Does Starbucks really smell the coffee on staff training?

If Americans had an urge to pop into a certain ubiquitous coffee chain yesterday afternoon for a caramel cocoa cluster frappuccino, a pumpkin spice latte, or just an espresso, they would have been disappointed. Every single one of the 8,000 Starbucks shops in the US was closed. The Seattle-headquartered caffeine peddling phenomenon has not gone bankrupt. Nor has it been affected by some catastrophic nationwide sanitary crisis.

The shops were all shut because the entire 175,000-strong US workforce of the company was undergoing "diversity training". The cost of the great Starbucks shutdown in foregone profits has been estimated at around $12m (£9m). That may sound like rather a lot of "bucks" to spend on staff training. But that figure needs to be put in the context of the chain's $2.9bn of global profits last year. Starbucks can afford to make this expense. Arguably, it can't afford not to.

The company's US training day was prompted by a public relations disaster last month, when staff in a Philadelphia branch called the police to arrest two black customers, one of whom had merely asked to use the toilet. Such a reaction would be outrageous in any country, but in America, with its shameful history of racial segregation (including "Whites Only" restrooms) and a current president who describes white supremacists as "very fine people", one can easily see why it's especially toxic.

The Starbucks training day, we're told, will encourage workers to talk about their implicit biases and stereotypes when encountering ethnic minority customers. To understand the underlying economics of this story, it's necessary to grasp the nature of Starbucks' business. Starbucks doesn't hold a patent on coffee. It doesn't own the majority of the world's coffee plantations, or enjoy a global monopoly on the supply of beans.

For all those inventive recipes, it doesn't have a secret formula that cannot be emulated. Its coffee-making equipment is essentially no different from what can be found in most other coffee outlets. Nor does Starbucks own the freehold of those tens of thousands of shops in prominent locations in cities and towns around the world. Nor do its staff have any kind of unique training that enables them only to work in Starbucks; they could just as easily ply their trade for one of its many rivals.

Add up all the cash, property and sacks of coffee on Starbucks' balance sheet and one comes to a figure of $14bn. Yet the company's stock market valuation is closer to $80bn. What explains the difference? The value of its brand. If the Starbucks brand is harmed, all those revenues, all those profits, risk melting away like foam on a cappuccino. Of all the associations that the multinational Starbucks brand wants to avoid, racial bigotry must rank pretty highly. Protecting that brand is paramount. And $12m is, in this context, a pretty small price to pay.

However, that's not the end of the financial considerations. Research suggests that top-down, mandatory, one-off diversity training exercises often fail to deliver results, with any lessons learnt rapidly fading.

Voluntary programmes, and training designed to build a genuine sense of engagement, and to directly expose workers to different social groups, seem to do much better.

The greater financial risk for Starbucks lies not in the size of the outlay, but in the danger that this training is ineffective; if it represents a cosmetic public relations exercise rather than a serious operation to educate its workers and managers in how to treat customers. It's not enough for a firm to wake up and smell the coffee when a brand is in jeopardy. It needs drinking too.

Dog bites man and driverless Tesla crashes

Are journalists innumerate? Elon Musk and Steven Pinker think so. A range of news outlets reported earlier this month that one of Musk’s Tesla cars, in “autopilot” mode, had crashed into the back of a fire engine in Utah at 60mph.

The vehicle’s technology apparently failed to prevent the collision, as it ought to have. Thankfully, no one was seriously hurt, although the driver broke her ankle.

Musk took to Twitter to vent his frustration at the fact that what he regarded as a minor traffic accident had been considered “news”.

“It’s super messed up that a Tesla crash resulting in a broken ankle is front page news and the 40,000 people who died in US auto accidents alone in past year get almost no coverage,” he grumbled.

The popular Harvard psychologist Steven Pinker has endorsed this, tweeting: “Elon Musk is absolutely right about this. Journalistic innumeracy is damaging in many ways, and editors should put an end to it.”

In some ways Musk is talking nonsense, and self-serving nonsense at that. Driverless vehicle technology is consistently presented as one of the revolutionary innovations that will transform our lives in the coming decades, not least by Elon Musk.

