It is almost impossible to put the words "interesting" and "chief economist" into a sentence that makes any sense. One exception involves Andy Haldane, boss of the 200 or so mostly PhD economists at the Bank of England. Haldane's most recent speech touched on a topic with obvious relevance – economic growth – in a way that was fascinating and different.
Non-economists are often surprised by how little is known about the drivers of growth. They are taken aback when shown the data: economic growth was invented in Britain during the industrial revolution but is noticeable by its almost total absence before then. The living standards of the average global citizen in 1750 were not that different to those of the cave dwellers of the Stone Age.
Innovation
We think we know something about growth but much is still uncertain. Innovation clearly plays an important part. Haldane draws our attention to the surprising role played by patience.
When kids are left alone with sweets and told that if they wait more will be on offer, it is found that those who show no patience – eat the sweets immediately – have inferior life outcomes compared to the ones who are prepared to wait. Other tests of patience say the same thing.
Impatience is but one example of a more general problem: short-termism. Something is acting to shorten time horizons to the detriment of growth. Instant gratification is the problem. From the average holding period of stock market investors to the tenure of premiership football managers, we observe plenty of examples of shrinking time horizons.
The development of the patience gene had several drivers. Haldane points us to literacy as a key factor: reading a book requires patience. Acquiring the skill to read and the ability to reap the benefits meant that we had to become patient. Reading, say some neuroscientists, rewired our brains, helped develop patience and made a large and direct contribution to something that had never happened before: economies that grew.
Right now global growth is sluggish. One of the causes of this could be increasing impatience. Lack of investment in education – itself a factor in patience – is also part of the story. The positive role played by education in economic development is so well-established it just beggars belief that 17 million UK adults still barely have the numeracy skills of a primary school child.
But it's not just about traditional education. Technology itself may be playing a role: if social media and the internet are shortening attention spans there is plenty to be worried about. Just as books rewired our brains for the better, glancing at Twitter, Facebook and Instagram could be having the opposite effect.
Anxiety
Another interesting economist, Nobel Prize winner
Robert Shiller
, also points us to psychological drivers of our economies. He highlights “animal spirits” and “anxiety”. We could be tempted to argue that social media, for all its obvious benefits, makes a contribution to increased anxiety. Twitter’s chief executive has admitted that the company “sucks” at dealing with online abuse. How much of social media commentary adds to the human condition? Some 10 per cent of people have admitted to checking their emails during sex.
We fret over job prospects for our children. The world is becoming a tougher place to make a decent living. Yet, in keeping with Haldane’s musing about growing impatience and attention-deficit problems, I observe a couple of things.
First, the paradox of the smart phone is that it is supposed to help us be more organised. The evidence before me suggests the one thing our university-educated children need to learn is not how to write an app but how to turn up on time.
Second, anyone who can read and understand a book is already a winner in a race where many of the competitors are going backwards.
