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IB African Business Careers Club claimed top honours at the Cambridge Africa Together Conference, defeating Oxford, Cambridge, and LSE in a landmark debate on foreign investment in Africa.

Main image: Students from IB African Business Careers Club with Dean Peter Todd | Imperial Business School

3 minute read

How protectionism risks undermining the US economy

Jonathan Haskel — Tue, 25 Feb 2025 10:39:25 +0000

How protectionism risks undermining the US economy

Jonathan Haskel Tue, 25/02/2025 - 10:39

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10 April 2025

Donald Trump’s announcement of wide-ranging tariffs has threatened to upend the rules of global trade that have been in place for decades, impacting supply chains and businesses across the world.

The US President’s plan has been designed, in his words, to be reciprocal. What could be fairer than this? The theory is that the US will charge its trading partners in response to what they charge them.

What this means in practice is that the US will charge a country based on it having a goods trade surplus with the US. Some countries that do not have a notable surplus will still be hit with a universal baseline tariff of 10 per cent. For example, countries in the European Union will be subject to a 20 per cent tariff, while the UK will face the baseline 10 per cent tariff.

As the consequences of these tariffs will have major consequences for the global economy, it is worth considering the logic that has informed this decision and whether it stands up to scrutiny from an economic perspective.

Let’s say a country, for example the UK, is running a goods trade deficit with Costa Rica of £100 worth for bananas. From an economics point of view such a deficit makes perfect sense: the UK does not grow very good bananas, but we are good at education and financial services, which we export by accepting Costa Rican ��ý, and providing secure banking for Costa Rican residents. Therefore, we run a deficit on goods, balanced by a surplus on services.

President Trump's reciprocal tariff calculation asks: what would the British tariff have to be on Costa Rican bananas to rebalance trade in bananas? He appears to have done this by assuming the tariff would raise an import price by a certain percentage, which in turn would cause British consumers to switch away from imported bananas by another percentage, which would then reduce banana imports. Select those percentages and work out the tariff that would entirely wipe out all imports. Then take half of that number (for obscure reasons) and that is the alleged tariff rate which Costa Rica is charging the UK.

These bizarre counterfactual calculations have nothing to do with the actual tariffs which are imposed. True, our bananas trade is likely affected by tariffs and safety standards on agricultural products. But fundamentally the pattern of trade is determined by the patterns of comparative advantage across different countries. To repeat, if the UK is good at financial services and education and Costa Rica is better at bananas, both are better off with free trade.

What then follows from this?

Firstly, these numbers should not be taken as an estimate of the type of tariffs which the US or any other country faces. Average tariff rates which the UK imposes on the US are well below five per cent when calculated properly - that is, zero per cent on the vast majority of goods, and higher percentages on goods like agricultural products.

We should also not assume that the UK has been given special treatment by having a lower rate than other countries. The US has a slightly lower trade deficit with the UK than with Europe, so the simple maths of this calculation would lead to a smaller ‘reciprocal’ tariff.

Thirdly, we should remember that the US is a relatively closed economy. British imports are around 30 per cent of GDP, American imports are around 15 per cent, so we must not overstate the impact of unilateral American restrictions on trade on the world.

Unless we descend into a full trade war, the economy most hurt by these measures is the American economy.

The right response to these tariffs is to carry on trading and let the US sink under the weight of its own bad policies.

More narrowly, what does this mean for the UK? The effects of this policy will of course be concentrated in certain export sectors, such as the car industry, and I would expect policies to be forthcoming to mitigate that adverse shock. But more broadly, we should stay focused on what will get the UK economy growing: policy to encourage science, clusters and startups.

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Jonathan Haskel takes a closer look at why "reciprocal" tariffs misunderstand the real nature of global trade

Credit: Nuthawut Somsuk / iStock via Getty Images Plus

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Listen: The Standard’s Tech and Science Daily podcast interviews Dr Mark Kennedy on the US supreme court’s TikTok ban

Evie Burrows-Taylor — Mon, 20 Jan 2025 11:43:18 +0000

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Digital transformation

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Left vs. Right: How polarised are our everyday lives?

Sanaz Talaifar — Wed, 15 Jan 2025 12:14:02 +0000

Left vs. Right: How polarised are our everyday lives?

Sanaz Talaifar Wed, 15/01/2025 - 12:14

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Today, much of life seems increasingly politically divided.

But little is known about the mundane details of everyday life and how politics seeps into these ‘smaller’ activities – the minutiae of how we spend most of our time, such as when and where we socialise, work or travel. Do political leanings shape how we live our everyday lives?

