Why Is Britain Poor?
edwest.co.uk
edwest.co.uk
"When my parents were born, Britain had been the richest country in Europe for a century". No questions as to why Britain was the richest country. No mention of India.
The UK and Europe became much richer thanks to industrialisation, etc while others stagnated in their "old" world.
In fact, one reason for the current situation in the UK is that most of those old industries which were the foundation of the country's prosperity disappeared but were not always replaced.
You just wait.
The boot of the British crown is stomping down on their white subjects as well.
I think they are just more used to it
They would not have fared better in that respect without colonisation/aggression when you look at the political and social state of India and China at the time, and they would probably have stayed the way they were and not evolved. The very obvious example is China that was basically "punched" into modernising (including by Japan that had modernised earlier). But the same goes for India which might not even exist as a country today without the reaction to British invasion.
Japan is actually a good example of that modernisation. Do you think this would have happened endemically in the Indian subcontinent?
Japan is quite unique in that respect as it happened very early and profoundly to the point it became an "equal" to Western powers in the early 20th century (which also demonstrates that it was possible to achieve)
This is where I disagree. Because it very much was a loss of wealth [0]. As for growth, would the East India Company or the British empire after it allow India to grow to a degree they could challenge them or gain independence? We know that they didn't, and we know they fought to suppress rebellions, pit local factions against each other, and hold on to power over the region for as long as possible.
> They would not have fared better in that respect without colonisation/aggression when you look at the political and social state of India and China at the time, and they would probably have stayed the way they were and not evolved.
Maybe, maybe not. It's hard to know the counterfactual. But what we do know is that they were not "modernized" by Britain out of the goodness of their heart. And it was not done in a way that had the well being of Indians as the primary concern, but that of Britain.
[0]: https://www.aljazeera.com/opinions/2018/12/19/how-britain-st...
For a small island off continental Europe to control the whole of the Indian subcontinent it means a huge gap in strength and development. A bit like when the Romans conquered the Mediterranean and Europe. This needs not hurt feelings or make one look for a narrative to blame others. Instead, it should trigger change. It happened in Japan, China, and India which is now developing fast and will soon be a top global power.
India was certainly not one of the top two richest countries in the world before the British Empire. Maybe some ideological academics played with numbers until they found a way to claim that, but reality would disagree. War is romanticised in our culture as being about bravery, heroics and the justice of your cause, but actual analysis of the history of war tells a fairly depressing story: the countries with the bigger economies win. Britain established a global empire because it was much wealthier than the places it colonized. The Mughal Empire was an essentially agrarian / medieval society with little technological innovation and industry. It moved things around using roads. The British Empire was industrial. It moved things around using trains, canals and ships. That's why it was the British colonizing India and not the other way around.
No, but perhaps you have heard of the opium wars.
> what does "trillions of wealth" even mean? Trillions of what? Pounds? Rupees?
Literal gold most of the time: https://www.aljazeera.com/opinions/2018/12/19/how-britain-st...
We aren't arguing over whether or not the British won. We're arguing over how they won (not just be outcompeting others, but by subjugating them) and what they won.
London banking and to some extent every other industry in London is basically carrying the entire country.
What is Mississippi if you remove 20% of it's population that lives in high-density urban areas?
And it's not true for Mississippi: https://mdes.ms.gov/media/8639/pci.pdf
http://www.usa.com/rank/mississippi-state--population-densit...
Relatively easy to disprove. The misinformation just fits the narrative better.
Now I'm not saying that finance isn't an important industry for us, but it could be anywhere. It's only inertia that keeps it in London. If it left, London would be the same as any other county.
But the average Londoner isn't a banker. They aren't obscenely rich. Any wage benefit is lost to higher costs. Unless you're a property owner, you're no better off than somebody outside London.
Not at all!
Over a decade in banking, I have witnessed this argument resurface time and again in the context of the US. Indeed, it's true that two of the nation's largest banks, Wells Fargo and Bank of America, are headquartered in Charlotte. Hedge funds predominantly anchor themselves in Greenwich. GS has relocated its back-office operations to Salt Lake City. JPMorgan conducts risk analytics out of Columbus. CC processing is entirely Wilmington, commodities desk entirely Chicago.