But will it be a beneficial revolution? Putting one’s life in the hands of a fast-moving machine feels risky and people naturally want to know if it is actually safe or not. That will be determined by the reliability of the kind of sensors used in Tesla’s autopilot technology. The idea that the media were excited by the Utah crash because of a broken ankle rather than the apparent failure of the technology is obtuseness squared from Musk.

And then there’s the self-serving element. Tesla, and Musk’s other projects, as my colleague Jim Moore has pointed out, have benefited hugely from obsessive media coverage and a lot of hype. To lap up all that free publicity when it’s commercially useful but then to complain about the massive media interest when it’s more problematic represents a monumental cheek.

As for news values, as the old saying goes “dog bites man” is not a news story, whereas “man bites dog” is. Those multiple daily car crashes are not news precisely because, as Musk notes, they are so common. Crashes by driverless (or autopilot) cars are news because they are so rare.

All that said, the thrust of the Musk/Pinker critique has some validity. The media’s obsession with “man bites dog” stories can distort the public’s sense of risk. As the behavioural economist and psychologist Daniel Kahneman has documented, we are all prone to recall what comes easily to mind (the “availability heuristic”) when making judgements about danger.

Because plane crashes get far more coverage in the media than car crashes, many people wrongly assume air travel is far more hazardous than driving. In fact, the fatal accident rate for large commercial airlines is one for every 16 million flights. Last year was the safest for aviation on record.

The automobile, on the other hand, as John Thornhill of the Financial Times has pointed out, has a claim to be the most deadly human invention ever, with around 1.25 million road traffic deaths a year globally. Musk is right to suggest that this is the correct statistical context in which to view the development – and indeed the risks – of driverless technology.

The media has a proven ability to create “availability cascades”, creating panics and scares based on not very much. Think of the News of the World’s notorious “name and shame” paedophile campaign in 2003, which gave the impression that there was a child molester on every street and prompted mobs to attack innocent people.

Consider Donald Trump’s recent claim that London is“like a war zone”. Does media coverage of the recent spike in youth violence in the capital – in particular, the failure to put the deaths in the appropriate statistical context – help to stoke that kind of malevolent hysteria? Think of the recent ubiquitous claim that London has a higher murder rate than New York.

There’s also reason to believe skewed media coverage tears at the social fabric. Surveys suggest British people think a fifth of the UK populations are Muslims, when the true figure is 5 per cent. We think a quarter of the population are immigrants, when the actual figure is around 14 per cent. Those grossly distorted perceptions are due to distorted media coverage – and not just from the shameless right-wing propaganda corp.

Pinker claims in his recent book, Enlightenment Now, that too little attention is given by the media to the major global health advances of recent decades, such as falls in childhood mortality and rising longevity, and that this omission contributes to an unwarranted sense of demoralisation. His overall case is overstated and flawed in some respects, but he’s right to claim that a sense of balance is often lost.

Should Tesla’s Utah crash be considered news? Yes. Should journalists think more carefully about statistics and consider whether their news values in general are sound and genuinely serve the public interest? Also, yes.

Journalists on autopilot have done far more damage than Teslas.

Europe's symphony of complacency over Italy's economic disaster

Italy has a new coalition government. One wing of it aligns with France's Marine Le Pen, admires Hungary's Viktor Orban and is determined to forcibly deport half a million migrants over the next year and a half. The other wing is stuffed with antivaccine conspiracy theorists and is so chaotic that it makes Ukip look like New Labour in the 1990s.

Both wings are sympathetic to Vladimir Putin and are pushing for European sanctions on Russia to be lifted. Their puppet prime minister is to be an obscure law professor who appears to have embellished his meagre academic credentials.

As if all this wasn't bizarre and depressing enough, both Five Star and The League have campaigned in the past for Italy to ditch the euro.

Though quitting the single currency does not command majority support in Italy, many suspect the strategy of the two movements is to provoke a clash with the rest of the single currency area's member states and to profit electorally from the ensuing chaos. In other words: these populists relish playing with fire.

And with a study by the European Council on Foreign Relations think tank suggesting that levels of EU cohesion in Italy have plummeted over the past decade, there is plenty of combustible material around.

Perhaps it's the fact that the anti-establishment Five Star was founded by a comedian, Beppe Grillo, that has led to financial markets struggling to take its tie-up with the xenophobic League seriously.

