I’ll be the first to admit I know little about economics, but I despair at the state of things.
It feels like half the electorate live in a fantasy land. Over two million people using food banks—many in work—and yet all the chap I see on my morning dog walk wants to talk about is “all the people on the dole who live in big houses and drive brand new cars” (Jobseekers Allowance is £77/week, for reference).
Meanwhile our household income is far above the national median, and we still need to scrimp and save far more than our parents and grandparents did to work towards a deposit on a house. I truly feel for the low wage earners in this country, even though a significant portion of them continue to vote for these monsters. We seem to be totally without compassion as a nation right now.
The Tories have been systematically destroying Britain's welfare programmes since they got into power. This was all planned, when David Cameron effused about "Big Society" back in 2010, he meant his government was going to cut state-funded services to the bone, so charities like food banks would have to step in. Usually run within churches (or other religious organisations) by people who actually care about others, unlike all these Tory vultures who only want to feather their own nests and enrich each other.
The worst is how they are treating disabled people, it's very common now for the government assessors to claim there's nothing wrong with you, and mark your disability score as zero, only to have this overturned in court later on, after months of stress and poverty. The unofficial government approach seems to be, let them die. It's disgraceful and appalling how these Tory scum are treating the most vulnerable in society. I can only hope with recent events they've fucked their electability for a very long time. A general election can't come soon enough.
> The Tories have been systematically destroying Britain's welfare programmes since they got into power.
The current variety of Tory has been destroying the country, and not just welfare programmes, since 2010. Look at productivity growth or at how people talk about Britain abroad.
To a limited extent, the churches sometimes receive a bit of government funding for these activities (food banks, help for the homeless, etc.). It certainly doesn't cover costs but it can make the difference between being able to do something and not being able. However that is drying up. In my town, we used to run overnight accommodation and two meals a day for the homeless for 3-4 months in winter until COVID stopped that in March 2020. We had a grant via the local council but from central funds to cover the employment of the administrator (a very necessary cost!). We can't restart because the policy is now against it and that funding has gone. I don't want to frame this as "Tories Bad!" - in fact there are some arguments for stopping it, but on balance I think that it is still needed.
Another issue is that church people tend not to be rich, and are dying off from old age with few people replacing them. We have to pick what we can still do with increasingly limited funds and people.
Btw, while I am liberal/left, many of the people working at the coal face are conservatives. I think one has to distinguish between Tory MPs and Tory voters, some of whom are socially liberal (though they would be offended to be described as such).
You've brilliantly expressed exactly how I feel as well. It's so depressing, everyone seems to have their heads burried in the sand or focusing on what other people seem to be getting. It's driving me insane.
A central issue is that we have an ageing population and slowing growth. Old people have a tight grip on who runs the country, and tend to get what they want (e.g. high house prices, triple pension lock, fewer immigrants, etc).
Unless we can attract highly-skilled workers by offering higher salaries than other countries we're doomed to be servicing pensioners with fewer and fewer workers. And this will happen while our taxes are slowly increased to deal with their health needs while other public services are slowly reduced.
Any government that is in power should be working out how to build a political coalition that doesn't involve letting the old eat the young. Young people shouldn't be spending all of their money on rent and need to be able to build wealth and support families.
Edit: To be clear, encouraging immigration wouldn't lower house prices -- but without immigration we will have difficulty supporting the no-longer-working ageing population. Increasing immigration is one option; the other option is to trying to make it easier for the young to have children by making houses cheaper and providing completely free childcare for everybody, but these are much more difficult to achieve, as they have a much slower pay-off and would require taking money away from pensioners (which will get you voted out).
I'm an American and I can talk about the same things, nearly word for word (Jobseekers allowance notwithstanding) and feel exactly the same way.
Something is wrong with the economy, not just in the UK, but in America and probably a bunch of other countries. Where is the prosperity, if its there, why is it not more widely shared? is it a single cause, or is the cause manifold?
I have some ideas as to the answers to these questions (and its not capitalism is bad), but I too am just an engineer, not an economist. The unrest that propels populism is real. It's clear the status quo isnt working for the majority.
Because we live again in a new Gilded Age, with its monopolies, robber barons, regulatory capture, and corruptions.
If you want to understand these days, you have to understand the Gilded Age, the rise of Unions, the New Deal, the G.I bill, the rise of the middle classe post WW2 until the end of the 70s, when reagan started to reverse the course engaged by FDR in the 30s, gutted every regulation intended to protect workers, envirronement, gutted union coercitive power, deregulated financial system with its new credit offering allowing to compensate diminished real purchase power of middle class salaries, slashed taxes on highest tiers of population and corporation, slashed public service.
The subprime crisis is a direct consequence of this...
For a short introduction in the matter, I suggest you to watch the last episode of season 33 of The Simpsons.
Which is the year Bretton Woods ended, and productivity gains began to be captured by speculators instead of being shared with workers.
In STEM we've seen huge stagnations in frontier research, breakthrough physics, and academic originality. And the arts are hardly in a healthier state.
Financially we're in a 30s-style depression but the media are being careful not to call it out as such.
Clearly this is Not Working.
An economy that privileges a few hundred billionaires at the expense of everyone else is not prosperous, stable, secure, or capable of real invention.
