ROLLING BACK THE 20th CENTURY

ROLLING BACK THE 20th CENTURY

23 Feb 2020

The generation known as baby boomers (b.1946-64) looks at 21st century technology and gradually realises that almost all the important, everyday, societal functions with which it is familiar have been usurped by the digital age. Writing letters, making telephone calls, watching television, shopping, going on holiday, banking, insurance and, hell’s teeth, even paying your bloody tax – online, online, online, online…….

Everyone younger (b.1965-) is likely to be unsympathetic to any moaning and to suggest that these crotchety ingrates wake up to the fact that the internet age has opened up a new world of opportunities. Everyone is entitled to an opinion and in the end the younger people win by staying alive.

TECHNOLOGY DRIVEN JOBS

But there is irony in the nature of the jobs that technology creates. They are largely pre-industrial. Collection and delivery about sums it up. The new service economy is unskilled, low paid and part-time. Every time you search via Amazon and click on “Add To Basket”, the company’s software will be contacting one of twenty two fulfilment centres in the UK and in one of them someone wearing trainers will soon be sprinting to find your product.

The next morning, if you are lucky or have paid up, a fleet of trucks will arrive to pick up and deliver the results of all those clicks.

The fast food delivery industry has moved way beyond Indian and Chinese takeaways. Now someone is offering to bring you Big Macs and Greggs sausage rolls. Two companies that were built on the idea that you could drop in and get fed almost instantaneously are now going to save you the trouble of getting out of your chair. Someone will be paid to deliver your order. This is sometimes known as the gig economy.

FAITH IN NEW TECHNOLOGY

The key to the business models of most technology businesses is scale. One reason why most global technology companies come from the USA rather than, say, Finland, is that the former has 300 million eager consumers. There is no market testing like launching a product for free and seeing who wants it. Technology successes are not only hard to predict but often seem to come from nowhere. This is important to remember when we think about what else we expect technology to provide.

Electric vehicles, renewable energy, eternal life – we know what we expect but in truth very few of us have the first clue about how they will be delivered.

THE FUTURE OF CARS AND PRIVATE TRANSPORT

Governments of the world, not least in the UK, are getting very excited about returning to the 19th century, when the first electric cars were built. Here is a picture of one. (Spoiler: cars powered by the combustion engine proved more effective and popular).

 

Until very recently, the UK had joined Singapore, India and Sri Lanka by proposing to ban petrol and diesel vehicle sales in 2040. But recently 2035 and then 2032 have been proposed. Still short of some of the Scandanavian countries that are already flagging 2030! It’s the Olympics of competitive virtue signalling.

I was in India in 2018 when I read about its 2040 target. I had just been to Delhi where there were 11.2 million motor vehicles (including bikes and rickshaws) on the roads (possibly all at the same time). Aside from the extreme pollution, the other thing you notice in India is that the lights keep going out as the electricity grid is often stretched beyond capacity.

It is tempting to chuckle condescendingly at India’s hubristic ambition but let us instead turn our sceptical gaze on our own leaders’ heroic aspirations.

CONFLICTING MESSAGES

The owners of the UK’s 32.5 million cars have learned to be suspicious of public policy. It was not so many years ago that many of us switched to diesel from petrol. In 1997 the Kyoto protocol sought to reduce CO2 emissions and on this basis diesel cars were favoured. In 2001 the government introduced tax breaks for diesel cars and in 2010 sales of petrol cars were in the minority. By 2015 it was discovered that this had all been in error. Now there is a growing list of measures to penalise owners of diesel vehicles.

In view of the above it is easy to imagine that embracing electric vehicles has a kind of “with one bound we were free!” appeal (for politicians, not motorists). The trouble is that this is nowhere near a like for like substitute. A 200 mile range might sound fine but there is a phenomenon known as “range anxiety”, well known to everyone who has seen their fuel needle pointing to empty while driving through an area that appears to be free of petrol stations.

It is also reported that battery performance is worse in cold weather and that range performance deteriorates by 2.3% per year, or more if the battery is usually charged rapidly. How plausible is this for our Amazon delivery driver who reportedly delivers up to 200 parcels over a 12 hour day?

People appear to assume that battery technology will improve. It will, but the unknown questions are by how much and how soon?

The truth is that electric cars will change driving, stripping it simultaneously of its polluting toxicity, its convenience and, for now at least, its affordability.

Many people say that the government needs to spend heavily on installing charging points nationwide. If only it were that simple.

CONTRADICTORY MESSAGES

Electricity supply can be defined in three stages: generation, transmission, and distribution. Electric vehicles will of course demand much from power generators and there is no imminent prospect of satisfying this with renewable energy. It is certain that “traditional” power stations will have to deliver the excess supply. That is known as irony. And very soon decisions will have to be taken about building new power stations and that could mean nuclear, a subject that, to say the least, divides opinion.

The most economic time to recharge vehicles is likely to be overnight, slowly, when other demands on the the generating network will be at their lowest. Obviously there won’t be much solar energy around at such times. The model in which car drivers pop into a charging station for twenty minutes and have a coffee while they wait sounds good but in terms of the electricity network it is a disaster.

According to recently published research it is the local distribution networks that would be most at risk, resulting in voltage reductions or complete outages.

In the UK there are seven district network operators. Some of us remember the LEB (London Electricity Board), which is now part of UK Power Networks, which operates across London and South East England. These district network operators are highly profitable but are probably going to need to make significant investments to keep the lights on.