Despite a selloff of Italian bonds over the past week, the country's interest rates are still very low. At around 2.35 per cent, they are no higher than they were even a year ago. These are not levels that scream "emergency". Those 7 per cent-plus Italian interest rates, which almost destroyed the entire single currency in 2011 and 2012, are nowhere in sight.

The assumption seems to be that Italy's populist experiment will be contained by the country's domestic institutions (particularly its strong presidency), the backstop bond-buying of the European Central Bank and the unflappable statecraft of Brussels, Paris and Berlin. The Eurogroup and the European Commission successfully faced down the kamikaze far-leftists of Syriza in Greece in 2015, goes the logic, so they can do the same to the Italian populists.

A lot of traders have lost money over the past five years wagering on the demise of the single currency.

Perhaps it's not surprising that few seem to want to make that bet again now.

Yet whatever the dance playing out in financial markets, the mood music from Europe's mainstream leaders over the populist takeover in Rome has been a symphony of complacency. The most they have roused themselves to say in public is that there will be no relaxation of the eurozone's rules, whatever the Five Star/League programme demands.

A generous view would be that they are carefully working out their next move. But Europe's leaders should not really be asking themselves how to handle Five Star and the League but questioning how it came to be that they will soon be sitting across the table from them in the first place.

The answer is surely that Italy's economy is a disaster zone. We talk, with good reason, about a lost decade of growth here in Britain in the wake of the financial crisis. But compared with Italy we have been in an emerging market-style boom.

Per capita GDP in Italy is still more than 8 per cent lower than it was when Lehman Brothers went bust in 2008. Quite incredibly, it is even lower than it was when the country joined the eurozone back at the turn of the millennium. Unemployment stands at 11 per cent, down from a peak of 13.1 per cent in 2014, but still double the 5.8 per cent low seen in 2007.

This story of economic failure must surely be a large part of the reason why Euroscepticism has taken hold of this once supremely enthusiastic member state and why the country's mainstream political parties have collapsed, letting in a bunch of populist cranks and xenophobic authoritarians.

Much of the new coalition's programme is misguided. Some of it is repellent. But the call for a reconfiguration on the eurozone's fiscal and monetary rules is justified.

Italy certainly needs market reforms. But it also needs more public investment. And the eurozone's policymakers have undermined Italian domestic reformers by keeping the macroeconomic environment far too restrictive and ignoring the polite calls of successive waves of technocrats in Rome that they need support.

The calls now will be less polite. But the great fear is that the eurozone's leaders, like the Bourbons, have learned nothing and forgotten nothing.

How much is the 'free' internet really worth to us?

On my morning commute last week I decided to dip into a bit of 18th-century philosophy: Hume's fork, Kant's Critique of Pure Reason. Then I veered off into some physics: Newton's law of universal gravitation, Einstein's theory of general relativity. But what's even more remarkable than my geekiness is the fact that I did all this on my smartphone. The articles were on Wikipedia. And I started out not with a planned reading list but with Google.

In those ancient days before smartphones, wifi on public transport, and, of course, the internet, I would have needed to go to a library to read up on such an eclectic range of topics. Or I would have needed to carry a number of books around with me, carefully selected before leaving the house. We all know that digital technologies have changed our lives over the past decade. But what is harder to pin down is how much this benefit is worth to us economically.

Leaving aside for a moment the issue of advertising and our personal data, there is no upfront charge to use a search engine like Google. Wikipedia is, of course, a public resource. But this means there is no price tag for economists to use in order to impute the value we all derive from such new services.

But that doesn't mean economists have given up on estimating it. In 2010 Yan Chen from the University of Michigan conducted an experiment to see how much time people save through searching for information online relative to the older methods. She found that the average online search time for a given task is seven minutes, versus 22 minutes for the offline search. We should perhaps take the research with a pinch of salt given that it was partly funded by a Google research grant. Yet there seems little reason to doubt the basic result that online search is around three times quicker than the older methods. When was the last time you went to the library, or opened an old-fashioned dictionary to look up a word's spelling? 

So how does that help us to value such services? Time is money. To get a very rough estimate of the value of your time consider how much you get paid per hour. Now consider how much time a day you spend searching online for information. Multiply the time spent searching by your hourly pay rate. Now double it. That's a rough estimate of how much online search engines benefit you financially. Or, if you're searching of information as part of your job, that's how much the technology benefits your employer by making you more productive.

