Britain has abandoned its claim to be the world's fifth largest economy
money.cnn.com
money.cnn.com
And apparently, this is news.
For example: usd/gbp * gbp/eur might not exactly equal usd/eur at a given time.
France - 67M, UK - 66M.
So, the UK overtook France in 2013 and since then has had double the GDP growth, resulting in...France now having a larger GDP?
My haircut here in Beijing contributes less to measured global economic output than a similar-time-effort-and-skill haircut in Croydon.
Back to my haircut example: if GBP is now worth 20% less against EUR than it was before, does that mean that the relative value of a haircut in Croydon vs one in Fontainbleu has gone down by 20%. Of course not: their relative value, whatever it was, is unchanged. It's only how we count that value (i.e. how we calculate and compare GDP across countries) that has changed. But that's an artifact of measurement.
In this particular case, the difference between #5 on the list and #6 is less than 1%. But that's much smaller than the drop in the value of GBP vs. a trade-weighted basked of currencies. And the UK economy is still growing in GBP terms.
So it's clear that the change is more driven by exchange rates than by a change in economic activity (i.e. there aren't fewer goods and services being produced in the UK). This is my main point.
BTW - I'm not defending the UK. Just pointing out that GDP is a far from perfect measure of economic output.
So similarly with Britain. Just because the value of all of Britain decreased, so has the value of all the work done in Britain even if the work itself didn't change.
As another example, think bitcoin. If you mine for 3 hours and you get 1 satoshi the value of your 3 hours are worth different things if bitcoin was worth $100 vs $8000. In either case you did the same amount of work, the only difference is what foreigners, ie, non-bitcoiners think the value of your work is. That's how it is with GBP.
So long as the currency changes are driven by real events, they matter, they matter a lot.
Please attack my arguments rather than insulting me personally.
"The beijing haircut indeed produces less value on average than the British haircut."
I get some of my hair cuts in Croydon, and some in Beijing. They are all of the same economic value. But the ones in Croydon contribute more to GDP measures.
Rule Britannia!
http://www.independent.co.uk/news/uk/home-news/brexit-latest...
But perhaps you have other data that supports your case?
If you re-read the above you'll see that I didn't claim to have data on the matter. I'm perfectly open to the idea that a large share of the leave vote is anti-immigration (although that sentiment itself has a broad range of meanings from intolerant to reasoned), but my point was to highlight the perception of leave voters as being generally xenophobic members of the working class as being inaccurate or at the very least, a broad stroke of the brush. Through discussing the vote with the other leavers I know, not once was immigration mentioned as a concern, and we all work in average-to-senior software roles, not Dave the van man who rants about Polish people coming for his job.
Your anecdotal evidence is not very useful in a reasonable discussion, and it might be more interesting to have a data based discussion (if you have some data).
>Through discussing the vote with the other leavers I know, not once was immigration mentioned as a concern
You seem to be a bit obsessed with backing everything with data. Do you want me to make a survey for the people I've spoken to? I'm not trying to say "immigration is not the issue and I have proof!", I'm saying that immigration isn't the issue for everyone, and that there are people in the main HN - reading demographic (and more than just me and the 5 I know, although I'm sure you're going to ask for a citation) that A. Don't match the image in your head and B. Didn't vote the way they did as some kind of attempt to lock out immigrants.
Your suggestion that discussions can only be had by providing data is just not true. If I were trying to assert a claim large enough to need a sample size then sure, but I'm not.
That is reasonably obvious, and not useful basis for a discussion on Brexit.
If you want to gain a better understanding of why people in general voted for Brexit, data would be valuable. Everything else is anicdotal, and not very useful.
How would you support the claim that people in the “HN demographic” voted in significant numbers for leave?
For example this poll from the referendum shows that the no. 1 reason people voted to leave was 'decisions about the UK should be taken in the UK'
http://lordashcroftpolls.com/2016/06/how-the-united-kingdom-...
Edit: typo
It also suggests that leave voter see multiculturalism, feminism, the Green movement, globalisation and immigration as negatives (80%). Overall I see this as supporting the notion that the leave vote was anti-immigration, perhaps as part of a wider distrust of outside influences.
