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Winckley Square and Albert Einstein

December 2, 2016

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Type: Corporate Finance, Latest Blogs, Trending

A strange juxtaposition, you might think,  if you are familiar with the centre of Preston (and perhaps a meaningless one if you are not).

 

But perhaps not; after all Preston has played host to a very wide range of well known historical figures.  Benjamin Franklin stayed here briefly in 1775 whist visiting some relations.It was the birthplace of the Temperance movement under Joseph Livesey in 1832 and Charles Edward Stuart (“The Young Pretender”) caused a bit of a rumpus here when he passed through in winter 1745 during the second Jacobite Rebellion.  Less favourably it was also the ‘inspiration’ for Charles Dickens bleak portrayal of Victorian life in his novel Hard Times (Preston is widely considered to be the basis for the fictional Coketown of the story).

 

Yesterday (30 November) Winckley Square, a hitherto somewhat tired and neglected Victorian town square,  officially re-opened after its recent £1.2 million revamp.  And very impressive it looks too.  In my opinion it feels like money well spent.

 

But has it improved people’s utility?  Was it an economically rational use of Heritage Lottery fund money?  Those are different questions.

 
Current mainstream economic theory rests, as we know, upon several fundamental assumptions –  arguably the least realistic of them is the assumption that we are all of us some kind of hyper rational economic automatons, unswayed by irrational thoughts, desires and emotions and capable of instant cost-benefit judgements when faced with the myriad range of goods and services which we are implored to acquire.  I exaggerate –  but not materially so as an auditor might say.

 

Rational economic man (and woman) is the shorthand term for these ‘economic actors’ ie you and me.  And we are all driven to maximise our ‘utility’ in life.

 

How exactly do we measure ‘utility maximisation’ when it comes to the flattering renovation of a Victorian town square?  Or are we asking the wrong question?

 

An argument could be advanced that the wellbeing of people who live, work and visit Preston is improved by virtue of the square’s revamp (by the way it is much more than a cosmetic facelift; quite extensive surgery has occurred to rectify quite severe drainage problems).  A common good has been, if not created, then enhanced as a result of the work.  But how do we measure this?  In particular how do we measure it in monetary terms?  The return on the ‘investment’ in the square might never manifest itself as a direct monetary consequence – a charge sometimes, unfairly perhaps, also levelled at expenditure on marketing by a business.

 
Perhaps we shouldn’t even seek to do so.  Perhaps we should recognise that there are some things in life which cannot easily be financially quantified. We may even recall US senator Bobby Kennedy’s speech in the 1960s  which highlighted the limits of using GDP (he referred to Gross National Product – you say tomato I say tomato?) as a measure of societal flourishing and wellbeing.  He said that GNP was perfect for measuring everything except that which makes life worth living.  The recent Sir Charles Bean review into the use and reporting of GDP and similar economic statistics in the UK has picked up and developed this theme further.  Questioning the supremacy of GDP is no longer the preserve of the oddballs and cranks.

 
And, at this time of year above all, when we are encouraged to partake in a frenzy of material consumption, it is worth reflecting upon these ideas and, as Albert Einstein so succinctly put it, not everything which can be measured matters and not everything which matters can be measured.

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