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Comment by gaius | Hacker News Reader

Elephant in corner of room: The City which he is so contemptuous of is the one industry in the UK that pays technical people fair wages.

I studied Mech Eng at college; no-one does that who doesn't want to be an engineer. When I graduated in the mid-90s there were no jobs, so I went into high-tech. But my CV is still floating around, and I occasionally get called by recruiters in engineering. Now I am no rock star, I am paid well (market rate) but not extravagantly so. But these engineering jobs pay a fraction of what I earn, for the equivalent years of experience. And they wonder why no-one wants to do it?

This comes back to the old class system which is still strong in the UK. No matter how educated, an engineer is not "one of us" to the management class, and will never be paid fairly in the old industries, never more than a paper-pushing middle management bureaucrat who went to the "right" school. Only high-tech (enlightened) and The City (where managers are so well paid that they don't feel threatened) pay technical people fairly.

Anyone smart enough to be an engineer - and there are plenty who want to be - is smart enough to not be exploited in that way. And that is why manufacturing died in the UK.

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It's only very recently that I learned how odd the legal status of the City of London is - it's effectively a private corporation that has assumed the functions of a local authority. It is also the only place in the UK where businesses get to vote - businesses have 24,000 votes and actual residents only have 8,000 votes.

The actual amount of money controlled by the City of London Corporation isn't public either - e.g. there is the "City Cash" fund.

http://en.wikipedia.org/wiki/City_of_London_Corporation

My favourite bit of City trivia is that they have an official representative at Parliament, who gets to sit opposite the speaker - the wonderfully named Remembrancer.

[Edit: For some highly entertaining, if slightly paranoid, ranting about the City and the evils of offshore finance I can recommend "Treasure Islands" by Nicholas Shaxson - http://treasureislands.org/]

The UK is weird when you start looking at "constitutional issues" (since it doesn't really have one). There are lots of "technicalities" which aren't true in practice. Like technically it has a state religion (Church of England), however it's quite secular as a country compared to many others. Technically the Queen has to approve and sign any law, but it's a rubber stamp, she can't refuse to sign an act. Technically Parliament can pass just about any law "that's not naturally impossible" (checks and balances? what's that?), but there are laws and other treaties, and the judges have some power etc.

The monarch can refuse to sign legislation. However the refusal to sign would trigger the dismantling of the monarchy plunging the UK into a deep constitutional crisis not seen since Oliver Cromwell.

And while technically the House of Commons can pass just about any law it wants, the House of Lords generally acts as a counterweight to reign in worst of the Commons. Usually if its not in the governments manifesto and the bill gets kicked back to the Commons then by convention its usually kicked into the long grass unless the changes proposed by the Lords are acceptable.

Of course the Commons could invoke the Parliament Act to push through legislation it generally only does so in rare circumstances (a handful over the last century). However any attempt to do this over anything other than a firm manifesto pledge would likely again plunge the UK into said constitutional crisis.

So the checks and balances in the UK system come from the fact none of parties involved wants to deal with the mess that would result if they didn't follow prior convention.

There's also the EU, which (particularly with the EU Bill of Human Rights) acts more and more as a reasonably sane constitution for the UK.

EU Bill of Human Rights

Don't you mean "Charter of Fundamental Rights of the European Union"?

> it's a rubber stamp, she can't refuse to sign an act

Funny - in Australia and New Zealand we have Governors General to represent the Queen, and they're also given the final say on whether a law is passed. In New Zealand the people I've talked to have considered it purely ceremonial, but in Australia 1975 that viewpoint was refuted when the governor general dissolved the parliament.

See http://en.wikipedia.org/wiki/John_Kerr_(governor-general) for more.

Well technically the Monarch and Parliament have disagreed in the past, but there was a civil war over it (Parliament won). So it's tricky how they would settle it now. Though Parliament (in UK) has the right to depose the monarch and get someone else in (Glorious Revolution, where they got rid of the Catholics), so if the queen refused to sign a law, they'd get someone else in.

"Church of England" - there is a hint in the name there, it is most certainly not a UK-wide state church.

Well it gets tricky here. The Queen is Supreme Governor of the Church of England, and the head of state of the UK (the Queen/King) has to take an oath to defend & uphold it (i.e. no catholics allowed to be monarch), though they are changing that.

There is also a Church of Ireland (which was disestablished as the offical religion of Ireland (which was in the UK) in 1870ish), and Church in Wales. Scotland has sorta it's own church (think it's a slight different variant) which it has a right to exist due to the Act of Union of 170x.