Feels like there's a very obvious answer that covers the majority of the answer and everything else is quibbling over the small remaining sliver.
The UK and other western countries were a global power because colonialism. Then WW2 happened and the US was mostly unscathed while also prioritizing long term growth through a stable democracy which led to high quality of life until the rest of the world caught up.
We can talk about immigration, austerity, trade policy, etc. But these will only move the needle slightly. The overwhelming advantages that these countries experienced won't happen again until there's another major disruption.
How far back in history do you stop counting advantages? What about the Ottomans, the Romans, the Egyptians? Did they not also use wars and slavery for their own gain?
I have suspected for a while that the single biggest cause is our lack of a national Land Value Tax (LVT). After all, Henry George predicted a century ago that continued technological progress and wealth creation would also lead to poverty unless there is a sufficient LVT. Until then, whether you or your family holds land is going to be a primary factor in whether you benefit from our societal progress.
I think both Georgism and Modern Monetary Theory are both interesting ideas, I'm not sure how applicable either is to reality however. (Even if I want MMT to be true and correct)
Exactly. Today's economy (in the US) is in a really good place. Moderate inflation, very low unemployment, decreasing inequality.
Yet the narrative is that the economy is in the crapper. The powers that be want to go back to the glory days of low inflation, high unemployment and increasing inequality. That's what we'll get if the fed continues to raise rates.
We have had times with low unemployment and low inflation, but that's outside the Fed's control. The Fed has 2 levers it can pull -- interest rates and QE. Increasing rates / decreasing QE makes inflation better and unemployment worse. Decreasing rates or increasing QE makes inflation worse and unemployment better. This is about as well studied as anything in economics can be.
And while low unemployment is not unique to 2022, the decreasing inequality and the imbalance between the number of job openings vs job seekers are both at levels not seen in modern times. It seems reasonable to say that the inequality reduction and the high number of job openings are correlated. Raising interest rates will impact the latter so it's quite probable that it will reverse the decreasing inequality trend.
Thank you for explaining that. Doesn't Quantitative Easing just destroy the savings of the middle class over time? I don't understand how this helps equality in the long run, because it seems that inflation and Quantitative Easing are tools used to destroy generational wealth.
Do you have a resource you can recommend for self study?
Neither the poor nor the middle class have significant generational wealth to destroy. Wealth inequality is much worse in the US than income inequality. Inflation decreases wealth and increases income which is why it is a powerful tool to combat inequality.
Forced sharing is a silly way of referring to taxes which are fees assessed for collective services. Nobody builds anything alone and is a benefactor of all sorts of common goods, services and infrastructure. To say otherwise is to prefer the bootstraps narrative to reality.
Top marginal tax rate in the mid 1900s was 70-90% and the estate tax was actually assessed without exempting the first $14M or whatever it is.
It’s all a social construct and we collectively set the rules.
The effective tax rates when the marginal rates were 70-90% were not much different than they are now. Cherrypicking marginal tax rates while ignoring deductions against those rates is misleading and deceptive.
This only seems to account for direct social spending, not indirect - which much of the cold war was, that large peacetime military, its transfer payments from the government to rural america.
Also, when I say shared prosperity, I dont mean transfer payments, nor do I mean forced sharing, I mean why are so few benefits of our greater productivity seen by the majority (bottom 2/3rds), why has the standard of living fallen in real terms for the bottom 50% of the country? why do we feel poorer?
Median real personal income has risen significantly in the past 1-2 generations. It looks like the common man in the US is doing quite well compared to our ancestors.
If we're looking at voluntary trade of wealth, rather than forced sharing, that seems to be doing quite well!
>why has the standard of living fallen in real terms for the bottom 50% of the country?
>Right, but again, I'm not talking transfer payments, or forced sharing, if I'd meant to speak to transfer payments, I would have said transfer payments, not 'shared prosperity'.
Do you think those at the bottom are getting most of their income from transfer payments or are they getting it from voluntary trade and charity? The people at the bottom are living off of transfer payments (forced sharing).
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>which makes the actual situation very clear: real median personal income has lagged substantially behind real GDP per capita ever since 1975 or so.
Perhaps the median worker is being 'robbed', but another explanation is merely the median worker isn't where the majority of the value creation gains have been located for the past ~50 years.
> Median real personal income has risen significantly in the past 1-2
generations.
That's already a warped measure. Given that we've seen GDP (and some other measures of overall economic productivity) rise during that time, the least you'd expect is that "median real personal income would rise".
But the more relevant question is: how has median real personal income risen compared to the overall increase in productivity? That is, we're doing/making more (and also buying/selling more), but who are the beneficiaries of this growth? If it isn't basically everyone, why not and should it be?
There is effectively no cash welfare in the United States. Those who are getting cash income at the bottom of the scale are getting it because of disability or age.
Because there is no cash welfare, people are indeed earning their money mostly by performing work.
Forced sharing isn’t an accepted term or even one that is worth using in discourse. Transfer payments benefit society which in turn benefits the best off too. They benefit from them.
And we all know anyone talking about the standard of the bottom is looking exactly at transfer payments. That's how those at the bottom survive. We shouldn't try to trick the reader by saying "I'm not talking transfer payments."
