Econ_April_14

12 Leaders

The Economist

April 14th 2018

Second, the biggest downside to Brexit was never going to

be immediate economic pain. If Britain leaves the single mar-

ket and customs union in an orderly manner, the short-term

shock should be manageable. But there is still the swingeing

cost to longer-term growth from higher trade barriers. Firms

selling to the continent will gradually cut Britain out of their

supply chains. Britain’s workers and capital will have to be re-

directed to produce things that previously were imported

more cheaply. Britain’s exports to Europe will cost more. With

free movement curtailed, it will be harder for knowledge to

flowacross borders. The economywill be less efficient.

Brexiteers retort that economists have been proved wrong

once and will be proved wrong again. Yet the profession is

much better at predicting trade flows than it is at guessing how

investors will respond to events. Few economic models have

had as much success in explaining the real world as the one

saying that as distance between trading partners doubles,

trade flows fall by roughlyhalf. There isno replacement for fric-

tionless tradewith a singlemarket of 450mpeople on Britain’s

doorstep, whatever the government’s hopes for trade deals

with countries, like America, that are oceans away.

Reliable trade models predict long-term losses from Brexit

ofup to10%of

GDP,

dependingonhowit is conducted. Accord-

ing to analysis by civil servants, even if Britain retained tariff-

free access to the single market and maintained free move-

ment of people, as Norway does, the eventual hit to

GDP

per

person could be as high as 2.6%—enough to undo its growth

during 2017 almost three times over.

In theory, investment could boost productivity enough to

outweigh the effect of lost trade. Policymakers are, slowly, get-

ting some things right. Government investment, as a share of

GDP

, may soon reach its highest sustained level for 40 years.

Philip Hammond, the chancellor of the exchequer, is saying

some sensible things about solving Britain’s housing shortage.

Yet the government iswalkingdown a train that is speeding

in the opposite direction. The effects of merely tinkering with

policywill be of a different order ofmagnitude to those of up-

ending Britain’s trading relationships with its neighbours. For

productivity, as for somuch else, howBrexit is conducted is the

thing that mattersmost.

EWchoose how they die, but

they can choose what hap-

pens next. Most leave this to

loved ones who, in their dis-

tress, usuallyoutsource the deci-

sion to an undertaker. The trans-

action is often a let-down, with

hardly any choices beyond

“Burn or bury?” and “Cheque or card?”

The average American funeral with a burial costs nearly

$9,000. In some countries, the exorbitant cost of staging a

“proper” funeral can lead families to financial ruin. Nearly

everywhere, the bereavedhave put upwith rip-offlast rites be-

cause ofthe lackofbetter options. At last, technology and com-

petition are starting to disrupt thismost conservative of indus-

tries (see International section). This is good news for anyone

who plans to die one day.

The funeral trade has the most basic of business advan-

tages: inexhaustible demand. Every minute more than 100

people die somewhere. Not all pay for a funeral. Tibetans still

practise sky burial, leaving bodies onmountaintops; the Cavi-

teño in the Philippines bury their dead in hollowed-out tree

trunks. But in the rich world, dying is big business—an indus-

try, for example, worth $16bn in 2017 in America.

Undertakers have long been able to get awaywith poor ser-

vice. Their customers are typicallydistressed, under time-pres-

sure and completely inexperienced (people in rich countries

buy more cars than they do funerals). As a result, few shop

around, let alone haggle. With consumers docile, providers

can keep quality low and prices high—much like tourist-trap

restaurants, another one-offpurchasemade in hastewith little

information. Some sellers have made matters worse with

techniques ranging from opaque pricing to emotional black-

mail. The asymmetry in knowledge between undertaker and

grief-stricken client allows ludicrous markups on things like

coffins. It alsomakes it easier to sell services that people do not

realise aremostly unnecessary, such as embalming.

But nowundertakers’ market power is being challenged on

at least three fronts. One is changing customer demand. Dri-

ven in part by the decline of religion, and broader shifts in atti-

tudes to death and dying, fewer bereaved are ready to cede

their dead unthinkingly to an off-the-shelf burial. They prefer

shrouds and woodland burials to coffins and graveyards; cele-

brations of life to sombre rituals in funeral homes; and video

tributes to a life just lost to displays of the embalmed dead.

Second, more and more, they choose cremation, which is

cheaper than burial, and allows a “direct” form in which the

disposal of the body is handled without fuss, and kept sepa-

rate from the commemoration of the life lost. And third, the in-

ternet is disrupting death as it has life. Comparison sites shed

light on funeral providers’ services. And though not many be-

reaved relations yet “bring their own coffin”, a quick browse

online gives people a far better idea of what it should cost.

Startups are offering more radical disruption: rocket-launches

for ashes;

codes on graves linked to online tributes; new

ways of disposing of bodies besides burying or burning.

The nail in the coffin?

Nobody is yet writing undertaking’s epitaph. But the industry

will have to adapt. The first signs of a shift are already on dis-

play in America, where funeral-home revenue is projected to

stagnate despite an annual death rate—the industry’s life-

blood, after all—that is expected to rise. In Britain a price war

between the largest providersmay at last cause prices to drop.

The most important effect of all this disruption is not just

cheaper funerals and fewer debt-burdened families. It is a

more profound shift in returning to consumers perhaps the

most personal of all decisions: control over their farewell.

Undertakers

Death, disrupted

Great news for the dead: the funeral industry is being shaken up