This is Sóller. A town in the north of Mallorca with a pretty church, lovely botanical gardens and a quaint tram that trundles down to the sea. But the thing it’s prob best known for is... 1/
Oranges. The orange groves, or “huertas” around Sóller (see pic) produce oranges of a particular sweetness and succulence. Louis XIV used to demand only to be served oranges from Sóller. Take it from me, they’re really juicy and lovely. 2/
But orange trees are relatively thirsty and rainfall in Mallorca is not esp frequent, so there wouldn’t be Sóller oranges without a complex system of irrigation canals originally constructed by the Moors hundreds of yrs ago. You see them all around the valley 3/
If you’re a farmer you’ll be entitled to a certain no of hours of water each week, after which it’s yr responsibility to switch a gate, diverting water onto yr neighbour downhill (pics show one of the junctions & one of those gates, which in practice is just a rock in a hole) 4/
The striking thing abt this system is it’s managed and enforced not by the Ajuntament (town hall) or a company but by the farmers themselves. If you forget to move your rock you’ll soon get a visit from an irate neighbour. The COMMUNITY manages this common resource (water) 5/
And this is not really what conventional economics implies. The whole point of the “tragedy of the commons” is that it’s a tragedy: people are doomed to deplete common resources because someone will always take advantage. But Sóller’s orange groves show that’s not quite right 6/
Indeed it turns out there are hundreds of examples of small communities coming together to manage common resources. Elinor Ostrom won a Nobel memorial prize for her work cataloguing them. Her Nobel speech is a must read on this topic [pdf]: nobelprize.org/uploads/2018/0… 7/
One of Ostrom’s examples was the orange growers around Valencia, who operate a very similar system to the one in Sóller. Here’s the map from the relevant chapter of her seminal work Governing the Commons 8/
Ostrom found that actually these community managed systems tended to be MORE efficient than those managed top down by governments or companies. This is the exact opposite of what conventional economics and the tragedy of the commons suggest. And it’s an important reminder... 9/
We often assume that if there’s the risk of a market failure the obvious solution is either top down regulation or slicing something up into parcels of privately owned land/resource. Ostrom’s work suggests there is a better bottom-up alternative 10/
Of course there are many provisos. Small community schemes to manage common resources prob won’t solve climate change or overfishing since these issues are too vast. Still it’s striking how often ppl trot out the “tragedy of the commons” w/o remembering it’s not that simple 11/
Before anyone pipes up, yes that includes me; I made a whole documentary about problems facing the oceans which talked extensively about the tragedy of the commons 12/
🧵Some thoughts re inflation.
Not the data today, but two deep issues we should prob spend more time thinking about. 1. While economists and policymakers may have convinced themselves that the cost of living squeeze is over, for millions of households, it doesn't feel that way.
The key thing to remember here is that when economists talk about inflation what they're really talking about is the ANNUAL RATE at which a basket of goods and services changes price. And certainly, that rate is much lower than the 2022 peaks...
But, as I say, what that number is is simply looking at the difference in the LEVEL of prices over the past year. This chart is that level. (The actual consumer price index!).
And yes, look over the year to May and it's up 3.4%.
🧵Why, barely 24 hours after the Spending Review, is everyone already going on about tax rises?
Are they REALLY coming?
Or is this an "incoherent argument", as one leading minister calls it?
Well here's a thread explaining what's really going on here.
Bear with me...
First things first.
Key thing to remember is that the main job of HMT is to generate enough money, mostly via taxes (left hand bar here), to finance all its spending (right hand bar).
If that left hand bar isn't high enough, we have to borrow to fill the gap.
That's the deficit!
This week's Spending Review was about the right hand column, obvs. But not ALL of the column.
Actually more than half of govt spending is on stuff that WASN'T covered by the spending review - on benefits, debt interest, pensions etc. It's called "annually managed expenditure"
🧵
You may recall a spate of stories a few years ago about appalling working conditions & abysmally low pay in Leicester's clothes factories.
The hope was those stories would shame businesses into improving working conditions.
But here's what ACTUALLY happened next...
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Instead of staying in Leicester, most brands abandoned it & shifted production to N Africa & S Asia.
Today Britain's biggest centre of textile & apparel manufacture is battling the threat of extinction.
It's a mostly untold economic story we've spent recent months documenting
Once upon a time Leicester was the beating heart of UK clothes manufacturing.
The city was dotted with factories making clothes for big name brands.
Now, according to one estimate, the number of clothes factories has dropped from 1500 in 2017 to under 100 this year. A 95% fall.
How big a deal is the new trade agreement unveiled between the US and the UK? Here are some initial thoughts.
Start with this: this is total UK exports to the US over the past 5yrs: £273bn. Right now most of this will face a 10% tariff. Some things (eg cars) face 25% extra
Let's break down that total. The biggest chunk is cars. Just under £30bn. That's covered under the agreement. So too are steel/aluminium exports. Much smaller at £2.7bn...
These sectors will benefit from special deals (though much of the detail still remains vague).
Rolls Royce will apparently get tariff free access for its jet engines. That mostly helps Boeing, but also Rolls Royce. Jet engines comprise a surprisingly large chunk of UK exports to the US, about £17.3bn. So let's shade that red too...
🚨
The Chinese owners of British Steel say they are now considering shutting their blast furnaces and end steelmaking at Scunthorpe in early June - only a few months away.
It would mean an end of virgin steelmaking in the country that invented it during the industrial revolution
British Steel say the main question now is timing: whether the operations will close in June, in September or later.
It says tariffs are one of the reasons the blast furnaces are "no longer financially sustainable".
Press release 👇
The news means @jreynoldsMP faces two interlocking crises in the coming months: 1. The imposition of US tariffs on an ever growing segment of British exports 2. The end of virgin steelmaking (the UK would be the first G7 country to face this watershed moment).
This is big stuff
Donald Trump just announced 25% tariffs on anyone importing oil from Venezuela.
This is odd.
Because the country importing the most crude from Venezuela is... the US.
Capital Economics chart of Ven oil exports by Capital Economics via @rbrtrmstrng
But it raises a bigger point
🧵
Why does the US import so much oil from Venezuela?
Mainly for the same reason it imports so much oil from Canada.
And no it's not just because they're close.
It's because most US refineries are set up to refine the kind of oil they have in Venezuela and Canada.
To understand this it helps to recall that crude oil is actually a broad term. There are LOTS of different varieties of crude - a function of the geology of where the oil formed and the organic ingredients that went into it millions of years ago.
It's called "crude" for a reason