Right, but again, I'm not talking transfer payments, or forced sharing, if I'd meant to speak to transfer payments, I would have said transfer payments, not 'shared prosperity'.
Largely, in my adult life, I've seen management and shareholders pots grow, and labor stay the same.
When the pie grows everyone ought to get a little bigger piece of it.
Meanwhile, rent, price of a used or new car, college education, homeownership and medical costs have grown unabated - and generally faster than inflation.
So corporations doing share buybacks and dividends? Something else? Is there a real number you're looking at in order to do a comparison, or just labeling some vague idea?
Share buybacks and dividends are profit sharing for shareholders, not workers...
A shareholder of a public company has done nothing for the company to generate value, even more when buying the paper from a previous shareholder and so not contributing to capitalise the enterprise.
Apart from helping to set pricing in the market, what exactly does a shareholder in the open market brings of value-generation to a company? Nothing. And they get dividends while most workers depend on the benesse of a company sharing bonuses and so on.
They don't, I'm trying to get a comparable number. "profit sharing" is too vague a term to compare two groups (across time or geography) with any credibility.
If we are going to compare on an axis, we need to first have a defined axis, otherwise it's just an opinion.
For instance, GGP and you both clarified things with two different definitions for "shared prosperity".
You’re splitting hairs here under the guise of data centrism. By virtually every metric shareholders are continuously improving their lives while workers have not. Obviously the 0.01-10% of the population that comprises shareholders with voting rights or majority holdings is a smaller cohort but when they improve their lot at the expense of everyone else we’re in a tyranny of the minority and doing nothing but argue is a wholly unacceptable state of affairs.
> Something is wrong with the economy, not just in the UK, but in America and probably a bunch of other countries. Where is the prosperity, if its there, why is it not more widely shared? is it a single cause, or is the cause manifold?
I'm trying to find basis for the part that references America, other than a gut feeling. If not transfer payments, GDP growth, real wage growth, then what? If everything we can measure says things are generally improving, then why the feeling that prosperity isn't happening?
Your response here tells me prosperity is pretty widespread as there are lot f shareholders in the US.
Yeah, things are about to get worse. The newer generation wants equality of outcome and wealth (aka communism). They're enamored by income equality and climate which is just a complete subjectivism take over. You can do no little and you can always do more. We're here to shame you.
Asian countries have adopted what worked in the west: Capitalism and lifting people out of poverty at an unprecendented rate.
Those that complain about inequality are totally ok with not comparing themselves to someone in Bangladesh. To them, you look like a multi-millionaire. The hypocrisy is so blindingly bright, it is unbelievable.
None of the current zeitgeist has any reason, rationality and logic. It is subjectivism and post-modernism in its worst form. Biting off the hand that feeds them.
The "newer generation" is reacting this way because there is no political alternative being offered. Speaking in terms of the US, where is the party that advocates fiscal responsibility? Not fake "fiscal responsibility" where the Fed gives away trillions of dollars in "loans" to the financial industry while politicians run interference by making a show about legislative spending, but actual fiscal responsibility that respects the inherently-distributed economy. It's been outside the Overton window since the everything-bubble was kicked off by the ending of the gold standard.
There are folks running for office that advocate for significantly less spending by the government as well as balanced fiscal discipline. People don't tend to vote for them.
Sure, candidates do exist sometimes. The deeper problem is the whole topic is swamped by the mainstream party that has claimed "fiscal responsibility" as part of their platform, while doing the exact opposite.
I know someone who works for IBM, his healthcare costs more in real dollars than it did when he hired on, he gets at best infrequent raises and there's no more pension plan.
How is that ruining his life though? Why didn't you account for the fact that IBM provided for his family for years? They are welcome to leave, we are not practicing slavery and the best part of at-will hiring is that you can fire your employer and find another job.
Don’t know much about Tsmc. IBM is a rather terrible company though, between their incessant illegal discrimination, mass layoffs, near criminal monopolist behavior, etc. look at any large publicly traded company and the piles of skeletons behind them are shocking. you’ve shifted the goal posts from companies picking pockets (taking unwarranted profit, or worse) to making ruining lives. This isn’ta gotcha though, the state of capitalism is abysmal when we actually consider the crimes against humanity these corporations get away with every second of every day for the past hundred odd years.
Sure, the sixth largest economy in the world is “poor” because too much wealth is generated by financial services in the capital and not mom and pops in small towns or whatever. That’s like saying California is poor because most of the wealth isn’t generated by McDonalds employees. You picked some romantic ideal for how money “should” be made and voila now you can complain when it isn’t so.
The article actually wants to make a point about falling living standards, but the author couldn’t resist a clickbait title so nonsensical it overshadows the rest. There’s probably some interesting analysis that could be done about UK PPS, absolute, mean and median incomes, incomes vs average cost of living etc. This is not that article.
It depends on what you think the point of an economy (or a society) is.
If the purpose is to create a competition and see who can accumulate the most resources and power, then the UK (and US) are doing quite well.
If the purpose is to collectively grow our productivity so that all (for some definition of all) members of society have the opportunity to live better and richer lives, then the UK (and US) are doing rather badly.
Not sure if absolute economy size is really relevant. You could have 20 billion really poor people. You could have 19.9999 really poor people and one really rich one. I would consider both of those poor.
