Nissan has been betrayed by Brexit ideologues

There's something tragically appropriate about the fact that the most high-profile British industrial story, as the country staggers in the direction of a no-deal Brexit, should involve Nissan.

The proximate cause of the Japanese company's reversal of its decision to build a line of SUVs at its Sunderland plant was the collapse of European demand for diesel vehicles. But as its management has made perfectly clear Britain's departure from the EU was a factor too.

It's worth recalling why Nissan is here in the UK at all. In the 1980s Margaret Thatcher practically begged the Japanese firm to establish a plant in Sunderland, promising a smorgasbord of public subsidies and support to make it happen. Such interventionism jars with the popular image of her administration as a callous band of laissez-faire ideologues obsessed with the City of London and happy to let former northern industrial powerhouses crumble.

Yet the biggest lure for the Japanese was not those subsidies, but the UK's position in the European common market. As Keith Joseph, Thatcher's industry minister, wrote in a memo to Thatcher: "Nissan had chosen the United Kingdom because it gave them access to the whole European market. If we were outside the community, it is very unlikely that Nissan would have given the United Kingdom serious consideration as a base for this substantial investment."

Another irony about the Nissan investment is that France and Germany were, in those days, hostile to the idea of allowing Japanese car firms a production bridgehead within the European common market, fearing the impact of the competition on their own domestic automotive manufacturers.

Thatcher overcame those protectionist European impulses and indeed made the creation of a free market, regulation-harmonising, "single market" among the European member states a personal priority. Yet now, 33 years on, we have nominal Tory Thatcherites not only insisting that the UK must leave Thatcher's single market but also airily dismissing the Brexit concerns of Nissan's Japanese management - a management which their heroine was once so keen to court.

The suggestion by the chair of the European Research Group faction within the Tory party, Jacob Rees-Mogg, that because Nissan's former boss Carlos Ghosn stands accused of embezzlement in Tokyo that nothing the company has to say need be taken seriously, shows how far this wing of Conservatism has drifted into denial. The ERG prefers conspiracy theories and witch hunts to listening to firms' worries about trade barriers. Before the private "letter of comfort" to Nissan from the business secretary Greg Clark in 2016 was finally published on Monday, the great fear among these hardliners was that this letter had made unacceptably positive noises about Britain remaining in a customs union with the EU.

Another lip-chewing irony over Nissan is that the Labour leader Jeremy Corbyn has been fretting recently about the restrictiveness of EU aid rules and some of his supporters have gone as far as using this as an argument in favour of total rupture. But the Clark letter revealed £ 80m of promises of UK government assistance for Nissan, with £ 61m of grants formally offered. If such state aid is forbidden under "neoliberal" EU law, as some "Lexiteers" seem to suggest, the EU's institutions and courts have been surprisingly tolerant of it.

The air is thick with accusations of "betrayal" over Brexit. But the reality is that it is Nissan and other foreign corporate investors in the UK that have been betrayed; betrayed by political extremists ignorant of history and by those who find their ideology preferable to reality.

When it comes to taxing the wealthy, heed the economists not the billionaires

Money doesn't talk, it swears, sang Bob Dylan. And liberal billionaires in the US are certainly not being polite about the latest policy ideas emanating from America's Democratic Party.

Howard Schultz, the billionaire founder of the Starbucks coffee chain who is considering running for president in 2020, last week condemned universal healthcare and higher rates of income tax on the superrich, as proposed by the new Democratic congresswoman Alexandria Ocasio-Cortez, as "un-American".

"It concerns me that so many voices within the Democratic Party are going so far to the left," Schultz lamented. "If I ran as a Democrat, I would have to say things that I know in my heart I do not believe."

Meanwhile Michael Bloomberg, the former mayor of New York and billionaire head of the financial terminal business, also last week warned that a wealth tax, as proposed by Senator Elizabeth Warren, another Democrat presidential hopeful, is potentially unconstitutional and risks turning the US into Venezuela.

The historical solecism of saying that high taxes on the super-rich are unknown in American history has been widely noted (the top marginal rate of tax between the 1940s and 1970s was well over 70 per cent).

But just as important is the question of what the impact of such progressive, inequality reducing, changes to US taxation would be now. Would overall growth suffer? Would the pie of prosperity be smaller, as the likes of Schultz and Bloomberg suggest? A new book by three International Monetary Fund economists, Jonathan Ostry, Prakash Loungani and Andrew Berg, attempts to provide some answers to those questions. And their answer is that redistribution, unless it was extreme, would be unlikely to hurt growth and could actually sustain it.

"Inequality undercuts the sustainability of economic growth. More unequal societies tend to experience more fragile growth," said Ostry at the Peterson Institute for International Economics in Washington last week. "There is too much caution about using redistributive fiscal tools in terms of their possible disincentive effects. On the whole, the macro data strongly suggests redistributive policies have done more good than harm ... Going for growth while assuming that inequality takes care of itself seems to us to be a dangerous gamble." In other words, Ocasio-Cortez and Warren are thinking along the right lines (although the devil will be in the detail of any policies) while those anti-redistribution liberal billionaires are essentially wrong.

Two other economists who specialise in tax research - Emmanuel Saez and Gabriel Zucman - advanced a subtly different argument in favour of higher US top tax rates and wealth taxes last month. "An extreme concentration of wealth means an extreme concentration of economic and political power," the pair wrote in The New York Times. "Progressive income taxation cannot solve all our injustices. But if history is any guide, it can help stir the country in the right direction."

The prospect of Schultz running as a well-funded independent candidate, splitting the anti-Trump vote and handing the property magnate the keys to the White House for another four years, seems to illustrate beautifully this argument about the distorting influence of massive wealth on politics.

It's often asserted that mainstream economists are all shills for neoliberal politicians, and ignore issues of inequality. The fact that Ostry, Loungani and Berg are thoroughly mainstream economists and all work at that supposedly neoliberal death star, the IMF, shows what a crude caricature this is. One can say the same of the ideas and arguments of Saez and Zucman, who are both based at the University of California, Berkeley and who have both been published in the most prestigious mainstream economics journals.

The fact is that the thrust of mainstream economic research on inequality and policy development among Democrats are moving in the same direction. And the old road of the anti-redistribution billionaires? Well, it appears to be rapidly ageing.

Blame China, not Trump, for the US shut out of Huawei

A robot called "Tappy" which monotonously jabs away at mobile phone screens does not, let's face it, sound like the most sophisticated of technologies.

So it's possible to feel a degree of sympathy with the Chinese firm Huawei which finds itself accused by the US Justice Department of the theft of this supposedly bleeding-edge bit of intellectual property from T-Mobile. The phrase "trumped-up charges" (in every sense) comes to mind.

Yet, of course, there's a bigger picture here than Tappy and Trump. There are questions that go beyond the agenda of the current occupant of the White House and his rabidly sinophobic advisers. Foremost among them is this: are Chinese firms operating in the west a potential security threat? Specifically, should Huawei be shut out of the construction of new 5G infrastructure due to concerns that the company could build "back doors" into its systems that could then be exploited by the Chinese state for espionage purposes?