As just a single example the housebuilding industry has been consistently able to build fewer houses than there are people arriving by a large number, and the statistics over how many people are arriving are themselves deeply suspect - they don't correlate with any other population related statistics, and are based on airport surveys that ask a subset of people whether they plan to stay for a long period.
If politicians allow immigration at levels significantly above the speed at which infrastructure can be built out to support the new people then infrastructure reliability and availability will decline. It is reasonable to be concerned about that if you rely on that infrastructure.
The idea of Brexit voters as incorrigible racists isn't supportable, no datasets of any integrity show that and the brief spike of "omg britain is so racist" died down very quickly after the referendum, simply because the UK is and remains by far the most racially diverse nation in Europe.
That's sort of the point. The uk has rejected market distribution as a fair mechanism
So as a simple matter of logic there are things you can do after Brexit you couldn't do before - because parliamentary supremacy has been restored.
The closest argument you could make is that if the UK still didn't want to follow EU law when it was in breach then it'd have to make a decision of paying fines (because it'd legislated to give the EU to right to fine it) or leave the EU.
There simply aren't any economic projections of a trustworthy nature right now.
That said, not all price hikes are attributable to Brexit. The significant hike in butter prices is apparently more due to a supply shortage across Europe.
All those experts (~90%) predicted a sharp 20% increase in unemployment in the period between the vote and the finalized deal when surveyed by the bank of England just before the vote because of "uncertainty".
Unemployment didn't spike a massive 20%. It went DOWN.
I'm not even a leaver but seriously... fuck the economists. You're not a smart person if you trust them.
Given that many people who work are in poverty it would be more meaningful to track the numbers in poverty.
That's bullshit of course. For the reasons you mentioned.
Still didn't go up. Still went down.
My favorite experience when it comes to economists was back in highschool (~15 years ago), when my teacher showed us a recording of two economists arguing with each other (on the news, I think). One was an expert in macroeconomics, the other in microeconomics.
They were using the exact same evidence to argue opposite positions.
We've been in the transitional period for over a year now. The whole period is only supposed to last about 30 months or so.
Moreover, as far as I can tell zero of leading indicators (shipping, retail, etc.) indicate that this cataclysmic 20% drop will ever come.
We haven't even had a quarter of contraction that can be blamed on Brexit - and we had one of those in 2013!
At what point do you stop saying "too soon to tell"?
It sort of sounds like you're still trying to argue that the prediction was correct. Are you?
I think it takes a certain amount of bravery to accept that there are no "experts" when it comes to predicting the future.
Unless you want to argue that the recent economic signs are positive?
You're implying that's some kind of great news. I'd say, real estate investors have lots of enthusiasm for sellers threatened with foreclosure. You can frame it as positively as you want but at the end of the day the UK's position at the negotiation table is simply weaker, and it's no surprise everyone suddenly wants to talk.
Nice, hehe :)
While that's definitely nice... there is the possibility that making a disadvantages agreement with the US, China, Canada, etc. is better in the long term.
It took years for the EU and Canada to reach an agreement. If one of them was in a less advantages position maybe it could be done faster... And maybe speed is more important than conditions of the agreement, who really knows?
EDIT: okay, the brits perhaps ought to know what disadvantages trade agreements can do... given their past experience making them with their colonies :)
I note that the brexit'ers probably didn't want disadvantages trade agreements :)
This does not even factor in tariffs that are in play to protect industries that some members have no interest in and as such negatively impact them.
It's like trying to agreeing a meal that everybody will eat between two people over agreeing a meal of nearly 30 people, and comparing steak with gluten free bread in some cases.
Remember trade deal can encompass everything or area's of trade/industry. That is when having just two parties becomes a positive.
Still, volume always helps, but more than enough upsides to offset that.
But this takes time, luckily much easier without everybody elses interests coming into play, as you have with trade blocks that have many members to all appease. Just look at how one vote against in the UN can kill of any moving forward and see how that can work out and you will start to see that volume at that price, is not as idyllic as it seems for trade deals.
We import more from Germany than France does.
$19 to $19.5 trillion for the US, versus $16.5 to $17.5 for the EU (depending on your source, however they all universally agree the US is several trillion dollars larger).
