The world according to the statistics fetishist

COMMENT

Like train spotters with their engine numbers, economists love statistics. A report that includes, amongst many hundreds, the fact that Britain is the world's seventh most urban nation, with 89 per cent of its population living in towns and cities, and that its pupil-teacher ratio of 20 is twice as high as Sweden's, ought to be economist heaven.

Yet today's World Competitiveness Report is the kind of document that will get most economists hot under the collar; many would dismiss its rankings as utter nonsense. Certainly a lot of the assumptions used to draw up the rankings can be challenged. The report assumes that more even income distribution and bigger newspaper circulation make for greater competitiveness. Maybe, but there are dozens of contentious assumptions like these. For the train spotters, Britain fares badly on the former, coming 38th out of 49. On the latter it is high up the league.

Why bother to process and merge this mass of detail when there are some perfectly straightforward economic measures of competitiveness? Any of the productivity growth, comparative costs, direct overseas investment and export growth measures would give a clearer and more meaningful picture.

Paul Krugman, the controversial MIT economist, has an even deeper problem with the league table. He argues that the language of competitiveness misleads people into the belief that trade is a pitched battle with winners and losers - or, as an economist would put it, a zero-sum game. If newly industrialising countries are winning, the old guard must be losing. And if that is what they think, these countries are more likely to give in to pressures to subsidise national champions, protect declining industries and block imports. The expansion of international trade - the one completely unambiguous engine of economic growth - could be damaged if such pressures prevail.

There's no denying the basic pleasure in looking at a league table, or even the more exotic delights - for some - of the statistical detail. But competitiveness rankings should not be taken more seriously than that.

British Gas seizes a last chance to make hay

Another fine mess British Gas has got itself into, with its 10 per cent rise in servicing and repair charges. Politicians and consumer groups were yesterday back on the attack while in the City the controversy helped to revive rumours that Cedric Brown, the hapless chief executive, is about to be chopped by Richard Giordano, the chairman.

There is, however, rather more to the price rises than meets the eye. Servicing and repairs are not regulated like gas prices. This is a market that - unlike domestic gas supply - is already open to competition and in principle ought to be left alone, because consumers should be able to vote with their feet. British Gas itself was taking the line that with a market share of 25-30 per cent and 50,000 competitors, any customer who does not like the price rise has a free choice.

But nothing with British Gas is ever as straightforward as it sounds. The company bases its market share on the fact that it has service contracts for about 3 million of the country's 11 million central heating systems. It turns out, however, that little more than a third of the total - about 4 million systems - are serviced with regular contracts, so the company's actual market share of the business on offer is more like 75 per cent. Even if you include another couple of million homes that have informal rather than contractual service agreements with a local gas fitting firm, the market share is still about 50 per cent.

In theory, the price rise ought to be an opportunity for these competitors to grab a larger slice of the business. In practice, it will probably be nothing of the sort. British Gas is the only nationally known brand name, which gives it a great deal of muscle. Green Flag - formerly National Breakdown - the AA and a number of insurers are moving into the business, but they are at an early stage, and most competition is from small local and a few regional firms.

However, critics cannot have it both ways. A key reason British Gas has kept such a dominant market share is that it has underpriced. Charging economic rates is essential to encourage competition, which as it develops will curb prices far more effectively than any kind of regulation.

The domestic gas supply market will also open to competition from next year onwards. The real reason so many big brand names, including insurers, are suddenly taking an interest in entering the servicing business is the scope they see for teaming up with new gas suppliers to offer package deals. These price rises, opportunist as they are, could prove British Gas's last chance to make hay while the sun shines.

Deregulation key to fighting Murdoch

The BBC has just published one of the more helpful and constructive contributions to the debate on media concentration and how to regulate it - a collection of essays under the title The Cross Media Revolution; Ownership and Control. This is not without irony, for almost alone among British media companies, the BBC is barred from participating in large parts of the revolution going on before its eyes. As the world changes about it, the BBC must stand on the sidelines, its revenue base predetermined by a licence fee that becomes harder to defend as its ability to compete diminishes.

While the BBC must cope as best it can, the rest of the world moves on. What rules, if any, should limit further concentration among commercial players in this industry? The Government has already taken a stab at it, but as its own white paper admitted, this doesn't constitute a long term solution.

All the writers in the BBC pamphlet back some form of regulation; plainly there have to be safeguards to guarantee fair and equal access to technologies and means of distribution. But beyond that the case for limiting Britain's budding media tycoons looks more questionable. Artificial rules to protect plurality of content look increasingly unnecessary provided open access is protected.

Equally, rules to prevent the big daddy of the British media, Rupert Murdoch, from further advancing his position - other than normal competition and merger law - seem a lost cause, even if politicians had the guts to implement them. When it comes to regulation, Mr Murdoch is a master at the art of circumvention. Yet something plainly needs to be done. At his present rate of progress it will take him less than 10 years to match in British TV the monopoly he already has in the national press.

He took big risks getting himself into this position and there is a case that he should be allowed to enjoy the rewards. If there is to be a convincing challenge to Mr Murdoch, therefore, it needs to be a commercial one. And for an adequate commercial challenge to be mounted, Britain's other media companies need a freer reign than they are getting. Less regulation, not more, is the way to guard against growth of monopoly power.

Start your day with The Independent, sign up for daily news emails
News
news
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
PROMOTED VIDEO
News
i100
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
fashion
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
tv
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Sport
sport
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all