What if we’re thinking about productivity all wrong?

This week: bit of economics, love it. Also: why are so many towns so crap? And the historic world population map of your dreams.

On Sunday Nick Fletcher – since 2019 the Tory MP for the red wall seat of Don Valley; a man whose existence was previously unsuspected by science – sent a series of tweets in which he set out his thoughts concerning the subjects of the economy, student numbers and graduate debt. Under the repeated rubric “UNIVERSITY FOR ALL?” he argued that Labour’s post-1997 plan to send everyone to university had resulted in vast numbers of “young men and women leaving university with worthless degrees and saddled with debt”, even while the country struggled with a shortage of bricklayers. All this, he argued, was “bad for them and bad for the country”. 

I could spend the rest of this newsletter fisking Fletcher’s assertions, line by line, but it’d be very lazy if only because everyone else on Twitter has already done it. Suffice it to say that the proportion of young people going to university when the Blair government arrived was not, as he said, 2% but 22%; and that 50% is not and never will be “all”, but is in fact half of all.

More importantly, though, there is a strong argument that, if you’re looking for someone to blame for the fact young people are drowning in debt for degrees that don’t get them jobs, it is at least possible the party that has been in power for the last 13 years should be in the frame. It did, after all, manage to create a student fee system which somehow, against all logical plausibility, has managed to leave the higher education sector, individual students and the taxpayer out of pocket at the same time.

And it’s presided over a lost economic decade, too. Four tweets into his thread, Fletcher quote tweeted a finance bro of no particular note, arguing that “college degrees [are] becoming increasingly worthless”. To prove his point he included a suspiciously pink chart, showing that, as the size of the UK’s graduate workforce has grown, the “graduate wage premium” – the increase in earnings the average graduate can expect – has fallen. Taken at face value, all this stinks of mis-selling. 

The person who made the chart, though, had said explicitly that we should do no such thing. The day before Fletcher had his big idea, Financial Times data reporter John Burn Murdoch had produced a column and a thread of his own about the relationship between graduate numbers and the graduate wage premium. In column and thread alike, he made clear that there’s no inevitable correlation between these two variables after all. In London, the graduate wage premium has stayed stable, even as graduate numbers have increased. Across the Atlantic in the US, it’s actually increased.

The problem, in other words, isn’t that producing more graduates inevitably reduces their value – it’s that it does so in the specific economy Britain’s government has presided over. The obvious question is why.

One theory put to me by writer and wrestling fan Will Cooling is that it’s all the fault of austerity. The state has historically funded vast numbers of new graduate jobs, in medicine, academia, the civil service, and so on: the public sector employs around 1/6th of the UK workforce directly, and vastly more via publicly-funded construction projects, outsourcing firms, and the like. For the last 13 years, the state has been holding down wages and cutting back on jobs. That must surely have had an impact, especially in those cities in areas whose major employers include a university or the NHS. And if publicly-funded salaries aren’t rising, there’s less pressure on private sector employers to raise theirs.

The argument against wage rises has always been that they aren’t affordable unless productivity is increasing. But – call me a Keynsian – I’ve begun to suspect the causality here is the wrong way around. What if employers haven’t needed to increase productivity because wages aren’t rising? If the wage bill was going up, after all, employers would have to invest in training and equipment to make sure its staff were earning their keep. For many years, though, wages have been suppressed, by a weak economy and lack of pressure from government.

What if instead of low productivity leading to flatlining wages, flatlining wages are the cause of our productivity trap?

Fletcher is the only Tory ever to win Don Valley, and did so in 2019 by just 8%: he thus seems unlikely to be bothering us for much longer, and presumably has an eye on a post-political career (though not, one suspects, in higher education). The legacy of the ideas he espouses, I fear, will be bothering us for rather longer. Austerity, according to right-wing economic orthodoxy, was meant to reduce the state’s “crowding out” of private spending. But it feels more plausible it’s had the exact opposite effect. Perhaps the best thing a government could do – for productivity, the graduate wage premium and the chances of students paying back their debt, all at once – is to give the nation a pay rise. 

The not-so-strange death of the British high street

Last week I went to Bedford, which as opening lines go is not quite up there with “Last night I dreamt of Manderley”, but you work with what you’ve got. I like wandering round random British towns once in a while: I tell myself it’s research for a long-term project that would involve writing or talking about them, but the honest truth is that it’s basically a nerd’s minibreak.

Bedford had been on the list for a while, because it’s easy to get to from London, and because I’d seen some pictures of the riverside looking quite lovely. And the town is midway between two ancient university cities, in the “Oxford-Cambridge arc” that ministers periodically like to tell us will provide our prosperity (all the while blocking all the housing, transport or lab space that might actually make that happen). So between one thing and another, I was expecting somewhere that felt, if not dripping with prosperity, then at least comfortable

Exactly the sort of picture that gave me a misleading impression of how picturesque Bedford might feel.

That was not how it felt. The walk from the station into town felt faintly depressed, and took me past a series of grim post-war tower blocks, which reminded of the uglier and less-celebrated side of brutalism. Beyond lay the same cold, half-empty shopping precincts you could find anywhere, with department stores standing shuttered and an upsetting number of nail bars and vape shops. The town still had plenty going for it: the riverside and parks are genuinely beautiful; the Higgins is one of the best local museums I’ve been to in ages, combining local history and art with whatever random rubbish some local bigwig had collected before dying childless. Still, though, for a county town with history stretching back to the Anglo-Saxons, it was a little underwhelming.

There may have been specific reasons for this. Bedford is just up the road from Luton, one of poorest major settlements in the south east of England: that, perhaps, should have tipped me off that this might not be the booming commuter town I’d imagined. Nonetheless, this was not a place to which my standard explanation for why so many towns feel depressed – a lack of graduate jobs, leading to an outflow of young people – seems to apply. Bedford is a commuter town, offering relatively cheap housing and a lot of trains to London. And yet much of it still felt miserable as hell.

All of which got me thinking – why do so many British towns feel depressed these days? What’s going wrong?