“Stop worrying about hairdressers”: The UK government has misdiagnosed its productivity problem

We’re going as fast as we can, here. Image: Getty.

Gonna level with you here, I have mixed feelings about this one. On the one hand, I’m a huge fan of schadenfreude, so learning that it the government has messed up in a previously unsuspected way gives me this sort of warm glow inside. On the other hand, the way it’s been screwing up is probably making the country poorer, and exacerbating the north south divide. So, mixed reviews really.

Here’s the story. This week the Centre for Cities (CfC) published a major report on Britain’s productivity problem. For the last 200 years, ever since the industrial revolution, this country has got steadily richer. Since the financial crash, though, that seems to have stopped.

The standard narrative on this has it that the problem lies in the ‘long tail’ of unproductive businesses – that is, those that produce less value per hour. Get those guys humming, the thinking goes, and the productivity problem is sorted.

But the CfC’s new report says that this is exactly wrong. The wrong tail: Why Britain’s ‘long tail’ is not the cause of its productivity problems (excellent pun, there) delves into the data on productivity in different types of businesses and different cities, to demonstrate two big points.

The first is that the long tail is the wrong place to look for productivity gains. Many low productivity businesses are low productivity for a reason:

The ability of manufacturing to automate certain processes, or the development of ever more sophisticated computer software in information and communications have greatly increased the output that a worker produces in these industries. But while a fitness instructor may use a smartphone today in place of a ghetto blaster in 1990, he or she can still only instruct one class at a time. And a waiter or waitress can only serve so many tables. Of course, improvements such as the introduction of handheld electronic devices allow orders to be sent to the kitchen more efficiently, will bring benefits, but this improvements won’t radically increase the output of the waiter.

I’d add to that: there is only so fast that people want to eat. There’s a physical limit on the number of diners any restaurant can actually feed.

At any rate, the result of this is that it’s stupid to expect local service businesses to make step changes in productivity. If we actually want to improve productivity we should focus on those which are exporting services to a bigger market.  There are fewer of these, but the potential gains are much bigger. Here’s a chart:

The y-axis reflects number of businesses at different productivities, shown on the x-axis. So bigger numbers on the left are bad; bigger numbers on the right are good. 

The question of which exporting businesses are struggling to expand productivity is what leads to the report’s second insight:

Specifically it is the underperformance of exporting businesses in cities outside of the Greater South East that causes not only divergences across the country in wages and standards of living, but also hampers national productivity. These cities in particular should be of greatest concern to policy makers attempting to improve UK productivity overall.

In other words, it turned out, again, to the north-south divide that did it. I’m shocked. Are you shocked? This is my shocked face.

The best way to demonstrate this shocking insight is with some more graphs. This first one shows the distribution of productivity in local services business in four different types of place: cities in the south east (GSE) in light green, cities in the rest of the country (RoGB) in dark green, non-urban areas in the south east in purple, non-urban areas everywhere else in turquoise.

The four lines are fairly consistent. The light green, representing south eastern cities has a lower peak on the left, meaning slightly fewer low productivity businesses, but is slightly higher on the right, meaning slightly more high productivity businesses. In other words, local services businesses in the south eastern cities are more productive than those elsewhere – but the gap is pretty narrow. 

Now check out the same graph for exporting businesses:

The differences are much more pronounced. Areas outside those south eastern cities have many more lower productivity businesses (the peaks on the left) and significantly fewer high productivity ones (the lower numbers on the right).

In fact, outside the south east, cities are actually less productive than non-urban areas. This is really not what you’d expect to see, and no a good sign for the health of the economy:

The report also uses a few specific examples to illustrate this point. Compare Reading, one of Britain’s richest medium sized cities, with Hull, one of its poorest:

Or, looking to bigger cities, here’s Bristol and Sheffield:

In both cases, the poorer northern cities are clearly lacking in high-value exporting businesses. This is a problem because these don’t just provide well-paying jobs now: they’re also the ones that have the potential to make productivity gains that can lead to even better jobs. The report concludes:

This is a major cause for concern for the national economy – the underperformance of these cities goes a long way to explain both why the rest of Britain lags behind the Greater South East and why it performs poorly on a

European level. To illustrate the impact, if all cities were as productive as those in the Greater South East, the British economy would be 15 per cent more productive and £225bn larger. This is equivalent to Britain being home to four extra city economies the size of Birmingham.

In other words, the lesson here is: stop worrying about the productivity of hairdressers. Start worrying about the productivity of Hull.


You can read the Centre for Cities’ full report here.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites

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In many ways, smart cities are really very dumb

Rio de Janeiro’s control centre. Image: Getty.

