WS MoreOrLess: The numbers of 2013 - part 2

Summary

More or Less (BBC Radio 4): "The Numbers of 2013 – Part 2"

First Broadcast: January 4, 2014
Host: Tim Harford

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Episode Overview

In this special New Year’s edition, Tim Harford and guests look back at some of the most intriguing and surprising numbers from 2013, exploring what they reveal about our world. The figures chosen span economics, rare elements, and even record-breaking mathematics, with expert insight and a little festive fun.

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Key Discussion Points & Insights

1. The Unsung Importance of Tantalum (Element 73)

Guest: Dr. Pippa Malgren, founder of Principalis Asset Management
Timestamp: [00:46]

• Context: Dr. Malgren highlights element 73, Tantalum, as her number of the year, emphasizing its crucial yet underappreciated role in technology and global markets.
• Impact:
  • Tantalum is essential for telecommunications and defense equipment—“Your mobile phone won't work without it.”
  • The world is heavily dependent on rare earth elements, and many have limited supply.
  • Quote:

    “Lots of the most important things that we need are actually very limited in the supply.” (Dr. Pippa Malgren, [01:13])

• Further Economic Implications:
  • Challenges in securing rare materials like tantalum or phosphates for food production stem not only from physical scarcity but also from financial and skills bottlenecks.
  • Mining and engineering face a talent shortage:
    Quote:

    “For the last 25 years, if you had any math skills, you went into finance because that paid the most. ... This year is really interesting because it's the first year that the graduates of the Colorado School of Mines ... will be paid more than Harvard Business School graduates.” (Dr. Pippa Malgren, [02:16])

• Takeaway:
  • Global supply chains for critical resources are more fragile than assumed, due to both material and skills constraints.

2. Art, Wealth, and Quantitative Easing

Guest: Merryn Somerset Webb, Editor in Chief of Money Week
Timestamp: [03:04]

• Highlight:
  • Somerset Webb’s number of the year: $142 million (record auction price for Francis Bacon’s triptych in November 2013).
  • This number demonstrates how quantitative easing (QE)—central banks creating new money—has driven up the prices of many “real assets,” from prime real estate to art and classic cars.
• Mechanics of QE:
  • Money from QE circulates through markets like a “hot potato,” boosting asset values as it changes hands.
  • Quote:

    “You've injected money into the economy and people are shifting it from person to person... and eventually it ends up all over the place.” (Tim Harford, [03:52])

• Debate over QE’s effects:
  • Does it stimulate growth for all or simply inflate the wealth of those who already own assets?
  • Quote:

    “It's doing a bit of both, but more of the helping the rich. ...It's shifting money from the not so well off to the well off, and therefore it's no longer a policy that central banks should be following.” (Tim Harford, [04:45])

• Will QE end soon?
  • Harford is skeptical:

    “I don't think they're ever going to stop, really. ...You've got to be a very, very brave central banker to be the one who stands up and says, I don't care if the stock market crashes.” (Tim Harford, [05:18])

3. Mathematical Marvels: The Largest Known Prime

Guest: Helen Arney, musical comedian and self-described “geeky songstress”
Timestamp: [07:02]

• Segment Highlight:
  • Helen celebrates the discovery of the world’s largest known prime as of January 2013, a Mersenne prime: 2^57,885,161 – 1, with 17 million digits.
  • Delivered as a light-hearted, festive song, Arney explores prime numbers with whimsy and mathematical precision.
  • Notable Lines:

    “If I had one I could do whatever I like with it, well, anything I want apart from dividing it except by itself and 1.” (Helen Arney, [07:34])
    “If I tried to sing it in hours, I'd need 1,181.” (Helen Arney, [07:48])

• Fun Fact:
  • Mersenne primes are extraordinarily rare; only 48 were known at the time.

