BofE’s Ben Broadbent inserts hoof in gob, message gets tossed in can

Raven

Poor old Ben Broadbent, second in command to the suave Canadian fellow Mark Carney at the Bank of England. Mark’s a chap who can fall out of a boat without making waves, unlike his deputy.  In the hoopla about Ben’s  perhaps unwise choice of words – did you know climacteric1 was a thing? his message got lost. but it’s pretty straight between the eyes. In an article for the Torygraph in the guise of Edgar Allen Poe’s Raven, the harbinger of doom says

compared the current slowdown in growth and wages to a lull at the end of the 19th century, when the height of the steam era was over but the age of electricity was yet to begin.

Today’s economy could be experiencing a similar trough as it passes the boom of the digital era and awaits the next big breakthrough, possibly with artificial intelligence.

Ben Broadbent to British economy – you’re over the hill, every which way is down from here for at least a generation

Oy vey. And among other things it’s good to know that the ermine is doing his bit2 for this incoming doom:

something similar happened in the late Victorian era. Towards the end of the 19th century, British productivity “slowed pretty much to a halt” after peaking, as it entered what he labelled a “climacteric” period.

The word “climacteric” is, according to Mr Broadbent, a term that economists have borrowed from biology and means “you’ve passed your productive peak”. It has the same Latin roots as “climax” and means “menopausal but it applies to both genders”, he said.

Mr Broadbent added: “I once got an economist to explain the origins of the word ‘climacteric’. As soon as he started talking to all these middle-aged men – about [how] it means you’re past your peak and you’re no longer so potent – they all said: ‘We understand’.”

Hehe. I understand that climacteric bit, after all I am no longer a productive member of society. For those lucky enough to have the choice, it comes from the age-old arc of a human life, poetically summed up by Carl Jung thusly:

It seems to me that the basic facts of the psyche undergo a very marked alteration in the course of life, so much so that we could almost speak of a psychology of life’s morning and a psychology of its afternoon. As a rule, the life of a young person is characterized by  a general expansion and a striving towards concrete ends; and his neurosis seems mainly to rest on his hesitation or shrinking back from this necessity. But the life of an older person is characterized by a contraction of forces, by the affirmation of what has been achieved, and by the curtailment of further growth. His neurosis comes mainly from his clinging to a youthful attitude which is now out of season….

Carl Jung, 1929, CW 16, ¶75

You gotta live this to know it3, and worse still, we have both a youth-focused culture and a materialist-rationalist one. Both of these do the first half of life in spades. Youth is expansionist towards concrete ends, all the stuff that we measure by GDP. I’ve used that quote a lot on here because I find it is a key to retiring well – after all, a retiree does surrender some of that expansion, giving up work is a pretty big step in that direction. Too many people find work was much of their meaning of life in their 50s, their kids may have left home, they haven’t yet had the opportunity to find meaning in their grandchildren, there’s nothing reflected back from the rest of the world, particularly if most of the latter is still at work and they aren’t. Carl carries on

The very frequent neurotic disturbances of adult years have this in common, that they betray the attempt to carry the psychic dispositions of youth beyond the threshold of the so-called years of discretion. Who does not know those touching old gentlemen who must always warm up the dish of their student days, who can fan the flames of life only by reminiscences of their heroic youth—and who for the rest, are stuck in a hopelessly wooden philistinism?

[…]

We wholly overlook the essential fact that the achievements which society rewards are won at the cost of a diminution of personality. Many—far too many—aspects of life which should also have been experienced lie in the lumber-room among dusty memories. Sometimes, even, they are glowing coals under grey ashes.

Jung gets odd support, for instance from the likes of Steve Pavlina – someone so driven that I can’t ever imagine living under that sort of funless regime. HuffPo has a nice piece on this too by a female writer.

Now being less expansionist all very well for a person, but there are too many of these layabouts in the economy for Mr Broadbent. The Ermine has been a totally unproductive bastard wandering about taking a look at things like this

Ring of Brodgar, Orkney

and this

which is a total deadweight from the point of view of the economy. Perhaps not in the first case but definitely in the second, and I did my bit for the balance of payments deficit.

Britain is ageing, and more and more of us are past the climacteric in economic terms. Young people like that Monevator fellow just don’t get why these old boys want to check out of the economy, because they have yet to rattle across the second half of life bit, and that’s just fine, we need people going great guns keeping the engine of capitalism oiled and running. Not everybody gets to the retire part of financial independence/retire early – there are some that stay working till they drop, electively. There’s nothing wrong in that at all, each to their own, and yet from observation I would say that staying outward focused4 in the second half of life can come at the cost of some spiritual5 self-development.

