards and everyone mocks him for it. But you know what, if you are young, you need to carry ID with you basically all the time.

If you want to buy booze or get into clubs or, even simply buy paracetamol, you will be asked for your ID. 

I don't think this should be a physical card (although it can be an option I guess) but basically an app you open on your phone. Obviously this could be used for age verification but other things too such as your driving licence.

If you want to register for things like bank accounts or mortgage applications, or just get by in life you often need to have things like proof of address. If you rent, as most young people do, this is a massive pain. It benefits older homeowners that don't move very often and are less tech savvy. 

Having a UK digital ID could hopefully do away with a lot of form filling and I actually think a carefully designed one could reduce identity theft.

I would, however, make this digital ID entirely optional simply because there are many people concerned with privacy who have read at least one book by George Orwell. You would have to find away to reassure users they are not being tracked, and I think that could be quite a hard sell for some.

But just like with contactless payments, there will be a lot of grumbling at the start but eventually come round to how easy it is and it just becomes the norm.

4. Reform Local Democracy

The main issue I have with local democracy is this is that it is entirely dominated by people who have a lot of time on their hands or who have a bigger incentive to take part. Who might this be? No prizes for guessing older, homeowners.

This is what the make-up of parish councillors look like - it is basically a club for retirees. 

While I think there is an interesting debate on who has the right to decide what happens in a local area, the power is so overly skewed in favour of a certain group of people and results in NIMBYism.

Not exactly sure how fix this so suggestions welcome.

5 Childcare

"But there has been a policy on this" - you cry! Well, there has, but quite a lot of the policy focuses on subsidising demand rather than thinking about boosting the supply of childcare. But it really is a huge cost, and can be anywhere from £10k-£20k a year and that's even if you get a place. It is why having Grandparents near by raises fertility. 

If people are weighing up the financial costs of having a child, in a high-income country, then I think something has gone wrong.

6 Housing

So much has been written about this already: we need to build more houses. 

7. Anywhere but London

In the UK, London is the place to be. It feels so much more exciting and bigger than anywhere. All the exciting jobs are there; music, restaurants, you name it - it's there. Lot's of graduates move there and end up living in cramped houses, with over an hours commute. But it doesn't matter, because London is exciting. You are happy to be part of it all. But then commutes become long and you realise you are not really taking advantage of this massive city and end up spending all your free time in a 1 mile radius surrounding your house.

The issue comes when thinking about where to go outside of London, the jobs are not as exciting, and you feel like your missing out on something. But what if I want to go to British Museum - I can't do that in Manchester or Leeds? (You say this to yourself despite not having gone there in over 10 years). London is the free gym membership you never use. You want to keep it, just in case.

Personally, I wouldn't want to ever live in London again. I did it for 6 months but I found the commute really sapping. My commute in Durham is a 20 minute walk along the river being overlooked by the cathedral. I can meet any of my friends in less than 5 minutes and am in the countryside in no time at all. It has excellent pubs and is a 10 minute train ride in to Newcastle which has really good restaurants and an amazing music scene. 

So then why isn't everyone clamouring come and live here? I think it all boils down to two things: jobs and public transport.

I will develop this a bit further (suggestions welcome) but a good start would be for the government to make a centre outside of London - not just randomly spread across different cities.  

9. Compulsory Voting

My last policy is a potential solution to all of the above. If everyone was pushed/incentivised to vote, even if that included an option that says "I decline to vote", I think politicians would start focussing more on issues facing young people.  

If anyone has any evidence on what compulsory voting does with respect to politicians targeting the young I will add it here as I couldn't find it in my extensive literature search.***

*The policy has now recently changed again and it is £25k for students starting this year. It has changed about 4 times, which makes it really annoying giving blanket advice to graduates about their loans. 

**It is not technically the same as if you leave the country you are still liable for the loan. However, I would say it is more similar to a tax than a loan. 

***1 minute of Googling.

Saturday 22 April 2023

Is "Greedflation" happening? I'm sceptical

What is causing current inflation?

There are a number of articles saying that rather than a wage-price spiral, it is being caused by companies increasing their profit margins. In fact, even some people at the ECB are taking this view. 

When you do Econ101, one of the first things you learn how companies maximise their profits. It is also probably the first time you think economics is very far away from reality. Do companies really find their marginal revenue and equate to their marginal cost? Not a chance.

What actually happens is people think about their "mark-up". The price they sell it at vs the amount it costs. So if I sold coffee for £1 and it costs me 10p to make then my mark-up is 90p. But what price should I charge? Well, crucially this depends on demand. If you charged £100 for your coffee your mark up would be £99.90 - but no one would buy it. If you charged 11p for your coffee you would selling 100 cups of coffee would make you £1 in profit.

What I am saying here is that demand matters. If you mess about with your price a bit you will probably hit a nice sweet spot where you get the most profits (you are doing MR=MC without knowing it!).

So this is why I find it hard to buy that profits are driving inflation. Just because companies raise their price doesn't mean they will be able to sell the same amount as it should lower demand. Even if you are more likely to buy a product if you think inflation is a reasonable excuse, at some point demand is going to fall. This is especially true if wages are not rising as you literally can't afford it. You can only be spun a yawn by companies so many times before you run out of money.

You might not buy the wage-price spiral story (for what it's worth, I don't think this is what's happening now), but the reason why inflation persists in theory is that when prices increase, workers demand wage rises at least in line with inflation, which then increases demand and pushes prices up further an so on and so forth. There isn't a mechanism like this in "greedflation", there is not really a way for it to spiral.

But what about necessity goods like food, you have to buy food!? Well, yes. But it would mean we should be seeing prices fall in other areas as people spend more on food. Also, if companies are just crying wolf over inflation why are some not undercutting each other? 

Supermarkets are notoriously cutthroat when it comes to competition on price, so your story needs to explain why suddenly firms have discovered their market power and also are tacitly colluding with each other to maintain high prices. 

I don't really have an issue with profits being the cause of inflation - I just don't know how this is meant to work. At the moment, it is a slogan looking for a theory.

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