Stairing death in the face
One of the big themes of John Lanchester’s Whoops is that people are terrible at understanding risk, but that modern economic theory does not account for this (amongst a number of other basic psychological basics).
He illustrates our crude understanding of risk by pointing out that stairs kill around six hundred deaths every year. That’s roughly the same as the number of murders every year. And yet no-one feels particularly scared of stairs.
It’s a chance for Lanchester to indulge in another wonderful little aside.
“A warning about the government mortality statistics: if you are of a nervous or hypochondriacal disposition, avoid them at all costs. Here are some of the categories of deaths: ‘Accidental suffocation or strangling in bed’ (eight deaths), ‘Contact with plant thorns and spikes and sharp leaves’ (one death) and ‘Drowning and submersion while bath tub’ (eighteen deaths). Interestingly, only one person died after being bitten by a rat, but ten from being ‘bitten or struck by other mammals’. But which mammals? Dogs? If so, why not say so? Badgers? Dolphins?”
The English are obsessed with housing. The newspapers are full of articles about it, politicians argue about it, and young people struggle and worry about ever being able to afford it. John Lanchester points out that while 70% of Brits live in their own homes, only 40% of Germans do.
Why is this? There are many reasons why buying is a terrible idea: expensive repairs, a fall in prices will leave you in negative equity, you are less flexible …
Going into the credit crunch, the typical household in the UK owed 160% of his or her average income. In France a bank will only lend you a third of what you’re owning, and if you get into trouble paying it back, the bank can be sued for reckless lending. One of the reasons we can’t join the Euro is because there’s so many property owners, interest rates are too politically important to hand over to Brussels.
So why the Anglo-Saxon obsession with housing?
John Lanchester has a theory:
“Our longing [for property] is connected to the sense of dislocation which spread throughout British society during the industrial revolution. …
Countries with the go-go attitude to the free market, countries which pride themselves on their openness to competition, willingness to take a chance, lack of feather-bedding and protection from the laws of the jungle, might be expected to have a property market in which people were easy-going about rening and reluctant to tie up all their money in a single illiquid asset. On the other hand countries with more traditional, less capitalistic attitudes, less open to the cold winds of the markets and more willing to protect their citizens from market realities, might well have a conservative appetite for bricks-and-mortar. Instead it’s the other way around. Why? Well perhaps that’s exactly why. It’s precisely the most free-market, go-go countries which show this overpowering appetite for people to own their own homes. The less security there is in the workplace, the more exposed the rest of life is to the pressures of competition and uncertainty, the more people want to feel secure within their own four walls, at the beginning and end of the harsh working day.
The huge expansion in British home-ownership began during the 1840s, when the effects of the industrial revolution had spread sufficiently to create a new middle class with the economic means to buy their own homes. Because we were alienated and insecure at work, we felt an increased need to own the walls we live in, to feel safe and in possession of our own property. It was the psychic trade-off for the other losses of industrialization.”
One of the things I love about John Lanchester’s Whoops, is despite a strict determination to keep it to 200 pages, he’s still finds space for wonderful little asides.
“You get a glimpse into the world view [of myopic economics] when you look at the Economist. It is an excellent newspaper (a term they prefer to ‘magazine’) in particular full of good first-hand fact-finding. The first 80 per cent of almost every article is full of fresh things. But every single piece, on every single subject, reaches the same conclusion. Whatever you’re reading about, it turns out that the solution is the same: more liberalization, more competition, more free markets. However nuanced and original the detail in the bulk of the piece the answer is always the same; it makes The Economist seem full of algebraic formulas in which the answer is always x.”
Unfortunately (or fortunately) their consistency seems to be working. James Harkin in Niche, uses the magazine as an example of a media organization that has successfully shunned the mainstream. While Time‘s worldwide circulation has fallen from 4.07 million to 3.3million, and Newsweek’s circulation fell from 3.14million to 1.97 million in the last decade, the Economist‘s circulation almost doubled, from 720,000 to 1.4 million. Time and Newsweek now operate with less than half the staff they had in the 1980s.”
Little observation from John Lanchester, author of Whoops! (An excellent, slim 200-page explainer of the banking crisis).
“There is a profound anthropological and cultural difference between an industry and a business. An industry is an entity which as its primary purpose makes or does something, and makes money as a byproduct. The car industry makes cars, the television industry makes TV programmes, the publishing industry makes books, and with a bit of luck they all make money too, but for the most part the people engaged in them don’t regard money as the ultimate purpose and justification of what they do. …
The City views everything as a business. This has always been true … but the thing that changed under Mrs Thatcher was that for the first time the City now had unquestioned supremacy…” [pg 170-1]
The values in British society changed. Instead of being interested in making things, we became interested in just making money.
This seems a shame, if for no other reason, when you make things you have more than one thing to make you happy.
When you’re making something, you get pleasure from that process. If the process is compromised – management interferes, there’s not enough time, or disaster strikes- and the car/ book / TV programme isn’t as good as you had wished, you can say to yourself: “Oh well, at least it paid the bills”. Similarly, if you’re not making loads of money, you can derive satisfaction from the thing you’ve created.
Just like an investor might diversify their portfolio so that it’s not overly reliant on stocks or bonds etc, working in an industry – rather than just business – means you diversify your sources of satisfaction.