Thursday, 6 February 2014

Put a Value on That

It's been claimed that the current Tube strikes will cost the capital's economy £200 million (£50 million a day). This is meaningless, and not just because it's mere rhetoric by a business lobby, or an arbitrary figure with no supporting data (hilariously, the Daily Hate managed to reveal the fictional nature of the number by misquoting it in their headline as £20 million). It's meaningless because any attempt to calculate the net impact of a specific shock to an economy is incredibly difficult, and certainly can't be made with any accuracy in advance (the upside variant of this is the giddy claim about the "boost to the economy" of fracking and the like). In reality, a short and limited strike is a trivial interruption (even if personally inconvenient) as commuters switch to alternative transport, work from home or take a holiday. According to TfL, who are routinely pro-business but here have an obvious interest in showing that the strike's impact is limited, "86% of Londoners who usually paid for travel using their Oyster cards had done so as normal".

£50 million represents about 5% of the average daily value of the London economy (£309 billion in 2012), which equates to an average "loss" of 22.5 minutes for every worker (i.e. 5% of a 7.5 hour working day). The source for the claim, the London Chamber of Commerce and Industry, puts the figure at £48 million (media inflation does the rest) and bases it on an opinion poll of its members from September 2007. The London Overground wasn't launched till November 2007, while the branch between Clapham Junction and Surrey Quays that I used yesterday on my way to Shoreditch (home of a couple of iconic Tube carriages) didn't open until December 2012. 22.5 minutes is coincidentally a quarter of a football game, which reminds me that England played their final 2010 World Cup group game at 4pm on a Wednesday afternoon ("work lunch and you can bugger off early", was the common adaptation). I suspect the notional "loss to the economy" that day was considerably greater.

This sort of specious calculation (which the media usually accept at face value) was also present following the suspension yesterday of the main rail line to Plymouth and Penzance due to storm damage at Dawlish: "Business leaders claim the closure of the line will cost the south-west up to £30m a day in lost business". I'm surprised they didn't predict cannibalism on the English Riviera inside the week. The operative term here is nothing to do with the number, or even the implied authority of "business leaders", it's the phrase "lost business". The idea that economic activity is a tangible substance, that can be "acquired" or "lost", like buried treasure or loose change, is such a timeworn trope that we lose sight of what it signifies, namely that everything has a precisely calculable market value. This has reached a new level of absurdity in Italy, where the state is considering suing Standard & Poors for downgrading the country's credit rating in 2011 without taking into account its "history, art or landscape which, as universally recognised, are the basis of its economic strength".

S&P could point out that a credit rating is merely an assessment of a state's likelihood to honour its debts, not the valuation of a balance sheet containing "priceless" assets that might prove difficult to sell. However, Italy could point out that flogging off the landscape (or at least a few islands) was precisely what was demanded of Greece in 2010. Of course, the references to islands and the Acropolis were iconic, with the actual "sell-off" comprising leases on government land and the privatisation of services (and thus economic rents), rather than the ceding of sovereignty or disposal of cultural treasures. But the use of icons like this is (if you'll pardon the meta-pun) emblematic. It represents a world of commodities and property, where everything has a tradeable value and nothing is so fixed (not even the Acropolis) that it cannot be uprooted and sold on.

The economy is a highly complex, dynamic, open-ended network, which is why it is resilient to shocks and highly adaptable, in the same way that a "self-organising network" of millions of commuters will adapt in the event of a transport interruption. The 2008 banking crisis (and associated meta-narratives like Nassim Nicholas Taleb's "black swans" and "anti-fragility") has encouraged us to forget this, to think of the economy as a singular "property" that must be husbanded, defended against further depletion and built up over time, hence we remain suckers for nonsense like a £50 million "loss" or, at the other extreme, a "windfall" like fracking.

Meanwhile, the real action is elsewhere, as shown in this Bloomberg video. Having quickly dispensed with the "cost" of the strike "to London's commuters" (or at least the well-heeled segment that make up their audience), they move on to TfL's "modernisation" plans and the commercial opportunities opened up by demanning ticket offices, from Amazon lockers to station sponsorship, all over the strapline: "Bringing business to public transport". In the neoliberal world, business is always a benefit, never a cost, and always progressive. The irony is that commercial outlets were a traditional feature of Tube stations, from kiosks to vending machines, before they were removed in the 1980s as part of an earlier wave of modernisation. Even station "sponsorship" has been possible, if you didn't treat it as a commercial exchange, as Herbert Chapman found when he persuaded London Underground to rename Gillespie Road station to Arsenal. Of course, rebranding it now as "Emirates Arsenal" would cost a packet. Everything has its price.

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