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A similar article from The Atlantic: > How the U.K. Became One of the Poorest Countries in Western Europe https://www.theatlantic.com/newsletters/archive/2022
by chrisaycock 3y ago
A similar article from The Atlantic:
> How the U.K. Became One of the Poorest Countries in Western Europe
https://www.theatlantic.com/newsletters/archive/2022/10/uk-economy-disaster-degrowth-brexit/671847/ https://www.theatlantic.com/newsletters/archive/2022/10/uk-e...
The subtitle says it all:
> Britain chose finance over industry, austerity over investment, and a closed economy over openness to the world.
- rayiner 3y agoWait, that doesn’t track. Until 2020, Britain had one of the most open and trade dependent economies. And austerity dates only back to 2010 or so. It’s doubtful that Britain’s current situation can be explained by policies that are barely a decade old. In terms of per-capita GDP, the UK was behind France from 1985 to 1998. It jumped to parity with the US from 1998 to 2008. But that jump seems to be a product of the very financialization that the Atlantic article complains of. That evaporated after the 2007 recession. And since then, the UK hasn’t done any worse than France or Italy: https://www.google.com/search?q=uk+per+capita+gdp&client=safari&hl=en-us&ei=TYfGZLCuDrij5NoP9K-N8AY&oq=uk+per+capita+gdp&gs_lp=EhNtb2JpbGUtZ3dzLXdpei1zZXJwIhF1ayBwZXIgY2FwaXRhIGdkcDIKEAAYgAQYRhj7ATIFEAAYgAQyBRAAGIAEMgUQABiABDIGEAAYFhgeMgYQABgWGB4yBhAAGBYYHjIGEAAYFhgeSMItUKMEWMkqcAF4AZABAJgBnAGgAbIOqgEEMjUuMrgBA8gBAPgBAcICChAAGEcY1gQYsAPCAgoQABiKBRiwAxhDwgIHEAAYigUYQ8ICBRAuGIAEwgILEC4YgAQYxwEYrwHCAggQABiABBixA8ICChAAGIoFGLEDGEPCAg8QABiKBRixAxhDGEYY-wHCAggQABiKBRiRAsICCxAAGIAEGLEDGIMBwgIMEAAYigUYQxhGGPsBwgINEAAYigUYkQIYRhj7AeIDBBgAIEGIBgGQBhE&sclient=mobile-gws-wiz-serp https://www.google.com/search?q=uk+per+capita+gdp&client=saf...
- RosanaAnaDana 3y agoUKs austerity dates back to Thatcher.
- trumpeta 3y agoThey were making austerity jokes in Yes Minister!
- panick21_ 3y agoBritain had discussion about Austerity by different names for literally 500 years at least.
- rayiner 3y agoBut the asserted poverty of the U.K. does not. In reality, the U.K. peaked in the mid 20th century. Its per-capita GDP lagged behind France from 1975 to 1998. There was a brief finance-driven rally from the late 1990s to the 2008 recession. But the overall pattern seems to be the U.K. having become a has-been European country, just like France, Italy, Spain, etc., since the mid 20th century.
- JKCalhoun 3y agoYou didn't comment on "Britain chose finance over industry". Perhaps that has been the greater contributor.
- Mountain_Skies 3y agoThat Britian was at the forefront of the industrial revolution also means that it endured some of the worst horrors on the labor that powered it. Also being a smallish island, such impacts were more difficult to hide and diffuse as would be possible in a larger land mass. I wonder if that impacted their willingness to offshore their industry instead of reforming or evolving it into something more humane.
- pydry 3y ago>Wait, that doesn’t track. Until 2020, Britain had one of the most open and trade dependent economies. That does track. The finance industry required an open economy. The actual "makes things" industries? Not so much. Of the two the finance industry is much more vulnerable to deglobalization. Paper wealth can evaporate overnight.
- acdha 3y agoFinance is also much easier to move: all of the companies which shifted from CoL to their offices in finance hubs which are still in the EU just need offices, computers, and relocation bonuses for their employees. The lawyers are going to get small fortunes dealing with details but that’s still much lower inertia than something like a heavy industrial plant and its supply chain.
- nocoiner 3y agoThe UK doubled per capita GDP in six years (2001-2007)? That seems implausible. That’s got to be a function of exchange rates, or an artifact of PPP (is that chart PPP adjusted?), or - as you said - somehow related to financialization. If the data is good and illustrative, then so be it - that’s an incredible increase of economic output in a developed economy (and the UK should go back to whatever they were doing during that decade). But that metric just seems disconnected from any actual improvement in the standard of living. Interesting data point though!
- flir 3y agoQuite likely exchange rates (0.70 in Dec 2001, 0.50 in Dec 2007). A lot of our house price inflation disappears when you denominate in USD.
- nocoiner 3y agoYup, that makes perfect sense. Going from a fairly weak pound to a fairly strong one, coupled with a subset of strong growth years, can most definitely make per capita GDP appear to have doubled in a surprisingly short period. Thanks for digging up the numbers. Is looking at house prices in USD a sensible measure for the UK? It seems slightly perverse to me, but maybe it makes sense in the context of financialization, foreign investors putting money into UK real estate and/or immigration? Or whatever other factors may be relevant.
- flir 3y ago> Is looking at house prices in USD a sensible measure for the UK? My gut feeling is yes, but only if you're trying to answer a wider question than "can I afford a house?" I'm not smart enough to articulate it in economic language, but I think of it like a physics model. Are houses getting more expensive, or is the country getting poorer? If you've only got two particles, you can tell the gap between them is widening, but you can't tell which is moving because you don't have a frame of reference. Comparing with the global reserve currency builds that frame of reference. If most of the house price increase disappears, the prices aren't really going up, our wages are shrinking (relative to the rest of the world).
- tgv 3y agoI don't consider the British economy really closed, do you? They import quite a lot. Quite a lot more than they export. That might contribute.