It’s not news that anything and everything is increasingly being prefaced with “smart”: phones, watches, homes, fridges, and even water (yes, smartwater exists). And it’s not unintentional either. 

Marketeers know that we, the public, are often stupid enough to believe that thanks to their technology, life is better now than it was way back in, say, the primitive Nineties. Imagine having to, like a Neanderthal, remember how to spell words without an autocorrecting algorithm, or open the fridge door to check if you’d run out of milk, or, worse still, interact with actual people.

So it’s hardly surprising that we’re now also witnessing the rise of the so-called “smart cities”; a concept which presupposes that cities that are not technologically  “smart” are dumb, which, as anyone interested in the millennia-old history of cities — from the crypto-currency grain storage algorythms of ancient Mesopotamia to the complex waste infrastructure of ancient Rome, to London’s public transport infrastructure — will know, is not true.

Deployed in these smart cities are cameras and other networked information-gathering devices, load cells and other “sensing devices” detecting passing pedestrians and vehicles, audio surveillance devices listening for gunshots – and even vending machines equipped with biometric sensors to recognise your face. This is not to mention beacon technology — tiny anonymous looking black boxes hidden in trees and on lampposts — which transmits advertising, offers and other information directly to smart phones in the vicinity. 

If that doesn’t seem sinister enough, take, for example, Rio de Janeiro, where, in 2014, the International Business Machines Corporation designed a mammoth “control centre” that integrates data from 30 agencies for the city’s police. 

Described by the Guardian as having “the functionality of a Bond villian’s techno lair”, the then local mayor, Eduardo Paes, claimed the centre was making the city safer while using technology to deploy its “special” police unit to carry out the state’s “pacification programme”. Launched in 2008, the programme, which aims to push out drug gangs from Rio’s favelas, has been criticised by Amnesty International: “in January and February 2017 in Rio de Janeiro alone, at least 182 people were killed during police operations in marginalized neighbourhoods (favelas) – a 78 per cent increase in comparison to the same period in 2016”.

Sinister or not, as smart cities grow, they create new problems. For example, as urbanist Adam Greenfield writes in Radical Technologies: The Design of Everyday Life, neither the algorithms nor their designers are subject to the ordinary processes of democratic accountability – a problem that international academics are currently attempting to tackle.  


“We need to understand that the authorship of an algorithm intended to guide the distribution of civic resources is itself an inherently political act,” writes Greenfield. “The architects of the smart city have utterly failed to reckon with the reality of power.”

The Real Smart Cities project, founded by Dr Gerald Moore, Dr Noel Fitzpatrick and Professor Bernard Stiegler, is investigating the ways in which so-called “smart city” technologies present a threat to democracy and citizenship, and how digital tools might be used create new forms of community participation.

Fitzpatrick is critical of current discourses around smart cities, which he says “tend to be technical fixes, where technology is presented as a means to solve the problems of the city.” The philosophy underpinning the project is “that technologies function as forms of pharmacology”, he adds, meaning that they can be both positive and negative. “The addictive negative effects are being felt at an individual and collective level.” 

An example of this lies in the way that many of these smart cities replace human workers with disembodied voices — “Alexa we need more toilet roll” — like those used to control the Amazon Echo listening device — the high priestess of smart home. These disembodied voices travel at the speed of light to cavernous, so-called “fulfilment centres”, where an invisible workforce are called into action by our buy-it-now, one-click impulse commands; moving robotically down seemingly endless aisles of algorithmically organised products arranged according to purchase preferences the like of which we never knew we had — someone who buys a crime novel might be more likely to go on and buy cat food, a wireless router, a teapot and a screwdriver. 

Oh to be the archeologists of the future who while digging through mounds of silicon dust happen upon these vast repositories of disembodies voices. That the digital is inherently material and the binary of virtual/real does not hold — there is no cyberspace, just space. Space that is being increasingly populated by technologies that want to watch you, listen to you, get to know you and sense your presence.

One project looking to solve some of the problems of smart cities is that of the development of a “clinic of contribution” within Pleine Commune in greater Paris (an area where one in three live in poverty).This attempts to deal with issues of communication between parents and children where the widespread use of smartphones as parental devices from infancy is having effects on the attention of young children and on the communicative abilities between parents and children. 

This in turn forms part of a wider project in the area that Stiegler describes as “installing a true urban intelligence”, which moves beyond what he sees as the bankrupt idea of smart cities. The aim is to create a “contributory income” in the area that responds to the loss of salaried jobs due to automation and the growth and spread of digitisation. 

The idea being that an income could be paid to residents, on the condition that they perform a service to society. This, if you are unemployed, living in poverty and urban deprivation, sounds like quite a simple and smart idea to try and solve some of the dumb effcts of the digital technology that's implemented in cities under the ideology of being “smart”.