But let's think about it from another perspective. Google saves us time. But is there not value from spending longer on the internet sometimes too? Think of time on social media catching up with friends and family. Erik Brynjolfsson of MIT conducted a survey in which Americans were asked how much they would have to be paid not to use the internet for a month. From these results he and colleagues were able to derive a rough estimate of how much value individuals derive from various online services. The value of social media - the likes of Facebook, Instagram and Snapchat - for Americans in 2017 was put at $322 a year. The value of search engines was put at a whopping $17,500.

Brynjolfsson presented his results at an Office for National Statistics conference about measuring the economy last week, hosted by the Bank of England. He argued that such benefits for consumers from the new digital economy are being missed in the national accounts of countries like the US and the UK - and that statisticians should consider using work like his to incorporate them. It wouldn't be a trivial adjustment. Brynjolfsson's figures suggest free sites added around $ 100bn a year to the US economy between 2007 and 2011, around 0.75 per cent of GDP.

Speaking at the same conference was Hal Varian, Google's in-house economic guru. Varian made a point about free cloud storage for digital photos, offered by firms like his employer. How much is this service worth? Well, he noted that Kodak used to say that people would rush into a burning home for three reasons - to retrieve family members, pets and, finally, photo albums. Again, the fact this claim came from a photography company might detract a bit from its credibility. But it rings true. The implication of the fact that many people would be willing to risk their very lives for their photos implies the digital photo revolution has an implicit financial value to people - and a significant one.

So should statisticians be making substantial adjustments to their national accounts as Brynjolfsson, Varian and many others suggest, in order to capture the undeniable value to consumers of new free online services? Aren't we underestimating an important area of economic growth by our failure to do this? There are reasons to be a bit cautious. First, as mentioned earlier, there is a question mark over whether we actually should regard all these services as free given some of these firms run a business model in which they sell our personal data to advertisers. Wikipedia might be a nonprofit, but Google and Facebook most certainly are not.

Second, there are many other goods beyond the digital realm that people value - and which one could attempt to measure through surveys - which do not enter the national accounts. Consider clean air, or friendship, or political freedom. How much would we pay not to choke on smog? How much would we pay to be free of the fear of being locked up by a repressive regime? Perhaps the problem is less that official measures such as GDP are not fit for purpose in the digital age but that, in the digital age, we place too much weight on GDP as an indicator of our changing quality of life.

Welcome to Jim Ratcliffe’s Britain

Not since the days of Margaret Thatcher has a trade union been so comprehensively outmanoeuvred. In 2013 the petrochemical giant Ineos announced that its Grangemouth refinery, Scotland's biggest industrial site, was losing money.

To restore profitability, the management demanded cuts to employees' benefits, including an end to their final salary pension scheme.

The workforce refused and, represented by the Unite union, voted to strike. But when Ineos threatened to shut down the entire plant in response they caved in, agreeing, against the advice of the union, to swallow all of the management's terms, including a pledge not to strike for three years.

The founder of Ineos and the man who broke the resistance of those Scottish fitters and labourers was Jim Ratcliffe, named by the Sunday Times at the weekend as Britain's richest man, with his 60 per cent stake in the company valued at around £20bn.

The media has made much of Ratcliffe's humble origins, growing up in a council house in Oldham, and being publicity-shy. Yet his reticence in promoting his interests should not be exaggerated.

There was a disturbing coda to the Grangemouth showdown. Documents revealed last year (thanks to a rare freedom of information request that was not frustrated by officials) show that in the months before the 2013 industrial action, Ratcliffe had been privately lobbying the former chancellor, George Osborne, on the need to erode union rights. The Ineos man urged Osborne to "remove the right to strike, directly or indirectly" over threats to workers' pensions.

Billionaire business owners can get a private audience with a chancellor in which to push their preferred policies. How many trade unions have had similar opportunities in recent years? The "beer and sandwiches" these days are for reserved for executives.

We can speculate on why Osborne's door was open to Ratcliffe. Ineos had ostentatiously shifted its headquarters out of the UK to Switzerland in 2010 in order to trim the company's corporation tax bill.

