3rd Edition
Trinity Economic Review
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CONTENTS.
London House Prices and The Pandemic
05. Fashion Industry: Its Effect On the Economy and Environment
06. Inflation: Transitory or Trouble
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How has free market capitalism failed us?
House Prices – Up, Up and Away
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The Economics Pathway 2 years after Trinity
Stocks Only Go Up
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The Economics Pathway 6 years after Trinity
The Truth Behind The UK Gig Economy
17. Why Win £40million when you can win half as much?
London House Prices and the Pandemic Joseph Wilding As lockdown restrictions have started to ease, the general trend with house prices globally is that they are on the rise. One area where house prices have been particularly closely followed in recent years is London. The crisis in London was one the UK government was worried about before the pandemic and before Brexit, and is that prices continue to rise above affordable levels due to massively high demand for housing near the business hub. Near the end of 2020, people were beginning to become anxious about the crisis worsening post pandemic. Sadiq Khan’s plan to fund 116,000 “genuinely affordable” flats and houses near or within London by 2022 seems now unachievable as construction only started on 1600 of these affordable homes from January to July 2020. However, the trends we are seeing now as the end of
the pandemic seems tantalisingly close, may provide hope that the crisis will be solved without the need for this intense infrastructure spending. Firstly, the cuts to stamp duty which have been extended until June this year as opposed to ending in March have accounted for much of the price rising trend, and we can expect so see something of a cooldown when this is lifted. Secondly, online working has shifted demand away from London and towards more suburban areas, along with reducing demand for transport and therefore need for investment in transport. If people only rarely need to commute to the office, they will not feel the need to live so close. Nationwide’s figures for house price increase rates in the first three months of 2021, show that London rose the least in all of England at 4.8%. In the North-west of England prices rose by 8.2%, the highest
rate since 2005. This potentially illustrates the benefits of the pandemic for inequality between cities and less built-up areas. On the other hand, there are factors which could restrict the amount by which demand for London housing decreases. For example, predictions that thousands of financial jobs would be lost in London as a result of Brexit, have thus far not been fulfilled. Jobs are leaving the city however in far smaller numbers than predicted. JP Morgan for example, warned that Brexit could cause them to cut 4,000 of their British jobs, many of which are in London, but by the end of 2021 will have only cut 400. This is, in many ways, a pleasant surprise for the economy, the decrease in growth and unemployment from the financial sector are much smaller than expected. However, this also means the demand for London housing and housing in big cities has generally not fallen as much as expected, and the governments may still wish to act on the crisis. Clearly many factors, such as the impact of Brexit and the policies of Joe Biden, come into play when asking whether the UK government should increase the budget deficit and spend lavishly on infrastructure.
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Fashion Industry: Its effects on the economy and the environment Maya Knight Perez In recent times fashion has been put under extreme pressure by us, the consumer, to make sure that it can adapt to the quick change of trends. Because of this there has been an increase in fast fashion, and businesses are competing against each other to see who can release the latest trends fastest and at the cheapest price. With this comes mass overproduction and unethical manufacturing. With trends coming in and out of style every week and the accessibility of the items being affordable, people are buying clothes that they will only wear once without thinking about the implication on the environment. Environment However, the biggest threat that this industry must be its devastating effect on the planet. Currently 93 billion tonnes of water are used in textile production each year, 1.7 billion tonnes of greenhouse gas are emitted, and a quarter of industry resources are wasted as fabric and garment leftovers. £140 million worth of clothing goes to landfill each year and by 2050, 160 million tonnes of clothing will be produced and 26% of the global carbon budget will be
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used by fashion. Therefore, there is an evident issue in how this industry is being run. Perhaps the industry has no real reason to change in the short-term as current practices work and generate strong profits. According to data collected by McKinsey & Company, the global apparel and footwear industry produced more greenhouse gases than the UK, France and Germany combined in 2018. The total CO2 emissions released came to 2.1 billion tonnes, which adds up to 4% of total global emissions. Even more shockingly, unless any immediate action is taken by companies or consumers, the figure could reach 2.7 million tonnes within the next 10 years. Businesses are now being encouraged to reduce this and have taken three main approaches collectively known as “accelerated abatement”. They will attempt to cover different stages of the supply chain, reduce emissions from upstream operations and brands own operations and finally encourage sustainable consumer behaviours. If the industry were to make these reductions, it is predicted that 61% of the necessary reductions could be achieved. The main issues that need to be addressed in upstream operations are
switching to renewable energy sources, improving energy efficiency, trying to reduce production waste, and investing in decarbonisation across materials production. It would also be more efficient for a business to take these steps - as of 2020, only 60% of garments were being sold at full price due to the excessive overproduction. Economy There is no doubt that the fashion industry is a very promising and important industry, not least economically. The fashion industry is an important and pivotal part of the UK economy with the industry directly contributing £32.3 billion to the country’s GDP in 2017, with fashion being a major UK employer, providing 890,000 jobs. It is even considered one of the most important industries in the world coming behind only the technological and construction industries. To conclude, it is very obvious that there is an issue within this industry that must be dealt with, and if the fast fashion industry does not change, the effects to us and our planet could be fatal.