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Memorable Quotes & Moments

• Scarcity and Talent:

  “We just take for granted that you pull stuff out of the ground when you need it. ...Guess what? We don't have enough engineers, and we probably won't for some years to come until we fix and redress this imbalance.”
  (Dr. Pippa Malgren, [02:38])

• QE as a “hot potato”:

  “The best way to look at it, I think, is as though it's a hot potato.”
  (Tim Harford, [03:48])

• Largest Prime Number Song:

  “So give me, oh give me, this Christmas time, a 17 million digit Christmas prime.”
  (Helen Arney, [07:12])

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Timestamps for Important Segments

• [00:46]: Dr. Pippa Malgren on Tantalum (Element 73) and resource scarcity
• [03:04]: Merryn Somerset Webb on the $142M Bacon painting and the impact of Quantitative Easing
• [04:44]: Harford and Webb debate QE’s effects on wealth distribution and the likelihood of its continuation
• [07:02]: Helen Arney’s musical ode to the world’s biggest known prime number

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Summary Takeaways

• 2013’s numbers reflect deep interconnections: rare elements and skills shortages threaten the real economy, monetary policy interventions distort asset prices and wealth, and mathematics continues to astonish with breakthroughs of mind-boggling scale.
• The episode’s tone moves from analytical (Malgren and QE discussion) to playful (Arney’s song), offering both serious insights and a lighthearted celebration of numbers.

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Transcript

[Tim Harford]

This is the short edition of More or Less, first broadcast on the BBC World Service.

[BBC Announcer]

Thank you for downloading from the BBC. For details of our complete range of podcasts and our terms of use, go to bbcworldservice.com podcasts

[Tim Harford]

hello and welcome to More or Less on the BBC World Service. I'm Tim Harford. It is, of course, 2014. Happy New Year. But before we look forward this week, we'd like to look back at some of the most intriguing, striking or just plain delightful numbers of last year. And what better place to start than with Dr. Pippa Malgren, founder of Principalis Asset Management and former financial market adviser to President George W. Bush?

[Dr. Pippa Malgren]

For me, the most interesting number this year is the number 73. It's the periodic table number for an element nobody's ever heard of called tantalum. And yet we're incredibly dependent on this rare earth metal. It's essential for all telecommunications, defense equipment. Your mobile phone won't work without it. And I think it's interesting because it serves as a reminder that in the world economy, lots of the most important things that we need are actually very limited in the supply. And there are lots of things that in the world economy that we need to think about, the limits on the supply. And I don't mean this as like a tree hugging green person. It's not an environmental issue. I mean, we assume that there's always enough finance to pull something like tantalum out of the ground, when in fact, we continue to have a problem with banks lending because they're so inhibited by their own debt problem. Food is another issue. We sort of assume that somehow, yes, with technology, we'll be able to feed the world. We forget that phosphates are essential to the production of food. And like tantalum, it's a rare thing. It's hard to make. And to build a factory today that can make phosphates, you won't get any return on your capital for 15 years. So right now nobody's prepared to fund that. So. So this is another example of things like mined assets. We just take for granted that you pull stuff out of the ground when you need it. What's the shortage of talent today to dig the stuff out of the ground? For the last 25 years, if you had any math skills, you went into finance because that paid the most. And I think this year is really interesting because it's the first year that the graduates of the Colorado School of Mines, which is America's best engineering school, will be paid more than Harvard Business School. Graduates, thus enticing young people with masculine to actually go back into the real economy, which is a great thing. But it means we've also got a global shortage of engineers right now. So, again, you assume if you need something like tantalum, you just get it. Yeah, well, guess what? We don't have enough engineers, and we probably won't for some years to come until we fix and redress this imbalance. So tantalum, we really literally wouldn't have the global economy we have today without it.

[Tim Harford]

Pippa Malmgun, My next guest is Merryn Somerset Webb, the editor in chief of Money Week.

My number of the year this year is $142 million. That's the price that a set of three studies by Francis Bacon sold for at auction at the beginning of November. That is the highest price ever for a piece of artwork at auction in nominal terms. And to me, this shows us the way that quantitative easing across the world has leached into real asset prices. We knew it would happen. It was forecast by the central banks, but I think it's happened to a slightly more extreme level than any of expected.

[Merryn Somerset Webb]

So quantitative easing, is this printing money, to put it crudely, or central banks creating money? Why would that drive up the price of Francis Bacon paintings?