Which goes to my point: the title is explicitly saying the UK is a "poor country" which is what makes it silly. You want to write an article about poor income distribution, that's fine, but your title should say that.
On the same note, the gini index is a kind of inequality measure. If your definition for "poor country" is one with uneven income distribution then the US is one of the poorest countries in the world. Like I don't know, I just don't feel like this definition of "poor" works.
The article is trying to tie together a bunch of ideas but doesn’t really do a good job of it frankly.
However the underlying theme is definitely something that’s worth digging deeper. An economy that is too reliant on only one sector to generate wealth cannot survive on the long run when all the sectors are being systematically torn down and pushed behind. And as the author correctly pointed out, the left wing idea of creating a world without climate change through de industrialization and the right wing idea of living in the past are both fantasies that do a lot of long term damage that may not be apparent immediately.
I'd say the UK feels like a bifurcated economy. There's Finance, and closely related industries. Then there's everything else - and that is indeed suffering.
I think the article makes a firm, though not very clear, distinction about these things.
Not a great article, but it touches lightly on a lot of the key points like our problem with an aging, NIMBY-ist voting bloc who decry things getting worse, but won't allow for any meaningful change.
The missing puzzle piece for me when trying to better understand this topic is what "productivity" really means. I get the notion of "output per unit of work" - but there is never much attempt to peer deeper and understand why productivity is lower here.
Is there actual evidence of workers doing less on a given day? What does that even look like, for example in the retail sector where workers seem to have very little impact on the purchasing decisions of customers.
If it isn't employees, where does the lower productivity come from - are we just outcompeted on cost because we still try to have too much of a low-skill economy which can't keep prices as low as the developing world? It would be good to compare productivity in the UK with countries in Scandinavia, i.e. those with a better social safety net and without the financial centre of gravity that is London. Where does their productivity come from?
These are the kinds of topics I'd like both journalists and politicians to discuss more - but for as long as they have to cater to the lowest common attention span, I'm not getting my hopes up.
Or these are just copiers that get labeled as fax machines as they do everything? I bought a "fax" machine 2 years ago as I need to print something out once every 3-6 months. My partner likes printing things out more often.
Anecdotally, from friends who lived in UK and Sweden: yes, people do less. They are less well equipped, less well trained. Three people do jobs one person could do as a result. Work is not well coordinated, so people end up at work with nothing to do.
> They are less well equipped, less well trained. Three people do jobs one person could do as a result.
Trying to think of examples where I've seen this, the first thing that comes to mind is receptionists in my dentist's office. 2 or 3 surly, over-makeup'd women sat around chatting and occasionally dealing with customers. Maybe a good starting point would be to fire 1 of them and pay the other two more (or more likely, use the higher pay offer to get better people). Of course what really happens is that the business keeps that money and doesn't hire new/better employees, making the current ones even more surly but no more productive.
Going down this rabbit hole I conclude it is a cultural problem, but every solution I can think of (better safety net and higher minimum wage to push these people out of the workforce, for example) feel like they would be inordinately expensive.
Class difference is huge in the UK. There is a large ruling elite living miles from reality. A quick tour in cities like Manchester, Belfast etc show the enormous amount of worker class neighborhoods. And these worker class people are falling below middle class standards now. Good that there is still lots of work availability. But if a recession comes and unemployment becomes a thing then huge issues in the UK will appear.
This analysis [1] and the linked FT article is eye-opening for many people. I can't say I am surprised though. I've traveled across the UK and the level of poverty in some areas is really shocking.
I think the real take away from those stats is that modern Slovenia is actually quite wealthy. Their GDP per-capita is similar to Italy and their HDI is higher.
very large class difference has always been a thing in the UK as far as i remember. And the only period i can think of when the economy improved drastically for the working class in britain was in the late 60 and the seventies.
Not from the UK myself, but who do you see the '90s in that respect? (i.e. how good or bad they were for the working class people). I had the impression that they were not bad, certainly better than the dreadful '80s, and, on the other end, by the mid-2000s the "third way" shine was beginning to peel off.
If the UK was a US state, it wouldn’t quite be the poorest per capita. It would be USD400 per person better off than Mississippi. Everywhere else – from Arkansas to Washington – would earn anywhere between several thousand to several tens of thousands more.
Include the cost of an individual's health insurance (and many other public services that Americans are charged for despite their similar tax load) and I think the cards wouldn't be quite so stacked in favour of the USA.
A direct comparison like this can't be made. I'm not even sure where your comparison comes from, the median American income seems to be about $5k lower than the median UK income.
You are right but there's a thing where if one has to worry about the affordability of healthcare one avoids seeing medical expertise at all for fear of crushing cost or debt. That probably isn't put into the normal economic measures though may be reflected in maternal outcomes or lifespan trends per income. A long wait as some complain about in Canada or the UK national healthcare seems like a luxury to many in the USA.
GDP per capita is a terrible way to compare the actual lived experience of the citizens. It's regularly used to make Americans feel better about their lot, given that even the poorest US states tend to have higher GDP per capita than the Canadian provinces and some EU countries that are thrown in America's faces as doing better.
But massive corporations and billionaires don't improve the day-to-day life of citizens. Americans are wealthy on paper but are one health crisis away from destitution.