However, despite these geographic shifts in various financial functions, the heart of the financial world remains unmistakably tethered to Wall Street. For the foreseeable future, the nexus of global finance will continue to pulse through New York City. To suggest otherwise is a fundamental misreading of the industry's deeply entrenched culture. Just as in London, where finance is inextricably woven into the fabric of the city, New York represents more than just a place—it is the embodiment of finance itself. The gravitational center of this world does not and will not shift to places like Utah, Ohio, Delaware or North Carolina. It is, and will remain, rooted in global financial hubs such as New York, London, Mumbai, and Hong Kong. To imagine otherwise is an exercise in futility.
Well give them a reason to overcome that inertia (like Brexit and its regulatory mismatches) and they flee. New Financial's estimate is 10% of the sector has gone, mostly to Dublin, Frankfurt and Paris. And there's definitely a cost-driven pull towards the north of the UK too. Insurance more than banking has diversified.
But that's slightly beside the point that, these are rich companies, and a few rich people. London is not Monaco, Geneva. Just 2% of London's population are liquid-millionaires (vs 35%, 15%). Other UK cities can probably beat it millionaires per capita if that's what's important.
As soon as you look at median salaries, London does attract a premium, but £5k does not offset the insane costs.
Building out the monetary and trade networks they did enabled them to buy their goods where the labor was a lot cheaper (and more abundant) than it was in Britain.
Same reason Americans are poor -- ever since Wilson we've barely been effectively a separate country in the first place. The only big difference, and why Americans aren't quite as poor on average, is that America still has natural resources. Britain's got some oil, but not a ton else -- their resources previously came from their colonies.
Of course even when we can do it, the land owners extract all the value. While the working man paid for crossrail with a little input from businesses which benefited, the people that really benefited were London land owners, who saw their land near crossrail stations balloon in value even more.
The UK is actually much more unionised than France is: 22% vs 10%.
The difference is a culture of strikes, especially in public services and state-owned copanies, combined with a very high protection for strike action in France: The right to strike is actually in the French Constitution and requires neither recognised union nor ballot, but technically only to find another employee to agree with you.
On the other hand, if you try to kidnap your boss, people will 100% call the cops, and anyone involved would be looking at sentences including multiple years in prison.
In some stores in some cities, you can get away with small-value shoplifting without anyone really batting an eye, while if you try to steal a TV from Best Buy near me, you are going to get tackled.
I'm curious what one might search to learn more about the range of illegal behaviors that are actually tolerated in any given society.
> Because only the best paid people can afford to move to the most prosperous cities, there is no longer general migration across the economic spectrum, as there was in the nineteenth century when it was the poorest people who were most likely to move to find better work. Today, this has created a situation where only the most gifted and educated people can afford to move to richer cities and stay there. Their less well-off peers are quite literally “left behind”, and compete with one another over a narrow pool of jobs, driving the wages down even further, making those places feel even more deprived.
Most cities in the US have gotten insanely expensive, primarily due to housing costs. As someone who lives in Austin TX, I've seen it first hand with people in non-tech jobs just concluding that they can have at least an easier quality of life if they move to someplace cheaper.
But Austin also should serve as a glimmer of hope, because since the peak of pandemic-house-price insanity of about early/mid 2022, house prices (and especially rents) have dropped considerably, bucking the national norm. The primary reason is that Austin and surrounding areas built a shit ton of housing (especially multi-family) starting right around 2020, with a lot of that coming online just in the past couple years.
I think it's rare and usually a mistake when one tries to tie so many societal ills to a single cause, but in this case I believe doing everything possible to build a crap load of new housing in desirable areas is the #1 thing to do to fix so many of today's societal problem. Not a "cure-all", and I'm also not saying it's politically easy, but I think it would give the biggest bang-for-the-buck given that so much of are problems today are due to people becoming disillusioned that they can ever really afford a stable, comfortable, "opportunity-providing" residence. I've often said myself I feel lucky to have gotten on the "property train" early in my career, as without the increased equity value in my home I wouldn't be able to afford to buy here now.