 In my 2013 book, Chinese Whispers, I suggested that much of the then suspicion of China's commercial influence abroad was over the top. At that time I argued that it was simply not in the commercial or broad economic interests of the Beijing leadership to use western infrastructure assets, or allow them to be used, for nefarious purposes. In some respects that remains true. It's hard to see why there's such anxiety in the west over the Chinese state buying brands like Weetabix, trying to purchase US oil companies or even investing in nuclear power stations.

Why would the Chinese state, which wants to use Bradwell in Essex to provide a proof-of-concept for a new global nuclear reactor technology export business, interfere with the UK's power supply for political reasons? This would, at a stroke blow up its own multibillion dollar investment.

However, one has to accept that the Chinese political leadership has changed profoundly over the past six years. There has been a clear authoritarian turn under Xi Jinping, who has abolished term limits in place since the death of Mao Zedong. Xi has also launched a severe clampdown on domestic dissent, harnessing the full power of online technology to do so.

The new online "social credit system" is somewhat overhyped as a dystopian authoritarian tool, yet it could become one.

Meanwhile there have been countless assertions of party control over nominally private sector firms. Xi came to power promising to let the market take a more "decisive" role; but he has presided over a resurgence of the party-state. The giant Chinese internet and e-commerce companies - Alibaba, Tencent, Baidu, JD. com - have found themselves much more closely regulated.

Once it was just about possible to believe the assurances of Huawei's founder Ren Zhengfei that it had experienced no state influence whatsoever and would not permit it. But no longer. And Xi's conduct is to blame for that.

Alibaba's Jack Ma was "outed" as a member of the Communist Party last year in state media. Members are required to show loyalty to the party above all else. Ma has also announced that he will step down by the end of this year and some informed observers suspect government influence in that decision.

In this context of surging digital authoritarianism and growing private sector subordination it is, sadly, prudent to keep private Chinese firms at arm's length. The UK should follow the lead of the US and prevent Huawei from providing its mobile phone infrastructure.

This is unfortunate for Chinese firms and employees. Huawei is a genuine world leader in its field. And it is precisely the kind of globally competitive technology firm that China needs to prosper if it is to see domestic living standards rise over the coming century.

Perhaps the one, small, positive is that the shut out of Huawei from the west underlines the true nature of China's crisis: that the country's authoritarian leadership is now obstructing the country's economic development.

We’ve been pushed and pulled around on pensions – and what we need now is decent advice

The "pushmi-pullyu" in the 1967 film of Doctor Dolittle was a double-headed llama, with one head facing forward and the other back. Pensions policy in the UK in recent years has borne a resemblance to this contradictory animal.

In 2012 the government introduced a "nudge" to encourage people to save for their retirement. Rather than relying on workers to sign up to occupational pension schemes, the legal default became that everyone gets enrolled unless they deliberately opt out.

And all companies, above a certain size, also had to offer a scheme. The result has been a surge in retirement saving, with the number of active pension scheme members up from 8 million in 2012 to 15 million in 2017.

Some criticised it as intrusive paternalism and a red-tape burden on firms. To most, though, what matters is that it worked.

Yet George Osborne introduced a lurch in the opposite direction in 2015.

The former chancellor, out of nowhere, decided that the rules around what people could do with their accumulated pension savings were too restrictive.

"People who have worked hard and saved hard all their lives, and done the right thing, should be trusted with their own finances," declared Osborne.

He gave the over 55s the freedom to cash in their pension pots and to do what they like with the money, scrapping the requirement for them to transform it into an annuity (a contract with an insurance company to give them a guaranteed annual income for life).

But what if they made bad choices? That's up to them, was the government's answer.

"If people do get a Lamborghini, and end up on the state pension, the state is much less concerned about that, and that is their choice," chirped the former Liberal Democrat pensions minister Steve Webb.

From paternalism to libertarianism in just three years. From "push me" to "pull you".

People may not be buying Lamborghinis. And mercifully there's no evidence thus far that people are frittering their money away, although they don't seem to be doing much shopping around before putting their money into investment funds which is rather ominous and some are just keeping their money in low interest rate cash savings accounts.

Yet one thing they certainly aren't doing is buying annuities. At least not in the volumes they used to. The proportion of people who access their pots buying annuities has collapsed from 90 per cent to just 12 per cent.

Why? Well it could be because they want to spend the money on an expensive one-off purchase - such as property - something they couldn't do if they bought an annuity. Perhaps with annuity rates low by historic standards they think they'll get better returns from investing their pension pots in stock market funds.

Yet new research from the Institute for Fiscal Studies published last week, based on survey evidence, suggests a big part of the reason is that people are under-estimating their own likely longevity.

They are choosing cash or shares over annuities because they don't think they will live long enough to get good value from an annuity, even though many would. In simple terms, a great many people seem to be making a financial mistake.

It's clear how this could be storing up problems for the future: those who run out of pension savings in old age will have to fall back on state support, making life more financially uncomfortable for themselves and also imposing a greater fiscal burden on future taxpayers.

One can see how an ideological battle could be joined over this. The libertarians would fetishise "freedom" while the left would argue people need to be protected from themselves.

Yet people are more complex than the terms of such a squabble allows. Yes, we want the freedom to occasionally make mistakes. But we also grasp that sometimes a more complete autonomy can be found within a framework of guidance, even at times compulsion.

There is a tension between freedom and protection - especially when it comes to financial services, where the consequences of decisions often don't materialise for many decades.

Should the great pension liberalisation be reversed? Should we embrace push me, rather than pull you? Whatever the answer to that, one obvious imperative is to start furnishing people with good and accurate evidence on how long they are likely to live for.

Can a dash of socialism be good for capitalism?

If capitalism is defined by the question of who controls capital - the money that makes the world go around - there's one organisation that has perhaps more influence over modern capitalism than any other. That company is BlackRock.

The American-founded investment company has total assets under management of more than $ 6 trillion (£ 4.6 trillion), bigger than any competitor.

BlackRock owns - on behalf of its millions of pension fund investors - a portion of just about every publicly-listed company in the world. And often a sizeable one. It invests in trillions of dollars of debts of global governments and company bonds.

So who runs this leviathan? Well, to some extent it's on auto-pilot. A hefty chunk of these assets are held in tracker funds, which simply passively "track" stock markets. But BlackRock also has hundreds of active fund managers, who select companies for their portfolios based on various criteria.

And what's their ethos? The answer, if you're used to hearing about the endemic short-termism of the world of finance, might surprise you.

Last week Larry Fink, the chief executive and founder of BlackRock, published his annual letter to the chief executives of all the companies around the world in which it invests last week. And Fink's message was: don't put profits first. Put "purpose" first. "Purpose is not the sole pursuit of profits, but the animating force for achieving them," Fink explained. "Profits are in no way inconsistent with purpose - in fact, profits and purpose are inextricably linked."

