How Will Autonomous Cars Change Our Economy?

Self-driving cars are about to become widespread; the advantages these vehicles have over traditional cars are obvious. One question then is how will this automation impact the economy? Mark Slater investigates...

image: pursuitist.com

Mark Slater
AutoMax, North Carolina

Self-driving cars navigating themselves by computer are becoming an actuality in the 21st century. In fact, it is projected that by 2030 over 50% of the cars on the streets will be driverless. It’s time to carefully examine the effects this will have on our economy and to what extent.

Automated vehicles do have some incredible benefits. It is believed that accidents will be reduced by a considerable amount, mostly because it is estimated that 93% of all vehicular accidents are caused by human error. This is probably one of the best features these cars will bring to the table, but since the roads will be safer when you look at it from the perspective of an insurer or injury lawyer you see the loss of revenue as a direct result of these vehicles. Accidents cost the USA US$900 billion every year in repairs and administration costs- which will also be greatly reduced by the advent of autonomous cars. This could have a massive impact on the economy.

Still, car dealership mechanics need not necessarily fret, as even though there will be a reduction in accidents and the repair work mechanics perform there may actually be an increase in their workload due to a higher need for maintenance as a direct result of an increase in daily automotive use from convenience and vehicle sharing. Mechanics would certainly have to become accustomed with the innovative technology and get themselves through the necessary training. If they invest in these skills they could actually see a substantial increase in revenue over the next few decades.

Morgan Stanley believes US governments could lose US$1.3 billion from more esoteric revenue sources such as parking fees. This is mostly because automated cars can be on the road much more. Here is an example: imagine a parent going to work in the morning and directing the car to go back home and take his daughter to university before directing it to come back to pick him up. The vehicle will have much less need for a constant place to park all day.

Similarly, there will be a widespread reduction in the number of parking garages and parking spaces needed, which will allow for more apartment and office space development. Consumers, and not government, will benefit from this more. There is also a projected reduction of vehicle ownership from an average of 2.1 non-automated vehicles per household to 1.2 driverless vehicles per household, and this would reduce government revenue from vehicle registration fees.

Car ownership could even cease to exist by 2030. A Columbia University study suggested Uber would need just 9,000 autonomous vehicles to completely wipe out all taxis in New York City, with consumers only having to wait 36 seconds on average for a ride.

When these vehicles start to show up more, people will naturally be skeptical of how safe they are. This will be the response until these cars start to gain more recognition for safety. When this happens, the travel industry could also be heavily impacted. Why would anyone book a domestic flight or a hotel when they can have their car drive them somewhere overnight while they sleep safely in the vehicle? Why would anyone go through the trouble of reserving a room or even spending any money on a room when their car could drive them the whole way in privacy and luxury? Highway motel operators will take a big hit when these cars become more common.

It is estimated that trucking companies could save up to US $500 billion dollars annually by 2025. This would, however, cause many truck drivers to become unemployed. Indeed, there are many other drivers that will be affected such as taxi drivers, bus drivers, and even shuttle drivers. This level of job loss could put a real strain on the economy through unemployment.

On the other side of things, however, IT workers and analyst will see a positive impact as they will be more important in the age of automation. Disabled people will also benefit from these vehicles as their mobility, freedom, and income are expected to increase.

Despite the shifting tides, driverless cars could add as much as $7 trillion to the global economy. There will be winners and losers as with anything, but these vehicles will make our lives more efficient, safer, and convenient.

Why Is The iPhone X So Expensive?

The iPhone X was revealed with much fanfare in Apple's new Cupertino HQ last week- but it wasn't just the personalised poop emojis, the wireless charging or the new display that stole the headlines...

The all-new iPhone X was proudly revealed by Apple CEO Tim Cook as the "biggest leap forward since the original iPhone". The device, which marks the 10-year anniversary of the iconic smartphone, features an all-new bezel-less OLED display, 'Face ID'- the most advanced facial recognition technology on a smartphone- and other new updates such as wireless charging.

Not only was iPhone X arguably the biggest leap in technology since the original iPhone, but it was in fact the greatest leap in price- at $999 dollars, it became the most expensive mass-market smartphone ever, $230 up from the iPhone 7 Plus. This significant price increase, and the landmark of the iPhone X becoming the first ever thousand-dollar smartphone, remains a significant talking point of the new device- and most of the coverage around the price has been negative. So, why exactly have Apple made the iPhone X so expensive?