Inflation: Transitory or Trouble? John Brandi If you cannot afford to buy a garden shed this year, you are not alone. The price of lumber on the wholesale market has surged 350% year on year due to a shortage of milled timber. That is not the only sign of rising inflation pressures, iron ore is up over 60% year on year, as well as copper; 94%, while the increased cost of corn and soybeans is boosting the price of animal feed and meat. In the US, various firms are struggling to hire workers. McDonalds has announced an increase in wages for over 36,500 US employees by an average of 10% as it aims to hire 10,000 more people over the next 3 months. Amazon is currently hiring 75,000 workers in North America, and is boosting salaries with an $1,000 starting bonus. Dominos and Denny’s are amongst other companies warning of a difficult hiring environment as the economy re-opens after the pandemic. The US registered a record 8.1m job openings in March 2021. Despite this evidence, the Federal Reserve continues to offer the reassurance that
inflationary pressures are ‘transitory’. In April 2021, US CPI inflation registered a 4.2% year on year jump, the highest rate in more than 12 years. It is clear that some of the April price pressures will be temporary. Fuel prices have jumped drastically since the start of the pandemic at a pace that will not be sustained. The average price of a secondhand car surged 10% month on month in April, the largest spike since 1953, and the cost of shelter is up 2.1% year on year. As the economy starts to normalise, some of the supply side issues causing these price rises will dissipate. The worldwide shortage of semiconductors has led to temporary shutdowns of many vehicle production lines. As a result of a shortage of new cars, second-hand cars have appreciated. Labour supply will also likely be boosted by the continued rollout of vaccine programmes. This will encourage workers back to the workplace, as will the reopening of schools and childcare facilities. Central to the Fed’s confidence, that inflation will be transitory and supply shocks will be overcome, is that on many measures there is still a lot of slack in the labour market. That said, many people are still
unconvinced that all inflationary pressures will be transient. Measures of inflation expectations have started to creep higher in the US. The University of Michigan’s May survey showed that 1 year inflation expectations have climbed to a heady 4.6%. This is well above the Fed’s 2% average inflation target. If consumers and firms fear rising inflation, they tend to bring forward their purchases which can push both demand and price levels above where they would have been otherwise. The huge degree of fiscal support from the Biden government coupled with a $1.9tn monetary stimulus from the Federal Reserve are central to the debate over inflation in the US. Inflation hawks are concerned that the increase in fiscal spending suggests a reduced need for as much monetary policy support. Even before the pandemic trade tensions between the US and China had raised the issue of ‘onshoring’. Supply disruptions could accelerate these trends with firms potentially giving up cheaper wage costs to guarantee access to production inputs. On top of bithis, factors such as global warming and the transition to sustainable energy may bring mediumterm price pressures.