This corporate purpose, he went on, means investing for the long term, serving a community, developing the talents of a workforce. And so on. BlackRock also says that bosses' pay should not rise faster than that of the firm's workers and has threatened to vote against remuneration committees that agree to excessive awards.

It's enough to make the libertarian epigoni of Milton Friedman, the economist who famously asserted "there is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits", choke on their cornflakes.

But purpose is often easier said than delivered in the business world. Sacha Romanovitch was the chief executive of Grant Thornton, the first woman to run a major accountancy firm. She attempted to restructure the company to have a focus on (in her own words, but words that might also have come from Fink) "profits with a purpose". This meant dropping some questionable clients and sharing profits with all staff rather than just top partners. She capped her own pay at 20 times the average in the firm.

It ended badly. Romanovitch was essentially defenestrated by other Grant Thornton partners last autumn.

An anonymous memo of discontent leaked to the media claimed she was following a "socialist agenda".

But is Romanovitch's brand of reform really "socialist"? And even if we call it that, is it really something to fear? Among successful German "Mittelstand" companies - small and medium-sized family manufacturing firms - the kind of practices introduced by Romanovitch have always been normal.

Klaus Fischer, the owner of a firm near Stuttgart that makes wall plugs and car parts, insists that happy workers come above profits. "I've always been driven by the urge to be jointly successful with my employees, not just alone," he told the Financial Times recently.

And there's some evidence from the UK and the US that "shared capitalism" - where firms pay employees, in part, on the basis of performance of the overall enterprise or workplace - is associated with faster productivity growth within the organisation.

We often hear about Jeremy Corbyn's supposedly backward-looking "socialism". And Labour's plan to compel larger firms to distribute a tenth of their equity into special funds for workers has been dismissed in some quarters in those terms.

But it's worth thinking a little harder about what socialism means in the context of 21st-century business and finance. Perhaps a dash of that broader purpose-over-profits ethos is not as antithetical to successful business practice as we're often told. Perhaps it could actually be a benefit. The world's biggest fund manager, for one, seems to think so.

The exaggerated importance of government debt

"Fiscal illusion" sounds like the kind of thing Derren Brown might do to your wallet in front of a packed theatre.

But actually, fiscal illusions are what perturb experts at places such as the Office for Budget Responsibility and the Institute for Fiscal Studies.

They refer to various official statistical artefacts and quirks exploited by ministers, such as the fact that student loans or spending on private finance initiative construction projects don't show up in the national deficit.

But could there be a fiscal illusion to make those look like trivialities? Could the greatest fiscal illusion of all be the idea that reducing elevated levels of public debt should automatically be a priority for governments? Olivier Blanchard is one of the world's most respected macroeconomists and the former chief economist of the International Monetary Fund.

Giving the annual American Economic Association presidential address last week, Blanchard argued something along those lines.

Put simply, his thesis is that if the market interest rate at which a government can borrow is lower than the economy's expected growth rate, there is little social cost from the debt because the government can simply roll its borrowings over when they come due - without having to raise taxes or cut spending and without risking a dangerous debt spiral.

Blanchard noted that the US government can currently borrow for 10 years in financial markets at around 3 per cent a year, but that America's projected nominal GDP growth rate is higher, at around 4 per cent.

The gap is even bigger in the UK, where our own government can borrow for just 1.3 per cent but the expected nominal growth rate is 3.6 per cent.

When one considers the positive impact on growth of higher government deficits in a time of private sector retrenchment (and the negative impact of over-hasty deficit reduction) the Blanchard finding becomes an even more significant result.

"The welfare costs of debt may be small or even altogether absent," he suggests.

These are not entirely novel arguments. Many economists have made the related point in recent years that a government can stabilise its debt pile so long as the deficit as a share of GDP does not exceed the trend GDP growth rate - and that it's not necessary to eliminate borrowing entirely to achieve this, despite what some politicians insist.

But the fact that these points are being advanced from one of the most influential pulpits in the world of academic economics is significant.

It's important to stress what Blanchard is not saying. He isn't arguing government debt levels never matter or that politicians can always happily borrow and spend without limit. Interest rates may rise. Trend GDP growth rates may fall. Borrowing to spend on white elephants is inherently wasteful.

But his analysis suggests that politicians, their advisers and civil servants need to have a much more sophisticated appreciation of the costs and benefits of government borrowing for the welfare of the population. They need a far more nuanced approach to fiscal policy, one that takes into consideration interest rates and the condition of the overall economy.

The issue of public borrowing has shaped American and European politics over the past decade. Their influence in the UK has been especially profound. The coalition government successfully created a grossly misleading narrative that the spike in the deficit in 2009 was due to Labour profligacy (rather than the recession) and that its austerity policies were the only possible remedy.

When the former Labour leader Ed Miliband forgot to mention "the deficit" in a speech before the 2015 general election, he was beaten up by even the non-partisan sections of the media for neglecting what was widely seen as the most important issue of the day.

But if Blanchard's analysis is right, it was a justified omission. The national debt just doesn't matter as much as we're led to believe.

Social housing can be 'homes fit for heroes' once again

David Lloyd George never actually promised "homes fit for heroes" after the First World War.

The Liberal prime minister's pledge was that his coalition government would construct "habitations fit for the heroes who have won the war".

But whether a "habitation" is the same as a "home" the substance was clear: the state, in the form of local authorities, would build new residences on a large scale.

National resources would be ploughed into improving the housing conditions of the working class, who had paid such a fearful price in the military conflagration.

A new ironclad political will came forth, forged in the sacrifices of the Great War.

Shelter's cross-party Social Housing Commission, a century on, urges a similar housing revolution, although one forged not in the fires of war but the flames of the Grenfell Tower disaster.

The report, which has been in the works for a year, argues that the state should commit to constructing three million new social housing units over the next 20 years.

This would not only represent a housebuilding revolution, it would ultimately create a profound shift in the way we live.

The dominant housing trend of the past two decades has been the doubling of the number of households in the private renting sector to 5 million, with the share also doubling to 20 per cent. The commission's supply surge would probably squeeze down the share back down to the 10 per cent last seen in the early 1980s.

The upfront cost would be around £11bn a year according to the commission, around half a per cent of GDP. Yet additional social housing (rather than the more expensive "affordable housing" category invented in recent years) should ultimately reduce the housing benefit bill. And the additional construction activity should boost tax revenues. The consultancy Capital Economics estimates suggest this would cut the average net cost to the taxpayer to around £4bn a year.

This estimate seems broadly plausible. We've had a vivid demonstration in recent years of how housing policy creates feedback in the broader public finances. The coalition slashed grants to housing associations - which build social and affordable housing - after 2010 but this didn't save the taxpayer money in the end.

It merely inflated the housing benefit bill as people were shuffled into the more expensive private rented sector and required higher welfare payments to make their rent, precisely as experts in the sector had warned.

The obstacle may be less the cost of the commission's proposals than the politics.