The most obvious contributor to the increase in sale price is the increase in the cost of production. According to GSM Arena, the X costs $412.75 to produce- compared to the $220 production cost of the iPhone 7. This drastic increase in cost is the result of a significantly larger, OLED display, a new glass material, and also a larger standard storage of 64GB for the base iPhone X.

Interestingly, the only place Apple could source the new OLED display was from its smartphone rivals Samsung- no doubt, the Korean firm will have exercised this monopoly power to try to reduce the margins of its competitor.

The new design and technologies of the iPhone X has also limited production capacity. This is rumoured to be one of the reasons why there have only two colours offered at launch, as well as why the actual sale date is in November, despite the announcement coming in early September. As basic economics dictates, a lower supply is likely to induce higher prices, as people clamour to not miss out on this latest iPhone.

While this price increase is rather drastic, people often forget that it's not the first time Apple have introduced devices at a high price. Apple believe that the iPhone X is a whole new device- an iPad Pro to the iPad that is the iPhone 8, or a MacBook Pro to the iPhone 8's MacBook. This is especially evident when you see that the prices of the iPhone 8 and 8 Plus have actually increased from the iPhone 7 and 7 Plus.

The first MacBook Air (top) was succeeded by a
more successful and affordable generation.
Source: Engadget

Historically, new Apple products as revolutionary as the iPhone X have provoked controversy due to their costs- the first generation MacBook Air, the 2015 MacBook and the Apple Watch are just three such devices. Experiences from these products have arguably given Apple the confidence to set a high price for the new iPhone. Where successful, Apple have been able to sell high volumes at high prices- and in slightly less successful cases, such as the launch of the first MacBook Air, Apple reduced prices over time as the new technology introduced became standardised in its line-up.

Apple knows that many people unwilling to pay $999 for the iPhone X will opt for the cheaper iPhone 8 instead- and this doesn't necessarily present a financial loss to Apple, given the lower production cost of the latter device.

And Apple also knows people will still buy the iPhone X. The massive marketing buzz around the product, and the sheer difference it represents from the usual iPhone lineup means that the device is undoubtedly going to sell in high volumes. It's likely, in fact, that the higher $999 price will be attractive to many customers. At a sub-conscious level, the round pricing of $999, essentially a thousand dollars, the idea of having a thousand dollar device will appeal to people who may want to own the device as a status symbol as well as a phone.

This type of product is known as a Veblen good- a product for which demand increases with price, in contrast to standard economics. At a sub-conscious level, the round pricing of $999, essentially a thousand dollars, the idea of having a thousand dollar device will appeal to people who may want to own the device as a status symbol as well as a phone.

A high pricing brings other potential smaller benefits for Apple. For example, when people spend as much as $999, the smaller purchases seem even smaller, and thus more appealing, to the buyer. For example, spending $100 on Apple's new AirPower wireless charging station seems less of an expense when you've spent $999 on an iPhone X than when you've spent $500 on a previous generation iPhone.

So while the increased production costs have introduced a necessity for Apple to raise the sale price of the iPhone for the new iPhone X, the decision to increase the price to as high as $999 is likely to prove a shrewd business decision for Apple, especially given the release of an updated iPhone 8 at a cheaper price. What remains to be seen, however, is whether Apple will eventually reduce the price of future generations of the iPhone X, as its technology becomes standardised in the iPhone range, or whether Apple is preparing the market for a shift to a new level of price for smartphones.

Should You Get Free Lunch In The Office?

By providing free meals, are offices providing gratuitous nourishment to their staff, or just locking them down in the office?

We've all heard (and, admit it, envied) those offices in which lies the promise of free food for all staff. Breakfast, lunch, and even dinner in some companies, is offered to employees, without a single penny leaving their pockets. These meals are not only free, but they are known generally to be higher quality than paid meals in other offices. 

But, like they say, there is no such thing as a free lunch. Free food at work has a variety of effects on a workers' life- from obvious things like their weight, their time spent at the office, to the more subtle things, like how staff interact with each other and how the food can affect worker performance.

The most obvious benefit of this particular perk is that it makes the office a more welcoming place for employees, both increasing the satisfaction of current employees and making a job at that company more appealing for potential recruits. 

Similarly, the most obvious cost of free meals at work, from an employers' perspective, is the cost of giving away food to employees. This cost has multiple layers: firstly, the employer must give up the cost of the staff, the facilities, and ingredients to make the meals themselves. Secondly, the employer gives up the potential for a small profit to be made by selling meals to employees at more than their cost price. And thirdly, the employer runs the risk of abuse of the system, which can lead to unexpected additional costs.

