Stagnating productivity in US construction. The UK productivity crisis deepens. How Musk is ruining his market & the battle of the brass bands in 19th-century France.
Great links, images, and reading from Chartbook Newsletter by Adam Tooze
Thank you for opening your Chartbook email.
Slide from the Monuments and Birds cycle, example of Władysław Hasior documenting his work
In construction, labour productivity in the US today is at levels close to those in the 1930s.
Local land use and state and federal environmental regulations proliferated in the early 1970s. About this time, US residential construction productivity began to decline; today, it is close to the level of the 1930s. In contrast, manufacturing productivity has risen for many decades. In the auto industry, for example, it has risen from 4.8 cars per employee per year in 1939 to around 25 per employee per year by 2020. In Why Has Construction Productivity Stagnated? The Role of Land-Use Regulation (NBER Working Paper 33188), Leonardo D’Amico, Edward L. Glaeser, Joseph Gyourko, William R. Kerr, and Giacomo A. M. Ponzetto investigate the relationship between restrictive land use regulations and the residential construction productivity decline. They find that more restrictive regulation favors smaller projects, artificially limiting the size of the firms that build homes. Smaller firms invest less in technology. A back-of-the-envelope calculation shows that if half of the link between productivity and firm size is causal, homebuilding would be approximately 60 percent more productive if the size distribution of US homebuilding firms matched that of firms in the manufacturing sector.
HEY READERS,
THANK YOU for opening the Chartbook email. I hope it brightens your day.
I enjoy putting out the newsletter, but tbh what keeps this flow going is the generosity of those readers who clicked the subscription button.
If you are a regular reader of long-form Chartbook and Chartbook Top Links, or just enthusiastic about the project, why not think about joining that group? Chip in the equivalent of one cup of coffee per month and help to keep this flow of excellent content coming.
If you are persuaded to click, please consider the annual subscription of $50. It is both better value for you and a much better deal for me, as it involves only one credit card charge. Why feed the payments companies if we don’t have to.
And when you sign up, there are no more irritating “paywalls”
Falling Chinese Treasury holdings?
For contributing subscribers only.
It may be time to panic in the UK … perhaps !?
If the official data can be believed, it is time to panic about the UK economy’s efficiency. Britain’s long-standing productivity puzzle is turning into a crisis. After kinking downwards in 2008 as the fastest growing sector and regions all underperformed, the latest data are even more gloomy.
The most recent data is alarming. Productivity levels have been falling since 2023 and the growth rate has dropped below the post-2008 trend.
I started this column saying “if you believe the data” it is time to panic. Sadly, you cannot believe the data, especially the productivity figures at the moment. Data for output, employment and hours worked are all compromised. The ONS itself recognises that its most recent figures do not reflect the latest population projections and when the new data with higher migration is incorporated, the productivity trends will look even worse. Going in the other direction, the NHS this month published much more encouraging health-sector efficiency data than the official figures, suggesting public-sector output is likely to be revised significantly higher. The hours data in all measures comes from the discredited labour force survey and its replacement will be based on a different concept entirely. The Bank of England has found the latest trends impossible to explain.
Source: Financial Times by Chris Giles
Why sanctioning tankers works so well against Iranian oil exports
For contributing subscribers only.
How BYD is redefining the auto bargain once again!
For years, carmakers have looked to driver assistance software as the key to offsetting declining hardware margins. This held promise as a cash cow, much like tech companies monetise cloud services, a high-margin add-on that would generate billions in new revenue. Tesla, for example, charges $8,000 for its driver assistance software in the US as of April. … Assuming a conservative 30 per cent adoption rate and a $5,000 fee per vehicle, a carmaker selling 10mn cars annually could potentially generate $15bn in revenue a year from self-driving features alone. … Safety sells. The question now is: can it still be sold? BYD is making that question harder to answer. By including advanced driver assistance systems as standard across its line-up — even on its $9,500 Seagull EV — BYD is challenging the pricing strategy that rivals have relied on. Automakers will find it increasingly difficult to justify charging for software in markets where BYD is offering it as standard. … the industry’s vision of AI-powered, high-margin profits may never fully materialise.