Margaret Thatcher's Right to Buy revolution of allowing tenants to acquire their council houses at discounted rates is seen in Conservatives circles as one of the party's greatest policies - supposedly spreading wealth and boosting socially mobility - despite the fact that it severely depleted the stock of social housing for future generations. For all the claims of Conservative ministers to have reformed their attitudes to social housing, a surge of construction on this scale would probably feel like a painful repudiation of Thatcherism.

Conservatives have also been opposed to social housing for more practical reasons since, in the reported words of George Osborne and David Cameron, it "just creates Labour voters". Survey evidence backs this instinct up. Social tenants were more likely to vote Labour in each of the past three general elections.

Yet the context here is that the nature of social housing tenants has been shifting. Research by the Resolution Foundation shows 80 per cent of social renters are in the bottom half of the income distribution, up from 60 per cent in the 1960s.

To reactionary sections of the media social housing has become a place where only poor people should live - something that explains the outrage when it emerges that a relatively well-paid MP like Kate Osamor or a trade union boss like the late Bob Crow does so.

From "homes fit for heroes" to "homes fit for zeros". If the stigma around social housing is to be vanquished, this is surely where a major battle needs to be won.

But the electoral logic is shifting. A stark feature of the 2017 general election was the large advantage for Labour not only among social renters but also among the growing ranks of younger and middle-aged private renters. The housing status quo, for the Conservatives, does not look electorally attractive.

A mass expansion of social housing is not the only way to tackle the housing crisis of course. Tenure reform is another. Private tenants in Germany, who make up the majority, have extensive rights and security of tenure and, as a result, are not clamouring for social housing. And rather than making housing cheaper, politicians could focus on ways to boost families' incomes, which have been under heavy pressure for a decade.

Yet a major expansion of UK social housing supply from the current feeble levels - even if they do not reach the volumes urged by the Commission - is plainly warranted. Those sprawling waiting lists for social housing and the explosion of homelessness since 2010 tell the frustrated demand story for this form of heavily subsidised accommodation in themselves.

And if ministers stall on promises of making life more secure for all private tenants - if the vested interests of MPs, a fifth of whom are landlords, contrive to block it - the radicalism of the Shelter Commission will surely start to look increasingly attractive.

The roots of the rough sleeping crisis

Emergency shelters opened up across London this weekend as the mercury dropped and the risk of death for those sleeping rough on the capital's streets rose.

The government last month announced more funding for shelters and specialist support in cities across England. It is implementing a £100m rough sleeping strategy.

There are signs that politicians have belatedly woken up to the national rough sleeping crisis.

But have they woken up to the causes of it? The government's own figures suggest the numbers sleeping rough have more than doubled since 2010, rising to almost 5,000 in 2017.

And the estimates for 2018, due later this month, are expected to show another sharp increase.

The response of the housing secretary, James Brokenshire, has been to argue that rough sleeping is a "complex" issue. And in one sense this is obviously true. As charity workers and other experts attest, rough sleepers tend to have overlapping and interacting problems, from family breakdown, to bereavement, to mental health issues to drug and alcohol addiction.

Yet there's also a danger of over-complicating things. While the individual cases are idiosyncratic, the sharp overall rise in recent years suggests a common factor.

"Sanctions" for those claiming jobless benefits who fail to cooperate with the state's efforts to ease them into work have been around for decades. But the coalition cranked up sanctions in 2012, making the penalties for non-compliance more severe.

And these sanctions are likely to be responsible, to a significant degree, for the surge in both homelessness and rough sleeping across the country.

A study by Sheffield Hallam University researchers in 2015 found around a fifth of the people using homeless services had been put in that position directly because of these new benefit-withholding penalties.

Iain Duncan Smith, the former work and pensions secretary, described the jacked-up sanctions system as a way of ending "the something for nothing" culture.

The six-week wait for new universal credit claimants is a decision that could only have been made by those ignorant of the cash flow problems it was likely to cause

But a comprehensive independent evaluation of the regime last year found they were ineffective at getting claimants into work and were more likely to push people into "avoidable crises relating to worsening mental and physical health, poverty, hardship, unmanageable debt, insecurity or eviction".

The conviction that what jobseekers needed was more stick was, to put it mildly, out of touch.

Speaking of out of touch, last month the former chancellor George Osborne dismissed the suggestion his austerity policies had been in any way responsible for the spike in rough sleeping.

Yet the National Audit Office noted in 2017 that the government has not launched an official evaluation of the impact of its welfare reforms, more broadly, on homelessness. Perhaps ministers are afraid of what the conclusion would be.

A broader lesson is the danger when administrative changes impacting the lives of those who are extremely financially vulnerable are taken by those who are, themselves, not financially vulnerable, or have scant experience of poverty.

As with the six-week wait for new universal credit claimants - which Iain Duncan Smith now says was a stipulation of the Treasury - this is a decision that could only have been made by those ignorant of the cash flow problems it was likely to cause.

America last week witnessed the swearing in of the most diverse Congress in the country's history in terms of ethnicity, religion, sexual orientation and gender.

These kinds of diversity among lawmakers are undoubtedly important. But, as events closer to home demonstrate, diversity of financial background is also valuable.

There is, of course, no guarantee that policymakers and MPs with direct personal experience of the details of the benefits system would not inflict the kind of unnecessary damage we've seen in recent years.

But it's a line of defence we should welcome, in any kind of weather.

The case for free market price caps

Every introductory textbook teaches that the price of a good or service is established by supply and demand. When a price of something is set not by these impersonal forces but arbitrarily by politicians through a cap, the usual expected result is inefficiency, distortions and, ultimately, a loss of welfare. The people who the government wants to help end up getting hurt.

Think of some developing world authoritarian decreeing that the price of petrol, bread or some other staple must not be sold above a certain price to ease the pressure on the people's cost of living. Such interventions have not tended to end well.

So doesn't that logic imply that the energy price cap introduced today by the government will be counterproductive? Isn't this a classic case of ministers ignoring the lessons of economics and history? Maybe not. There are times when introductory textbooks and horror stories of populist economic incompetence are an inadequate guide.

Last year Botond Koszegi, a highly respected economist at the Central European University, presented a theoretical paper at the Royal Economic Society conference in Brighton suggesting that regulatory price caps should not, in fact, always be anathema to economists and policymakers.

Koszegi showed that in certain rather complex markets, which require a high level of research from customers to get a good deal, price caps can be effective both in helping the less well off and also in boosting competition.

Koszegi posited that if consumers who have limited time and attention can do less "study" (defined as scanning the small print of a particular contract offering) they can spend more timing "browsing" for better offers. The key is to regulate the "secondary features" of contracts - for instance capping the charges for additional data in a mobile phone contract - so that consumers can be reasonably confident that they are not going to be ripped off, even if they spend less time studying.

Does this model apply to UK domestic energy markets? It's not a precise fit, says Koszegi. Those 11 million UK households languishing on private energy companies' notoriously expensive "standard variable tariffs" (SVTs) are likely to be totally disengaged from the market. They're neither studying or browsing - they've simply ended up there through inertia.