Personal pique also seems to have played a role in the departure. Ineos, struggling with a large debt burden in the wake of the global financial crisis, had asked earlier that year for a special VAT tax break from the UK government. The favour had not been granted. Ratcliffe vented his frustration at that time at not being able to make his case directly to a government minister (although he apparently did get access to the powerful cabinet secretary Jeremy Heywood).

As part of that 2013 capitulation, Grangemouth's workers agreed to a three-year pay freeze. That's a microcosm of the wider economy over the past decade. In real terms average wages are more than 6 per cent below where they were 10 years ago - this has been the worst decade for pay growth since the Napoleonic wars. And official projections suggest the pre-recession peak for wages will not be reattained until well into the next decade.

Theresa May's preferred form of Brexit - leaving the single market and the customs union - will, according to the government's own projections, compound this economic damage to living standards.

Incidentally, Ratcliffe is a fan of Brexit, and has been lobbying the government to reduce environmental taxes on companies like Ineos when Britain leaves the European Union.

Wages and living standards for most people in Britain remain under severe pressure. But some aren't doing too badly. The combined wealth of Britain's 1,000 richest residents rose 10 per cent in 2017 according to the Sunday Times' calculations. That's a £66bn increase, with £15bn of that jump accounted for by Ratcliffe alone. It's hard to credit that Ratcliffe's wealth has risen so dramatically in only a year; his net worth was either under-measured before, or possibly overestimated now. Much remains opaque since Ineos is a privately held company.

Yet, whatever the truth about his fortune, Ratcliffe makes a suitable figurehead for the modern British economy. Soaring wealth for the union-busting, tax-avoiding, regulation-reviling boss with ready access to the ear of the country's top politicians and policymakers. Stagnant wages, hollowed-out pensions and chronic insecurity for his workers.

Theresa May said she wants to create an economy that works for everyone. At the moment, it feels like a country that works for the likes of Jim Ratcliffe.

'Neoliberalism' and nonsense

Here's a fun fact: the founder of neoliberalism was a Corbynista.

Well, not exactly a Corbynista. The German sociologist Alexander Rüstow died in 1963, long before Jeremy Corbyn entered Parliament, let alone became Labour leader. But some of the economic policies Rüstow advocated bear a striking resemblance to those pushed by Corbyn today.

Rüstow, according to the valuable research of Oliver Marc Hartwich, was in favour of the nationalisation of rail companies and utilities. He supported an active industrial policy to ease the social impact of economic upheaval. He wanted to reduce inequality through high inheritance taxes. He proposed higher taxes on large companies. "The economy is there for people," Rüstow insisted. Any of that might have come out of Labour's 2017 election manifesto.

From this historical perspective, the cry from Corbyn's intellectual outrider Paul Mason last week that "Labour needs to wage war on EU neoliberalism" sounds pretty strange. Yet, of course, the definition of neoliberalism that Mason is using is different from that put forward by Rüstow in the 1930s.

For Rüstow, neoliberalism was a third way between socialism and British-style laissez-faire economics. It was conceived as a specific cure for late 19th-century German-style corporatism, with its proliferation of cartels. Mason's conception, on the other hand, stems from the theorising of Michel Foucault in the late 1970s, who saw neoliberalism as an ideological project to transform all of society into a giant marketplace.

This freemarket fundamentalist conception of neoliberalism owes more to the thought of Friedrich Hayek and Milton Friedman than Rüstow.

Words can change their meaning, of course. And there's no reason Mason, or anyone else, shouldn't use the modern definition of neoliberalism as a kind of unhealthy fetishisation of markets. After all, this is what most people today understand by the term. Yet it's important to ask whether Mason, and others on the radical left, are justified in describing the EU as part of a neoliberal project - especially when they use this framing to argue that Labour should be wary of joining the EU's single market after Brexit.

With its high levels of social protection, state-owned rail companies, nationalised utilities and banks, various price controls and industrial interventions, the European continent does not, on the face of it, look like the neoliberal hellhole of the leftist imagination. Europe actually seems to be a collection of social democracies and what Peter Hall and David Soskice described as "co-ordinated market economies". Yet, according to Mason, the European "social market economy" is merely "the specific European form of neoliberalism" because "it prefers private over public, vaunts market mechanism over state direction or subsidy, relies on effective competition to make capitalism fairer, rather than strong regulation."