Despite this, massively successful companies such as Google are well-known to incorporate this practice into their offices. So the question is- why?

Perhaps even more significant than the direct benefits mentioned earlier, is the ability of a free meal in the office to win the employers more of its staff time. This starts with breakfast: providing the most important meal of the day for free increases the probability that staff will come to work sooner, reducing the level of tardiness. When it comes to lunch, employees are able to stay in the office, rather than head out to the shop to buy a meal deal. Removing this travel time, and keeping employees in the office, means lunch breaks are likely to be shorter when lunch is provided in the office.

Some companies like Google take the food offer further- even offering free dinner on-site. This increases the likelihood of late working nights- especially, in the case of Google, because many employees will be young and no doubt become dependent on meals provided by the office.

The numbers can prove that providing office meals genuinely brings greater benefits than cost*. Assume that, given the costs of ingredients, cooking facilities, staff, an economy of scale whatnot, the average cost of producing a meal is £6. Furthermore, reasonably assume lunch provided in the office increases an employee's working time by 15 minutes every day.

An example of the fine food on offer at Google
(Credit: Michael Krehan, Quora)

Google's average salary in the UK is reportedly £160,000- though it's highly likely that this figure is skewed by the number of staff being paid 7 figure salaries, so assume a lower average salary of £120,000. This means roughly £2300 a week- £640 per working day, and thus, given a 9 hour working day, £71 an hour. By offering free meals, Google increases each employee's working time by 15 minutes- bringing an extra £17.75 of value, according to the £71 an hour pay estimation. The cost of this, according to our assumption, is £6- bringing a net benefit of £11.25. So, the cost of providing the free food is more than paid for by the additional productivity!

According to the above assumptions, a minimum average wage of £56,160 is required for a business to breakeven in their offer of free lunch. For most large businesses, this is not an unreasonable level.

From an employee perspective however, free hot meals can have negative effects, if not executed properly. A heavy meal can negatively impact worker performance, and in the long run, can lead to weight gain. Furthermore, some argue the shorter lunch breaks caused by on-site meals can negatively impact employee wellbeing over time.

Free lunch also brings intangible benefits. We emphasised in a previous article the significance of community spirit in any office. By offering lunch in a single place, employees are more likely to eat with each other, rather than head their own separate ways, increasing the likelihood of relationships across the country developing.

So we have (loosely) proven that free lunch can bring net benefits to a successful business like Google. But does free lunch work for all businesses? No.

Massive businesses, hiring thousands of employees on a single site, may enjoy a larger economy of scale, but equally they may find it harder to monitor and control the free food. Smaller businesses are the least likely to offer free meals. Though it may be an emerging trend, particularly with Silicon Valley startups, most small businesses may not be able to invest in the facilities and staff for free office meals. Such businesses may instead decide to invest in something similar, like free snacks.

Free lunch works for most businesses that demand a lot from workers. Some businesses take the investment in such perks even further- for example, Google offers free laundry services in many offices for its employees. Such perks are luxuries- but through increasing employee satisfaction, and minimising time wasted by employees, investment in these things can provide significant benefits for the firm.

*warning- an avalanche of assumptions is imminent...

The Office - To Hot Desk, Cold Desk, or not Desk At All?

Can businesses increase their employee productivity if they let them work from anywhere- even from home?

Last week we discussed how businesses can work to keep their employees satisfied- we learnt how features of a job such as a trusting employee-employer relationship, the design of an office space, and a community atmosphere were crucial in keeping employees happy.

But this is not the end of the story- productivity is key, as it is the ultimate result of all the satisfaction and hard work put in by employees. Productivity is arguably the ultimate aim of any firm- it directly determines the overall output.

Like with employee satisfaction, the methods of improving productivity range from massive scale to very small details. The first feature we'll talk about today is

We mentioned last week that the atmosphere and design of an office can have significant psychological effects on those working in it. But the design of an office is equally crucial in determining productivity.

The traditional office that we are perhaps accustomed to is one that is desk-based, perhaps in cubicles or small sections, with each employee assigned their own desk to keep. However, a recent trend has emerged of what is called 'hot-desking'- where no employee actually has their own desk, but they are instead expected to come into work, unpack their things onto any open desk, and pack everything back up at the end of the day.

Could empty desks be part and parcel of the office
of the future?