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How has Free Market Capitalism Failed Us? Alex Bailey The free market emerged in the wake of Adam Smith’s ‘The Wealth of Nations’, laying out the concept of the laws of supply and demand and the invisible hand, creating the foundation of the Western societies we have today. This an overarching analysis of how capitalism is, and would be, treating people and the environment in the absence
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regulation. There are inherent problems with the way the free market would work under a zeroregulation economy; how the workers are treated financially and conditionally, as well as how the environment would be affected, are the two most significant issues at hand. It is no mystery that corporations, too often,
have no interest in the benefit of society, but rather maximising profits by any means necessary. There is much debate within economics on the effectiveness of the minimum wage, and whether a hands-off approach would lead to higher economic growth. However, one thing is for sure, the minimum wage, as well as numerous other benefits, ensures the security of a workers’ life, beyond the bare minimum. This presents obvious discrepancies if removed; there would be no protection for workers’ rights, as well as lead to exploitation for profit. Nonetheless, some argue that because there would be no minimum wage, it would undoubtedly increase employment, pointing toward more bargaining power for the employed. This increase in power would observe an increase in wages, as it is not the workers who would be competing with each other at full employment, it would be the firms competing for the
workers, promising a pay rise. This presents a problem of expanding the societal and financial inequalities of the bourgeoisie and the poor. The only workers who would have an inherent demand beyond equilibrium would be high skilled workers; ones that have education and experience, leaving the low-skilled behind in a ruthless labour market that caters only to the privileged. The free market is designed to benefit those who are successful, and those who are not, are merely a cog in the machine of success. Even if one works twelve hours a day, seven days a week, there is no guarantee that they will succeed; in fact, people on the lowest incomes are more likely to be harder working than those on higher ones. This is purely down the fact that they are working for their survival, whilst the rich are working for more money, presenting glaring differences in their motivations. The nature of regulation in the accomplishment that it simply exists, proves that without it, firms would not comply with basic needs of the people, hence the government has to intervene to ensure that the basic needs are provided. The markets that cause deforestation, overfishing
and greenhouse emissions develop this point; even when firms are faced with huge backlash and know the irreversible damage that they inflict on the environment we live in, they are still willing to go to the furthest extent just for a higher profit margin. The regulation currently present in the UK and many other similar democratic mixed economies like the US, has lead to subordinate mounts of inequality. The regulation is by no means perfect, however, it ensures many basic rights, like universal income, pensions, maternity leave, as well as protection of the environment to an extent. The damage done if a reversal of regulations occurred, is not worth the pain it would cause to society and the environment initially, to justify any means of waiting for an improvement.
Ultimately, we cannot trust a complete free market because firms have repeatedly demonstrated that they are not interested in social wellbeing, but rather profit. It is the safety net that regulation provides for lowskilled workers, who are at an intrinsic predisposition in society for reasons out of their control. The free market would never allow every single person to live a life in which necessities are affordable, but rather one which benefits the skilled. The environmental impact of deregulation would be devastating in a world in which we only have one chance to sustain – granted, it is clear that more needs to be done urgently, and that entails an increase in regulation.
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The Economics Pathway 2 Years After Trinity An interview with Brodie Foxley Brodie Foxley attended Trinity School from (2013 - 2019) and is now in his second year of studying Economics and Management at Oxford. Lev wanted to seek out some advice for his own university application. Many of our readers are in the process of deciding what they would like to do post Trinity. Some may be interested in apprenticeships; others may want to pursue a degree at university. So, my first question - what made you decide to pursue an economics degree at university? Would you recommend it? The standard “economics applies to everything” answer does have some truth to it. Economics at a bachelor’s level gives you a useful, broad skillset that lets you properly analyse some real human issues, like wealth inequality and gives you an insight into why governments across the world what do they do. Most degrees will give you the chance to study anything from development economics to financial market regulation, and if like me there wasn’t any single subject that really grabbed you at school the ability to pick and choose is something I really appreciate. With that said I think the honest reason I started to think about economics was because it was degree where I thought I could avoid, to some extent, the maths problem sheets I would have to do in a STEM degree at a top university, whereas I could probably get by in Econ. While that turned out to be true relative to what you have to do in STEM degrees, university economics still has a lot of statistics, calculus, and algebra. But if anyone is thinking along those lines’ I would really recommend thinking about joint degrees, to balance things out even more. On the note of apprenticeships, I think they’re really worth having a look at. Especially if you’re the type of person who is leaning towards economics, or any degree, just because of the starting salaries of