And that of course is despite the EU having ~55% more people.
Considering Brexit being the likely cause of the UK sagging, I wonder if Trump might be having a similar effect on the US.
Facebook, Google and Uber couldn't make it in China, what chance do UK service providers have?
Tongue in cheek:
After the industrial revolution kicked in britain's main innovative energies were spent on financial innovation and exploitation of a closed, huge global internal market, and being a colonial master at the expense of actually making better products or services.
Except for the rich nabobs coming home from India, I suppose. But there are only so many Savile Row suits and London luxury apartments one can sell to the global population.
UK was at the heart of industrial and scientific revolutions, and was a huge financial innovator. I presume the wealth from colonies in the 19th century killed the two former.
It may not be fair, but on the world stage, power matters. Inside the EU, we try (but don't always succeed) to be fair, but outside of it, power matters. A relatively small country like the UK doesn't have much leverage to get a good deal from other major powers, whereas the EU does.
Last I checked the UK had a 6-7% GDP trade deficit.
The UK needs another supply-side revolution, and not to turn it in to some beggar-thy-neighbour mercantile trading powerhouse. Brexit is small potatoes in the grand scheme of the real economy.
If you go read press releases made about trade deals they always have apparently huge numbers but spread over a very large number of years. Modulo what's said elsewhere about the uselessness of economic predictions, the predicted impact is usually very low. Probably because tariffs are already quite low and falling globally, most trade barriers are now regulatory in nature and those tend to be relatively unaffected by trade deals.
The UK has never created barriers and does not want barriers.
The EU is creating barriers to entry into it's economy for purposes of punishment (their words) - like the gym that makes you pay extra when you leave?
The UK is now free to negotiate deals with any nation in the world - and not restricted to taking what the EU provides it - this is not restrictive.
UK can now chose exactly whom it wants to migrate - this is not restrictive.
If it were up to the UK, the EU nations would be considerably less economically restrictive than they are today.
Finally - wages are up in the UK considerably, and property prices are down a little - which is exactly what we all want to hear when thinking about 'affordability'.
'Open trade' of real estate creates crazy bubbles and holds regular citizens under the tyranny of the massive cash-flows of foreigners who are able to hold their own citizens in indentured servitude. There are more empty flats in London than there are homeless people.
And the weak pound + slow down in migration from the EU has caused wages to rise - which is awesome.
Mass migration is 100% a downward driver on wages, only in very specific cases is it not - it's an issue some have a hard time grappling with. In the Alberta Oil Fields they want to increase migration for what they call 'labour input costs' - which is literally a different way of saying 'high wages'. In other words: 'wages are too high, we need more immigrants' - it's all rather obvious.
There are issues that should have been addressed by the EU, but they won't - so we have full revolt.
There's no reason for UKIP, True Finns, AFD, Sweden Democrats to exist - they exist because EU leadership won't listen to reason. In many ways America is the same - Trump is the ugly response to a system that wouldn't bend for some reasonable causes.
Brexit was an ugly choice, hopefully a real wake up call for EU leaders, sadly, they seem to be doubling down and it won't end well.
Of all countries on planet earth, it's frankly nothing less than comedy that we're seeing 'this eu realpolitik is unfair!' arguments from the UK. Anyway, no trade barriers, just one on real estate?
Anyway, frankly the UK today enjoys approximately the same circumstances pre and post vote. It's way too early to look at current metrics and say 'look, nothing going on or even an improvement' when the brexit vote has occurred, but the actual brexit is years away.
>And the weak pound + slow down in migration from the EU has caused wages to rise - which is awesome.
Also, I'm lacking some crucial context. Sure, wages are up, have you looked at inflation? In globalisation a weakening pound creates jobs and makes goods more expensive, can't have your cake and eat it too. Real wages are actually down in the UK, surprise.
> In the Alberta Oil Fields they want to increase migration for what they call 'labour input costs' - which is literally a different way of saying 'high wages'. In other words: 'wages are too high, we need more immigrants' - it's all rather obvious.