On the plus side, hot-desking is argued to save employers rather significant amounts of money. A study from Vodafone UK, whose Newbury HQ is entirely hot-desk based, £5,746 could be saved per desk per year if an office is hot-desked. What's more, many argue that the nomadic behaviour brought on by hot-desking increases the opportunity for employees in a business to work with and get to know more people in the company, improving office relations.

However, hot-desking has a number of reasons to be unpopular for. Some employees see their desk as a 'home away from home', often adorning it with photos, decorations, and also organisational aids, like a whiteboard. The lack of their own desk also reduces the potential for employees to store their items at work- instead they have to take things home each day. Hot desking removes this possibility, due to the fact that employees have to clear their desks at the end of every day. From a direct productivity standpoint, there are time savings to be had from a traditional assigned desk policy, particularly when accounting for the time each employee must spend setting and packing up each day, which may be small on a daily basis but add up over time.

What's more, many argue that hot-desking doesn't always open the door for more relationships to be built. On the contrary, sitting next to new colleagues each day for some can make every day feel like their first, especially when considered that people in the office are not always so free as to get to know new people every day.

Some argue that no desk at all is the way forward- ie., the office is a thing of the past, and benefits can be enjoyed by letting employees work from home. Though one can envisage issues with this proposal- notably the lowered opportunities of communication between teams, and the potential for employee distraction- there are well-defined benefits to enabling employees to work from home. Firstly, by allowing employees to work from home, businesses can hire the best talent, regardless of any other commitments potential employees may have (most notably, having kids to drop and pick up from school). Employees can enjoy a better work-life balance, improving their satisfaction with their job and opening potential for increased productivity. Employees save time and money on commuting, too.

Businesses stand to save even more on office space and maintenance by allowing employees to work from home, and the wealth of video conferencing and document sharing platforms mean that employees can maintain communication wherever they are. Fewer sick days are expected to be taken by employees, and the lack of a trudge to the office every day may also reduce the employees' demand for leave days. And employees can use that hour or two spent commuting daily to do more work.

All this adds up to improved productivity caused by allowing employees to work from home- as much as 13.5%, according to a study by Nicholas Bloom of Stanford University.

So, what should businesses do? The answer, as it so often does, depends largely on the individual circumstances of a business. Businesses whose work is done entirely digitally, like many modern tech firms, stand to benefit perhaps most from allowing employees to work from home, while of course working from home is not such a viable option for businesses involved in face to face sales. Whatever the business, the future of the office seems to be becoming far more dynamic and less building-based. Particularly due to its cost and productivity benefits, more and more businesses appear to be shifting focus from their physical offices to alternative workplaces.

What's The Best Way To Keep Employees Satisfied?

There's a reason why The Office is such a popular hit TV show, that has been subject to numerous remakes from around the world. While often exaggerated, the life of seemingly regular office workers relates to many, many people who can see glimpses of their own office in the TV show.



86% of American workers sit all day at work- and the majority of these, like Michael Scott and co., are likely to be office workers. Given that the economy is driven by people working, the office is a generator for growth and economic success, and thus plays a key role in any nation's fortunes, let alone a company's.

When it comes to how offices should be run, however, there is a distinctive lack of uniformity across businesses and countries. From the renowned 'Google-plex', the Silicon Valley HQ of Google, to the more traditional cubicle based offices that have existed for decades, the office today arguably plays the greatest role it ever has in the lives of employees.

To begin looking at what kind of office brings the best results, we have to first determine what the desired result is. This will, of course, differ between businesses- but a safe assumption to make would be that a business seeks to maximise the productivity of its employees, taking cost into account. That is, the business wants to maximise output, while relatively minimising how much it pays for it.

And to go deeper, what determines productivity? Again, there are an abundance of factors- but, for simplicity, we'll look at two of the biggest- employee satisfaction, and employee organisation. We'll be exploring the first of the two today.

Employee satisfaction
The term 'satisfaction' is highly subjective, of course. Many people, usually those on the lower end of the income spectrum, will not be overly concerned with job satisfaction- sadly because many will not have the luxury of doing so. For people struggling financially, or with a lack of alternatives, hard work is a must.

Recently, a trend of 'job-hopping' has emerged, particularly among the younger generation, who seem more willing than ever to switch between jobs. They seek new challenges, new experiences, and for the more educated there is arguably more choice than ever, especially given the globalisation of the jobs market.

Thus, some younger workers today are more sensitive to their satisfaction at work- which is why companies nowadays must invest significantly in their offices if they want to recruit the brightest young people.