Yet other aspects of Koszegi's modelling, looking at what can happen in a complex market in which some consumers are sophisticated and some are naive, does apply.

"We would predict that new entrants attract away switchers, and legacy providers are therefore left with many non-switchers," he explains. "This change in the customer base of legacy providers leads them to concentrate on exploiting non-switchers so that competition is actually detrimental to non-switchers."

That sounds like a good description of British Gas, the legacy provider which still has around 3 million customers, many of them less well-off and elderly, on its SVT.

Koszegi and his colleagues conclude that the government's price cap on the SVT is not a regressive move.

"We're sceptical that a cap on the SVT would be harmful," he says. "Although this is ultimately an empirical question, our sense is that the cap would not harm competition much, as the switchers are choosing not between the SVT and another tariff, but between different non-SVT tariffs. And even if the cap lowers competition somewhat, it makes sense from a distributional point of view."

The 19th century man of letters Thomas Carlyle was not enamoured with economists. As well as inventing the term "dismal science" he once scoffed: "Teach a parrot the terms supply and demand and you have an economist."

Perhaps there's some truth in that. But some, at least, are singing a more nuanced tune.

Financial volatility matters less than we're told

Stock markets have been up and down like Santa in the world's chimneys this Christmas.

After taking a record unfestive pummelling on 24 December, American shares experienced a record oneday gain on Boxing Day. It's a fitting way to end a year that has been characterised by an unusual level of financial volatility.

The MSCI World Index covers most of the developed world's largest listed companies. It raced up in January to a record high. But since then the index has shed around a fifth of that value.

And consider some of the constituents of such indexes. Apple crossed the $1 trillion (£790bn) valuation threshold in August, becoming the first listed company ever to do so. But four months on and the iPhonemaker is worth "just" $740bn. On 26 July Facebook's shares dropped by 20 per cent. That translated into a paper loss of $120bn - the worst day of value destruction suffered by a single company in US corporate history.

The global oil price has bounced around wildly too this year. In October it hit a four-year high of $86 a barrel, prompting concerns about a potential surge of global inflation. But now, within a few months, the black stuff is back down to $54 a barrel.

Sterling peaked at $1.43 in April, up from $1.34 in January. Now the pound languishes at a measly $1.26, beaten down by fears of a no-deal Brexit.

An honorary mention is due to bitcoin. The original cryptocurrency shot up at the start of the year to $17,500. Now one unit trades for only $3,600.

Why does this kind of financial volatility - these surges and slumps in prices - matter? Perhaps it seems obvious. If you own something and it halves in value that's likely to be alarming, not to mention expensive. If you're going abroad on holiday you obviously don't relish discovering that the value of the currency in which you are paid has fallen by a tenth.

Perhaps it might even be ruinous if you were planning on selling a financial asset to realise the cash for something important such as paying off a debt that's falling due. Those who have borrowed in dollars and invested in bitcoin are unlikely to have had an enjoyable year. If you were planning to retire in 2019 and your pension has collapsed in value over the past 12 months you can also see the problem.

But all these examples assume the investor needs to realise the cash imminently. If you're saving for retirement several decades hence, even a 5 per cent daily swing, like the one we saw in US stocks on Boxing Day, is really neither here nor there.

What about the real economy? It's true that financial volatility can damage a normal business, perhaps even ruin it. Think of a goods importer that sees its import costs go up due to a currency slide. Think of a small oil driller that watches the value of the black stuff suddenly plummet. When those companies expire their workers can lose their jobs and livelihoods.

But it's necessary to separate out the micro from the macro. At an economy-wide level, idiosyncratic shocks will tend to balance out in the medium term. Sharply lower energy prices are bad for energy producers but good for energy consumers. A cheaper currency can be bad for importers but can be beneficial to exporters. A currency plunge certainly harms living standards by pushing up inflation. But the impact of a revaluation on prices is temporary if it's a one-off, as we've seen since the Brexit vote.

Some economists, such as Roger Farmer, think stock market crashes lead to domestic recessions. But the causality of that relationship is disputed. And as the Nobel economics laureate Paul Samuelson caustically observed, "The stock market has predicted nine of the past five recessions."

It would be fatuous to argue that financial market volatility doesn't matter at all for ordinary people. Yet it matters rather less than we're sometimes led to believe by the noise of excited speculators and the dramatic media headlines. Sometimes it's better not to pay too much attention to the puffs of smoke emitted by the chimney of markets.

Could 'peak stuff' be in sight this Christmas?

Many parents of small children will be familiar with the depressing Christmas Day rubbish routine.

Presents are unveiled. The paper is eagerly ripped off. And packaging starts to accumulate around your ankles at such a rate that you start to empathise with those flood victims you see on TV wading through their own living rooms.

Disposing of the mountains of trash that are the by-product of the joyful gift unwrapping is as much a part of the festive workload as peeling the potatoes, keeping relatives refreshed and sweeping up the tree's pine needles. It's estimated we collectively throw out around 100 million black bin bags full of packaging at this time of year.

It's not a new observation of course, but nothing illustrates our materialist and ecologically insouciant economy quite like Christmas.

But is change, along with sweet notes of carollers and the whiff of mulled wine, in the air this year? One of the eye-catching business stories last week was the profit warning from the previously unstoppable online fashion chain Asos.

We all know that traditional bricks-and-mortar retailers are, as Mike Ashley put it recently, being "smashed to pieces" by savage trading conditions. But their market share was, we thought, being devoured by the internet players. Yet if the online leviathans like Asos are suffering too could that mean that we're collectively simply buying less than we used to? Will we look back on the Christmas of 2018 as the moment where we reached a "post-consumer moment"? Let's reserve judgement on calling that one until we see the retail sales figures for the end of the year.

"Peak stuff" has been called before only for us to discover that "stuff" was only, in fact, taking a breather.

There's been no dip in the upward growth trajectory in UK retail sales since Ikea's head of sustainability said we'd reached the top of the western physical consumption market in 2016.

Yet that doesn't invalidate the concept. Maybe it's just a question of timing. After all, it's manifestly true that the rise of the digital economy makes the possibility of less stuff than before feasible.

There's no need to buy DVDs or CDs anymore in the era of downloads and streaming. We can read a whole library of books on a single tablet. And Independent readers don't need to be told that no one needs to hold slices of dead tree in their hands any more to consume a newspaper.

Presents, even Christmas ones, don't need to be manufactured. We can gift "experiences", whether a ride in a hot air balloon, a visit to the spa or concert tickets. Some surveys have suggested that many young people now value soul-enriching experiences more than physical possessions.

The retail sales data may also be misleading. The Office for National Statistics has looked at the amount of material consumed in the UK and estimates it declined from around 12.5 tonnes per person in 2000 to just 9 tonnes per person in 2016.

Some economists argue that advertising doesn't create demand from nothing, but rather only persuades us to buy a particular brand of a good that our underlying preferences inclined us to desire anyway.