For our research - Lifestyle Polarization on a College Campus: Do Liberals and Conservatives Behave Differently in Everyday Life? - we wanted to find out more about how people live across the political divide. We went to a large US state university in Austin, Texas and more than 1,200 undergraduates helped us by declaring their political identity – whether and how strongly they felt they were liberal or conservative.

Rather than relying on self-reported surveys to measure behaviour at a single point in time as much previous research has done, we used data collected by these ��ý’ smartphones to track what they were doing over time – were they texting or jogging or in the bar? Did they exercise more at weekends, were their mornings spent online? Using phones, we were able to gather data on some 60 different behavioural tendencies to a level of detail not possible through more traditional methods.

Political identities impact the choice of third spaces and leisure activities

Political identities structure people’s non-political actions and the way they live, relax and move about. Conservatives tended to spend time in social places such as bars, parties and noisy places. They also engaged in more physical activity. Liberals by contrast were more likely to spend time at home, use more social media, or work more. If we had to sum it up, conservatives made the most of their local surroundings, while liberals explored more distant places – and were less likely to socialise closer to home.

Even though liberals and conservatives behaved differently in everyday life, the differences were not obvious to members of the campus community. In a separate study, we asked undergraduates if they could estimate differences in how their fellow liberal and conservative classmates lived and spent their time. This was to gauge how accurately people estimate differences in lifestyle among members of their own community. Our participants got nearly 75 per cent of behaviours wrong -- they tended to see lifestyle differences when there were in fact none.

Opportunities for interactions at the crossroads of ideology are minimal

Back in the 1950s, political differences between Democrats and Republicans, both in terms of platforms and demographics, were so subtle that political scientists considered this problematic - a lack of differentiation between the parties did not give voters enough choice. This no longer appears to be the case. As our research shows, ��ý living on the same campus have different lifestyles according to their political identities. Research has shown that the divide between those on the right and left is growing in terms of policy preferences and disdain for those on the other side. But our work reveals that politics has penetrated even nonpolitical areas of everyday life.

Why does this matter? When people from different political sides get together, they might find they share more than they realise. Face to face contact is a way of breaking down barriers, understanding each other and bridging the political divide. Socialising helps to dispel prejudice on both sides and allows people to discover what they have in common.

If people have little chance of crossing paths with those of a different political identity in everyday life, divisions within society may become even deeper.

Our second survey, which asked ��ý about their perceptions of people linked to their politics, revealed some good news – the political divide in everyday life isn’t as extreme as people believe, and this offers scope to build on what they share rather than how they differ.

But in fact, our work asks more questions than it answers. Our innovative use of smartphone data could be developed to tell us more about the wellbeing of people on different sides of the political spectrum. For instance, prior research finds that liberals tend to be unhappier than conservatives. We could look more closely at whether differences in the things liberals and conservatives do each day could explain this partisan wellbeing gap. Smartphones could be used to measure the social media apps people use and when, alongside different measures of wellbeing such as anxiety or loneliness at different times of the day and night.

By looking at the nonpolitical – the fabric of everyday – we’ve unearthed another source of growing political division in society. As US film director John Cassavetes remarked back in 1971, “there is only one level of agreement. And that is lifestyle. If your lifestyle is like my lifestyle, then we like each other. If your lifestyle is not like my lifestyle then we can see nothing in each other.”

Our research hints at a troubling possibility - that the lifestyle differences of those on the left and the right mean that they can see nothing in each other.

Edited 27 May 2025: This article’s headline was changed from “Left vs. Right: Are our everyday lives more polarised than we think?” to better reflect the findings of the research.

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From work to screen time: The subtle ways politics shapes our daily lives

Main image: FotografieLink / iStock via Getty Images Plus

4 minute read

Watch: Professor David Miles gives evidence on Chancellor's Budget in the Houses of Parliament

Evie Burrows-Taylor — Tue, 12 Nov 2024 14:44:25 +0000

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Evie Burrows-Taylor — Mon, 04 Nov 2024 15:47:53 +0000

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Visiting Lecturer Catherine Mulligan about the impact of Donald Trump using Bitcoin

Evie Burrows-Taylor — Fri, 04 Oct 2024 13:40:22 +0000

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The Telegraph quotes Professor David Miles on how low-skilled migrants impact migrants impact the UK’s long-term debt

Evie Burrows-Taylor — Fri, 04 Oct 2024 13:34:00 +0000

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Why we fail to see the positives of population growth and immigration

Guy Voichek — Mon, 17 Jun 2024 12:55:57 +0000

Why we fail to see the positives of population growth and immigration

Guy Voichek Mon, 17/06/2024 - 12:55

20 June 2024

Many people believe population growth means greater competition for a fixed supply of resources. But we should view others as producers, as well as consumers, says Dr Guy Voichek.

