Calibrating clocks and currencies
Nigel Williams, 27 March 2014
British Summer Time starts on Sunday. Mothers nationwide will have an hour less of their day but as a compensation they will have an hour of extra daylight every evening until late October. It is a simple change with apparently far-reaching consequences that has parallels with the call to change the sterling exchange rate.
Evenings that have been gradually lengthening for weeks become substantially longer at a stroke. Outdoor evening events become instantly possible. Summer has arrived. The general lightening of mood raises questions about keeping daylight saving all year round. Road-safety campaigners point to journeys home in the dark as a peak time for accidents. Exporters to Europe think of matching our clocks to European offices, thereby gaining two shared hours each day, one at start or finish, one at lunch, when workers would be at their desks in both countries at once.
Of course, the extra hour doesn’t come from nowhere. An hour of morning daylight that can be readily spared in summer is a much more precious commodity in winter, when what sun there is needs to thaw the frost from the roads. In the country’s south east quarter, London is a long way from the average. Elsewhere in Britain, the spring sun sets several minutes later. Edinburgh, three degrees west, has twelve more minutes. Glasgow has quarter of an hour and Penzance twenty minutes. In winter, those minutes have to be borrowed from increasingly dark mornings. At the winter solstice, Glasgow waits until 0848 for the sun to rise and would scarcely wish to wait even a minute longer. There are more illustrations in What Your Year 6 Child Needs to Know.
I personally enjoy the unearned kudos of having the world use Greenwich as its reference time, but that is less than the advantage of keeping some link to the sun. The classic example is the farmer whose herd of cows want feeding and milking at a set time of day, not when the clock says a particular figure. It is cruel to drive those people further from the norms of the rest of society.
There are other ways than keeping the clock an hour ahead. For a company that trades with western Europe, they have the option to set their office hours from 0800 instead of 0900. Setting their own start and finish times is one of the freedoms that free schools are enjoying. The long summer holiday was originally a chance to allow extra people to work on the harvest, but a free school can reflect whatever special circumstances apply to the community it serves. If parents are working earlier hours, a free school can also keep their children to an earlier schedule.
Like the time on a clock, the exchange rate is less constraining than it first appears. There is a nominal exchange rate, used for trading money, but for everything else what matters is the effective exchange rate. That depends also on what can be bought for the money. If exporters feels that their price is too high to be competitive or too low to be profitable, they can lower or raise it accordingly. Just as extra daylight has to come from elsewhere in the day or the year, so the prices are constrained by what the market will bear and what costs the producer has elsewhere. In his series of analyses of the exchange rate for Civitas, John Mills pays particular attention to the costs, especially those of labour. In an international market, labour costs are the prevailing wage rate multiplied by the rate of foreign exchange. Reducing wages is difficult, since it attracts opposition from organised labour and ultimately runs up against the minimum wage. Reducing the rate of exchange, on the other hand, preserves the workers’ purchasing power for anything wholly denominated in the home currency and only reduces it for items with an overseas component. As when the clocks go forward, the extra ease of selling may compensate for making it harder to buy. Just don’t be an hour late with breakfast on Mothering Sunday.