While I left work for negative reasons about six years ago, I suspect by now even if that hadn’t happened, I would be starting to ask myself what the hell is the point of going to work to earn money that I probably don’t need, while it blocks out my days getting in the way of more congenial things I could do with my time. I do appreciate that I am fortunate in that this choice is a possibility for me. But it’s part of the Turning Inwards than Jung spoke of, and while that call starts softly in the background it becomes more compelling with time. If you hear the call and don’t heed it, then often like many things in the human psyche that are suppressed, they back up and transform into the neuroses Jung talked about. As these inner needs try and force themselves up into the light of consciousness, the effort needed to suppress them tends to increase with time.

What Ben meant to say, before we got all distracted

Enough with this metaphysical shite. What did our Ben actually have to say, after he extracted his hoof from his gob? I actually subscribed6 to the Torygraph to get the inside skinny, ‘cos I felt sorry for poor fellow, and also because if the ravens are threatening to leave the Tower of London yelling curses then I want to know, even if their language isn’t exactly #MeToo.

Incoming from all points

Ben said there be deep shit ahoy, incoming all points

“The result of a long period in which productivity growth is weak is not so much that I get more employment than I otherwise would have done, it’s that I get less output growth and less income growth,”

That less income growth is a bad signal for a lot of social goods. I experienced a three times increase7 in real earnings over my thirty-year working life. Not all of that increase was my own work – while the grizzled old ermine was more accomplished at many things and handled people a lot less badly8 than his younger self, some of it was improvements in technology and general accumulated collective knowledge. I started work with green-screen VT100 terminals connected to a VAX cluster, when I left people had a similar computing power to that in their back pockets, networked at 4G rather than 9600 baud. Sadly they used much of it for Facetweeting, perhaps Ben should see if switching that off would improve British  productivity 😉

And that’s drying up, now, according to Ben. Think, for a moment, what that means. I grossly overspent on my first house in youthful exuberance, but as the tide lifted all boats, I was eventually able to buy my way out of that hole and accumulated inflation plus my increased real earning power diminished the capital part of my mortgage. That won’t necessarily happen for today’s mortgage holders; in real terms they may need to pay back more of their borrowings than I did.

Inequality will increase. Think back to other times when  growth was slow, pretty much any time before the Industrial Revolution. Under such circumstances capital accumulates much faster than increases in earnings as that fellow Piketty said, ancestral capital matters much more. Be a King or the nobility rather than a serf, preferably starting many generations back. Wealth inequality increases – there’s an argument that the massive increase in productivity post WW2 helped the poor and blue-collar workers and the middle classes more relative to the rich – in previous generations I would have been far too poor to go to university because I have no inherited financial wealth, and those times will come again I would imagine.

It’s not a pretty prognosis, particularly if you have most of your working life ahead of you, unless you already have a decent amount of capital. YoungFIguy will probably thrive in that environment, because he is young (so has much compounding ahead of him) and has capital behind him. A young ermine starting out now would be stuffed.

A stuffed Ermine. I don’t approve. Ermines should not be stuffed IMO

I don’t have any clever ideas of what to do about it, although the usual shibboleths of personal finance apply – carry less debt, because your real wages won’t increase enough to outrun it. Probably have fewer children if you aren’t rich and really get behind those you do have, and look forward to having the daily pleasure of their company sharing your gaff until their 30s.

There are a lot of things that will get harder if this secular stagnation is true, and Ben is that raven bill rapping on the window in threes, telling us the good times have gone and will not be back for a couple of generations…

About those good times, Ben? When will we see them again?

Nevermore, quoth the Raven

The Torygraph happens to be a major Brexit booster, and I’m kinda tickled by some of their professed puzzlement, viz:

Modern societies expect to become more efficient and hence better off as their economies grow. But in recent years the amount of output being produced per working hour has levelled off. The economy continues to grow but mostly because the population is getting larger.

Lots of theories have been posited for this so-called “productivity puzzle”, which is particularly pronounced in the UK.

Now I do wonder why this pestilence afflicts the UK in particular. Maybe because we told a lot of productive members of the population to f*** right off and go back to where they came from a little while ago? Surely not, at least nary a word was whispered about that possible cause in the Torygraph 😉


