Keep it foolish: London’s “cool” has built an economy around tech-savvy young people. Photo: Wayne Tippetts/Rex
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Love or hate them, East London’s hipsters have fuelled a vast economy

Most of us rolled our eyes at the invasion of hipsters, but the “Flat White Economy” is flourishing.

The Flat White Economy
Douglas McWilliams
Duckworth Overlook, 256pp, £16.99

“Year after year the annual report of the Uganda Protectorate has referred, under the heading of industry, to a few large undertakings directly sponsored by the government,” wrote the economist W Elkan in 1959. “At the same time the multifarious development of furniture workshops, soap mills, tyre retreading plants, bakeries and brickfields has gone on largely unnoticed. An official who was once asked about Kampala’s industrial area said: ‘There are no industries there – only a lot of furniture works, bakeries, maize mills and soda
water factories.’”

Modern economies are complex and constantly in flux. As a result, understanding what is going on in them and where they are heading next is difficult. You might have thought that civil servants and the economists who work for them would have an advantage over the rest of us. In reality – as the story above shows – their preconceived ideas of what counts as “genuine” economic activity can generate blind spots even more egregious than our own.

There are exceptions. Douglas McWilliams, the founder of one of the UK’s leading economic consultancies, has spent his career trying to get at what is really going on in the UK through that most unfashionable of economic activities: detailed empirical research. In his new book, he shows how surprising the results can be.

His story starts with the resilience of London during the financial crisis of 2008. Many analysts thought that the crash would rebalance the British economy away from the capital. They were wrong.

In 2009, London’s output collapsed and house prices plummeted. But its recovery was exceptionally rapid. By 2013, employment was growing at 4.4 per cent a year. House prices were more than 10 per cent above their 2007 peak, while elsewhere they were still 10 per cent below. London has been leading the UK recovery, not slowing it down. Where did this renewed vitality come from? Rather like those Kampala soap mills, the answer, McWilliams argues, is staring us in the face – and we’ll see it as soon as we shed our preconceptions.

No one visiting east London over the past half-decade can have failed to notice that there are a lot of young people about. They have come from all over Europe and hang out in Shoreditch, Bethnal Green and the rest of the old “City fringes”. They ride bicycles, wear second-hand clothes and have elaborate facial hair (the male ones, anyway). And they drink a lot of coffee – often of the “flat white” variety.

Most of us rolled our eyes at this invasion of the hipsters and assumed, like the Ugandan official, that the real action must be going on elsewhere. McWilliams and his colleagues have crunched the numbers and found that the opposite is true. They argue that this influx of tech-savvy young people is a symptom of the flourishing of what they have termed the “Flat White Economy”: the dense network of digital marketing, computer programming, software publishing and video post-production businesses that have sprung up in and around Shoreditch since 2008. This is no lost generation of frugal fashionistas, in other words, but the economic engine of the future: less Nathan Barley, more Steve Jobs.

The statistics are striking. The Flat White Economy is big. Across the UK, the media, information and communication sectors account for nearly 8 per cent of GDP – the size of the car manufacturing and oil and gas industries combined. It is also growing rapidly. McWilliams reckons that its share of GDP will double over the next decade. Most impressively, though, it is extraordinarily entrepreneurial. Between 2012 and 2014, more businesses were created in the single London postcode of EC1V than in the whole of Manchester and Newcastle put together.

Why has the Flat White Economy taken off in east London quicker than anywhere else? It is all down, McWilliams argues in most orthodox fashion, to supply and demand. On the demand side, the UK is a unique environment for digital business because it has proportionately by far the ­highest level of online retailing in the world. One study projects that nearly a quarter of all UK retail will take place online next year – twice as much as in Germany and three times the level in the US or Japan. Britons love to shop online, generating a critical level of demand for digital marketing and advertising services.

On the supply side, meanwhile, McWilliams points above all to the availability of young, educated and entrepreneurial people from all over Europe (thanks to freedom of movement within the EU) who want to come to London not because it’s cheap or easy to live in, nor even because they can get rich there, but because it’s cool. It’s an analysis that, unlike a lot of dry economics, chimes with reality. Indeed, the eponymous flat whites prove the point: why else would anyone want to pay £2.70 for a cup of milky coffee?

There has long been a tendency on the left to disdain service industries such as those at the heart of the Flat White Economy as not quite the real thing – from Harold Wilson’s scorn for the “candy-floss economy” in the 1960s to Larry Elliott and Dan Atkinson’s 2007 excoriation of Tony Blair’s Britain as “Fantasy Island”. McWilliams makes a persuasive case that it was these industries that saved us from disaster after 2008 and hold the keys to our economic future. For questioning that prejudice alone, his book deserves to be read. 

 

Felix Martin is a macroeconomist, bond trader and the author of Money: the Unauthorised Biography

This article first appeared in the 14 May 2015 issue of the New Statesman, The Tory triumph

The University Challenge final. Photo: BBC iPlayer
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Why University Challenge is deliberately asking more questions about women

Question setters and contestants on how the show finally began to gender-balance its questions – and whether it’s now harder as a result.

University Challenge has long had a gender problem. When the show first started airing in 1962, some Oxbridge colleges were still refusing to admit women as undergraduates; in the decades since, women have been consistently outnumbered by men, with all-male teams still a regular occurrence. Those women that did appear were all too regularly criticised and objectified in equal measure by audiences: notable contestants like Hannah Rose Woods, Emma Johnson, Samantha Buzzard and Sophie Rudd have experienced intense media scrutiny and criticised the sexism of the show and audiences. In recent years, sexism rows have dogged the show.