I've never really fully followed the reasoning. Let's not let anyone into our countries because hey, we want to keep the high-paying jobs for ourselves. Oh damn, jobs are moving overseas cause it's cheaper or dropping our wages to stay competitive, well let's bring back protectionism. Oh wait no, we believe in free trade.
Look I'm sympathetic to brexit voters, but I think one way or another, the west has to come to terms that the only way isn't up anymore, and that their relatively position of power will weaken no matter what policy path is taken. Whether you allow or disallow migrations, allow or disallow free trade, things have changed and they'll never be the same again. Literacy in India from British rule (1947) was 12%, now it's over 75%, and India is below the world average. That's close to a billion more literate competitive agents. No policy can simply isolate you from that. And that's just one metric from one country. The nationalist rhetoric isn't the solution, it's simple scapegoating.
Nobody is claiming 'unfair' - we're pointing out that the EU is not this bullst idea of 'Europeans coming together in solidarity' it's just a selfish entity, mostly for the benefit of the elites.
And by the way - it's not 'realpolitik' - it's stupid-politik - because 'punishing' leavers may create some kind of barrier to others thinking about it - but in reality - it exposes the schizophrenia if the EU for what it is.
A 'strong' EU is what others want to join.
Only weak and inauthentic entities like the Soviet Union and the EU need to 'punish' people for daring to leave.
Can you think of other movements that punish people for leaving? China? Cuba? Soviets? North Korea?
The EU and UK should seek a 'good deal' with one another. The EU is afraid of falling apart and is seeking vengeance.
The EU is fundamentally broken and were it to have developed a degree of self awareness, would have remedied the issues and there would be no 'right wing movement' in the EU - it would not have had a chance to exist.
"Whether you allow or disallow migrations, allow or disallow free trade, things have changed and they'll never be the same again. "
"disallow free trade"
The UK wants free trade with the EU, it is the EU which is denying the situation.
As far as migration - the UK accepts considerably more migrants only only from EU countries - but also from non EU countries than effectively any nation in the EU.
But you do agree that's bullshit as well, don't you?
I mean, the EU's goals is to serve the collective best interests of all and every single member-state. Now you're seeing a nation that intentionally placed itself out of that privileged group, and you're complaining that their best interests aren't being considered by everyone else.
I mean, that's like taking up a spa membership to enjoy massages, then deciding to drop the service, and then complaining that the spa is a selfish entity that caters to the elites just because you expected to keep receiving massages after you got your wish of dropping your membership.
No, it isn't. Spa membership doesn't dictate what you cannot do outside the spa. Spas do not collude other competing spas to exclude you from interacting with them.
Second, some privileges are real, and some manufactured to punish outsiders. Prioritization and restrictions on trading with non-EU is an example of this, which addresses the "hypocrisy of protectionism" point.
Finally, "because that fits their needs and suits their best interests" who's interest? Brexit voters? They got one vote premised on an EU promising the moon, and little control or feedback sibce then until the recent Brexit vote.
That's clearly not what it's trying to do right now. For one the UK is still a member state and still paying its dues, but the EU is acting in an extremely hostile way. Unless you reflexively define the best interests of the EU Commission and related institutions as "the best interests of all and every single member state", it is certainly not the case.
Consider: The EU is setting things up such that in just over a year trucks will start to pile up at ports, costs will rise across Europe and the UK, many European firms will be cut off from the financing they receive from London, airplanes will be grounded, Irish politics will destabilise due to the introduction of a hard border and that's really just the beginning. None of this is in the interests of any person in any EU member state at all. And it can all be easily avoided.
Your spa analogy is very badly off by the way. Trade isn't something countries sell like a product itself, despite the EU's attempts to package it that way. Countries that strike free trade deals do not "buy" them, they negotiate and agree to them. Think about neighbours cooperating more than a consumer buying a product.
Rework your thinking with floating rate currencies.
No, you're not, if "the UK" is the government and London elite. Brexit voters are a demographic of their own, in a nation run by another demographic hostile to them.
> keep the high-paying jobs for ourselves
isn't the issue average wages vs top wage jobs? ie what the wage of unskilled labour is. Which demographic is saying "Oh damn.. well let's bring back.. Oh wait no.."? factory workers, or owners?