This is rather like arguing a hot bath is merely a warmer form of a freezing cold bath. It's a definition that ignores the experience. Most normal people, when they run a bath for themselves, are concerned with how comfortable it feels when they get in it, rather than which tap most of the water came out of.

The insights of Hayek and Friedman about the utility of markets - in particular the access to the socially dispersed knowledge embedded in them - are valuable. Yet it's also true that a mentality that presents the extension of markets as the answer to every social question is a destructive pathology. The merit of the post-war social democratic settlements of countries like Germany, France, Sweden and the Netherlands is that they have located a reasonable balance between those two extremes. Any theoretical framework that crams Germany's Social Democrats into the same category as the US Republicans or the hardline Thatcherite wing of the Conservative Party has either gone badly awry or is conceptually useless.

Perhaps we can learn a lesson from the genesis of the term neoliberalism. Rüstow's 1930s conception of neoliberalism had a specific social and historical context - the crony capitalism of Wilhelmine (and then Weimar) Germany and the global crisis of free markets and democracy in the wake of the Great Depression. To understand the programme, one has to appreciate the context.

The economically liberalising ethos of the EU's 2007 Lisbon Treaty, which the left revile as one of the supreme works of the neoliberal devil, has a context too: a series of member states with a greater role for the state and social protection than the UK and the US but also structurally higher levels of unemployment. It's not freemarket fundamentalism, for instance, to suggest that French employment laws ought to be reformed for the sake of those younger people who find themselves outsiders in a system designed to protect insiders at all costs. Nor is it wild-eyed neoliberalism, in a single market of 28 member states, each with their own domestic corporate lobbies, to police the granting of state aid.

The problem with the modern Foucauldian definition of neoliberalism is that it ignores context and invites paranoia. The result is that those who advocate a modest extension of markets in some areas cannot be understood as simply attempting to adjust the temperature of society's bath but must be seen as part of a sinister ideological project to atomise humanity.

European leaders have certainly handled the eurozone crisis abysmally, inflicting unnecessary suffering on the likes of Greece and Portugal through excessive public spending cuts and badly designed structural reforms. Domestic fiscal policy in Germany has been, and remains, a disaster zone. There are many reasons for this, but it's simply not credible to argue that these gross failures stem from the same species of ideological extremism that animates libertarian right-wingers in the Anglosphere. The context and the history are separate; the attitudes to markets, the state, inequality and social solidarity are fundamentally different.

It would be tragic if Labour rejected the option of single market membership for the UK after Brexit. And if the party did so on the basis of fallacies about European Union "neoliberalism", it would be farcical.

Is there a case for asset-based welfare?

Most of the tax recommendations in the Resolution Foundation's epic Intergenerational Commission report published this week will bring a smile to the face of public finance experts.

Scrap council tax and replace it with a progressive property value levy? Get rid of inheritance tax and replace it with a lifetime gift tax? Eliminate the loophole which means over-65s don't pay national insurance on their wages?

The politics of these policy proposals are, of course, a head-exploding nightmare. Property taxes are the third rail of British politics - touch it and it's liable to kill you. Levies on pensioners are scarcely any less dangerous. And given inheritance tax is already the most reviled of all taxes imagine trying to sell the public a beefed up version… 

But the public finance economics is uncontroversial. The community of credible researchers in this area have been urging such moves for a long time now. Yet the most eye-catching of the foundation's recommendations, the proposal to give everyone access to a lump sum of £10,000 on their 25th birthday, will divide opinion among experts.

The theory of asset-based egalitarianism goes back to Thomas Paine. In his 1797 pamphlet Agrarian Justice Paine proposed that everyone should receive a sum of £15 at the age of 21 (equivalent to around 65 per cent of a labourer's annual income at that time) funded by a tax on the estates of the wealthy.

"To the numerous class dispossessed of their natural inheritance by the system of landed property it will be an act of national justice," he wrote.

The idea of tackling wealth inequality directly bubbled around in the following centuries, but it was given new impetus in 1991 by the US economist Michael Sherraden, who argued in favour of establishing statefunded savings accounts for the less well-off as an alternative to traditional income redistribution and public spending.