The median income in America is much higher than almost everywhere else in the developed world. It’s not just a small number of billionaires padding the gdp and pulling up the averages.
GDP per capita is not a measure of actual societal progress. You have societies that don’t have natural gas pipes or potable water and so they buy tanks of propanw and bottles of water which is expensive (higher GDP) but doesn’t give a better quality of living. Instead, if you built the infrastructure then the costs (and GDP) for the same/better outcome would be lower.
For America, we burn a lot of productivity on vehicles that last 10ish years plus the gasoline to drive them. In much of Europe, they get the same/better experience with extensive subways and bike lanes and high speed rail.
I have to say foreign medias have no qualms mentioning Brexit as an aggravating factor. But local U.K. news would not even get near it, for fear of opening Pandora’s box once more. Even opposition parties (Labour) look the other way.
I know that things don't work as well as they should here, but to my ears this opinion piece sounds more like parody than reality. Take this line.
>Take out Greater
London—the prosperity of
which depends to an
uncomfortable degree on a
willingness to provide services
to oligarchs from the Middle East and the former Soviet Union—
and the UK is one of the poorest
countries in Western Europe.”
Yes. London is a financial centre. A large portion of the GDP of the country is generated by it's biggest (main?) population centre. Is there a problem that london chooses to indulge in the more lucrative financial services over Victorian industry?
Still, i do agree there are historical, major issues with lack of productivity and industry. The tories don't seem to have any vision for the economy future. They just throw money where its popular. I thought for a short while Liz Truss would be the answer, but she has turned up short in the IQ department, but i don't think its the picture of doom the atlantic thinks it is.
Lived all over London for 20 years, including pre-gentrification Hackney and very gentrified parts of Lambeth and there’s never been anything like that.
Lived here for a decade and don’t know what you’re talking about.
If I was to indulge this for even a second I’d point out this massive project sewage project involving 6 tunnel boring machines: https://www.tideway.london/the-tunnel/
I've never seen raw sewage running down the street. Admittedly I've not been everywhere in London, and some parts are better than others, but it doesn't seem any different from any other city I've been in. It feels cleaner than New York, for example.
The UK actually seems to do a better job of treating its sewage than other European countries. What happened is that a lot of the British press absolutely loathes the current government over Brexit and wants them booted out, so they created a narrative that our rivers and oceans are suddenly full of sewage based off the number of recorded overflows increasing due to much better monitoring. (The main problem is that the sewers are old, mix storm and waste water, and that overwhelms treatment capacity when it rains heavily. There's no easy way to fix it.) I guess one of those articles probably got mangled in repetition at some point.
Meanwhile, other nearby countries that are EU members still have urban areas with no sewage treatment plants at all and just dump all their sewage into waterways in normal operation, something that's against EU rules and I'm pretty sure was stopped a long time ago in the UK. That doesn't get as much media coverage because it doesn't fit a useful narrative, though, to the point even people from thsoe countries are convinced their country is doing a better job.
Also, this story largely originated in the Guardian, and it turns out prior to Brexit they were pushing the narrative that the big megaproject to 95% fix this in London was completely pointless and only served to channel cash to the Tories' pals, the problem wasn't really that bad and the overflows were mostly rain water anyway: https://www.theguardian.com/environment/2014/nov/27/london-s... This is, uh, rather different from the current narrative they're pushing.
"What happened is that a lot of the British press absolutely loathes the current government over Brexit and wants them booted out"
That makes it seem like the UK press is largely left leaning, when most of it is very much right leaning and usually pro-government in sentiment.
The Mail has far more readers than the Guardian, for instance. The Sun more than the Mirror. The BBC, while historically left of centre, is nowadays pro-government after threats of funding cuts brought them to heel.
There are a lot of reasons beyond Brexit to think the government is doing a poor job, though Brexit itself is obviously a huge point of contention.
Have _you_ ever been there? I've never seen that and I would not say London is a shithole (try walking around central London, e.g. Regent's Park, Hyde Park and surrounding area).
The comment is also _completely_ without any substantial basis. Sure, London provides financial services, but there's no data provided to suggest that a substantial portion of London's economic activity is generated by providing services to shady individuals.
Seems more interesting that automation via robotics is initially driven by car manufacturing [0], of which Germany and France produce substantially more units [1]
That said the UK government should really get a grip and have a coherent long term strategy instead of fire fighting the next media storm from week to week. Automation will need to increase given an ageing population, people exiting the workforce ( willingly or through care or health reasons ) and closing the door to immigration via Brexit.
Brexit has been absolute poison for the automotive industry in the UK, as expected. I would not expect much innovation or investment when there is so much uncertainty on trade and regulations. Politically it seems there is no appetite to face that reality though.
This is troublesome.. However, I can't help but blame the British system of government. There is no certainty, at any moment the government could collapse, and even when it's not, the PM must constantly watch their back so that his own cabinet does not stab them in the back.
America, and similar Presidential systems, there are set lengths of time for someone to be in office. That builds certainty. America may be a lot of things, it may have many issues, but you know with reasonable certainty, that there will be an orderly transfer or adjusting of power.