If you’re wondering how many of the seven are owned by UK nationals the answer is none. UK Power Networks is owned via a number of tax havens by Chinese investors: Northern Powergrid is owned by Berkshire Hathaway, proving, yet again, that Warren Buffett knows a cash cow when he sees one.

In short, if you think that electricity is always clean and comes from plugs, a rather steep learning curve lies ahead.

DISPARAGING THE PROGRESS OF THE 20th CENTURY

The twentieth century is rightly seen as a time of dreadful human folly – world wars, totalitarianism and genocide. If your glass is half full you will also claim that in the end democracy won. But the economic achievements of the last century are being widely disparaged.

The hostility to plastic now is remarkable. On that trip to India I walked along the beach in Mumbai and saw a horrible slick of plastic bottles ebbing and flowing with the tide. I strongly wished that people wouldn’t be so antisocial but it didn’t make me think that plastic should no longer be used in solar panels and bicycle helmets.

In the film The Graduate, Benjamin is taken to one side by a friend of his parents.

“I just want to say one word to you. Just one word”.

“Yes sir”.

“Are you listening?”

“Yes sir, I am”.

“Plastics”

Like everyone else, I found this very funny because it sounds ridiculous but the scene worked because plastic was taken very seriously as the embodiment of progress and the source of a lucrative career for an educated man.

In 2020, educated people talk of going plastic-free in the same way that they used to resolve to give up smoking or run a marathon. Smoking, obesity and plastic are now outdated symbols of ignorance and moral laxness.

Mobility was another twentieth century gift to the world. China was once famous as a land of bicycles – now it has 270 million cars and around 250 airports. Whoops. My suspicion is that China will cling on quite tenaciously to these manifestations of progress.

There are plenty of contradictions in the mindset of trusting new technology and trashing the achievements of the past. But I also see other financial and political reversions to the times of our Victorian ancestors.

REACHING BACK TO THE 19th CENTURY

One of the implications of rolling back the twentieth century is the opportunity cost of lost economic growth. A letter to the Spectator (15 February 2020) says: “By 2050 the UK is in danger of being very green and very poor”. Greta Thunberg has a different take: “We are at the beginning of a mass extinction and all you can talk about is money and fairytales of eternal economic growth.”

Regardless of where your sympathies lie, the prospect that we might in the future be less wealthy than we could have been is embedding itself in the collective consciousness. And there is a way in which we tend to behave when we feel threatened – our gaze turns not outwards to the poor beleaguered planet but inwards to ourselves and our families.

Older people are heavily in favour of passing their assets, especially their houses, to their children and I very much doubt if the beneficiaries are going to object, whatever their theoretical views on equality or fairness.

WHAT THE DICKENS!

This is straight out of the world of Charles Dickens. In the nineteenth century inherited wealth was the mechanism that maintained the ruling classes and kept the poor in their place. You might tell me that Dickens had great sympathy for the poor and, up to a point, you would be correct. But again and again, Dickens’ downtrodden heroes and heroines turn out to be related to the right sort of families because the Victorian readership felt that the story could only be complete when the demands of social order were satisfied.

Fast forward to the 1980s and the social order was being overturned. Crude and unsophisticated people were becoming rich. In Caryl Churchill’s play Serious Money (1987) a City trader walks into a country house and says “How much do you want for this, then?” (At least that’s how I remember it – I haven’t seen it since 1987 – but, my, how we laughed). Many people deplored the rise of the “barrow boy” but what was undeniable was that the world was in one way being turned on its head and money, or “new money” was the agent of change.

Be prepared to welcome back the era of asset-owning dynasties. It is already the case that parents or grandparents are heavily invested in the education and housing of the newest generation. If you don’t belong to that sort of family, tough luck. Not even the Labour party’s 2019 manifesto, which famously promised everything and a little bit more, dared to propose anything more radical than a reversion of the inheritance tax threshold to where it was five years ago.

We are looking at the consolidation of a property-owning class and a renting class. Dickens would have understood that.

SPLENDID ISOLATION

Another idea that we are rowing back from is internationalism. To put it another way, nationalism appears to be on the rise wherever you look. A better word might be insularity because this is not primarily about xenophobia. It is mostly an economic phenomenon again. For some reason, we don’t really care about global poverty half as much as we care about global warming.

The UK economy is comfortable by global standards. If it suits us to reassign our priorities the probability is that we will become yet more insular.

The average world GDP per capita is $11,300 according to the World Bank. The UK is at $43,000, since you ask. What is striking to me is that there are 131 nations below average. And a special call out for the twenty seven nations whose GDP per capita was below $1,000 in 2018.

Burundi, Somalia, Malawi, Niger, Central African Republic, Mozambique, Afghanistan, Madagascar, Sierra Leone, Congo Democratic Republic, Uganda, Liberia, Togo, Burkina Faso, Gambia, Chad, Ethiopia, Rwanda, Guinea-Bissau, Eritrea, Tajikistan, Haiti, Guinea, Mali, Benin, Yemen, Sudan.

Fairytales of eternal economic growth might be popular in those countries.

Just as Victorian foreign policy was known as “splendid isolation”, I think we should accept that if we decide to head back in time, our path is likely to be lonely. Our investments, by contrast, might be strongly weighted to those parts of the rest of the world that are prepared to accept them.

I am reminded of the fate of Jay Gatsby.

Gatsby believed in the green light, the orgastic future that year by year recedes before us. It eluded us then, but that’s no matter—tomorrow we will run faster, stretch out our arms farther…. And one fine morning——
So we beat on, boats against the current, borne back ceaselessly into the past.

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