But this feels too simplistic. Before NW Ayers' "A Diamond Is Forever" advertising campaign in the 1940s there was no mass market for diamond engagement rings in the US. And as my colleague Adam Lusher reported last week, Charles Dickens gave a push to the Christmas industry in the 1840s (even if claims the novelist "invented" it are exaggerated).

An interesting question is whether we could go in the other direction? Is it conceivable campaigns could stimulate lower consumption of physical goods, not just at Christmas but generally? In fact we did have something along those lines recently with David Attenborough's Blue Planet BBC series which showed how plastic pollution is throttling the oceans. This gave a significant boost to anti plastic public sentiment and has put a great deal of pressure on manufacturers and politicians to take action.

The conditions of peak stuff are arguably in place this Christmas. But we may require nudges to get over the top.

Japan's justice system is in the dock alongside Carlos Ghosn

On 19 November Carlos Ghosn, the most famous man in the global automotive industry, touched down at Haneda airport in his private jet and was immediately arrested by Japanese prosecutors. That was the last time he was seen in public.

Ghosn has now spent more than 30 days in detention, where he has been subject to questioning by the Tokyo Public Prosecutor's Office. He has not been allowed to have a lawyer present during those interrogations. Access to his family has been tightly limited.

Meanwhile, details of the allegations of what Ghosn is supposed to have done have been released by prosecutors to the media. We have heard nothing from Ghosn himself except a second hand report of a denial of wrongdoing.

It appeared that Ghosn was going to be released on bail last week, but fresh evidence produced by prosecutors at the last minute has kept him detained this weekend. In Japan suspects can be re-arrested on different allegations, which restarts the clock again on their maximum 23-day detention.

Ghosn has not even been formally charged yet. "Detention is essentially an investigative tool used to interrogate suspects and develop evidence," explains Colin Jones, a professor of the Doshisha Law School in Kyoto and an expert on the Japanese legal system.

Leave aside the issue of whether or not Ghosn is guilty of the allegations of under-reporting his Nissan income by tens of millions of dollars over many years, what does this kind of treatment of a suspect say about the state of the Japanese criminal justice system? The prolonged and indefinite detention without charge constitutes a punishment in itself. The majority of indicted detainees confess while in custody, during unrecorded interrogations. Rights groups have long complained of the risk that these confessions are extracted under duress.

According to some legal scholars, trial procedures favour the prosecution. There is a notorious 99 per cent conviction rate. "Most Japanese criminal trials are just about sentencing decisions," says Mr Jones. "A defendant may, of course, challenge the validity of their confession at trial, but the burden of proof is on them - they must prove they are innocent in the face of it."

Some have suggested that in understating his remuneration Ghosn was simply doing what many other executives in Japan do and that this is a case of selective justice, and therefore no justice at all, similar to the way formal corruption prosecutions in authoritarian regimes like China and Russia are about eliminating political rivals rather than tackling graft.

Others have claimed that Ghosn has been a victimised because he is a foreigner. Another view is that one has to understand his downfall in the context of a power struggle between France and Japan over the future of the Renault-Nissan alliance.

There are questions about Japanese corporate governance. Does this show there has been no improvement since the 2011 Olympus scandal that exposed astonishing levels of fraud in a Japanese boardroom? Or is the fact that this alleged scandal has been exposed, supposedly after a whistle-blower came forward, demonstrate the opposite? But we should keep the issues separate. It's possible that Ghosn is guilty of corruption, that the issue was brought to a head by a global corporate power struggle, that Japanese corporate governance is still deficient - and also that the Japanese legal system is in need of reform.

Japan's legal system is based on the imperial German inquisitorial model, where the courts are involved in investigating facts. Yet it also has elements of the US adversarial system, laid over the top after the Second World War. The result is a hybrid system that seems to give an unhealthy amount of latitude to prosecutors but with insufficient checks on their behaviour.

A former Japanese civil servant, Kazuo Yawata, has asked whether Ghosn's high-profile treatment might constitute the "suicide of Japan's judicial system". On the evidence we have, hara-kiri would seem to be rather welcome.

Brexit insurance that is worth having

The Irish "backstop", the legal clause that offends the sensibilities of hardline Tory Brexiteers - to the point where they would be prepared not only to immolate their own government but even possibly lose Brexit altogether to be rid of it - is often described as "insurance".

It's insurance, of course, for the people on both sides of the Irish border in that it means - if there's no trade deal between the UK and the EU by 2021 - a hard border on the island will not descend. But it's also insurance for people in the rest of the UK too, given it's not in their interests, either, to jeopardise the Good Friday Agreement. That latter benefit should really be more emphasised in the UK debate.

Yet why do we need insurance in life? The truth is that we often don't. Buying a warranty on a new microwave or vacuum cleaner is a waste of money given the cost of the insurance and the statistical likelihood of the product failing. These are immensely profitable contracts for retailers, which is why they push them so hard at the tills.

And insurance companies are so profitable, in part, because people have a tendency to over-insure against the wrong things. We like the peace of mind that comes from the possibility of relatively small claims, even if we would usually be better off foregoing them.

The better reason to buy insurance is to cover losses we wouldn't be able to cope with. "Insure only those things you cannot afford to lose," is the advice of the economist John Kay. "You need insurance against your house burning down, but not for replacing the bedroom carpet. You need insurance against being hospitalised in the US, but not for an extra night's accommodation because your plane is delayed."

Some Brexiteers don't actually care very much about the Irish border. A clean break with the EU matters more. Some, apparently, privately think the Irish are impudent for using the leverage with the EU to demand a backstop at all and should "know their place".

But let's assume those who have voiced such opinions are outliers rather than representative. Let's assume mainstream Brexiteers genuinely want to avoid a hard border in Ireland but believe that the backstop is unnecessary, that it's overkill.

They place a low probability on it being needed because they are confident we'll conclude a free trade deal by December 2021 and that this will include an unproven technological fix to the problem of Ireland being in the customs union and single market and Northern Ireland being outside both, something that would ordinarily require border checks on goods and agricultural produce passing between the two.

But consider who is calculating those probabilities. And consider their record. When he was Brexit secretary, David Davis predicted that the UK would establish a free trade deal with the EU, and a host of other countries, the "very next day" after we formally depart on 29 March 2019. We know now that's not going to happen.

Liam Fox, still the trade secretary, predicted that a post-Brexit free trade deal with the EU would be the "easiest in human history". It's certainly not looking that way now.

Yet, in fact, this isn't the right way to weight up the value of insurance. For insurance is not to cover eventualities we expect to happen with a high probability, but those that we fear. Even if one put a low probability on a trade deal not being ready in time, that does not imply a backstop would be a mistake.

A good insurance policy protects us against worst case outcomes. That's what the Bank of England was thinking about when it put together its no-deal Brexit scenario modelling. It wanted to test whether the UK banking system could cope in the face of an even an extreme economic and financial shock.