From Boris, to Truss, to Sunak in a matter of months. I'm an ocean away and I have little faith in the British government, I can't imagine what it's citizens must be going through.
Amusingly, I actually envy that aspect of the British system quite a bit. It feels like complete fantasy to imagine a president who has messed up and then resigns. The idea of a president's cabinet holding them accountable seems like fantasy as well. And it's only been a week since Truss announced her resignation but there's already a new PM. Boris' own party removed him from office, meanwhile only a handful of US congresspeople have ever voted to impeach/remove a president of their own party. Our last president tried to extort another country, and staged a nearly successful self-coup, and saw the end of his term.
The Prime Minister is technically the leader of the party so more like the US Speaker of The House than the President. Technically the King as the head of State has the role of President, but of course the King is effectively a figurehead.
Imagine if the House of Representatives managed to slap down the President and the Senate so hard that they never got up again, and you have what is effectively the UK system of government.
> However, I can't help but blame the British system of government. There is no certainty, at any moment the government could collapse, and even when it's not, the PM must constantly watch their back so that his own cabinet does not stab them in the back.
It's not very different to any other functioning democracy in that respect (and considerably more stable than many European countries which generally rely on coalition formation). The government has "collapsed" in the sense some politicians have ceased to back some other politicians because they've proved spectacularly inadequate in different ways, but it's the same party in power since the election, and since 2010 for that matter.
In other systems, there might be one person almost invulnerable to replacement even if they lose the confidence of everyone around them and everyone that voted for them, but if that person has a habit of hiring and firing people and changing political direction on a whim that's hardly resulting in greater stability, and often such systems come with their own alternative sources of uncertainty like midterm elections for chambers that get to block almost everything...
Political invulnerability of inadequate politicians is a bug in a system, not a feature.
The problem with british parliamentarism compared to the system other constitutional monarchies and democracies in europe have, is the the cabinet does not automatically gets disbanded when the goverment looses trust in the Prime Minister. In most european parliamentary systems, a re-election would be called if this situation happens. This is not the case in the UK.
Its utterly ludicrous the tories are still in the seat of power after having 5 PM's in 6 years.
It's the relative higher standard of living compared to poorer countries, and language. If someone can migrate to a country where they can understand people and be understood it's at the top of the list.
One reason it doesn't happen the other way round is language again. We have the burden of English being spoken as a second language in many other countries, so there is little incentive to really push language learning in school here. It's foolish, but there is a logic.
As the UK becomes poorer compared to the rest of Europe there will be those that will wish they could speak a second language. Not that it will do much good, as post-Brexit unless you are rich or a high performer there is very little chance of landing a job. The British population happily voted away that right.
Immigrants settle in all rich countries not just the UK.
Just because there is a queue of 100s at calais to get in, doesn't tell the whole story of millions of economic migrants travelling all over the world.
Sure, in the same way that if you take a flight from Australia to London which stops in Singapore and Frankfurt, then you are technically travelling from Germany to the UK.
The thing is, a lot of them do. Germany is outside most refugee routes (most of the people in Calais never went through Germany) but they get people from Eastern Europe fleeing westwards. But France has way more refugees per capita than the UK, and way more in absolute numbers. Seriously, have a look here for example, it’s ridiculous: https://en.m.wikipedia.org/wiki/List_of_countries_by_refugee... .
Those who try to cross the Channel planned to come to the UK since the beginning of their journey, mostly for cultural reasons.
The vast majority do. Germany, Italy and France get a lot more refugees than the U.K.
The few refugees that choose to cross the Channel do it because they have relatives or friends in the U.K. and take significant risks to cross the channel.
I cannot speak to where people go (lots of countries have lots of immigrants, including Italy, France, Germany, etc), but culturally the UK is more accepting of integrating immigrants than its neighbors. They also speak English, which will also be a driving force from certain countries.
> culturally the UK is more accepting of integrating immigrants than its neighbors
Considering the part of the populations that keeps voting for xenophobic Tories, that the whole country threw a hissy fit about immigration in 2016 and has been hardening its stance by the day since, and the pile of scandals à la Windrush, the reality is somewhat more nuanced than that.
> They also speak English, which will also be a driving force from certain countries.
Yes, this is an important motivation. There is also the aura from nearby commonwealth countries. The UK used to be good at building soft power.
Except they do. A very few risk their lives to reach the UK (usually because they have family there), but millions choose to stay in Western Europe (e.g France, Germany).
Although it’s made of countries, it is also a country, so the headline isn’t wrong to refer to it as “one” country, in case that’s what you were implying.
So when Liz Truss announced tax cuts and there was fire and fury after the news and the pound plummeted I started looking into what these tax cuts entailed. They were mentioned as giving the "rich" huge tax cuts so I imagined that they would see a tax rate of 50%(on someone making a million or more a year) going to 25% or something irresponsible like that.
After finding the actual figures, for some reason these were very hard to find in various news reports, it was a slight drop of 5% (from 45% to 40%) and the "rich" were classified as those making above 150k. In my mind that salary does not make anyone rich, I mean that's a low to mid level engineering salary in the US. Basically almost any US professional (lawyer, doctor, engineer etc) is going to make that or much more. Then I started looking into what does the average British citizen make and found it was incredibly low at 38K.