And in 2005 the UK got a policy motivated by the theory of asset-based welfare. This was when Gordon Brown rolled out his "Child Trust Funds" - £250 paid into a fund for every child at birth (more for those from poorer families), which they could access at age 18. CTFs were scrapped by the coalition in 2011. But Resolution thinks the concept should be resurrected.

Should it? Resolution proposes that the uses to which the £10,000 "citizen's inheritance" could be put should be limited to funding additional education and training, paying off tuition fees, putting down a deposit for a home, investing in a business or saving in a pension. So no Caribbean holidays or smashed avocado binges.

But if the government wants to help out hard-pressed millennials, why is it better to give them a lump sum rather than simply a higher income through the tax and benefits system, or specific support? The case for favouring asset-based welfare over more traditional redistribution will depend in large part on the counterfactual - what good things will the policy facilitate that could not have been facilitated more efficiently in other ways?

There might be other advantages though. Advocates cite indirect benefits, such as helping people cope with risk better, encouraging the habit of saving, and reducing wealth inequality. More broadly, the theory is that it will give people a greater degree of power over their lives than traditional redistribution.

"Income only maintains consumption, but assets change the way people interact with the world," said Sherraden. "With assets, people begin to think for the long term and pursue long-term goals. In other words, while income feeds peoples' stomachs, assets change their minds."

The evidence on this has been inconclusive. But, to be fair, this is because asset-based welfare hasn't been widely implemented. And, where it has, it has not been sustained for long enough to give clear results.

Perhaps, after suffering the introduction of tuition fees, this is one UK public policy experiment in which millennials deserve to be the guinea pigs.

Would Jamie Oliver’s junk food advertising ban actually work?

The latest target of Jamie Oliver's epic anti-obesity campaign is junk food advertising. The celebrity chef wants the government to impose a pre-9pm ban on broadcast advertising for fast food restaurants and unhealthy snacks, as well as tightening restrictions on their promotion on the streets, public transport and online.

Celebrities are flocking to endorse the cause (although not, so far, Lineker, Walkers crisps' brand ambassador of almost three decades standing). And Oliver, along with fellow TV cook Hugh Fearnley-Whittingstall, took his demands to the House of Commons last week.

The campaign has provoked some predictable "nanny state" objections from libertarians. Yet underlying Oliver's campaign is the assumption that restricting advertising will actually work in curbing consumption of junk food.

Would it? It's an old joke among company executives that they know half the money they spend on advertising is wasted, they just don't know which half.

Some argue that more than half of advertising spending actually goes down the drain. This raises the awkward question: what if advertising that Oliver wants to ban actually has a negligible impact on behaviour? That would imply a junk food advertising ban wouldn't do much good in curbing consumption - a prospect presumably as distressing for advertisers as it would be for Oliver.

Happily we have some evidence. Researchers from the Institute for Fiscal Studies (IFS) looked into the potato crisps advertising market last year. They managed to match up the TV viewing habits of a large sample of people, the adverts they were exposed to and their subsequent junk food spending decisions.

Their conclusion was that a ban on crisp advertising would actually work in reducing demand, cutting crisp sales by around 10 to 15 per cent.

One can presumably read across from this that a ban on all junk food TV advertising would be similarly effective in suppressing overall demand.

Yet that's not the end of the matter. The IFS researchers stress that the question of whether bans enhance total social welfare hinges on what economic purpose the advertising is performing.

Is it there to persuade us to buy something, by changing our tastes and stimulating consumption desires which we otherwise wouldn't have had? Fearnley-Whittingstall made it clear he thinks junk food advertising serves this particular function last week when complained that we are all being "manipulated to eat a much less healthy diet than we did 50 years ago".

But might advertising not instead be informative, giving us useful information about a product to help us make our choices? Think of an advert for a bank which is launching a new higher-interest savings account.

Some have argued, in a related way, that much advertising is a signal of brand quality. The fact that the manufacturer has invested money to produce and broadcast an expensive advert sends a useful message to the consumer that they are unlikely to produce a substandard product and to then disappear when the complaints roll in.

Or is advertising complementary, perhaps not having a direct influence on our decisions, but making us feel good about our existing purchase preferences, and cementing brand loyalty? Think of those glossy adverts for luxury Swiss watches.