That's why, even if one is sceptical of the assumptions used in climate warming models showing rising temperatures as carbon dioxide levels in the atmosphere rise, one can still be in favour of radical decarbonisation efforts. The risk of a super-heated planet is too great to take (and the cost of shifting away from fossil fuels is eminently bearable).

"Skin in the game," is the solution favoured by Nassim Nicholas Taleb for powerful people who propose to run risks affecting others. He gives the example of monarchs who personally led their armies into battle, and sea captains who go down with their ships. "Skin in the game means consequences when you are wrong as much as when you are right," he says.

Creating a political system with such clear symmetric incentives is difficult. But it's nevertheless a useful way to think about those loudly insisting we don't need the Brexit insurance of an Irish backstop.

Fantastic four? The future of the working week

As a society we can't seem to make up our minds about work. Do we want more of it? Or less? There's a chilling fog of fear over what technological advances will mean for our jobs, with an endless supply of alarming forecasts about how robots and algorithms are set to displace human workers.

But there's also a furnace of angst about low productivity and underinvestment by firms in just the kind of innovations that induce those nightmares of a "jobs apocalypse". Some lament the supposed proliferation of pointless, soul-dismantling, "bullshit jobs". Yet no one gets out the bunting when a struggling company announces redundancies. The UK's official labour market surveys suggest many of us want fewer hours at work, presumably driven by a desire for a healthier "work-life balance". Yet those same surveys also show that many people also want more hours, that the post-financial crisis curse of "underemployment" has not yet been lifted.

Some complain about the raising of the state retirement age and the depressing prospect of being forced to work longer than they planned. But for others the big problem is ageism, the risk of being pressured out of jobs they enjoy prematurely. When it comes to work, we're rather like those two diners in the Catskill mountains: "Boy, the food at this place is really terrible… Yeah, I know; and such small portions."

Yet onto this terrain of confusion and apparent contradiction some stride confidently. To Alex Williams, a Corbynite academic, automation should be embraced by the left as the emancipation of labour, provided the gains are comprehensively redistributed.

The Trades Union Congress seems to have been influenced by this cocktail of technological optimism and socialist assertion. Its general secretary Frances O'Grady recently demanded a four-day week by the end of the century, declaring: "Bosses and shareholders must not be allowed to hoover up all the gains from new tech for themselves."

The Labour Party is keen too. The shadow chancellor John McDonnell has made favourable noises about the four-day week and is reported to be asking the crossbench peer, Robert Skidelsky, to head an inquiry into the subject.

Yet this isn't just a British story. There are tectonic rumblings from abroad too. The IG Metall union in Germany earlier this year won the right to a four-day week for its almost 900,000 members. One technology start-up, founded by former Google employees, has a "Free Friday" policy. Even a think tank close to the authorities in China has called for the most populous nation on the planet to have a four-day working week as soon as 2030.

Any project that can unite German metal bashers, Silicon Valley coders and Chinese Communist apparatchiks clearly has an unusually wide appeal. So is the four-day week a big idea whose time has come? Or is it an unworkable left-wing fantasy? And even if a four-day week is economically feasible, should we really desire it? Or is it a case of being careful what you wish for? 

Productive possibilities

When Marei Wollersberger and her colleagues established an east London-based data design agency, Normally, as a four-day week operation in 2014, the motivation was largely personal. "We wanted to lead happier lives basically - enjoy ourselves more, not just to defer our enjoyment to retirement age," she told me. But there was another goal: "There was also a motivation to be more productive."

The economics of the four-day week revolve around the concept of productivity, the amount we produce per hour worked. The size of the economy - the size of our national income - is derived from the value of all the goods and services produced by businesses and households.

On the face of it, if we all worked one less day a week, our personal output would drop by around fifth.

Multiply that fall across the overall economy and you've got an economy that is considerably smaller, implying lower income and lower living standards for all, one way or another. Yet what if working fewer hours were to stimulate our productivity? What if we produced more per hour working four days than we did per hour working five? In that case there might be no overall drop in total output, and therefore no decrease in living standards. If our productivity rose enough we might even have a higher income than we did before. Wollersberger says the model has worked in stimulating performance at her company. "You're more productive - you achieve exactly the same or more in four days as you would in five," she says. "And I honestly believe it's better work."

A New Zealand financial firm called Perpetual Guardian found similarly gratifying results when it trialled a four-day week recently. "There was broadly no change in company outputs pre and during the trial," said its boss. "No reduction in job performance and the survey data showed a marginal increase across most teams."

Bear in mind that no change in output despite a fifth less time at work implies a stunning increase in productivity. But beware cherry-picking. The results of a Swedish trial involving 70 nurses working a sixhour day were more mixed. While there was some boost to worker productivity, the city of Gothenburg also had to hire more nurses to cover the hours lost.

Intuitively, this seems much more likely to be the result of moving to a four-day week in services sectors that are, currently at least, heavily reliant on face-to-face human interactions such as healthcare or teaching. That's not to imply the shift in working patterns should be ruled out as impractical. There are benefits in terms of lower stress and happiness to set against those financial costs. But it's probably unrealistic to expect the move to always pay for itself, at least in the short-term.

And some experiments have flopped. Treehouse, an online educational firm in Oregon, was one of those companies which got media publicity for its four-day week in 2015. But Treehouse's founder recently lamented that the working practice killed the work ethic in his company and called the experiment a "terrible thing".

The only way is down?

Individual "micro" trials are certainly useful, but they aren't necessarily a reliable guide to "macro" economic impacts. The closest thing that we have to a state-mandated four-day week is France's 35-hour week, introduced in 2000 under the Jacques Chirac-Lionel Jospin cohabitation.

The first thing to bear in mind is that this does not mean all French people work a four-day week. The regulation simply means overtime kicks in after a worker has completed 35 hours and they accrue the right to holiday lieu days. Yet it does establish a social norm of fewer hours and a financial incentive for firms to limit them. Opinions are mixed about its results. France has a high unemployment rate relative to the UK and other developed countries and it's notable that Emmanuel Macron campaigned for president promising to increase the flexibility of the system.

And though the level of French productivity stands comparison with the most productive nations in the world, there's no evidence that its growth rate has risen since it introduced the 35-hour week. This might incline us to scepticism about the value of the the state having any role in limiting working hours. Yet that could be the wrong conclusion. For the historic trend is clear. In the late 1900s, UK workers put in more than 2,500 hours a year on average. That's down to 1,680 hours in 2017. There's been a similar steep fall in other developed countries over the past century and a half.

That reflects the fact that the five-day working week, as opposed to six days with only Sunday off, only become standard practice in the 20th century. It was the industrialist Henry Ford who was the pioneer in the US, giving his factory workers a five-day shift in 1926 while keeping their wages steady. This prefigured legislation and Congress' 1938 Fair Labor Standards Act, which mandated a maximum 40-hour working week (effectively five working days).

We primarily think of John Maynard Keynes as the great promoter of employment for his pioneering theories on the economic benefits of government-funded job creation during the Great Depression.