So basically it dawned on me that the UK is a country that pays very low wages which to me is very surprising as houses(flats) in London are extremely expensive. I would love for a UK citizen to chime in, but for me it was a strange realization as I always assumed that people in the UK made more than in the US.
> Then I started looking into what does the average British citizen make and found it was incredibly low at 38K.
There are many ways to define and measure this (mean vs median, pre vs post tax, everyone vs just fulltime), so I don't know if the numbers are directly comparable, but US median earnings are $45K[1], which isn't that much different, especially once you take into consideration differences in government benefits.
I am a software engineer and I earn £55k. It's about twice the national average.
I must live an economy lifestyle to put anything aside - taking care to not heat my home too much, to never eat out, and not buy any luxuries. And on some months when I need private healthcare (as the NHS has collapsed to the point that some urgent appointments have months-long waiting lists) or dental costs, I have to dip into those savings.
I'm leaving the UK as soon as I have savings to do so. But it might take a while. I feel a lot of empathy for people earning around the national average salary. I don't know how they'll survive the Winter without using savings or going into considerable debt, especially those who have dependents. I am privileged to at least not go into debt and realistically think about leaving this country.
But is that a UK thing or not? I worked for a fintech company in London and was earning on the order of £250,000/yr. We had quite a few eng who were earning between £100k-£150k. Admittedly it was a UK/US company - the founders were American and the eng team was almost all in London. But it's not like your salary says something deeply fundamental about the UK, no more than salaries in Mountain View tell you something about the whole of the US.
The necessity of frugal living while earning twice the national average definitely says something fundamental about a country's economy. There are many countries in Europe where earning double the average salary will make one quickly accumulate wealth.
Regarding the London fintech experience, you are right, it is comparable to Mountain View. The financial industry in London is a well known exception to the rule when it comes to salaries in the UK.
Comparing salaries of similar companies, I completely disagree.
I'll use Discover Card as they are a financial services company in both the US and UK.
According to Glass Door, a Senior Software Engineer with 15 years+ earns:
UK: £90-100k
USA: $120-140k
Even at the top end of finance, with the most experience you will struggle to break the £100k wall in the UK.
As someone who has worked software in both the US and UK, you are more likely to find upper management in the US who can see their software as a competitive advantage.
In the UK I've seen upper management in fintech startups embrace the advantages, but not in larger organisations.
Based on the number you're citing for the average British salary, you're citing pounds, not dollars. That engineering salary you're citing is, in an ordinary UK economy, more like $225k than $150k (UK comp is also lower than US comp even accounting for currency). $225k is not an ordinary US household income.
Yes. That is a deeply abnormal state of affairs, and not the circumstances under which these salary numbers were set. People should be wary of analyses premised on the pound's current weakness.
median US salary is $54K, given the pound to dollar exchange that would mean a UK workers average salary should be 47K(pounds) to equal a US workers average, its not even close.
But a typical US worker has to pay significant amount of health insurance premiums and has a significant $3k to $10k deductible and up to $17k out of pocket maximum.
Assuming the common 70%/30% premium cost sharing for a silver health insurance plan, an American has to pay somewhere around ~$200 per person at the minimum. That is $2,500+ per year for a healthy young adult, and goes up from there, especially for those with dependents who may not even be subsidized by the employer.
Although, the quality and quantity of healthcare actually delivered and received in both countries is heavily in flux, making comparisons even including insurance costs quite difficult.
I also wonder if we are too caught between US and European attitudes to career progression.
I perceive people in the US doing better by being talented, but mostly by being able to sell themselves; the more shameless the better. Meanwhile in Europe the perception seems to be "age before beauty", i.e. you get promoted mostly through long tenure, the old fashioned way.
In the UK, these two factors come together to create a downward, spiteful pressure on anyone getting too big for their boots - unless they bluster straight past it via nepotism or good old fashioned public school overconfidence.
And here I thought America had the lead on combining the worst parts of different systems! As in Wall Street loves privatizing profits while socializing risk like happened with the sub-prime fiasco.
But the Brit’s applying the strategy to the social strata is next level. Seems us and the Brit’s really do share a common cultural heritage. Well we still got bigger hats. ;)
How does the cost of flats in Manhattan compare to the salary of the average American?
London real estate is notoriously expensive and it's not a practical way to measure wages.
The top rate of tax on earnings over £150k (until the pound crashed recently would have been around $200k) applies to roughly 600,000 workers. The UK has a population of 68M. If you earn upwards of £150k, you're rich.
> In my mind that salary does not make anyone rich, I mean that's a low to mid level engineering salary in the US. Basically almost any US professional (lawyer, doctor, engineer etc) is going to make that or much more.
When your world is tech and you're familiar with the salaries on offer, it's easy to lose sight of life for people who aren't inside that bubble. Your point of comparison is wildly skewed.
what I am getting it is not a critique of the UK, its just that housing, cars and alot of other things are wildly expensive compared to what people make(in the US and UK). And in the US alot of folks I know are making at that level or above and are solid blue collar, police and firefighters, and electricians, or nurses(they are based in the bay area so that may skew things)
The article is specifically highlighting the most expensive cities to live in.
Housing is becoming increasingly unaffordable and if you want to live alone in one of the most expensive cities, you'll need to be rich (compared to the average citizen).
