Mr Davies’ Penguins

As a child, my favourite animal was the penguin. I don’t recall how or why I came to love them so much, but it was the kind of quirky child preference that quickly becomes a focal point to adults, particularly those selecting presents. I had lots of penguins (toy ones that is) and penguin paraphernalia: clothing, pins, stationary and even books (including my favourite book at some point in my childhood, Mr Popper’s Penguins, whose penguin lives in the freezer, eats the family goldfish and is the inspiration for the title of this post). I think at one point I had amassed around 20 stuffed penguins, which took pride of place in my bedroom (and to this day are in a bedroom closet at my parents’ house, a closet I promise to clean out every time I visit and never really get around to).

Imagine then, my pleasure in the recent return of LSE’s very own penguin to campus. This sentence probably requires a bit of additional explanation. In 2005, a large sculpture of an Emperor Penguin created by an artist named Yolanda vanderGaast was given to the LSE as a present from a Canadian alumnus (above is a picture of the penguin in his natural LSE habitat). It sat there quite happily (near a neighbouring baby elephant sculpture – LSE has eclectic taste in public art) until earlier this year, when students from a rival university are thought to have stolen our penguin in some sort of drunken escapade. And despite LSE students organising a Facebook support group for the poor penguin, it was never recovered or returned. This week, a replacement penguin was unveiled, to the delight of LSE students (click here for an interview with the penguin).

There is something about penguins, and stealing them. In 2005, a penguin chick was stolen from a zoo in Southern England. A book published in 2003 about an infamous armed robber has a section where he describes childhood exploits, including stealing penguin eggs. Here’s a passage: “On another unofficial excursion we decided to invade London Zoo at Regent’s Park and try to steal penguins’ eggs from the architecturally acclaimed penguin enclosure. We would jump over the wall and calmly walk down the slopes to the wooden nesting boxes and nick their eggs in full view of amazed onlookers.” I’ve been told by a friend (who shall remain nameless) that he and his cousins once stole a penguin from the same zoo in the middle of the night: they put it in the bathtub of his Camden flat for a while, until they sobered up and realised they had a hungry, distressed penguin in their bathtub, at which point they snuck back into the zoo and returned it.

There is also, oddly enough, an international crime phenomena of stealing penguin sculptures. In fact, in 2001, another penguin sculpture by vanderGaast was stolen in Canada (the local police force doesn’t seem to have much to keep them busy as they organised a massive search for the penguin). The artist notes that they are particularly cute, and much lighter then they look, which might be why they get stolen frequently. Another potential explanation: they just fly away.

Selling Swine Flu

The predictions about the economic impact of swine flu are enough to make you sick. A group of consultants working with Ernst and Young estimated that if swine flu reached pandemic proportions – 50% infection rate in the UK – it could reduce economic growth by 3.0% of GDP. That’s A LOT. Given that they were already predicting a negative growth rate for this year of 4.5%, that means that the UK would finish the 12 month period 7.5% down.

If you are a loyal reader of this blog (and have put up with the fact that the frequency of my posting has recently hit an all time low – sorry), you might recall that I was quite sceptical about the depth and severity of the ongoing financial crisis. I’m also sceptical about the potential adverse economic impact of swine flu, in part because I think that pessimism in both cases are partially attributed to obsessive media reporting that influence people’s expectation of crisis. Let’s think through it for a second: what are the mechanisms through which swine flu could cause a downturn in economic growth?

The first, and most important, would be lost working hours due to people being sick, or having to take care of sick family members (especially children). It could also suppress demand for some types of products, like travel, or in general because people stay home instead of venturing out to Oxford Street to shop in fear of catching swine flu. Third could be the behavioural link I hinted at above: a swine flu pandemic on top of all the bad news about the economy convinces you that this is the end of the world as you know it, so you stop spending money, investing, etc.  Fourth and finally, all of these things could have an impact on the government finances (thanks to this blog for the list of mechanisms).

I believe the first. But I don’t think that it would lead to a 3.0% decline in GDP. While lots of studies got these numbers by assuming swine flu would keep people out of work for two weeks, amongst the people I know that think they might have had it already (and how do you know if you have or are suffering from some other flu or cold?), they’ve missed a week or less of work. And of course infection rates are not as high as the doomsday scenarios in some studies’ model.