  1. Me neither – it is noun: Physiology. a period of decrease of reproductive capacity in men and women. 
  2. I was having fun dragging this into the productivity problem. Although other people opine that the impending retirement of the baby boomers will damage the economy, in fairness to him Ben didn’t actually lay this charge, despite his unfortunate choice of phrasing putting half of this cohort and GenX’s nose out of joint. 
  3. Carl Jung didn’t have to live it to know it, I guess he observed it though his patients. He wrote that in 1929, so he was 54 at the time. Climacteric, according to Broadbent, but not totally over the hill. Jung died in 1961 
  4. Balance in all things, turn inwards exclusively and you’ll disappear up your own backside. Stay interested in the world, keep learning, interact with others, for sure. But focus too much on extrinsic things and fail to tend the garden of your inner being, then it will become parched and desertify, these are the old guys Jung talked about that always hark back to their student days, or the time they were in the military, because the intensity of their earlier experiences is never matched in their experience as lived since. It always disturbs me when I hear someone say their childhood was the best time of their life, not because I had a terrible childhood, far from it, but I find life lived with adult agency surpasses the limited life of a dependent child. 
  5. before I get yelled at by militant atheists, I mean spiritual in the wider meaning of what it is to be human and doing that well, which I find is not purely about material stuff and the experiences you have. I don’t think you have to have any belief in God or a discarnate higher power to do that, the world of human experience is very wide. But I do think that if you stick to the material then perhaps it’s best to stay with the foci attended to in the first half of life, at the possible expense of some self-development nad inner peace. But each to their own, it’s your life, live it by your own lights as long as you extend that grace to others. 
  6. Obviously I subscribed as a freebie, and ain’t Private Browsing and throwaway email accounts wondrous things for getting ermine#1-10, one doesn’t want to give the rapacious British rightwing press any financial support for the bilious blatherings that makes up a lot of the rest of their output 😉 Private Browsing ain’t just for onanists, y’know. It fights the Barclay Brothers too 
  7. the increase is tough to determine accurately because it’s sensitive to the original datum. I tossed out the crap jobs I had as a kitchen porter, which was paid a lot worse in real terms than the current national minimum wage 
  8. my primary school headmaster wrote a valedictory letter in which was generally positive on a Ermine’s capabilities as evidenced in tests before I entered grammar school. However, he did observe “this young mustelid doesn’t suffer fools gladly”. 40 years of living has never convinced me that fools shouldn’t be ignored at best and preferably run out of town at the earliest opportunity. However, those 40 years have shown me that it is often a very wise thing to be more circumspect around fools, because they can always be more fool that I can be clever ;) 
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23 thoughts on “BofE’s Ben Broadbent inserts hoof in gob, message gets tossed in can”

    1. It is indeed – I think it’s the bottom one of this pair closest to the sea, Mnadjra. The Malta temples were fantastic, and I managed to get to them using the bus, because the airport transfer convinced me I wasn’t hard enough to drive on Malta despite being OK driving in London and even in NYC outside the rush hour 😉

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  1. Another Tim nice-but-dim forgets his finishing school training on how to parley with the great unwashed sea of plebs one is destined to rule over. In their gilded world, our supreme rulers live in an echo-chamber of sycophantic lackeys who’re the only people they’re not related to or permitted to befriend, so it’s easy to see how they can trip up when informing the great unwashed.

    Luckily for him, he will be just fine, if he was connected enough to get the role he has, with his abilities, life will be like a box of chocolates, (if only the most expensive) one can simply select another plumb post that takes one’s fancy at the time. Perhaps in our currently more Orwellian-than-usual world, he could be the next foreign minister given his now proven credentials in diplomacy; (Think Minister of Justice for Otto in ‘A Fish called Wanda) how can one fail when the game is that rigged?

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  2. The British productivity puzzle isn’t that much of a puzzle surely? Britain has deindustrialised to a greater degree than any other developed economy and moved toward services. It has also allowed in an enormous number of low skilled people.

    It is much more difficult to apply automation, mechanisation, and economies of scale etc to services. The industrial sectors that would have benefitted from these technologies such as large scale manufacturing, mining, and heavy industries have atrophied or disappeared altogether. Instead there has been a vast expansion of low productivity sectors such as retail, logistics, financial services, tourism etc. This has been combined with a huge supply of cheap unskilled labour from abroad which has removed the incentive of service companies to innovate and invest to improve productivity in service industries. An amazing example of this to me is the humble car wash. In the 80s these were automated. Now car washing is done by hand by a crowd of low paid workers from the world’s latest refugee hotspot. Labour is so cheap and freely available that automation is pointless.

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    1. You’re mostly right, though I wouldn’t call financial services a low productivity sector. It was a major contributor to the productivity growth in the UK before the financial crisis. The sector is however cyclical and of course it took a hit in 2008. Check this out:
      https://www.bankofengland.co.uk/-/media/boe/files/speech/2018/the-fall-in-productivity-growth-causes-and-implications.pdf?la=en&hash=FC604765727E702F0DEB4DE5EE779F87DD7E9EAD

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      1. Thanks for the link to the report.

        As an aside I am curious as to how productivity is defined in relation to a services and how it is then measured. It is easy to measure the productivity of a factory worker or truck driver but surely almost impossible to measure for most white collar workers.

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  3. My 2p is the following:

    The UK has suffered from Dutch Disease. The North Sea oil discoveries coincided with a sharp drop in the competitiveness of our manufacturing industry.