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graduates and job opportunities. The degree can be fun if you’re genuinely interested and it gives you a platform to better work out what you want to do in the future, but if you’re money motivated, I think you skip a fair bit of hassle and focus solely on picking up relevant skills, by going for an apprenticeship. I’d recommend a degree if you’re genuinely interested in the subject or would rather keep your options open for a bit longer, but otherwise I think an apprenticeship is a really good idea. What was most beneficial in helping you prepare for your university application? Somewhat unfortunately, reading a lot of books over that summer between lower and upper sixth, was helpful to me. And it was something almost everyone I met at interviews had done too. I think that’s for two main reasons. First of all, it makes writing a good personal statement so much easier, especially if you pick books that help tie together any work experience or extracurricular things you’ve done into a broader narrative. Secondly, especially if you’re going for a course or university that interviews there’s a huge benefit to coming off as genuinely interested in the subject. If you, do it wrong being well read at least helps you pretend you’re interested. If you, do it right and pick books on topics that genuinely interest you written by decent authors the interest in the subject should come pretty naturally. Don’t feel like you
need to ruin a few weeks of your life by reading degree level economics textbooks, or some outdates treaty from the last century. I still find those things borderline depressing now. At the end of the day, it’s a pretty holistic process and there’s a lot you have to do right. Generally doing what the department told me do worked out pretty well for me. Using that summer to get things to put into a personal statement makes it easier for everyone and gives you a lot more time to focus on specifics in upper 6th, like making sure you can at least finish the TSA in time. What is your favourite module in your degree? So far, it’s been technology and operations management. Obviously, it’s a management module and it touched on a lot of really interesting topics. We got set a really interesting spread of work ranging from how to manage hate speech and political discourse on social media platforms, to providing some technical / numerical solutions to supply chain management for imaginary local businesses. It fits really nicely into industrial economics and microeconomics in general. If I have to pick an economics module, I will probably say so far, it’s been quantitative economics largely because it’s the first time they let me use a computer to skip all the annoying algebra parts of the questions. And you get to learn some data analysis languages that are really nice to stick on a CV. What are the potential career pathways you are considering? After a few mandatory financial analysis modules in first year, I realized pretty quickly that that was not a path I wanted to go any further down. Since that realisation I’ve thought about and done some work
experience in strategy/operations consulting, which I’d recommend as more interesting alternative. I’m still pretty unsure about what I want to do after graduating, and I’m definitely not opposed to finding an emergency fallback masters to delay that choice even more. But the nice the nice thing about an economics degree is at least you can basically guarantee somewhere will take you. What is your favourite economics book? Right now, the one that comes to mind is Rentier Capitalism by Brett Christophers. It’s very Britain-centric, and gives a pretty interesting, scathing critique of the way that capitalism has formed in Britain, and the extent to which rent seeking is embedded in the UK economy. Being a recent publication, I probably picked it up from the FT books of the year, it spends a fair amount of time on how the theory Christophers puts forward can be used to analyse Brexit and the UK’s covid response. Regardless of whether or not you’d agree with his position, I really enjoyed the book because it gives me a great way to back up my complaining about things like how I’m not going to be able to buy a house, and why I as a graduate with no practical skills should still get paid more. Also, purely in terms of usefulness it been great to use as a basis for counter examples in essays as it challenges the conventional view. One last question - macro or micro? Macro, without a doubt macro. At least in macro I can always get some pity marks by saying what should happen in theory after I totally butcher the mathematical part of the question. Plus, I can generally get away with drawing and labelling parts of graphs instead of having to write and work out some made up equations.
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The Economics Pathway 6 Years after Trinity An interview with Dan Thompson Dan attended Trinity School from 2008 to 2015 and went on to study at LSE. His degree title was Finance which means for the first two years he did the same as economics students but in his final year he exclusively picked financial economics modules. He is now a supervisor in the Financial Markets Infrastructure Directorate responsible for supervising systemically important Central Counterparties and Payment Systems. Lev decided to ask him some questions for the magazine. What was your favourite part of your degree? My favourite part of my degree is hard to decide. I loved applying economic and financial theory to real-world examples in my final year which included conducting merger and acquisition analysis and company valuations. I also loved the opportunity to study development economics as an additional module. This module focused on economic papers that analysed key problems in the developing world to help inform government policies. If you were to go back in time, what would you do differently regarding university? My one piece of advice would be to ensure you pick modules you are genuinely interested. Motivation to revise is a lot higher and the overall satisfaction from your course will be a lot higher. Do not feel like you have to just pick a module because everyone picks a particular module. What career paths were you considering after university? What did you choose in the end? Why? I had been considering a career in financial services for a long time but always in the private sector. I applied to all the usual big banks and consulting firms but it was my careers advisor who recommended that I
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apply for the Bank of England. I chose the BofE because the work they do is unique, intellectually challenging and the BofE offers an excellent work life balance which I did not fully appreciate until I joined. What do you like the most about your job? I love that the work is challenging and in my role I’m able to engage on very high profile BofE work streams. Last year I was involved in the BofE negotiations with European regulators on our supervisory cooperation agreements post-Brexit. What are your future job aspirations? Currently I am studying for the Financial Risk Management (FRM) professional qualification which I hope will give me the additional skills I need to become a risk specialist at the BofE. One last question - macro or micro? (or something else completely) I’m a micro guy all day long!
