The Wiki Man

Hailo matters more than HS2 – but we just can’t see it

2 March 2013

9:00 AM

2 March 2013

9:00 AM

One of Britain’s exam boards was attacked last year for a question in a GCSE religious studies examination: ‘Explain briefly why some people are prejudiced against Jews.’

Is this really a theological question? Or does it belong in biology? Or psychology? Or economics?

The Canadian evolutionary psychologist Steven Pinker in The Blank Slate devotes a few pages to the issue of prejudice, including not only anti-Semitism but also hostility towards trading groups and intermediaries everywhere: from Chinese shopkeepers in Malaysia to Armenians, the Gujaratis and Chettiars in India and Korean store-owners in the United States.

Pinker partly attributes this to what economists call ‘the physical fallacy’. We have evolved an innate sense of value that makes us far more content when we pay money for physical goods than for services or intangible benefits. Regardless of the usefulness or advantages these services bring, we are much more begrudging of money we spend (and hence of the money other people make) on intangible things than we are when we pay people for, say, manufactured goods or agricultural produce.


Shopkeepers and merchants may add great economic value — through transportation and storage and scale — but it is not value you can touch. The same goes for lawyers, bankers, landlords and so forth. Hence, if any group prospers through creating intangible value (sometimes because they are forbidden from owning land), it is easy to portray their wealth as parasitic — which is exactly what Nazi propagandists did.

We may not currently be planning a Kristallnacht against Tesco, but this innate bias seems no less potent in other decisions we make. We tolerate subsidies to farmers in a way we would never accept if they were paid, say, to mobile phone network operators.

The almost limitless appeal of economically inert forms of investment, such as art, gold and property, is probably attributable to this fallacy. Some fairly important industries are threatened by it. Will people ever be as willing to pay as much for music or newspapers or books if they are delivered in a non-physical form?

Perhaps there is nothing we can do about this — after all, it is not really anyone’s business to tell people what they should pay for things, even though there would be obvious environmental gains if we could persuade people to be as happy to rent more and buy less. But one thing we could do to counter the physical fallacy is to encourage government to broaden its definition of ‘infrastructure’ beyond its current obsession with building railway lines.

Take a technology such as Hailo, an application which allows you to find and book a nearby cab using a mobile phone. People who have regularly used this service (which has expanded beyond London to eight other cities from Toronto to Tokyo) would probably agree with me when I suggest that it may be as significant an improvement to London’s transport network as a new tube line which might cost 10,000 times more to implement.

Similarly, the really significant improvements to rail travel over the past 30 years have mostly been intangible improvements. Intelligent pricing which charges more for using trains at busy times — and far less at other times — has reduced overcrowding. Wi-Fi on trains, as I have said repeatedly, might be more valuable to travellers than money spent on faster trains.

Railway signals seem a ludicrously Victorian idea, relying on line of sight — and requiring enormous distances to be maintained between trains travelling on the same line. Why are we spending £30 billion on HS2 before we have spent £10 million investigating the intangible alternative?

Rory Sutherland is vice-chairman of Ogilvy Group UK.

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Show comments
  • Boris Watch

    “I suggest that it may be as significant an improvement to London’s transport network as a new tube line which might cost 10,000 times more to implement.”

    No, it’s an app that allows you to find cabs and directing them to your location. It’s very good at finding cabs (I use it myself and it’s a technical and conceptual triumph), but it’s not a significant improvement to London’s transport network because cabs don’t carry that big a proportion of London’s transport users (although I accept this may be different for the Spectator contributor demographic).

    “Railway signals seem a ludicrously Victorian idea, relying on line of sight — and requiring enormous distances to be maintained between trains travelling on the same line.”

    Conventional signals are, which is why in the UK all lines operating at >125mph (which is High Speed 1 at the moment, but HS2 in due course) use computer controlled in-cab signalling instead, as do high speed lines in Europe. These don’t have lineside signals for the simple reason that at that speed the sighting times are in the order of a few seconds and the consequences of a moment’s inattention are catastrophic. Computerised signalling is also increasingly used on underground systems, allowing massive increases in capacity by safely running more trains closer together faster. Try ditching the cab and taking the new Victoria Line sometime.

  • mopdenson

    HS2 is an ‘all fur coat and no knickers’ infrastructure project, the kind Governments like to should about whilst beating their chests.

    Conservatives came into coalition making promises to be the greenest government ever, now their persona is more bully boy dictator than eco warrior. If we genuinely can’t add more capacity to our extensive transport network (which is doubtful) then this Government should be building infrastructure that will cut carbon and tempt people and freight vehicles of the road.

    GB should not look to keep up with the Joneses, we should be using creative, innovative design for infrastructure so that others can follow our lead.

    Perhaps we need transport projects with big sturdy pants instead of no knickers HS2.

  • padav

    Why are we spending £30 billion on HS2 before we have spent £10 million investigating the intangible alternative?

    Because, at the risk of pointing out the ******* obvious, Wi-Fi on a train won’t allow me to board it in Manchester and alight 3 hours later in Paris (or seamlessly transfer to a myriad of other European mainland services, ie. modal shift from short haul air to high speed rail), neither will it provide additional train pathways along key arterial rail corridors, already beginning to demonstrate constraints in the physical number of train services they can host in any given peak period

    It seems to me that when it comes to HS2 (or any new rail infrastructure, which will necessarily result in disruption for that matter) there are none so blind as those who will not see?

    • rorysutherland

      Could I make a small observation, @pavdav . You are an enthusiastic poster, for sure, and patently well informed, but I cannot find any instance where you have posted on any subject except HS2. Either you are a single-issue fanatic of rare persistence, or you have skin in the game. Which is it?

      And wifi on the train does make train travel more effective (speed and effectiveness are not the same thing) by a factor of ten or more, because it undermines even further the already erroneous idea that time spent on a train is time wasted – an assumption on which more than 50% of the financial case for HS2 rests.

      • padav

        I have another small observation @rorysutherland:disqus

        Go and look at my comments on CIF – a much better debating medium than DISQUS (DISQUS could learn a thing or two from Comment is Free on the Guardian website)

        You will find that I post on a number of issues, including HS2, which is after all topical at present, presumably because the anti-HS2 brigade are pulling in favours from their friends in the media to get as many negative HS2 related articles published as possible, in order to maintain pressure on decision makers?

        For the record I have no direct or indirect financial gain to make from HS2 – I don’t work in the rail industry – I work in deep ocean shipping/freight forwarding. I am interested because I favour rail as the most sustainable means of mass passenger transport, bar none. I simply want my Region (NW. England) to benefit from the same connectivity taken for granted by London & the South East, courtesy of HS1 – a world class rail connection put in place by funding underwritten by ALL UK taxpayers (including me) – to put it very bluntly, NOW IT’S OUR TURN!

        Not really interested in the business case – it’s a red herring – I am interested in the undoubted long term (as in next 100 years) benefits flowing from implementing HS2 – those benefits are largely incapable of calculation but they exist none the less.

        Your bit about wi-fi on trains is peripheral to the entire HS2 debate

        What I am fanatical about is self-interested minority campaign groups spreading a toxic cocktail of selectively edited half-truths, misleading statistics and downright porkies, in a blatant attempt to pervert public sentiment in favour of their arguments – yes, that really does get me going – and it should be the case for every other informed citizen?

  • Mark McIntyre

    NO2 HS2 – signed, exam flunky saint !