These are the three standard theories. So which might apply to UK junk food advertising, on which companies are estimated to spend around £ 140m a year? If it performs the persuasive function, a ban is likely to be effective. Ditto with the complementary function. But if the advertising is informative, perhaps not so much.

Even if we could say with confidence, there would remain tough philosophical questions about how to judge peoples' "true" preferences and how to weigh the freedom of adults against the welfare of children, who might be watching TV alongside them.

Economic analysis can only take us so far on such issues. In the end, it's a question of what sort of society we want to live in.

Could this clash among Facebook's billionaires end up changing the entire digital economy?

If Hollywood producers are hunting for dramatic subject matter to make a sequel to The Social Network - David Fincher's brilliant 2010 film about Mark Zuckerberg's founding of Facebook - they will find plenty of promising material in the social media giant's real life boardroom battles of the past few months.

It would seem Menlo Park has been the arena not only for a titanic clash of billionaire personalities but also a profound philosophical disagreement over privacy. And the fallout of this row could help shape the future of the internet and the entire global digital economy. Any screenwriter worth their salt should be able to make something out of that.

This week's resignation of the WhatsApp founder Jan Koum from Facebook's board was plainly a long time in the making. Indeed, one could argue that it was inevitable from the moment Facebook snapped up Koum's messaging app phenomenon for $ 19bn in 2014, netting Koum personally around $ 7bn.

Facebook's business model is essentially monetising the personal data of its 2.2 billion strong active user base. The site scrapes your data off your page in order to serve you up with targeted advertising. It's hard to overstate Facebook's reliance on selling adverts. Of the firm's $12bn of revenues in the first quarter of 2018, more than 98 per cent came from this source.

WhatsApp's business model was historically very different. There has never been any advertising on the ubiquitous app. Indeed, Koum once described online ads as an "insult to your intelligence" and "the interruption of your train of thought". When it was founded, WhatsApp's revenues came from a $1 a year subscription price. And, unlike Facebook, WhatsApp has always refused to gather any data on users except their phone number.

The app has also, unlike Facebook, traditionally put a high premium on users' privacy, with Koum claiming this was motivated by his upbringing in the repressive Soviet Union. In 2016 WhatsApp even introduced "end-to-end encryption" of messaging, something that once irritated our former home secretary Amber Rudd. But when WhatsApp was folded into the Facebook empire it also surrendered ultimate control. And in 2016 the WhatsApp subscription charge was scrapped.

So: no advertising, no subscription price, no personal data. Where was the profit from WhatsApp's 1.5 billion users, which Facebook needed to justify that lofty acquisition price, to come from? The answer came two years ago when Facebook updated WhatsApp's terms of service and privacy policy to include data sharing across the social network. And there seems to have been pressure from Zuckerberg for more.

We don't know precisely what - there are reports about a weakening of encryption - but it was plainly enough for Koum to walk.

WhatsApp's other founder, Brian Acton, left Facebook last November. And he seems to be even more disaffected than Koum. Acton recently suggested on Twitter that the Cambridge Analytica scandal - which has seen some 87 million Facebook users' data transferred to a political consulting firm - meant it was time for people to "delete Facebook". Pretty remarkable from someone who earned an estimated $3.8bn from Zuckerberg's buyout of his company.

Acton is investing some of that Facebook cash in something called the Signal Foundation whose mission is "to develop open source privacy technology that protects free expression and enables secure global communication". That sounds rather like a potential rival to WhatsApp, perhaps even to Facebook. Koum has said he now wants to spend more time playing "ultimate Frisbee". But perhaps he might be persuaded to lend a hand to his old partner.

We seem to be at a crossroads in the development of the digital economy. Privacy breaches, tax dodging, fake news and a host of other scandals mean the golden aura of media and political favour in which the technology leviathans once basked has faded. The age of indulgence for Silicon Valley is over. But now comes the money question. How much do users truly value their personal data, or even understand it? Has the penny dropped among the public that Facebook is not - and never was - a "free" service? Do enough people care to make a viable market for privacy-focused rivals? 

Perhaps the answer is no, in which case Facebook can, having done its penance and tightened up its data rules, return to delivering Zuckerberg's project of global digital domination. But if the answer is yes, then we might, just, be living through the beginning of the end for one of the fastest-growing and most highly valued companies the world has ever seen.