House Prices - Up, Up and Away An interview with Robert Colvile Robert Colvile is the Director of Centre for Policy Studies, a pro-market think tank, and the Editor-in-Chief of its CapX website, as well as a political columnist for the Sunday Times. He was well placed to answer some of Lev Titov’s questions.
It seems as if housing is always in the media. “Stop the 12 Floor Flat” shout some headlines, whilst others complain about increasing homelessness. The population has been polarised. Those that have homes, mostly older generations, prefer to shoot down new housing projects, whilst the renters and the young, plead for more building. In November of 2020, sales volume increased by 67% year on year and house prices by 6.3% year on year according to the Rightmove Index. The Stamp Duty Holiday, which cut the tax on purchasing a house costing under £500,000 to 0%, has been given some credit for this increased demand in the housing market. From this comes the first question - Mr Colvile, do you think that the stamp duty holiday, which has contributed to the housing market boom, priced out those who are most in need of housing? No, I think year after year of house price inflation has priced people out of housing. In terms of this last year, the market wasn’t being driven just by the stamp duty holiday but by the fact that an awful lot of people suddenly decided they didn’t want to be living in cities any more in the middle of a pandemic, or didn’t need to commute in and could therefore live further out - there has been a massive surge in demand for homes with gardens in particular.
Sweeping land tax reform is probably politically unpalatable, but there’s certainly a case for adding bands to council tax, where the values haven’t been changed since the early 1990s. Land is an unproductive asset - should the UK government do more than the stamp duty to discourage buying property as an investment? If so how should it do so? Measures like stamp duty to encourage transactions need to go alongside increases in supply. Part of that has to be tilting the balance towards home ownership and away from buy-to-let. It’s already much less lucrative than it used to be but we’ve suggested giving landlords a tax break if they sell up to their tenant, which would also provide the tenant with the core of a deposit.
Should the stamp duty holiday be made permanent, or in fact does the UK require a tax reform concerning land?
Do you think that buying to let is a problem? Should rent controls ever be used to discourage firms buying out houses and flats to rent out?
Both! Stamp duty is possibly the worst tax the government levies, and certainly one of the least popular - because it taxes people moving to homes they want to live in, and therefore makes it harder for them to do so.
Buy to let is a problem. Over the decade after the financial crisis, buy-to-let investors snapped up the equivalent of all the new housing built. But rent controls are a terrible, awful idea - they’ve been called the worst
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idea in economics, because wherever they’ve been tried, it’s been a disaster. Are young people, who cannot afford a home, a threat to the “property owning democracy?” If so, what should we do to help young people to gain a foothold on the property ladder? Young people aren’t a threat to the propertyowning democracy - they are still desperate to become part of it. It’s the planning and housing system that has failed them. That’s why we need to cut deposits, incentivise landlords to sell up, and above all build many, many more homes.
If we need to build more homes, how should we balance house building and the protection of green spaces? We all want to protect beautiful places, but the green belt has grown massively in size and contains a lot of land that is simply not very pretty at all. There’s ample scope for building around stations, or on sites in the green belt where there is existing infrastructure. It can’t make sense to surround London with an area two or three times the size where you can hardly build anything.
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Stocks Only Go Up Sohrab Dhillon & Tyrese Ngegba Stocks are an opportunity to purchase a percentage of a company where that typically if they perform well, investors see a return on their investment, and if they perform poorly, they see a loss in the initial volume they put in. In this article we will be using the VTI (Vanguard Total Stock Market Index) and the S&P 500, as our basis for this argument as the VTI encapsulates the entire market since 2001 when it was introduced; and the S&P 500 have companies that the average investor is likely to invest in on a dayto-day basis. The obvious explanation for stocks depreciating in value is due to unforeseen events such as the 2008 Global Financial Crisis and the COVID-19 pandemic. However, stocks can also fall to poor institutional management or bad reputation amongst consumers and the media, which can lead to the basic economic principles of supply and demand being shifted negatively. These problems affect supply and demand by reducing consumers’ desire to hold onto stocks particularly if there is no price action, as consumers are driven by volatility in order to see short to medium term returns. The average investor seeks short-term growth and profits which
means that they are more likely to invest in company shares rather than indices which prove to have slower growth rates, but are more reliable. Although company shares are riskier in the sense that they can drop far more than indices, such as Tesla every time Elon Musk opens twitter, they still will go up in the long run because either the company will try to satisfy its investors so they do not sell-off stock or the company will end up being bought out.
term it can be said that stocks can depreciate and crash, if you are willing to see through a long-term investment then you are almost certain to see a return, even in the aforementioned extreme examples that we gave, such as COVID-19 and the 2008 Financial Crisis. The graph evidently shows that the market does recover and gets better, as long as you are willing to be patient, showing that as long as you have patience, stocks only go up.