The second, in turn, one seems to me to have a critical flaw: the amazing capacity of capitalist economies to turn anything into a market for new products. The first and most obvious source of economic growth from swine flu is the market for H1N1 vaccines and drugs like Tamiflu -revenues for Roche, the maker of Tamiflu, were up almost 10% in the third quarter of this year. Pretty impressive given the overall economic conditions.

Additionally, I noticed today on my commute into work on the London Underground (a breeding ground for swine flu if ever there was one, I note between two sneezes), that there was, all of the sudden, a huge proliferation of advertisement for products claiming to “capture and kill 99.9%” of germs. Including those pesky swine flu ones. Kleenex has a tissue that kills germs. Liquid hand soap companies are claiming to kill germs. And there are some kind of wipes now that do the same.

That means that a) there are more companies seeking ad space than would otherwise be the case in a recession (especially because lots of ad space on the tube is being taken up by the above pictured series of government adverts showing you how germs spread), b) there are new “anti-flu” consumer goods out there (think increased R&D and marketing budgets) and c) that there may actually be some growth in all of these anti-germ products. To add anecdotal evidence to anecdotal evidence, I’ve now been given 2 bottles of anti-germ hand gel by the Department at LSE I work for. Someone paid for those bottles.

Perhaps, you might think, this potential marginal uptick in income is just putting lipstick on the pig of any otherwise gloomy economic picture. But as the third transmission mechanism above suggests, a dose of optimism (and Tamiflu) might be just the antidote to feverish predictions about declining GDP (I just can’t resist the plethora of easily available puns for this topic).

Mommy Capital

In the recent weeks, I’ve been discussing with my students the political and economic conditions that help democracies to emerge, and make them stick. One of the most abstract ideas  to get your head around is that having “democratic values” and a “civic culture” helps you become a democracy and stay that way (abstract because how do you get these things if you are not a democracy?). This includes things like having high levels of citizen participation in social and political organisations, believing in the benefits of democracy, etc.

An extremely interesting article (accessible to everyone, not just LSE master’s students) was written in the mid-1990s by the political scientist Robert Putnam. It is titled “bowling alone.” Putnam is an expert on social capital because he studied the impact that having it had on the quality of policy and governance in various Italian regions for about twenty years. Basically, he found that if you had more social capital, you were more likely to have good governance, and good policy. Bowling alone takes these insights and applies them to the US. Putnam documents the decline of civic participation in the United States: Americans between 1950 and 1990 went from being highly engaged in social and political activities in their communities to being apathetic and uninvolved. Indeed, where they once bowled in organised leagues, they now go bowling alone.

All of this got me to thinking about the fact that one of the reasons M. and I decided to buy a flat in the same neighbourhood of London we currently live in is that we wanted not maintain the social capital we had already built up living here for 2 years. This social capital comes in the form of a couple of key forms, most of which are related to our role as parents. First, we have learned about activities during the day for our son: playgroups, library story and song hours, etc (if all of this seems like Greek to you because you are not a parent, the quick story is that babies these days don’t just sit at home and watch their mothers cook while teething on a rattle, they go to music and dance lessons, organised play hours with other children, swimming lessons and all sorts of other things). Second we know about schools and nurseries in this area. And third (and only partially related to being parents), we have gotten to know other couples in this area, and their children, which makes us feel more connected to the community.

A good part of this “connectedness” has been facilitated by my becoming a member of a group of mothers in the area. When I found out about this group about a year ago, it was just getting started in a formal way, in fact, they were in the process of building a website. Now, it’s a major “organisation” in our area with a blog, regular meet-ups for mothers and babies, social events (this past weekend, a Halloween party), a Facebook group and special discounts organised for moms at local businesses. They also provide information on schools, nurseries, doctors and political initiatives in the area. There are about 200 moms in this area who are members on the network which, if you assume on average that each mother represents a household of 3 people (a second parent and a child – a conservative estimate as many mothers have more than one child), that’s somewhere between 5-10% of the population of the area (depending on how tightly you define the neighborhood and whether you use 2001 census data or other sources).  Not a huge percent, but certainly a significant one.