[Tim Harford]

Well, there's an awful lot of arguments about how quantitative easing money gets into the asset markets. But the best way to look at it, I think, is as though it's a hot potato, you know, so the central bank buys an asset from somebody, buys a bond of some kind, whatever, hands the money to the guy who had the bond. The guy who had the bond now has the money. What's he going to do with the money? He's going to buy something else. So maybe he goes and he buys an equity. The guy who had the equity now has the money. He goes and buys something else. You've injected money into the economy and people are shifting it from person to person to person to person, buying new assets, and eventually it ends up all over the place. So you can look at the price of prime housing across the world. You can look at the price of classic cars, another thing that's going completely berserk. And you can look at art prices, and then of course, you can look at stock markets, again, all going completely berserk for no obvious fundamental reason.

And should we look at this as

[Merryn Somerset Webb]

a successful stimulation of the global economy, which of course is what it was designed to do, or should we look at it as something that's simply making the rich like the people who Already owned portraits by Francis Bacon and so on. Making the rich richer while nobody else benefits. Or is it doing a bit of both?

[Tim Harford]

It's doing a bit of both, but more of the helping the rich. I think at this point you have to remember that without QE we probably would have had very severe deflation in the end. And I think at this point you'd be hard pushed to find anyone who would say that the first little bit of QE wasn't a good idea. It prevented a deflationary collapse. But I think at this point almost everybody would say that QE is effectively now a fiscal policy in that it's a redistribution policy. It's shifting money from the not so well off to the well off, and therefore it's no longer a policy that central banks should be following.

[Merryn Somerset Webb]

And when do you think central banks are going to stop?

[Tim Harford]

I don't think they're ever going to stop, really. I think once. Once. Once you've let a genie like this out of the bottle, how do you stop? How do you stop when you stop? You have to accept that markets around the world will fall and you have to be ready for that. It's a really tough thing for a central banker to do. I mean, of course it will happen one day, but I think the tightening of monetary policy will probably take quite a lot longer than any of us expect. When it comes, it'll come fast, but I think it'll be a way off. You've got to be a very, very brave central banker to be the one who stands up and says, I don't care if the stock market crashes.

[Merryn Somerset Webb]

And let's be clear what we think of as an end to qe. I mean, is this an end to the process of creating new money? Is this destroying the new money that was previously created, hoovering it back out of the economy? Or is it something else? Is it raising interest rates and not affecting the money supply at all?

[Tim Harford]

Well, obviously they're very different. QE and raising interest rates. When I talk about the end of qe, I'm talking about the end of printing more. I find it almost impossible to imagine the process of pulling all the money out of the economy. That seems very unlikely.

Merrin, Somerset Webb. The actual winning bid for Francis Bacon's Three Studies of Lucian Freud was a mere $127 million. But the buyer needed to look down the back of the sofa for the $15.4 million commission. That took the total cost to $142.4 million. Now, that's a big number. But we know a bigger one and it's a prime number. A very special kind of prime number. It's a Mersenne prime. Mersenne primes are named after a 17th century French monk, and as of last year, only 47 had been found. Geeky songstress Helen Arney takes up the story.

[Helen Arney]

In January, Professor Curtis Cooper found a number. Not an ordinary number but a number that's humongous. So I don't want your mulled pies and you can keep your minced wine. Cause all I want for Christmas Is the world's biggest prime it's two to the power of 578-851-61 minus 1 Mersenne 48 the perfect gift for everyone so give me, oh give me this Christmas time a 17 million digit Christmas prime It's rarer than a cracker joke that actually makes you laugh as useless as a pair of roller skates for a giraffe if I had one I could do whatever I like with it well, anything I want apart from dividing it except by itself and 1 is 2 to the power of 578-851-6 1 minus 1 if I tried to sing it in hours I'd need 1181 so give me a, give me this Christmas time a 17 million digit Christmas prime so type it and text it or write it and post it Bake it in bread and then slice it and toast it if you can't calculate it and send it in time I'll accept 16 million decimal places of pie so give me, I'll give me this Christmas time a 17 million digit Christmas prime one more recursion give me, I'll give me me this Christmas dime a 17 million digit Christmas prime

[Tim Harford]

Helen Arney pining after Merzen 48 if there are any numbers you'd like us to have a look at, do email us. Our address is more or lessbc.co.uk and you can download this program and previous editions at our website, bbcworldservice.com/more or less.

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