> Literacy in India
EU would require you prioritise a Pole over an Indian immigrant, it is protectionism at a European scope.
Wages are stagnant and prices are down significantly in real terms. GBP won't go very far when you leave this island, and it's not like the island produces much worth purchasing.
I'm acutely aware of this since I foolishly bought a house 6 months before the vote. I expect to emigrate within the next few months after a refinance and pay off much more easily with foreign currency.
The UK has never created barriers and does not want barriers.
Mind, of course, that so much talk of EU barriers to trade are actually required for trade: standards and international law, and further to prevent social dumping and races to the bottom in social provision. If you think the UK will do well without social provisions, you haven't seen how nasty the underclass is getting. I've had to change my commute to avoid getting attacked, I've had three scooters stolen in the past year, and almost everyone I know knows someone who's had a phone stolen.
The UK is a deeply broken country; if it was a company, only the south-east would be worth keeping. The education system isn't fit for purpose, and the mass of the workforce is not going to make it in global competition.
The WEF rates the UK's "Education and Skills" as seventh best in the World, just ahead of Germany and five places ahead of the USA.
For "Business dyamism and innovation" the UK is sixth, behind the USA and Scandinavia but four places ahead of Germany.
https://www.weforum.org/reports/the-global-competitiveness-r...
http://fortune.com/2017/02/09/study-china-will-overtake-the-...
https://www.quora.com/Economic-History-At-what-point-did-the...
The rise of China has made the first tier out of reach to countries with only 60-80 million people (such as the UK, France, and Germany). If the European powers combined - somehow, who knows how - then they would have the weight to be global powers and have more influence to move global affairs in directions the Europeans desire. With only 60 million people, the UK is destined to be a bit player.
One wonders why a neighboring second tier Eurasian power would want to disrupt European integration and the resulting arrival of a superpower on their doorstep. Stand together, or hang separately.
Ukraine as the "trial" case?
Russia's GDP in the late 1980s was around half a trillion dollars. Today it's around $1.3 trillion. Accounting for even a small amount of annual inflation, they've grown the economy by perhaps 20% to 30% over 30 years. And that's coming from an extremely backwards Communist system.
Russian GDP has dropped since 2014 due to sanctions. If you look at prior to sanctions, growth is more impressive.
From [1]:
GDP (USD billion) 1990 2014 --------------------------------- UK 1093 2999 India 317 2035 Russia 517 2064
Recent growth is much stronger [2] [3].
[1] https://www.google.com.au/publicdata/explore?ds=d5bncppjof8f...
[2] https://www.reuters.com/article/us-russia-gdp/russias-gdp-gr...
[3] https://www.focus-economics.com/countries/russia/news/gdp/ec...
Whether a superpower we can debate, but they still have massive influence.
> Is not being part of a superpower a necessarily bad thing? So long as you have NATO for defense and EU for free trade, then yeah, what is the difference?
With regards to power, no one is best served by losing power. If you lose power you will be unable to defend your best interests. If that's a good thing or a bad thing?
"the resulting arrival of a superpower" = a stronger version of the EU.
Once you have nukes, superpower status has a power ceiling. The US demonstrated that we can grind up a non-nuclear power like Iraq. We cannot do the same to any number of other tiny countries that have the bomb or similar leverage.
Ha - nobody can see that far out.
Also, it's all based on relative value, PPP - so it's an incredibly difficult thing.
One could also argue that China surpassed the US a long time ago.
Chinese go abroad to shop for good reasons.
The Chinese government works much more directly in twisting the knobs of the economy, and the government regularly misleads with their economic numbers (sort of like companies that change the accounting rules on the numbers they report). As a result other methods get devised to try to estimate the Chinese GDP and its relative independence from other economies.
That said, they are expected to surpass the US on a comparative GDP model, what is less well understood is how durable their form of market management can be.
Japan has a smaller population than the US. Even with early automaton providing a huge multiplier effect to efficiency, they weren't likely to catch up.
Combine that with social pressure against immigration. The US benefited a lot from brain draining other countries, Japan never did. The odds of a country being the source of innovation are higher if all the world's geniuses keep moving to that country.
Next up, will China be willing to (keep) hiring away American professors? If China can clean up its air quality, continue to improve standards of living, and open itself up to immigration, it will be on track to best the US.
Shear numbers means that if they stay away from self-destructive policies, civil war, and climate change doesn't squash their resources they'll be the biggest economy.
Not per capita, but in total yes, and wouldn't it be unfair if they didn't... Consider how many people would live in poverty, if they don't grow.
With competent governance, max size of the economy is linearly tied to population, with some wiggle room for natural resources.
This is why Japan was always going to level off, and why China is going to be on top.
> why China is going to be on top
India will have a larger population than China (http://statisticstimes.com/population/china-vs-india-populat...) so it should end up on top.
> competent governance
India is far from competent in this regard.
What does this mean exactly? Getting lapped means getting passed and then passed again. How does that make sense in this context?
It'll take China 30 to 40 years to catch the US at the present trajectory. They're outrunning the US at about $200 billion per year if you assume present numbers going forward and if you believe the claimed Chinese growth figures. The gap is $7.5 to $8 trillion, while China's growth is slowing by the year.
That's ~30 year span is a best case scenario for China. The far more likely scenario, is they collide with common economic reality, with standard recessions, growth problems, debt problems, along with a continual decline in their growth rate. The last 20 years they've gotten to avoid most of those problems due to massive easy slack to fill in, in their formerly backwards economy. The debt is already there however, as they've taken on at least $50 trillion in new debt to fake their growth the last ten years (including shadow debt at the state enterprise and local muni levels). That's something they can never repeat going forward (their system is already shaking under the debt, they're constantly having to inject liquidity and restrict capital flows to keep the house of cards standing).
China has a roughly $11.5 trillion economy growing at a claimed 6.5%, with a persistent decline in their growth rate.
The US has a $19 to $19.5 trillion economy. The US is able to grow at 2.5% routinely, possibly higher in the near future.
In 2014, China's economy was $10.48 trillion. In 2015, it was $11.06 trillion. In 2016 it was $11.2 trillion.
In the time China added $1 trillion to its economy, the US added $1.6 trillion to its economy.
At 2.5% on $19 or $19.5 trillion, the US can routinely add nearly half a trillion per year to its economy.
At 6% on $11.5 trillion, China is adding $650 to $700 billion to its economy in 2018. Gradually slow their growth to even 4% to 4.5% over the next four or five years, and they may never catch the US.
I'd be willing to bet the US can sustain 2% to 2.5% growth going forward, while China can't sustain above 6%. This is especially obvious given the dramatic down curve over ten years in their growth rate. To add further to that point, there is wide agreement among economists that China aggressively lies about their GDP growth numbers, it's more likely to be closer to half the stated number.
How much of the economy is propped up by transfer payments and military related expense, all funded by borrowing?
Once diverse regional economies like the NY Metro Area are increasingly dependent on a narrow set of industry. IMO, the future is hard to predict and is likely to diverge from the 20th century.
Economic statistics for the US with fully disclosed methodologies are readily available. US military spending in 2016 was 3.3% of GPD, according to the World Bank. [1] New York’s economy is more industrially diverse than average (ranked 17 out of 51) with Long Island as the most diverse county in the state. [2] I realize that fed report is out of date, but as of 2016, the NY Metro area itself had a GDP of nearly $1.7 trillion, making it one of the larger economies in the world. [3]
[1] https://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS?end=2...
[2] https://www.newyorkfed.org/medialibrary/media/research/regio...
[3] https://www.bea.gov/newsreleases/regional/gdp_metro/gdp_metr...
The US clearly engages in the sort of behaviour that was described as trickery. The state is massively indebted and piling on huge deficits each year, and the only thing that keeps lenders lending money is this belief that the US will always repay its debt. Meanwhile the US deficit is used as a never ending source of free money created out of thin air that's injected into the economy, thus contributing to artificially inflate the volume of money being exchanged (i.e., the GDP)
If you compare the economy of 1967 to 2017, it’s more telling for NYC. Upstate is even more dramatic. The economy in central/western NY imploded.
The trickery is around the massive debt and the use of the dollar as a reserve currency. 100 dollar bills represent 80% of currency in circulation are like the equivalent of beaver bonds overseas.
It was purchased mostly by a group of secret investors which promptly turned around and made bank on the 1bn pound price difference.
https://www.opendemocracy.net/shinealight/kiri-kankhwende/uk...
https://www.theguardian.com/business/2013/jul/29/serco-bigge...
[1] https://en.m.wikipedia.org/wiki/Budget_of_the_United_Kingdom
The US debt to GDP ratio has increased, but several European countries have experienced the same. Turns out a monetary policy which is tuned to be tight but tolerable for the German economy is a disaster in other parts of the continent. If you are going to increase your debt to GDP ratio, you might as well accomplish something and reduce human suffering. That is, increasing the denominator with stimulus, instead of decreasing it with austerity.
I don't think US policy is perfect - we could have used even more monetary stimulus, and the fiscal stimulus could have been delivered in a more organized and consistent fashion. The incoming corporate tax cuts when the economy is already hot make no sense. We are in a good position to reduce the debt load if policy makers just hold steady.
You are somehow assuming there was a choice to begin with.
There wasn't. If you don't have the cash, you don't get to spend it.
Do note that all EU nations that were subjected to a bailout agreement were forced to do so because they lost access to international money markets and were essentially cut off from receiving any loan. We're talking about half a dozen states that were borrowing themselves at levels close or beyond 100% GDP, and the international money markets raising available interest rates beyond 7% for 5y loans in response.
How do you get a loan when you're over 100% in debtand you're running a keynesian double-digit deficit?
You don't. You pick up your phone to call the IMF for help, and start to cut spending to avoid bankruptcy.
That's true for people, but it's not true for governments, especially the U.S. government. During the economic crises, the Fed created money out of thin air and gave it to large banks with the idea that they could lend it out and assist businesses. This was called quantative easing, which is the modern form of "printing money", but it's very much the same idea.
The risk of that is that doing so devalues the currency everyone else is holding and risks increasing inflation. However, that didn't happen during the economic crises.
Actually, it's specially true for governments, and some people insist on being completely oblivious to that fact. Contrary to what you might believe, money markets do cut off access to credit to a nation that's over indebted and showing off unbalanced books. If that wasn't the case then no eurozone member would have required emergency loans from the IMF and even the EU and EACH just to cover their immediate expenses.
In addition governmentment who control the nation's currency may resort to ramping up inflation to print out extra cash but that doesn't mean they are getting free cashier or aren't empoverishing the whole nation. These magic money-making policies inflict the exact same damage than austerity has with the exception that it restricts access to imports.
The US is a very particular case as money markets somehow treat US debt as a very special case, one whose massive overspending has no impact on lender's perception.
Of course bond investors knew the EU did not intend to pursue monetary policy that would allow distressed economies to adjust. US debt is not a magic special case. Take a look at Japan.
I'm not sure if it's particularly special, just particularly large. It's the largest economy in the world, and even in times of relatively high debt-to-GDP, it's still far better off than many of the Euro-zone countries that were brought to the brink. China, for example, has a far higher debt-to-GDP than the US.
That said, one particular reason why the US may more resilient to inflation is the fact that the dollar is the worldwide reserve currency of choice. This helps with inflation, but can hurt by artificially increasing the value of the dollar hurting exports. So overall, it might not be a great policy, but in a debt crunch, it gives the government more leeway to print money without risking inflation.
> This year will be the first time since 2013 that France has topped the U.K. in the ranking, according to the IMF.
Another interpretation is that we have equally successful economies based on one, rather archaic but generally agreed on, measure.
But other countries eventually caught up to their industrialization. Eventually, the UK did no longer have an advantage in terms of productivity. So around WW2, Churchill transferred substantial knowledge to the US through the Tizard mission, so the US supplemented UK production.
After that, came the Suez crisis, which is when the UK stopped being a superpower.
The UK still has some of the best research universities in the world, but the role as London as trade hub is in decline.
The UK might do well in the future, and will continue to be relevant, but the best days are gone.
It made me think of the end of The Italian Job where the bus was hanging over a cliff edge. Seems like a fitting analogy.