You might guess what this made me consider next: does this unique form of social capital (“mommy capital”) in our neighbourhood have any tangible benefits along the lines that Putnam’s research suggests? I didn’t really  investigate this in any depth, or do any real statistics (certainly not any that would satisfy my quantitatively-minded MSc students), but I did look quickly to see how the area’s crime statistics compared to bordering neighbourhoods with similar or higher income levels, and to see whether there were any trends over time.

And here’s what I found. First, in the year that this network has been expanding and formalising, crime in the neighbourhood dropped, despite the obvious deterioration in economic indicators for London as a whole, and the neighbourhood’s demographic.   Unfortunately, there are only two years of statistics available, which makes seeing a longer term trend or a sudden drop impossible. Second, when you break down crime stats by type, there are fewer offences in quite a few categories in this neighbourhood vs. at least one adjacent and comparable (or more wealthy) area. In fact, crime rates in our neighbourhood are one of the lowest in Westminster. Drawing a causation between this rough data and “mommy capital” is of course silly, but it’s not silly to think that belonging to this group encourages people to become more involved in their community, which in turn improves the quality of living in the area on a number of metrics, including, potentially, crime.

SWPL at LSE – I like it!

A lot of serious people come through LSE to give talks. Last week, the Hungarian Prime Minister was here. Last spring the Russian president was here; this summer, academic Dani Rodrik was on campus. Paul Krugman is often here and many politicians, policy makers, journalists and other notables pass through. Tickets are almost always on a first come first serve basis, and often sell out within 2 minutes of them being available online. The combination of my child care responsibilities and my bad luck in never being quite quick enough to request a ticket means that, unfortunately, I don’t get to see many of the public speakers that come to LSE.

Some not so serious people also give talks at the LSE. Later this month, one such person will be here: the author of a very funny blog called “Stuff White People Like.”  While usual LSE speakers tell us what Keynes would have thought about the ongoing financial crisis, what to do about terrorism or about the politics of oil, Christian Lander of SWPL will tell us why the urban middle classes (i.e. LSE students and faculty) like camping, buy sea salt or are interested in political prisoners (if you’ve got some time, it’s well worth browsing through some of the others – there are too many funny ones to cite). I’m sure that just by posting this, I’m marginally reducing my likelihood of getting a ticket, as free tickets to quirky presentations are one of the things that white people like…

Tear-Free Economics

Last night I was going through a fortnightly ritual: wandering through the kitchen and bathroom to determine what we needed from the virtual grocery store. Seeing as we are still (though perhaps not for long) a car free household (which marginally balances our flight related carbon footprint) we do almost all of our grocery shopping online. Among the things that I noticed was running low was N.’s baby shampoo. He’ll be two at the end of November, and though I’ve shampooed his hair dutifully every other night since he was born, the bottle of baby shampoo I bought with my mom just before he was born still has about 10% left.

This got me to thinking: maybe baby shampoo is a natural monopoly. In other words, an industry in which its most efficient to have just one producer.   While usually applied to utilities or transport because of the large cost of infrastructure, baby shampoo might just be the same kind of industry. The average newborn has about enough hair to warrant the application of a half a pea-sized amount of shampoo, and not even every day as their little heads dry out quickly. Even a toddler has a relatively small amount of hair (though perhaps if I had a two year old daughter rather than a son I would be washing more hair than I am now).  Thus, why would you want to make a very low-cost cosmetic product that needs to be replenished only once every two years?

You wouldn’t really, unless you had cornered the market.  And given that the cost of producing baby shampoo is almost nothing, the question is how do you do that? By a clever, and timeless, marketing strategy. The “No More Tears” on every bottle of Johnson & Johnson Baby Shampoo is so familiar that I remember musing as a child about what the ” secret ingredient” was that made it tear free. The brand leader is so well established that the generic version available in the online supermarket was the same canary yellow colour.

I literally can’t name a single other children’s shampoo (though a quick search at the supermarket revealed that there are lots of fancy organic ones that I probably should be using instead of Johnson & Johnson).  This is relatively rare for a cosmetic / household product: try an experiment. Toothpaste? At least three major brands. Adult shampoo? Countless. Cleaning products? Ditto. The natural monopoly like nature of this product might just mean that one day N.’s children are using J&J Baby Shampoo as well.  Somehow that makes me feel like the world is just a little bit smaller… and less tearful.