So it's all a bit complicated and depending on how you define "UK" and "UKwide"

I think the members of the Church of Scotland would object rather strongly to being described as a "slight different variant":

http://en.wikipedia.org/wiki/Church_of_Scotland

NB Although I've always been an atheist, I grew up in a small community in the North of Scotland dominated by the Kirk and it's more zealous offshoots. If you've seen Lars von Triers "Breaking the Waves" then you'll get the idea.... :-)

This really is the biggest non-story of all time, being that virtually no-one actually lives in the City, and the decisions that the Corporation make relate mostly to boring municipal stuff.

I stopped reading Reddit about the time the entirety of r/uk was threatening to occupy twitter or something about this. Please don't bring it here too.

The City (where managers are so well paid that they don't feel threatened) pay technical people fairly

Another reason why The City might pay higher: Since there is so much money at stake/to be made, and since it's so compeditive, and rewards can be gotten so quickly (you could make millions in one year, no need to wait for things to pay off) that it would be foolish for a upper class toff to sit on their hands and not hire the bright young commoner.

It could be that the traditionalist companies probably missed out on a lot of good techies, and hence weren't able to compete and were marginalised by companies who did hire based on merit, not class.

Capitalism at work for our labour.

I agree. When I left my job as a games developer for a gig in the City my salary doubled. I had zero experience in financial software and about 5 years as a professional game developer. In that year I was the third developer leaving that studio for the City. The work was less interesting, but I went from living like a student to having enough income to live independently in London while saving enough to start my own business. The only software jobs in the UK that approach the US in salary terms are in the City.

> The only software jobs in the UK that approach the US in salary terms are in the City.

You can find considerably more interesting contract work outside the City that pays the same as a salaried role in the City - worth considering if you don't mind a little uncertainty, don't want to work overtime, and want to be able to switch around whenever things get dull...

Hi, any examples / places to look for these?

I always used to use JobServe, which allows you to search for contract roles specifically. Also tell recruiters you're interested in contract roles.

I'd be curious about City vs Wall Street salaries for engineers. Even in the US they are paid more than the vast majority of other programmers. I wouldn't be so proud of the financial sector paying engineers fair wages, because the bottom line is it's crumbs to them. They are skimming more cream off the economy without producing anything tangible than anyone else, so they can afford to pay above market to the privileged few. It's not a scalable model for increasing average salaries though.

The UK (and Europe) really needs to figure that out. I was able to move to London because I was moving from SV and I got a cost of living increase on top of my US market salary. If I was born here and forced to accept London market salaries I would be looking for my ticket out of here ASAP. As technology and mobility increases it's going to be increasingly important to economies to retain talent, something which I believe is obscured for the super rich who make money by arbitrage highly abstracted from the value in the base economy.

It's not "above market"; that's the point. Why shouldn't engineers be paid as well as doctors, lawyers, accountants, etc? What The City pays is what all should pay.

Engineering died in the UK because the management class can't tell the difference between a professional mechanical engineer and a car mechanic (not that the latter isn't a skilled worker). In the rest of the world "Engineer" is a meaningful, exclusive title.

Yep, reminds me of a great quote: "If you're having trouble hiring, you are by definition offering below market rates".

Which is true in a perfectly efficient market, with perfect information, interchangeable commodities, low search costs.

Many people complaining about hiring trouble are complaining about high search cost.

Most software companies that hire now could solve their problem by offering more money. More people will hear about your job the more above average your pay is. The higher your pay above average is, the easier it is to entice people to move (i.e. you widen your pool of potential people to include people who already have a job). If you pay more, you can make up for any disadvantages in your workplace, from boring dull work, to "you're not a sexy workplace like Google".

The lesson is that companies are strugglying because they aren't offering enough money. Ergo, if you offer more money, you struggle less.

Market rates are not what people "should" be paid. It's what they are paid.

How is a consumer web product any more tangible than a financial services web product ?

If you're building e-trade that's tangible, but the majority of engineers in finance are building internal tools to assist in finding arbitrage opportunities for the firms they work for.

I don't think you realize how complex the software in the financial industry is. Finance is probably the second most software driven industry in the world after the software industry itself.

Only a tiny percentage of developers in the financial world are working on arbitrage, the average bank probably has more developers working on compliance software than arbitrage software. A vast majority of software development work at most banks is infrastructure (integration between systems, data feeds, settlement, etc.) which supports the day-to-day operations.