In the US, where tech rivalry with China is intensifying and BYD has little presence, restrictions on its driving software — justified on national security grounds — are likely. Such measures would effectively shield automakers’ software-driven sales in the US from immediate disruption. But that would only delay the inevitable. BYD’s global expansion is already gaining momentum. In the UK, BYD outsold Tesla in January … In Singapore, BYD has overtaken Toyota as the best-selling car brand in the city-state, a feat given this includes both EVs and petrol cars. In Brazil, the story is much the same with sales growing fourfold last year. Now, with each new market it enters, BYD won’t just be selling more cars, it could start to redefine industry expectations. History suggests that once a technology becomes indispensable, the premium disappears. Power windows, anti-lock brakes, rear-view cameras — all were once luxury features that have become standard. Once consumers get used to something as standard, there is no turning back. Just like seatbelts.
Source: Financial Times by June Yoon
As Jonathan Portes points out intergenerational mobility for migrants looks pretty good. It is a less pretty story for Germany.
Władysław Hasior, Palace of Justice, 1973
The British army today has twice as many horses in its ranks as it does main battle tanks.
For contributing subscribers only.
Musk is now putting people off his own car brand.
The Brass battle
The largest legal confrontation in 19th-century France began not over revolutionary machines or innovative pharmaceutical products, but musical instruments. This was a time when the economy was in a state of significant acceleration – what would come to be known as the second French Industrial Revolution. The July Monarchy was concerned about the growing discontent of intellectuals, politicians, and businessmen who could channel the rage of the working class. Keen to hold onto power, the monarchy sought ways to limit the influence of those merchants and industrialists who might have Republican sympathies. In 1845 King Louis-Philippe’s military acolytes, headed by general Marie-Théodore Rumigny, aide-de-camp and one of his closest advisers, decided to regulate the instrumental make-up of French military bands in order to stifle the business of French instrument makers and reduce their influence. Bands were now to include saxhorns, saxotrombas, and saxophones, the patents for which were held by the Belgian inventor Adolphe Sax. This afforded the military the pretence of impartiality, but meant that if instrument makers wanted to continue to sell to the military – and profit from the industry – they would have to make a costly agreement with Sax. Instead, in 1846, a group of instrument makers filed a civil suit against Sax contending that his patents were not legitimate and that the instruments had been invented long ago, not only in France, but also in the German states. The first stage of the civil trial lasted seven years (1847-54). Sax won the initial rounds and the technical dossier – a report on the instruments provided to the court in November 1847 – supported his case. But the Revolution broke out in February 1848, bringing with it the collapse of the July Monarchy and the resurgence of the Republic. People were changed in the organs of government, and the military bands were again redefined: Sax’s disputed instruments were removed. The new Minister of Justice of the Republic was sympathetic to French instrument makers, and in August 1848 the first judgment struck down the saxhorn patent and completely invalidated the saxotromba’s. Only the saxophone was exonerated. In February 1850 both parties appealed, but the Court of Appeal continued to consider Sax’s brasswinds patents illegitimate. Sax then appealed to the Court of Cassation – the interpretive apex of the entire French legal system – which would involve a wait of over four years. During that time, Louis-Napoléon Bonaparte definitively seized power and re-established the Empire in France. Sax’s fortunes changed again. While going through his first bankruptcy (1852) – a result of both the court cases and his preoccupation with creating new, spectacular, and unsaleable instruments – Sax received one of the highest prizes in the Great Universal Exhibition of London. Back in France, he had returned to favour. Napoleon III, hoping to use music to seduce the people with military marches and brilliant brasswinds, named Sax ‘Manufacturer of the Military Household of His Majesty the Emperor’.
Source: History Today by José-Modesto Diago Ortega, author of The Battle for Control of the Brass and Instruments Business in the French Industrial Revolution
Władysław Hasior (1928-1999), St. Scoundrel, 1961
If you’ve scrolled this far, you know you want to click: