Saturday, November 30, 2013

Best bits from the Weekend Financial Times

  • Gillian Tett comments on an interesting paper from the Dallas Federal Reserve that investigates the effects of immigration on the state: put it another way, Mexican tomato pickers do not compete with American receptionists (not least because almost half of the immigrants in the study apparently have few or no English-language skills).
What immigration does do is lower the price of “immigrant-produced goods and services”, which equates to an income gain of $3.4bn-$6.6bn a year, the study suggests. And while this needs to be offset against the rising strain on public infrastructure and services, this is not such a big issue in bare-bones Texas, which has “a skimpy safety net and lower levels of publicly provided services than other large states”.
  • Simon Kuper writes about the food patterns have changed dramatically in a few decades. Globalisation has brought lower prices and more variety, making food an everyday route to happiness for the masses (go capitalism, go!):
Immigration is bringing good ethnic foods even to poorer neighbourhoods. And until the current spike in prices, food had been getting cheaper for decades. Americans on average now spend just a 10th of their disposable income on food, says the US Department of Agriculture. That is around the lowest level in human history. Most westerners can now afford to think about food as a source of everyday happiness.
  • Best of all this week is John Kay's wonderful, considered piece (Kay's writing stands out for clarity and thoughtfulness and getting to the heart of the matter) on the London housing market:
...people plainly can afford to buy houses in London. House prices can be high and rising if – and only if – people can afford to pay these prices. Some people who used to be able to afford central London house prices are now unable to do so, while others who used not to be able to afford them – or chose not to afford them – can now do so. If prices are rising, it is because the latter group outnumber the former. What has changed is not housing but the backgrounds of the people who live in these homes and their sources of wealth.
A home in Carlton House Terrace is the ultimate “positional good”. This is a term coined by Fred Hirsch in an insightful work titled Social Limits to Growth (1976). Economic growth is associated with increased availability of most commodities, but for some the absolute supply is fixed. ... The price of positional goods will normally rise faster than incomes. People aim to spend more of their income on positional goods as they become richer, but only a few can ever realise these ambitions. 

...Where gentrification has a longer history, you can identify successive layers of incomers, as on an archaeological site: most houses are occupied by people who could not now afford to buy them.

The monetary rewards attached to different occupations and social positions change from one period of history to another. The houses remain, the backgrounds of their occupants change. Central London houses are always affordable. The economic and political climate determine who can afford them at any particular point in time, and that in turn determines the social complexion of the capital.
  • Lastly, the FT has published its lengthy list of "Books of the Year", which is worth a perusal if you are stuck for what to read next.

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