You're right, I'm painting with too wide a brush. My main problem is with investment banks who make the profits while the taxpayers take the risk. It really has nothing to do with tangible or not.

I just love the fact that the Raspberry Pi isn't about money at this stage - it's a philanthropic initiative designed to help the world progress. Ultimately it gives computer access to far more people who will benefit economically in the long run

We can't all be rich, there aren't enough resources. We can all be moderately well off IMO (but we have to address population with vigour) and the rich dont want to stop being privileged.

I doubt this has anything to do with the "old class system", because you can see this pattern anywhere in Western culture.

Or maybe all of western culture grew out of the 'old class system' (hint: it did).

Which means that either

1) The free market is not efficient

2) There is some hidden benefit to overpaying clueless PHBs

I'm genuinely curious about this, actually...

Have you seen this? It actually identifies the role of the "clueless" in organisations quite well:

http://www.ribbonfarm.com/2009/10/07/the-gervais-principle-o...

Of course the free market isn't efficient in hiring. Companies do everything they can to hide salaries and, for whatever reason, the culture is such that people generally won't discuss it either.

Imagine if everything you ever bought worked this way. You want some eggs? You'll need to go in the store managers office, he'll make an offer and you can accept it or negotiate. You might not even get the eggs. Once you do, you're afraid to tell anyone else how much they cost. How efficient would that market be?

That's because salaries are not just about economics. They are also a proxy for "what is my status in society?" They are not just another type of eggs, so to speak.

There is a similar thing going on with sex. The difference between a back rub and rub&tug isn't just the target location, it's also the associated taboos and stigmas.

(Circuit IV, for those of you who've read Prometheus Rising...)

I find this argument weak as an "in favor" argument. How much we pay for things is also a status proxy ("You got that for how much? How much did I pay? Hrm, I don't remember...."). And we simply chose it to be this way. We could just as easily insist on transparency so that less people get ripped off.

The real issue is that, bizarrely, workers buy into silly fantasies about "family" etc., instead of realizing that selling your time for a wage is a market action and must be treated as such.

Or that there is nor a free market in operation in these places/industries.

And hence assuming that a free market is more efficient, that you can make more money by trying to make the market more free-er (i.e. hire based on merit, not class, etc.).

Source? Do you have any actual evidence that say the ratio of profit per employee to average salaries is lower at banks than at engineering firms?

Simply paying more isn't the same as not being exploitative, even if it does make you feel better about yourself. I suppose it might make sense to consider the wider picture too, like how much of that increased income is produced by more fully exploiting other laborers.

Can you please define what exploitative means? Is there a split of profit between labor and capital that is universally accepted as such?

http://en.wikipedia.org/wiki/Exploitation#Theories

http://en.wikipedia.org/wiki/Surplus_labour#Surplus_labour_a...

"Exploitation occurs when those appropriating surplus labour — whether in the form of surplus-value, surplus product or direct surplus labour — are different than those performing surplus labour..."

There is no universal definition exactly but they share certain elements. In particular exploitation is the result of a power inequality between the laborer and the exploiter.

The question is not simply about the split of profits between capital investors and laborers. (Since capital is the accumulation of surplus labor, it's already exploitative.) The original act of exploitation it's self occurs much earlier. When you do not receive renumeration equal in value to that of your surplus labor.

Putting real numbers to those values is hard and I don't really have a satisfying answer to give you. You might find Elinior Ostroms work interesting though. http://en.wikipedia.org/wiki/Elinor_Ostrom

Umm..ok. So this is just plain Marxism.

So - if entrepreneurs give away all surplus value to their employees, what motivation do they have to start businesses?

Have you read "The myth of Britain's manufacturing decline"?

http://www.theregister.co.uk/2010/02/22/manufacturing_figure...

Interesting that there is a dip in the graph around the time I graduated!

But, are these engineers being paid proportionally to the value they create? That is the acid test. The class system works both ways; people being held down are ingrained to believe that that is their station in life.

Pay is determined by supply and demand, not by a cabal of fat cat plutocrats agreeing how much to dole out to different positions. The idea that people be paid "proportionally to the value they create" is an obsolete Marxist idea. Check out the "Marginal Revolution".

Manufacturing actually died in the UK because of the unions. Workers became greedy, and unproductive. They were unable to compete with other countries, and instead staged big endless strikes demanding ever rising salaries, better working conditions etc - which made them even more uncompetitive with emerging countries.

You can either have great working conditions and pay, or a good manufacturing industry. Can't have both. Some other poorer country will just treat their workers worse, and so be more productive.