    A lot of the damage was “hidden” by the 80s and 90s boom in financial services. When the financial crisis hit, and oil prices peaked, the UK’s productivity took a nose dive. The ‘easy’ oil reserves are tapped. It takes more and more effort to get once flowing reserves. The windfall from the North Sea has been pissed away (unlike in Norway).

    The Government has followed austerity as its fiscal policy, drastically reducing the investment needed to spur growth. Conscious of having a jobless recovery (like in the 70s and 80s) high employment has been targeted. It necessarily means that real wages have fallen. Benefit policies have forced many of the most unproductive into work – often low-paid transitory jobs.

    None of this means we are doomed to a future of poor growth. But it needs a change in mindset (deficit does not mean bad, invest for the long term in meaningful projects, less political point scoring).

    On the capital point. It’s always been thus. Piketty has shown that over history capital almost always out grows wages. It is only that every now and then really bad stuff happened to shake things up (wars of religion, French revolution, Russian revolution, WW1 and WW2). We’re currently going through a period where capital hasn’t been ruinously destroyed for some time.

    It leaves one in a quite depressing scenario: those without capital are screwed unless really bad things happen (huge house price crash anyone?). As you note, I’m lucky in some respect. It’s a sad and necessary truth of capitalism.

    Thanks for a thoughtful post Ermine!

    Liked by 2 people

    1. I’m just the messenger. It was Ben and his raven wot did it. I’m also reading Martin Ford’s The Rise of the Robots which unlike his more upbeat The Lights in the Tunnel seems to be pretty much with Ben’s raven too. Naturally there’ll be sorts that chunter “lump of labour fallacy” till the cows come home, but I have the feeling the raven’s onto something

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  4. It is an interesting post, as I have recently finished reading a book focused on this problem from an American perspective: ” The rise and fall of American growth” by Robert Gordon. The main thesis of the book is that we live in a world of technological stagnation and growth has been anemic for the last half century, but for a brief spell in the years 1995-2005 caused by the IT revolution. Once this has been assumed, there has been no significant new technological development since. So it is a global problem, not a british one. I think that the main thesis of the book is correct , so no new sources of rapid growth will appear in the next couple of decades. That will probably lead to an ever increasing amount of inequality and international tensions.

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    1. When I was a boy we were promised that we’d all travel to work by gyrocopter and moving pavement. Ha! There was a fair bit of innovation in the early years of my life – a momentum effect from WWII I suspect – but nothing remotely on the scale of the industrial revolutions from the mid eighteenth century onwards. The best book on the subject that I know covers a narrow field but covers it well: James Le Fanu “The Rise And Fall Of Modern Medicine “.

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      1. I read those articles in ’60s juvenile tech-y mags like Treasure or WoW or Look and Learn – I still remember one idea of moving walkways which had about five levels of speed-increased parallel strips. And never coming to a satisfactory conclusion of what would happen if you tripped up, other than that it wouldn’t be good…

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    2. > growth has been anemic for the last half century, but for a brief spell in the years 1995-2005 caused by the IT revolution.

      1-2% growth per year is an extremely high number by historical standards ( 0-0.1 % being the norm in medieval times ).

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      1. > 0-0.1 % being the norm in medieval times

        I do wonder if the aristocracy will be back with a vengeance as inherited wealth becomes A Thing again. OTOH you need principles to preserve it across generations, and those principles aren’t hedonistic YOLO consumerism

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    3. We are about to enter the Lithium age. Electrication of transport and energy storage will see huge growth opportunities for countries with the foresight to invest in such technologies. Alas, the UK does not have the skills or the infrastructure to rise to the challenge. We are good at weddings though!

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      1. I think we did have a period of resource curse with North Sea oil and gas. It made us economically lazy in exactly the same way as happens with other resource-rich countries. Then when the easy money goes away, everyone just stands around looking blankly at each other.

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      2. I’ve occasionally wondered that – the money for the council house giveaway came from somewhere, and the unbalance towards services in our economy seems stronger than other Western European countries. There again, the UK economy wasn’t in terribly good shape at the end of the 1970s when North Sea Oil started to come onstream I think.

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  5. @ermine North Sea oil and gas production started in early 70’s and peaked in 1999. Revenue from this asset was much more volatile as the price fluctuated, but really took off in mid-late 70’s and was gushing when Thatcher took office. It peaked in about 1984, crashed down and then built up to another peak in 2008/9 (surprisingly). No politician seems to have been good at asking the two fundamental questions – how do we manage the production of this national asset to get the best overall income, and what do we need to put in place for when it runs out (or the price collapses)?

    So the oil income cushioned the impact of the collapse of physical production, but was not used to invest to reshape the economy. It was just enjoyed in the moment. So now we are where we are.

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