Not only does the prospect of job satisfaction help a business' recruitment, but it has been proven to improve performance on the job. A recent study from the University of Split in Croatia concluded that "there was an impact of the majority of job satisfaction factors on organisational performance". This is rather common sense- people who feel happier at work are likely to spend more time at work, likely to be more willing to work and thus are likely to perform better (though there is little consensus on whether more hours = better results).

The atmosphere of the office plays perhaps the most obvious role in determining employee satisfaction. This starts with the design of the office itself. Apple is not spending an expected $5bn on its beautiful new Apple Campus just for the sake of publicity- but research has proven repeatedly that a more scenic environment helps to improve wellbeing, and thus productivity at work.

Apple's new 'Spaceship' head office in Palo Alto, California

Psychology is key here- features of an office like an abundance of natural light, tall ceilings and even sufficient distance between workers and screens can impact the productivity of a worker. Evidently, this is not a discovery that works in favour of cubicle offices.

The mental wellbeing of an employee also has to be cared for- gone are the days when a worker was just counted as a number. Businesses now have to realise the full human aspect of their employees, and this is where the support system in an office is crucial. A good HR department, and sufficient pastoral support for employees can generate substantial improvements in productivity.

The employer-employee relationship must be a positive one. Bosses can no longer rely on fear, and their position of authority to bring sustainable results- they must be a lot smarter than that. They must take an active interest in their employees, and develop relationships that engender trust and loyalty from those who work for them. Different bosses will naturally have different styles that bring their results, but generally it is crucial that a boss is honest, considerate and open to their employees. Hating one's boss is such a common phenomenon that Hollywood got 2 films out of it- but in the real office, the boss-employee relationship is perhaps the most important of them all.

Maintenance of a good work-life balance is also very important. Schemes such as paid maternity and paternity leave are in vogue, and for good reason. Offering employees a 'sabbatical', time off to pursue other positive interests, also has a positive impact.

A positive community atmosphere helps massively. Whether it is through creation of communal lunch spaces, office events and competitions, or perhaps most importantly a strong bond between employer and employee, a business must invest both time and money into the office community. Not only does it improve the team harmony, which can lead to more positive results in work, but it gives employees another reason to want to work. Of course, the time dedicated to such activities must be balanced with the actual time spent working. Anyone who has watched 'The Office' will know that practically nothing actually gets done when employees are too chummy with each other. But there is a school of thought that believes once employees are taken care of and in a positive state of mind, the employees themselves will be motivated, and feel a duty, to self-regulate and ensure they get their work complete.

A positive workplace can have drastic impact on employee tenure- how long an employee stays with the business. As we mentioned earlier, the average tenure of an employee is decreasing these days- and there are both benefits and losses associated with these, that largely depend upon the firm. On the one hand, a high employee turnover rate can lead to a dynamic, fresh firm that does not get so entrenched in any old, perhaps flawed ways. On the other hand, such a high turnover requires significant investment by way of recruitment and induction, and perhaps has the adverse effect of reducing employees' loyalty to the firm.

For example, a law firm is likely to desire greater employee tenure. It will want barristers who have experience in the court of law and the kind of clients the firm serves. On the other hand a management consultancy firm (for example McKinsey & Co., which has a notoriously low average tenure) may have an interest to refresh its workforce with new blood to keep up with the changing landscape of the business world. Of course, that's not to say firms with lower average tenure will deliberately create negative workplaces- they have 'other ways' to ensure a lower tenure.

In today's world, businesses have to focus on their employees' satisfaction more than ever, and to do so, many businesses will go to extraordinary lengths: whether it's Google's free gourmet meals for all employees (which we'll discuss more next week), or Uber's super-cool office, happier employees will generally perform better.

The challenge that exists for the majority of businesses who are not Google or Uber is having the capacity to invest in such things. For these businesses, the cost of building a trendy office, or giving free food to all employees may not be financially viable (at least in the short run). This is where the less material aspects come into play. Small businesses can still offer career development opportunities to employees. Most small businesses can still create an open office atmosphere. Small businesses are suaully better, in fact, at fostering team spirit.

So whether a company is a giant or a dwarf, it is key that it recognises the importance of employee satisfaction, and invest for long run productivity gains, one way or another.

The Dark Side of Supermarket Warfare

All competition is good competition... right?



Entering through the doors of your local Tesco, you are not just entering a supermarket. You are entering a battleground. But in this battle, there are no guns or swords- instead, you'll find weapons of words scattered around the place- "I'm cheaper", "Brand Guarantee", and the like.