(I'm reading "Thatcher - the downing street years" at the moment - a great read).

"You can either have great working conditions and pay, or a good manufacturing industry."

Someone needs to explain this to the Germans then.

The German pay for factory workers isn't so great, by the way. Income structure is more flat in Scandinavia, for instance; compared to Sweden and Finland, Germany has cheap factory labor cost.

However, the main problem with British industries and collapse of some of them in 1970's was unionisation and political fighting. This included even outright sabotage, and of course abysmal build quality. My uncle had a Morris Marina, my father a Sunbeam Avenger. Never again a British car. British workers are OK as long as their overlords are Japanese or German.

UK manufacturing value as such is not so bad, after all. The curve looks very much like any other Western country. See http://management.curiouscatblog.net/images/curiouscat_top_m...

The only major country that took a significant dip recently is Japan.

Compared to Sweden and Finland, EVERYWHERE is cheap!

This is a valid point but at the same time - can every country make a lot of money selling extremely high end luxury goods? It seems to me (but I'm very open to information that would change this view) that Germany occupies a rather special position that doesn't scale out world-wide.

> can every country make a lot of money selling extremely high end luxury goods?

It seems to be working well for Apple...

In any case, the biggest car company in Germany is VW, and I wouldn't consider them a "luxury" car manufacturer. And most of the Mittelstand in Germany are companies that are not household names, but are very successful in their particular industrial niches.

Is there such a thing as a "position" that scales out world-wide?

Just as every individual is unique in its skills, experience, available resources and location, so is each country. Surely China's cheap workforce cannot be replicated in Europe or the U.S. and China's biggest problem will be their own middle-class which gets richer, so you can clearly see that a cheap workforce is not sustainable in a growing economy.

Can the world replicate Silicon Valley or Hollywood? Maybe, maybe not, but surely a lot of effort is required and there are also cultural issues that makes this hard. Failure is accepted as a sign of progress in Silicon Valley, but in Japan it's unacceptable.

The way to grow is to rely on your core strengths and make your weaknesses obsolete. So for example if companies move to China for cheap labor, then pay engineers to build better robots, a strategy which in the long run can yield better and more efficient factories.

I personally don't associated Germany with luxury goods (not in the same way as Italy or Switzerland) but I do associated it with very high quality engineering.

Koreans as well

The manufacturing problem in any first world country has the same problem, if anything USA has been the last to have the problem because they kept cheap workers cheaper for longer.

Look at Germany, they have both but that's partly the vertical companies being ethical and patriotic.

In the case of Germany, they did the smart thing of promoting their products as "High Quality". Even today, German manufactured goods command a premium in the market (automobiles, power-tools etc). The British had an excellent legacy of quality engineering, I guess they have squandered it. (Although not related to manufacturing, I am reminded of a quote about British Civil Engineering I had read that said that "Americans build for 50-100 years, but the British build forever". This is quite true in India; a lot of the infrastructure laid down by the British is still in use)

EDIT: In responses asking for examples, see http://en.wikipedia.org/wiki/History_of_Mumbai#City_developm... . The British were responsible for merging the many Islands of Mumbai to get what it is today. Also, the pipelines supplying fresh water to Mumbai were built by the British and are being augmented only in the last decade or so.

> This is quite true in India; a lot of the infrastructure laid down by the British is still in use

I think that says more about India than it does about British engineering.

I think you'd have to demonstrate commensurate projects taking place after the Brits have left to make your point

(fyi I'm neither :)

Indian railways is one of the third largest employers in the world (the Chinese Army and the UK National Health Service are the other two) and yet they are well known for being bloody awful.

EDIT: Forgot to add:

The engineering might be good, but the middle management was often really poor and the build quality of mass-produced items was usually sub-optimal.

Combined with post-war poverty here and post-war subsidies there (Japan) the UK had a weird combination of factors.

This is quite true in India; a lot of the infrastructure laid down by the British is still in use

How much of the continued re-use is due to it being so superior, or the government being so cash poor that they can't pay for any replacements?

They can pay for nuclear weapons, aircraft carriers and a space programme; India is not a poor country.

There are loads of countries that squander money on military and things like that, while people starve, or the infastructure falls apart.

Possibly the Indian government doesn't consider railways to be as sexy as those things.

Why does the UK give India £295m a year in aid?

http://www.bbc.co.uk/news/magazine-12607537

I like the way you state this as incontrovertible proof + openly admit you are reading an overtly right-wing book. I wonder whether this is a troll...