But it was this secular decline in hours worked, despite the agonising surge in unemployment in the 1930s, that led Keynes to look forward to a 15-hour working week in The Economic Possibilities for our Grandchildren by the year 2000.

The question is whether the recent flattening out is the end of the decline in hours worked, or merely a pause. And is a government nudge necessary to get history moving again? There's also the question of consumption. One of the reasons Henry Ford instituted a five-day working week was revealed in a 1926 interview: "Leisure is an indispensable ingredient in a growing consumer market because working people need to have enough free time to find uses for consumer products, including automobiles."

In other words, it was less a paternalistic concern for his workers' well-being than a recognition that it would create help create more customers for Ford.

There's an echo of this macroeconomic concern today, with government-linked Beijing researchers suggesting a four-day week could boost the domestic tourism and entertainment sectors and help rebalance the overall Chinese economy to consumption and away from excessive investment. But perhaps the major economic question about moving towards a four-day week is whether it could somehow boost our long-term productivity growth rate (perhaps by inducing more investment in automation by firms) or whether a shorter working week could only ever be the fruits of productivity growth with an origin elsewhere.

The truth is that we don't know the answer. Yet it's vital to recognise that countries and societies have autonomy too, even now. The US has a considerably larger GDP per capita than any developed country in Europe. But the bulk of this gap is due not to a vastly higher level of productivity but the fact that Americans, on average, work many more hours than the French, Germans or Swiss or British and so on.

The trade-off between work and leisure is different between our two continents. Both Europeans and Americans, by global and historical comparisons, have very comfortable standards of living. Choosing more leisure over extra working hours is not, whatever some might employers might argue, necessarily a route to penury and decline.

Doing nothing for ever and ever

The Victorian historian and essayist Thomas Carlyle believed in the redemptive power of work. "A man perfects himself by working," he enthused. "Foul jungles are cleared away, fair seed-fields rise instead, and stately cities … Even in the meanest sorts of labour, the whole soul of a man is composed into a kind of real harmony the instant he sets himself to work."

The (possibly apocryphal) epitaph on a Hertfordshire gravestone took a different view of the intrinsic value of hard labour.

"Here lies a poor woman who always was tired For she lived in a place where help wasn't hired Her last words on earth were, 'Dear friends I am going Where washing ain't done nor sweeping nor sewing And everything there is exact to my wishes For there they don't eat and there's no washing of dishes Don't mourn for me now, don't mourn for me never For I'm going to do nothing for ever and ever." One does not need to be a Carlyle-style work zealot to appreciate that there is some intrinsic psychological value to labour. Work is where many of us find not just an income, but friends, stimulation and status. But we can also see where that Hertfordshire washerwoman was coming from.

This dichotomy underlines that not all jobs are the same, or are experienced the same by the worker. For every occupation that that does help to clear away someone's jungles of mental disorder there will be one that is felt as detestable drudgery.

One of the deficiencies of the debate over the four-day week, as with discussions of the appropriate retirement age, is a failure to acknowledge the vast diversity of both jobs and workers. Labour is not homogeneous.

Working until 70 might seem entirely reasonable, even desirable, to the university professor, the politician or the TV presenter. But to the cleaner, the firefighter or shop assistant - especially jobs with a physically arduous component - it may have considerably less appeal. And so views diverge too on the desirability of the four-day week.

One of the most significant developments in the UK and broader Western economy over the past decade is the rise of the gig economy and self-employment. Around a sixth of the British workforce is now selfemployed.

This was brought home to me recently when I met the Romanian father of one of the friends of my young son. The father had been a chauffeur for a wealthy family in Chelsea. But he'd resigned after his son had started school and had signed on with Uber so he could pick his lad up directly from school and shift his driving work to airport shuttle-runs at night instead. "I wanted the flexibility and my previous employer couldn't provide that," he told me, as we watched our boys career around the playground.

His work-life balance was not to be found in limiting the hours he worked (indeed he wanted to keep those the same or even increase them) but in the flexibility of his arrangements. Survey evidence suggests this is a common story. The majority of Uber drivers like the personal control over their working hours made possible by the platform. Drivers who valued flexible working reported higher levels of life satisfaction, as well as lower levels of anxiety.

However, there was also a minority of Uber drivers who would prefer to work fixed hours in a more conventional work setting. And these workers reported lower levels of life satisfaction and higher levels of anxiety.

A question of representation

This brings us back to the apparent paradox of many people in the UK workforce wanting fewer hours but many others wanting more. David Bell, a labour market economist from the University of Stirling whose work, along with Danny Blanchflower of Dartmouth College in the US, has highlighted this divergence, says that the groups who want fewer hours tend to be older, while those who are underemployed seem to be younger.

One of the implications is that younger people in the workforce may need the money from more hours because they are under greater financial pressure, perhaps because they have families, or perhaps because they have suffered a greater real wage squeeze since the financial crisis. This suggests that Corbynite left is correct in stressing that to consider the economic and social case for a four-day in isolation is a mistake.

Incomes plainly matter too, as well as the level of inequality.

One has to consider the role of income redistribution and employment policies. Give people higher incomes and more "outside options" for employment, perhaps through a jobs guarantee or even a universal basic income, and the desire for extra hours in their current job may well melt away. They may begin to make different work-leisure trade-offs than they do now.

Perhaps one of the reasons why we some people languish in ultra-flexible gig economy jobs they don't appreciate - like those disgruntled Uber drivers - is that, despite what most economic analysts say, there is actually hidden slack in our economy - and that if the slack was eradicated they could find the kind of regular job they wanted elsewhere. But that still leaves a circle to be squared, presuming that different people, all else equal, are still likely to put different weights on work and leisure. How do we give those who would prefer a four-day week more freedom to choose it, while protecting the interests of those who don't? The empowerment of ordinary workers is Professor Bell's answer. Let individual employees have substantive input into determining the trade-off, rather than leaving it up to politicians or employers. "One of the things that might help is a strengthening of worker representation, which has declined so dramatically," he says. "Rather than jumping in to impose a four-day week you want to think first about whether workers' interests are being properly represented."

This would be going with the historical grain, given the driving role of new trade unions in the achievement of an eight-hour working day in the 19th century and early 20th century. It's notable not only that IG Metall workers in Germany this year were able to achieve a four-day working week through negotiation with bosses - but that they also had sufficient bargaining power to protect their overall levels of weekly pay.

Satisfying old Adam

A fundamental question that underpins this broad discussion about the future of working hours is a philosophical one: what makes us happy and fulfilled as human beings? Modern psychological studies do partially back up Carlyle's Victorian pompous sermonising: formal work can be as positive for human happiness as leisure, sometimes more so. A job does seem to bring a valuable sense of social usefulness. Involuntary unemployment is clearly harmful for people's mental health.

But how much work do we want or need? Keynes in the 1930s called this desire for work "old Adam" and predicted that three hours a day in the future would be "quite enough to satisfy" this inherited instinct.

Perhaps the right thing to do is not to dictate to people, or engage in speculation on what the future of work will look like, but rather to help them decide for themselves.