The supermarket industry has reached saturation point, and as a result, the players are all scrambling to win the pound in your pocket. One of the most prominent tactics to do this, that has risen to fame in the past decade, is the phenomenon of 'Price Matching'. The essence of this is that if you go to your local Tesco, for example, and find that the cereal you are buying could be had for less money in Sainsbury's, if you can prove this to the cashier at Tesco, they will match the cheaper Sainsbury's price in store. In some stores, the offer is made to go even lower than the competitor price.

Seems great, doesn't it? On the surface, yes. Competition is very important in any market, especially one that is as large a part of our daily lives as our supermarkets. Competition leads to better service, better stores, and, perhaps most importantly, lower cost to customers.

And at first glance, price matching seems to be competition set in stone by the supermarkets- a written promise to compete with each other. Furthermore, one could argue that price matching means setting low prices is not enough to compete- it arguably puts stores on a level playing field to compete on other aspects of the customer experience, such as customer service.

But not all is as rosy as it seems, because in reality, price matching is unlikely to lead to a better outcome for the consumer.

Firstly, the notion of price matching allows stores to set higher prices than competitors in the first place. Price matching means stores can attract those who are so sensitive to higher prices that they may have avoided the store if it wasn't a policy. In the case of direct price matching, where one store exactly matches, and doesn't beat, another store's price, the incentive to 'compete' and set truly lower prices is dulled. Essentially, price matching weakens the link between demand and supply that otherwise would drive a store to cut prices.

There are more practical arguments against price matching too. These are well set out in Morten Hviid and Greg Shaffer's 1999 paper on the subject, but in reality these weaknesses are not too difficult to comprehend.

Firstly, the procedure for actually gaining the right to a price match is not so simple- this is usually designed to be an inconvenience by supermarkets. For example, the very act of providing another store offers the same product at a cheaper price is often a hassle. The customer must provide written proof of the competitor's offer, usually a difficult task unless the customer is willing to travel between multiple stores in search of the best price. And if he does so, why would he then not purchase the product at the originally cheapest store?



And once the proof is provided, the ultimate approval is given by the store- who may disagree that the two compared products are the same, or have some other quarrel with the proof provided. The terms and conditions make the process far less open than it first appears.

Furthermore, as Hviid and Shaffer point out, "In every instance it takes longer to complete a transaction when price matching is requested than when it is not". This means there is a non-financial cost to entering a price matching deal, and often the amount you are saving is not enough to make this a cost worth bearing.

So while price matching is indeed a form of competition, it is not as beneficial to the consumer as advertised. It arguably allows stores to be less proactive in setting low prices, and also provides many practical stumbles that to many consumers will just not be worth it. It's a form of what is called imperfect, oligopolistic Bertrand competition- in which there are a few firms who compete with each other on price. In theory, Bertrand competition leads to an optimal solution for the consumer. But the painstaking realities of the price matching process mean this, in practice, is far from the case.

As consumers wise up to this reality, it seems some supermarkets are too- Sainsburys announced the removal of their price matching program last year, highlighting the need for "clear, simple pricing". The question that remains is whether other supermarkets will follow suit.

What Is A Hung Parliament?

To say that the morning of Friday 9th June brought an unpleasant surprise to British Prime Minister Theresa May and her Conservative Party would be a massive understatement. Having been expected since by the mainstream media to wipe out Jeremy Corbyn, not only did the Tories themselves perform poorly and lose 13 seats, but Corbyn's Labour Party performed beyond expectations, gaining an extra 30 seats from 2015, and earning the largest vote share gain the party has gotten since 1945.

Theresa May is no doubt being force-fed copious amounts of humble pie, after this decision to hold a re-election that many are branding one of the worst political decisions in British history. The reasons for the defeat are pretty simple: on one hand, Theresa May ran a wooden campaign hiding in the shadows, and on the other, Jeremy Corbyn made the most of his party's superbly popular manifesto by doing one of the things he does best- going out on the road and connecting with ordinary people.

But despite May's humiliation and Corbyn's victory, the fact remains that the former is still Prime Minister. This comes as a result of the hung parliament that came from the election, and the Tories' alliance with the Democratic Unionist Party of Northern Ireland.

What is a hung parliament?

To define a hung parliament, first it's important to understand what exactly constitutes a victory in a British general election. 