However, as you can see by the title stocks only go up. By this we mean stocks will, in the long-term, go up. However, most consumers are blinded by fast returns that they are not willing to see through with their investment which is why people believe that a stock can “go down”. However this is a losers’ mentality, those who are not willing to wait for their returns do not deserve them. Looking at the long-term trend for the VTI and S&P 500 Indices, it has only increased since the day it was introduced. Although at times it has depreciated, it is clear to see that the long-term overall growth has seen a large increase over the past 20 years, reflecting the entire stock market. Therefore, although our title can be seen as misleading, we are correct. In the short-
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The Truth Behind the UK Gig Economy Anand Clarke Once a small proportion of the UK economy, the gig economy model now accounts for roughly 5 million workers – around 10% of the UK labour force. As a concept, temporary work has been around for a while, but with the development of new digital platforms that connect customers with workers, (Uber, Deliveroo, PeoplePerHour) there has been an observed shift in labour towards these newfound enterprises. While there are some upsides, many firms abuse their position in the industry and employ workers with low pay and harsh conditions in the name of profit. What is a gig economy? A gig economy typically involves firms hiring freelance labour to undertake short-term ‘gigs’. The premise lends itself to unstable employment, whereby workers are classified as self-employed and so lose out on usual employee privileges such as healthcare and pensions. This low level of working conditions would suggest that the issue is prevalent in low-income countries where unemployment is high. However, it can be seen that even in developed countries such as the UK,
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many individuals have taken to this career path due to the expansive growth of the industry. The main reason for this being the advancement in technology. Increased connectivity has allowed for higher levels of working from home (approximately 15% of the employed in 2019). The COVID-19 pandemic undoubtedly exacerbated this situation; with strict lockdown measures, people were forced to work from home and purchase most products online. Apart from this, there are financial incentives for firms to adopt this employment structure. For example, they can avoid paying national insurance contributions and national minimum wages due to their workers being classified as self-employed, lowering their cost of production. Key Issues The most significant problems with the model concern the workers. The logistics of the system allows for firms to employ people under zero-hours contracts while avoiding minimum wages and other benefits of regular employees. Companies such as Uber also abuse their power as a monopsony in that they
control the wage rate for their drivers. Many workers are paid by the task rather than by the hour and have to be available to work throughout the day, despite earning substantially less money than most regular employees (25% reported an hourly income below the minimum wage in 2018). This leads to a lower quality of life and difficulty in borrowing money or getting mortgages, which reduces aggregate demand in the long-term. Lower wages also lead to increased income inequality and inwork poverty, while firms’ high monopoly power and market share allows them to make large profits while maintaining a low cost of production through exploitation. Inequality in gender also prevails, with women earning on average 10% less than men. Worse still is the fact that these zerohours contracts are slowly shifting to other sectors such as healthcare and education, causing increasingly low incomes for those previously under normal conditions. As well as this, the increasing shift towards self-employment leads to lower tax revenues for the UK government. According to the Office for Budget Responsibility, growing
incorporations will lead to a large loss in tax revenue for the state (£3.5 bn in 202122). This subsequently leads to high opportunity costs, whereby revenue lost could have been used for funding current and capital spending on wages or merit goods such as education. It’s not all doom and gloom Despite the apparent drawbacks associated with the UK’s gig economy, there are some advantages to individuals that reduce the magnitude of the problems. Freelance workers have much greater flexibility and independence in their chosen occupation, which ultimately allows for new
workers, who previously were unable to participate, to enter the labour market, causing an outward shift in the supply of labour and increasing employment levels. Thus, with more government regulation on firms in the gig economy, it can be seen as a tool for increasing the UK’s labour force participation rate. As well as this, more people are starting to take notice of the worsening situation. Many trade unions are starting to campaign for the precariat (working class without security). Recently, it has been ruled that Uber drivers should be treated as workers rather than selfemployed individuals, enabling them to receive a minimum wage and
workplace benefits – a good signal for firms to ensure they conform to these standards. A possible solution for the UK may be to adopt a False Self-Employment Policy, similar to that of ‘Scheinselbstständigkeit’ in Germany, which states that situations, where workers labelled as self-employed are actually employees, are social security frauds, and those involved are fined for up to 4 years. With this type of a rigid system in place, there would likely be less leeway for firms to exploit workers, and economies would reap the rewards of a higher labour participation rate without the trade-off with living standards.
