3 ms·

The 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 ch

The 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 ago
Quite 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 ago
  Yup, 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).

flir 3y ago

Quite 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 ago
Yup, 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).