There are 650 seats in Parliament up for grabs throughout the UK, each for a certain area of the nation. To rule effectively, a party must rule 'in the majority'- that means to have more than half (at least 326) of the seats under their control. This means that if there is a future vote in Parliament, for example on a policy being passed, the ruling party can ensure that it is passed- because it can tell all of its party MPs to vote in favour.

Before Friday morning, a strong performance in 2015 meant that the Conservatives held 331 seats in Parliament, meaning a majority of 5. Theresa May held this re-election hoping to increase this figure- instead, following this election, Conservatives are 8 seats short of holding a majority.

Labour won 262 seats; while this was impressively 30 up from 2015, it was still far short of the Conservative number. So the Conservatives had won the most votes, most seats, and thus the election- but, they did not command a majority in Parliament, and neither did Labour. This outcome is a hung parliament.

How common is a hung parliament?

Hung parliaments are usually highly rare, but seem to be becoming less so, most probably due to the emergence of more non-mainstream political parties taking away votes from Labour and the Conservatives. Since 1929, there have been just 3 hung parliaments- in 1974, 2010, and now in 2017. 

A winning party confronted by a hung parliament typically has 2 options:

i) Coalition

This was seen in 2010 when David Cameron's Conservatives failed to command a majority in the House of Commons, despite thumping the Labour Party and winning 48 more seats. 20 seats short, Cameron requested the support of the 3rd place Liberal Democrats, who had won 57 seats. In a formal coalition, this would effectively grant the new government a total of 363 seats, well clear of the majority threshold. Nick Clegg, the then-leader of the Liberal Democrats agreed to this coalition, and thus came the Coalition Government.

ii) Rule in minority

In February 1974, Labour under Harold Wilson won 301 seats, just 4 more than Ted Heath's Conservatives. However, rules dictate that if no party has a majority, the current Prime Minister has the first chance to try to form a new government, and this was Ted Heath. Heath tried, and failed, to form a coalition with the Ulster Unionist Party, and so consequently resigned, leaving the path clear for Wilson to take power. Wilson was also unable to command a majority via any coalition deal, but he ruled in minority. Knowing that in the long run, it would be highly difficult to pass through policy in a Parliament where Labour were a minority, Wilson announced an election for the October of that very year, where Labour won more comfortably to command a majority.

Theresa May has opted for a third route, a combination of these two options- a 'confidence and supply' agreement. This is a type of informal coalition, in which the DUP will promise its support in Parliament to the Conservative Party, with its 10 MPs granting Theresa May's government a working majority of 2. Of course, the DUP will expect some favours from Theresa May.

Where does the UK go now?

Far from 'strong and stable', May's government has come out of the election bruised and weak, leaving the Conservative Party worse off than they would have been without the election. The Prime Minister's own position as leader of the party is under jeopardy- Boris Johnson especially is rumoured to be sharpening his knives to take the throne- and the Labour party are resurgent.

The agreement with the DUP is necessary for the Tories to stay in power, but the fact that it leaves the government indebted to another party will not be something May will be totally satisfied with. 

What is highly likely to happen amidst all this uncertainty is another election, likely to be close to the end of this year or the beginning of the next. In this, the Conservative Party (under the leadership of Theresa May or not) will seek to regain the majority of Parliament, and the Labour Party will seek to finally end years of electoral disappointment and take control. 

Education Is King In South Korea

The education systems of East and West are like chalk and cheese. Mohammad Lone outlines the South Korean attitude to education.

Exams. The bane of the student, yet the very thing that actually makes us 'students'. Having five exams in the space of 7 days this month, I'm in a bit of a pickle with regards to preparation and revision. It's a hard act of committing enough time to study and succeed in the exam, while committing enough rest time to maintain your sanity. And in one of these rare periods of rest I had, I flicked on a documentary on iPlayer, called 'School Swap'- in which 3 Welsh teenagers were taken out of Pembrokeshire and plopped into the wealthy district of Gangnam (yes, that Gangnam) in Seoul, South Korea, where they were immersed into the life of a high performing Korean student the same age as them.

The fascinating thing that the documentary highlighted was the stark contrast between not just the education systems, but the entire cultures of South Korea and the UK (and, to an extent, the West as a whole).

Korean parents praying en masse for their children's grades

Education is king in South Korea. For parents, it is the highest priority for their child, to the extent that there are mass congregations of parents in temples, all praying for their childrens' grades, there are night schools that dominate many of the large streets in Seoul (called 'Hagwons'), and a Maths tutor can become a celebrity figure earning around $4m a year.