If you already live in one of those cities, your point of reference is other people also capable of sustaining themselves in that environment.
This time and time again. Income does not equal wealth. Sure over time you can build your wealth and become rich, but not really if you earn £150k.
It takes awful lot of work to get to that level. You are probably be in your 30s or 40s when you start making this much. If you come from working class, then you are unlikely going to have any sizeable assets until then.
£150k gets you "only" £7.5k net. If you want to actually enjoy life and fruits of your hard work, then you don't want to live in a flat share, you want to go out sometimes etc. In London, £3-4k rent for a decent home, nothing luxurious is a normal price. Bills, other outgoings probably £1-2k. You also want to save some money for retirement.
With that kind of money, you are realistically looking at £2k of disposable income.
To put that into perspective - if you put £2k each month into your savings account, it would take you about 40 years to save your first million.
This salary is really nowhere near making someone rich.
People are often confused, because they see an actual rich person that is making this much money, but they are not rich because they have such a job. They most likely inherited their wealth or they get money in other ways.
This metric is no longer meaningful, as in 99th percentile you'll have someone making £1.5m+, which is a world's difference.
> You can have a high income and choose to live beyond your means preventing you from accumulating wealth.
What I described wasn't living beyond one's means. It would be that if a person started engaging in taking loans and credit cards and buying things they can't really afford etc.
Simple living adequate to earnings, at a £150k, won't make you rich.
> This metric is no longer meaningful, as in 99th percentile you'll have someone making £1.5m+, which is a world's difference.
We're debating various degrees of rich. If you earn more than 98% of your working peers, I don't know what else you could call that.
People make choices with their money. Living alone in an expensive city is a choice. If you choose to do that on £150k, you're going to have far less disposable income than others on that same salary making different choices.
I have very little sympathy for people who blow all of their income funding a lifestyle they can't afford to project the appearance of wealth and status.
Comments like "London real estate is notoriously expensive" don't really refer to greater London. Central London sure, but 1/6th of the population doesn't live there.
> London in general has way-way-way-more-than-median-income-can-afford residential real estate.
If your metric for affordability is whether a single (local) median salary can afford a residential property, then almost nowhere in England is affordable. This is clearly a problem, but not unique to London.
But, you need to take into account people in the US needing to pay for health care, retirement/pension, education, sales tax (although the UK has flat rate vat), tipping, insurance for everything health related especially if it prevents you from working.
And house prices in london are like house prices in SF, i.e. not representative of the whole country.
- University is definitely not free, at least in England. Fees are £9k per year. Interest rates are high and you don’t have to pay it back unless you earn over a certain amount so in reality, it’s more like a graduate tax for many, but it’s definitely not free.
- Childcare is limited to a few free days a week, often has extras to be paid for and is otherwise very expensive. For those on higher incomes that’s reduced too.
- 52 weeks parental leave is for the mother only and is only at statutory pay after 6 weeks (about £150 per week). Paternity leave is 2 weeks at statutory pay.
- 6 weeks of holiday is not normal. Normal would be about 4 weeks.
- The state pension is £185 per week. Nearly everybody contributes a decent amount to a private pension too.
> 52 weeks parental leave is for the mother only and is only at statutory pay after 6 weeks (about £150 per week). Paternity leave is 2 weeks at statutory pay.
It used to be that mothers were entitled to maternity leave which broke down as:
- 6 weeks at 90% of your average pay
- 33 weeks of statutory maternity pay (£156/wk)
- 13 weeks unpaid
The legal minimum is 20 days plus 8 public holidays. I don't know anyone in a white collar job who gets fewer than 25 (+8) days off, and in the public sector 30 seems to be the low end.
> No additional costs for healthcare or health insurance
The state of the NHS for the last 2.5 years means that you effectively need to pay private (whether out of pocket or through insurance) if you want any chance at decent, timely healthcare.
What you're saying is basically true: if you're a skilled professional, you'll do much better in the US, than you would do in the UK.
US society has even more inequality than the UK. In fact, as a Brit, it was really strange to hear that President Biden disagreed with the UK's tax cuts for the wealthy -- doesn't he realise that the US taxes its rich significantly less than we do? It seemed absurd to me but I felt that he probably realises that it's in America's interest to continue to attract highly skilled workers by taxing them less, and would prefer if the US continues to have a monopoly on this advantage.
The average salary in London is higher than £38k, but it's definitely not high enough to buy a property here. You likely need to be making upwards of £150k to buy a house. That is quite possible at a hedge fund, HFT or prop trading firm, but I don't know any other jobs that pay well enough for home ownership in London. Of course, if you have dual incomes and are happy to get a heavily mortgaged flat and live on the outskirts of London then you have more options..
It feels like half the electorate live in a fantasy land. Over two million people using food banks—many in work—and yet all the chap I see on my morning dog walk wants to talk about is “all the people on the dole who live in big houses and drive brand new cars” (Jobseekers Allowance is £77/week, for reference).
Meanwhile our household income is far above the national median, and we still need to scrimp and save far more than our parents and grandparents did to work towards a deposit on a house. I truly feel for the low wage earners in this country, even though a significant portion of them continue to vote for these monsters. We seem to be totally without compassion as a nation right now.