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Why win £40 million when you can win half as much? The economic opportunity within the national lottery. Thabo Witter Millions of pounds available, but at what cost? A mere £2. It would be hard not to see this as bargain. Spending the odd £1 or £2 for the chance to win at least £500,000 is an offer that most people cannot refuse, and evidently do not. Data from a 2018 census displays that 70% of over 18s in the UK take part in the national lottery on a regular basis, with 50% of the entire population taking part more than once a month and on average, three times a week. As the evidence shows, this is an offer people would be silly to refuse or not participate in at least once. However, with the reward being so high, would it not be in the best interests of the economy to shave a little of the prize money from the top in order to redistribute where it is most needed? The lottery jackpot is determined by how much revenue is gained from ticket sales however demand is unlikely to change significantly with a slight drop in price. With the prize money making up 45% of total revenue, a jackpot of £27 million can be produced by £60 million in sales, or 30 million tickets. 12% of revenue goes to the state and approximately less than 30% goes to ‘good causes’. Within this 30%, 20% goes to sports, arts and heritage each and 40%
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going to health, education, the environment and charitable causes. If we were to divide this up equally, this is only 3% on each of these sectors, coming in at less than one million for each. Would the consumer really notice the difference between £27 million and £22 million to the point where they are disincentivised to spend? This is unlikely, especially with a cost no more than the average bus journey. Knowing this, we can deem the national lottery in relation to the value of the prize fund as extremely inelastic in relation to demand for lottery tickets, which is an opportunity that should not be cast aside in terms of increased redistribution. Taking £5
million off of the prize whilst still having that revenue could see an increase in £150,000 per the sectors receiving only 10% of the 30% revenue. This could even be specifically allocated in the areas that need it the most, with less of this new profit given to
sports for example and rather to education. Not only this, but with greater revenue, there is little to stop the prize money from rising completely within proportion. A potential jackpot of £40 million could still be reduced to £22 million for example, with an extra £18 million that could be used as see fit, which could see £10 million given to the state for spending where necessary, with an £8 million sum still left over. With such high sums of money, it would be a waste to not take advantage of a prize that would still see masses of revenue even with a much lower potential prize. £10 million is a lot more than you think.
If you would like to engage with the material further, please see some suggestions bellow. Brexit has caused very few finance jobs to leave London – The Economist 01/05/21 Building supply shortages drive up home prices – In Business 01/06/21 Covid-19 and inequalities https://onlinelibrary.wiley.com/doi/full/10.1111/1475-5890.12232 IFS Monica Costa Dias, Robert Joyce, Xiaowei Xu – 2020 Fashion and carbon emissions: Crunch time – Vogue Business 26/08/20 Front Cover DESIGN. / VISUAL., n.d. [image] Available <https://www.pinterest.co.uk/pin/651051689851737031/> [Accessed 16 June 2021]
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Global Fashion Agenda Report: Fashion to Act on Climate – Peppermint 01/09/20 House prices are going ballistic – The Economist 10/04/21 London House Prices and the Pandemic London faces worsening house crisis after work begins on only 1600 new affordable homes – Evening Standard 13/11/20 London is worst-performing region as house prices fall – The Guardian 31/03/21 McDonald’s raises wages for US staff as it struggles to find workers – Financial Times 13/05/21 The UK fashion industry is worth £32 billion to the UK economy, says British Fashion Council CEO – Evening Standard 13/09/18
The people behind the game – Lottery demographics - Lottoland 2018 What an infrastructure bonanza could mean for America’s economy – The Economist 01/05/21 What is the ‘gig’ economy? – BBC 10/02/17The Characteristics of those in the Gig economy – Department for Business, Energy & Industrial Strategy February 2017 The Trinity Economic Review team, and Trinity School, assert no claim over the photographs, diagrams, or data used in the publication.
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Joe D’Mello
Lev Titov