All I shall say is a. I think you'll find it's more complicated than that, and b. look at the data.

"openly admit you are reading an overtly right-wing book."

It's called an autobiography.

I've heard the left wing excuses and arguments and find them thoroughly unconvincing.

> b. look at the data.

I have.

I have a policy of not arguing online any more as it tends to lead nowhere, so this will be my last response on this (I don't mean to be patronising here, just stating my position).

It's a autobiography by a right-wing leader, so if you talk about subject X then reference said book, it's likely that opinion will be right-wing, which was my point.

Anyway, I didn't mean any offence, and I don't want to get embroiled in a political argument, rather wanted to highlight that.

I agree @ arguing online.

For what it's worth, the book isn't really filled with opinions, more than it's filled with facts from the time.

eg "We were spending X on British Steel, and the Unions wanted us to spend Y, wanted pay raises of Z, despite falling productivity" etc.

It was a mistake for me to include the book I was currently reading as it instantly isolates half the political spectrum unfortunately.

UK Manufacturing died because of the decision by the Thatcher government to privatize previously nationalized industries and abandoning the policy of full employment, happily accepting 2-3 million unemployed if it meant cheaper goods and services in the short term.

The unions certainly didn't help their cause, but it took two to tango to create the mess that is the UK economy.

Read the book (Or some other facts from the time).

She had to privatise industries because they became ridiculously uncompetitive and expensive to run.

During the previous socialist government the number of public sector workers increased drastically.

British steel was haemorrhaging money. And the unions response? Demand pay increases and strike. Same with the coal industry.

Would you rather she kept us paying billions in ever increasing public sector wage demands?

"Full employment" should not be a policy. You don't spend public money employing unproductive workers in useless public sector jobs just for the hell of it.

Full employment is something that happens naturally when individuals take responsibility for themselves.

The UK economy is a mess because of drastic overspending by socialist governments. Something we're having to put right (again). Shame the lessons of the 70s/80s weren't learnt.

FYI I actually lived through the Thatcher years so witnessed first hand the effects of her policies. I lived in one of the communities that she destroyed through her policies of privatization (enriching her supporters in the process) leaving thousands of workers with no future employment prospects and very little hope as the private sector having made its money promptly left town and did not deliver any of the promised new jobs.

(I agree that the actions of the unions in 70s are also to the blame, but a better approach would have been to engage the unions and slowly transition to better balance of public and private sector industries rather than the union busting and throwing the baby out with the bathwater that MacGregor and Thatcher did)

In answer to your question would I rather pay billions in the cost of benefits to support people being unemployed or billions keeping people working in nationalized industries or the public sector ? At least with the latter you are getting something back for your money rather than people sitting on their arse all day watching daytime TV.

I lived through it too.

I fundamentally believe that it is NOT and should not be the task of the government to "create" jobs.

We should toughen up benefits, which the current government is already doing, to ensure people out of work don't just sit on their arses all day.

You cannot do what the past socialist governments have done - create tons of unnecessary public sector jobs paid for by debt. That is unfair to everyone and just has to be paid for later.

I hope you realise that regurgitating from what's obviously going to be a right-wing book is only half the story.

For example there was a discussion that I half caught on Radio 4 this very morning that claimed the death of manufacturing in the UK is mainly due to the government totally failing to invest in R&D for the last 15 years or so.

I think the truth is probably somewhat more complex and a combination of a lot of factors.

Also find people who were around in the Thatcher days, you'll find a lot of people who either despise her or love her, the book will be biased.

"the death of manufacturing in the UK is mainly due to the government totally failing to invest in R&D for the last 15 years or so."

Interesting. Why is it the government's obligation to invest in R&D (of manufacturing?), surely that's the responsibility of the manufacturers themselves?

They problem is that they don't, they'll take the low-risk route every time.

The debate included anecdotes saying that China, Germany and America have been pumping %-wise much higher amounts into R&D (or schemes to 'encourage' it) through their governments compared to the UK.

To a socialist it's the governments obligation to do everything.

It's an autobiography. It's biased.

This doesn't make the facts she cites, or arguments she presents any less compelling.

It's not really that far fetched to say that "most of our stuff is made in countries with abundant cheap labour".

Investing in R&D would not have solved the fundamental issue - workers in the UK are expensive. Workers in poor countries are cheap.

That's not a fundamental issue unless you've redefined fundamental, you need to learn more about Economics and Manufacturing.

Yes it was a combination of factors, but most of them were class-based.

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