All this is in preparation for a single exam- the College Scholastic Ability Test (CSAT). This is the test that plays a deciding role in which university a student will attend, and it is believed by many to hold the key to a student's whole career. The day of the CSAT is almost like a national event- whole schools of younger students line the streets to cheer on those taking the exam, government employees are allowed to come to work an hour later so students aren't hampered by traffic congestion, even flights are rescheduled on that morning to minimise noise or disturbance to students. The CSAT is a massive deal in South Korea; after all, it is pretty much the focus of a student's life for 17 years or so.

Students gather to cheer on their seniors taking the CSAT

Clearly, South Korea is reaping its rewards from the high emphasis on education. In the 2015 PISA tests (from which a world academic is produced), South Korea came 7th in Maths, 10th in Science and 7th in Reading- as opposed to the UK, who came 27th, 14th and 22nd in those tests respectively. Such a gap in academic ability was demonstrated in the BBC documentary when a Welsh GCSE Maths paper was handed to a Korean class, who, with no previous experience of the format or style, devoured the paper like they had written the thing themselves.

And this contrast is not just exclusive to these two countries- it is just a single part of the massive gap between East Asian and Western education systems. The 'leader of the free world', the USA, performed even worse than the UK in PISA 2015, coming a pitiful 40th in Maths, 24th in Science and 24th in Reading. This does beg the question of how many of the world's most highly held universities (Harvard, Oxford and the like) are in these two countries that seem to have weaker education systems than in Asia. One could argue that the Western education systems, while not as rigorous in perhaps mathematics or sciences, provides strength in other areas such as humanities and arts- but this is all for another piece.

Samsung, the world's second largest tech company,
 is one of the major success stories of S. Korea's
explosive growth in recent decades.

Academic success has been a clear factor in the economic success of a lot of East Asia- South Korea is a great example of this. Exceptionally talented businessmen now head up Korean firms such as Samsung and Kia, both of which are proving to be ever more competitive global firms. Even on a more micro scale, the general work ethic and challenge that the Korean education system presents to its students to overcome has proven to contribute to Korea's stellar rise as a developed economy in recent decades. According to Sung Chulchung, a Professor at South Korea’s University of Science and Technology, “Without its well-educated, strongly motivated and highly disciplined workforce, South Korea wouldn’t have been able to achieve such success”. So South Korea is not just succeeding in the PISA scores- it is succeeding in creating a culture of discipline and strong work ethic in its people.

An example of how this resilience is built up is in the make up of the school day- as an example, in the documentary, the Korean students were usually up (and studying) from 7-11pm, or even until midnight. The Welsh students, meanwhile, who were sent to shadow their Korean counterparts for just 3 days, could barely handle the first. There is much to be said about how long hours can be detrimental for an individual, much of which is valid, but there are certain life skills such a schedule develops- basic things, like waking up early, using time efficiently, that teens in many other countries are notoriously poor at. In Korea, for example, many schools punish late comers by making them come in earlier the next day to clean corridors.

Teachers command much more respect in South Korea than in much of the West, which in turn leads to less time wasted in dishing out discipline and more time actually teaching.

Furthermore, another aspect of Asian cultures in general is that such skills and attitudes are actively encouraged by parents, who invest incredible amounts of time and effort into their children. In much of Asia, it is not uncommon at all to hear parents saving up extra money to be able to fund extra tuition or academic resources for their children. In the documentary, one of the Korean families had relocated to a new home to get their son into a better school. Despite the fact the new house was smaller, it was more expensive- because everyone wanted to get into that school's catchment. Now of course, such behaviours can be seen across the world- but arguably not as visibly as in Asia.

But this does come at a cost. As mentioned earlier, one could argue that the education system in S. Korea is too focused on fundamentals, which, while may be important, are considered by many not to be the entire point of going to school to get an education. Furthermore South Korean students ranked among the lowest in the world in terms of happiness, and, shockingly, suicide is actually the leading cause of death among Korean teenagers. This is not something to be taken lightly in the least. It raises a key question, that was raised by those 3 Welsh students who hopped over to Gangnam: the hagwons, the celebrity teachers, the CSAT and the stress and pressure that it brings to the Korean student- is it all worth it?

Is it possible at all to have a system that simultaneously instils that work ethic, that academic prowess, into a student, as well as the soft skills, without such a shocking impact?

That's what we will discuss in the next part of this series, as we introduce a certain Scandinavian country which is also known to have an excellent education system- but for totally different reasons...