How satisfying, then, to see two women carrying their teams in last night’s final: Rosie McKeown for winners St John’s, Cambridge, and Leonie Woodland for runners-up Merton, Oxford. Both secured the majority of points for their teams – McKeown with visible delight, Woodland looking unsure even as she delivered correct answer after correct answer.

But there is another site of sexism on University Challenge, one that earns less column inches: the questions. Drawing on all areas of history, science, language, economics and culture, the questions often concern notable thinkers, artists, scientists, and sportspeople. Of course, our society’s patriarchal hierarchies of achievement have meant that the subjects of these questions are mostly men. General knowledge is, after all, a boys’ club.

Over the course of this 2017-8 series, though, I noticed a shift. More women than ever seemed to be making their way into the questions, at times with deliberate reference to the inherent sexism of their lack of cultural prominence. On 5 February, there was a picture round devoted to female composers, with contestents asked to identify Clara Schumann, Ethel Smyth, Rachel Portman and Bjork from photographs, who, Paxman explained, are all “women that are now listed in the EdExcel A Level music syllabus after the student Jessy McCabe petitioned the exam board in 2015.” Episodes have included bonus rounds on “prominent women” (the writer Lydia Davis, the pilot Lydia Litvyak, and the golfer Lydia Ko), “women born in the 1870s and 80s” (Rosa Luxemburg, Elizabeth Arden and Vanessa Bell), and the female philosophers Mary Midgely, Philippa Foot and Iris Murdoch.

Elsewhere, questions raise a knowing eyebrow at the patriarchal assumptions behind so much of intellectual endeavour. A music round on famous rock bands quoted the music critic Kelefa Sanneh’s definition “rockism”: “the belief that white macho guitar music is superior to all other forms of popular music”. Another, on opera, quoted Catherine Clement’s Opera, Or The Undoing of Women, which explores how traditional opera plots frequently feature “the infinitely repetitive spectacle of a woman who dies”. “Your music bonuses are three such operas,” Paxman said dryly, to audience laughter.

University Challenge’s questions editor Thomas Benson confirms that there has been a deliberate attempt to redress a gender imbalance in the quiz. “About three years ago, a viewer wrote in to point out that a recent edition of the programme had contained very few questions on women,” he explains. “We agreed and decided to do something about it.”

Last night’s final included a picture round on artists with works concerning motherhood (Mary Casatt, Lousie Bourgeois, Leanora Carrington and Frida Kahlo) and a music round on Marin Alsop, the first woman to ever conduct the Last Night of the Proms, as well as sets of bonuses on the American writer Willa Kather and Byzantine historian and princess Anna Komnene.

Former winner Hannah Rose Woods is delighted by the increase in such questions. “I think it’s fantastic!” she tells me. “These things are really important in changing people’s perceptions about women in the past, and the way women’s contributions to science and the arts have often been written out of history. We need to keep challenging the idea of the White Male Canon.”

Last night’s winner Rosie McKeown says that while she didn’t necessarily notice a deliberate attempt to gender balance the questions, she was “very pleased with the quality of those questions that did come up”.

“Although it wasn’t in one of our matches,” she tells me, “I thought the picture round on female composers was especially good for highlighting women’s achievements.”

For all the enthusiasm for these questions, in the studio they’re often met with blank stares. While University Challenge questions are broad and imaginatively posed, there are some reliable revision topics and techniques: from Nobel laureates and the years of their wins to identifying famous paintings and classical music excerpts. McKeown says she has been a religious viewer of the show since she was 11 years old, and admits to watching reruns of the show to prepare. Shift the kinds of answers you might be looking for, and teams may struggle.

“Do we know any female British composers?” Leonie Woodland said weakly, looking at a picture of Ethel Smyth. Trying to come up with a female Muslim Nobel laureate, one contestant desperately suggested Aung San Suu Kyi. Asked to provide a first name linking an American concert pianist with the sister of Lazarus one male contestant still buzzed in with “Daniel”.

“Even if we didn’t always get them right,” McKeown tells me, citing that round on female philosophers, which saw them pass on every question, as an example, “it was great to see so many important female figures represented.”

“I don't think the questions about women necessarily affected our performance, but it’s certainly a very good thing that they were there and I hope that they’ll arouse people’s interest in the women featured and in their achievements.”

Benson believes that it hasn’t had a significant effect on performance. “The great majority of the questions that feature women are no different to any others, in that they sit firmly within the realm of standard academic general knowledge.”

He notes that they often refer to historical and background details, citing sets of bonuses on Canadian novelist Ruth Ozeki and British physicist Hertha Ayrton, which both teams answered correctly in full. “Though Ozeki and Ayrton may not be household names, the questions are definitely answerable and deal with central themes in their work and achievements.”

It’s easy to brush off the significance of a fairly geeky Monday night BBC quiz show, but University Challenge still regularly pulls in three million viewers. In any case, a show like University Challenge has a cultural significance that outweighs its viewing figures. It helps to shape our understanding of which subjects are intellectual or important, which are history’s most notable achievements, and who is worth learning about. To ignore questions of identity is to risk intellectual laziness, relying on tired ideas of canonical figures – or worse, supremacist propaganda, privileging the achievements of white men over all others.

Quite aside from making for less predictable and more enjoyable television, by including questions on the likes of Stevie Smith, Nella Larsen, Gertrude Stein, Myra Hess, Margaret Mead, and Beryl Bainbridge, University Challenge can diversify the mental encyclopaedias of its viewers, be it a tweed-wearing 60-year-old in Leamington Spa or an 11-year-old like Rosie McKeown with her own dreams of one day competing. It has a responsibility to do so.

Anna Leszkiewicz is the New Statesman's deputy culture editor.