Across the world, and particularly in Europe and the US, anti-immigrant sentiment is on the rise. This is driven by a range of complex factors, including questions of identity, culture and history. Alongside these, however, a key underlying component is concern about increased competition for resources.

People worry that incomers will rapidly increase local and national population sizes, leading to less food, fewer jobs, more strain on public services, and faster depletion of natural resources. This is not a new phenomenon: the global population has been rising almost continuously for the past 12,000 years, and has rocketed since the 1700s, and this fear has persisted for much of that time.

The problem is that, for almost as long as this fear has been around, it has been proved groundless. More people does mean more mouths to feed, but it also means more arms to work, more minds to generate ideas, and a greater incentive to innovate. This actually leads to greater abundance rather than resource depletion, and the world has shown this by adapting to a scale of population growth our predecessors would have considered impossible.

Why do people think migration is bad?

Our study highlights a psychological mechanism that causes people to fail to acknowledge the positive impact that population growth has on production and efficiency. This means most people see others purely as consumers, rather than as both consumers and producers. The researchers call this mechanism "efficiency neglect".

People are inclined to believe that population growth means they have to work for longer than those in previous decades

This way of thinking has a significant impact on people’s perceptions. For example, the research found that, even though a range of consumer goods have become cheaper over time (in terms of the number of hours of work required to afford them), people incorrectly believe they have become more expensive.

Linking back to the question of immigration, there’s a clear danger of such systematic misperceptions of economic trends leading people to align themselves with political positions and movements that they may not otherwise support. In other words, those who incorrectly see incomers as a direct threat to their own access to food, shelter and acceptable living standards may be driven to support action against those people.

Labour vs. demand

So, are we destined as a species to resent population growth as a threat to our own wellbeing? Thankfully, the research highlights a potential solution. Starting with the question of the price of goods: when the researchers prompted people to consider the effect of increased demand, they continued to believe that it would increase prices. However, when they were prompted to take technological changes into account, this effect was mitigated.

Most people see others purely as consumers, rather than as both consumers and producers

Moving on to immigration specifically, the researchers found that, when thinking about its impact, people similarly tend to focus on how it affects demand. In other words, they see it as zero-sum, with economic benefits for immigrants coming at the expense of current citizens. However, as with the question about the price of goods, when people were prompted to consider how immigration affects the number of available workers, this effect was reduced.

This demonstrates that simply reminding people that population growth can boost labour power and spark innovation may be enough to improve their view of immigrants and immigration. Critically, this has to be an active reminder – the study shows that the default view tends to focus on depletion, due to the psychological mechanism of efficiency neglect.

How people vote

Ultimately, and worryingly, people are inclined to believe that population growth means they have to work for longer than those in previous decades to purchase the same goods, and that they are in greater competition with others for a fixed supply of resources – even though neither of these things is true.

And, of course, faulty economic beliefs lead to bad policies. This helps to explain the rising fervour across Europe and the US for closed borders and population control measures, in the wake of conflicts and environmental impacts forcing greater numbers of people to migrate.

Fortunately, as the research shows, being reminded to consider how immigration affects productivity and innovation can mitigate people’s concerns, even if it does not eliminate them. A practical question for society at large is whether there is the political will to issue these reminders – to make the case for immigration’s positive impact on economic factors. This very much remains to be seen, but a year of elections across a range of developed countries may provide some clarity.

This article draws on findings from "Efficiency Neglect: Why People are Pessimistic About the Effects of Increasing Population" by Jason Dana (Yale School of Management), George E. Newman (University of Toronto) and Guy Voichek (��ý).

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Ageing populations and declining birth rates: are they really such a catastrophe?

Longer lives, coupled with a trend for richer countries to produce fewer children, has led to panic. But are these really things we should be worrying about?

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Professor Pasquale Della Corte speaks to Bloomberg about what a Donald Trump presidency might mean for Wall Street

Evie Burrows-Taylor — Mon, 15 Apr 2024 14:16:26 +0000

Professor Pasquale Della Corte speaks to Bloomberg about what a Donald Trump presidency might mean for Wall Street Evie Burrows-Taylor Mon, 15/04/2024 - 14:16

27 March 2024