This is very different from in the US, where New Yorkers might similarly call anything west of the Hudson River <http://www.hoodedutilitarian.com/wp-content/uploads/2012/12/...> "rural" or "the West", but, generally speaking, wouldn't make the distinction based on a perceived wealth gap. No New Yorker would claim that Dallas or Atlanta or Phoenix or Pittsburgh or Boise is "poor", nor would the residents of those cities concede that NYC is wealthier (as opposed to larger or more glamorous or more exciting). I've made this point elsewhere. Quoting myself <http://np.reddit.com/r/MapPorn/comments/1eymi7/number_of_cit...>:
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Consider the US's 10 largest metro areas <http://en.wikipedia.org/wiki/List_of_United_States_metropoli...>: In order, NYC (~7% of the total US population), LA (~5%), Chicago (3%), DC, San Francisco Bay area, Boston, Philly, Dallas, Miami, and Houston. They comprise one third of the country's population and the list is overall a very balanced one:
* 3 in the Northeast, 1 in the mid-Atlantic, 1 in the Southeast, 1 in the Midwest, 2 in TX, 2 on the West Coast
* 5 in the Sunbelt, 5 not
* 5 on the East Coast, 5 not
* 5 on the East Coast, 2 on the West Coast, 3 in between
Etc., etc.
Now, consider this map of the UK <http://en.wikipedia.org/wiki/United_Kingdom#Demographics> and this list of the largest UK urban areas <https://en.wikipedia.org/wiki/List_of_urban_areas_in_the_Uni...>. Note how, other than London, only one (Southampton/Portsmouth) of the top ten is below the Severn Wash line. Greater London is gigantic, relatively speaking, compared to its US counterparts--13% of the entire country's population (!)--and has no national peers the way LA and Chicago are real rivals to NYC.
This causes a huge imbalance, wherein London 1) sucks up most of the capital and human energy that would otherwise supply cities south of the Severn Wash, and 2) sucks up much of the capital and human energy that would otherwise supply the country north of the Severn Wash. No region of the United States is grossly wealthier or poorer than others to the extent that the Severn Wash in the UK divides the poor north with the wealthy south.
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The previous Conservative government mentioned forming a "Northern Powerhouse" <http://www.thetelegraphandargus.co.uk/news/elections2015/ele...> to help relieve the above imbalance. Devolution can't be only at the home-nation level, though, because England is so much larger than the other three combined. If England wants Scotland to stay in the union, it will have to break itself up for unity's sake. Regional devolution will hopefully give the new states/provinces a chance to compete with Greater London on a more equal footing and, as in other federations around the world, come up with innovative, local-specific solutions to their own issues.
Unfortunately, housing was only ever affordable when the govt built it. It had knock on effects into the private sector too making privately built homes affordable.
But I just dont see people and politicians voting for this.
Of course the private market will, if it still can make a buck. Can it buy land, buy materials, employ builders, sell a completed house, and come out ahead? If yes, then houses will be built by the private market. They may wish they got last year's price for the new house, but if they make money with this year's price, they will still build.
I appreciate that the article is trying to describe a complex topic, and many of the issues described are shared by us here in the US. It does cite different statistics of other nations as comparisons, and calls out that access to jobs, ease of movement, and housing are all things that help make countries wealthy.
Now for the downsides.
I feel like this article maintains a tone throughout that I might describe as "dismissive nationalism." The comparison against France is preceded by a paragraph that, due to the framing, is presented as ludicrous, proceeds to describe all of the things France does better, and then somehow still makes the claim that Britain has "many advantages." Perhaps that's intended in a vacuum, but with how hard it's pushing for private investment (to the extent that it touts all that earlier infrastructure in Britain as "built by a total of 1,116 private companies" and that it describes the State's role as functionally just exercising eminent domain), it's hard to overlook.
And while the underlying paper is discussing foundational, long-term effects, that there isn't a single mention of Brexit in the article feels stark in contrast to the conclusory statement by the paper's authors of "it is vital that Britain should once more have the strength and self-belief of 1939 with which to play its part in the leadership of the free world."
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I'm not an expert in economics (as my critique above might have clued you in), but I do think it's important to be careful in which experts you choose to listen to. I also don't know the biases that this particular publication or the underlying paper subscribe to.
I may try read the Foundations paper (https://ukfoundations.co/ - it's not that long), but if this article is summarizing well and is all, then it feels "too shallow." What's the underlying mechanism that got them to that state? If the proposed solution is "allowing more private investment," then what about all of the social shifts that happened in the meantime? NIMBYism is brought up as "logical" given the incentives at one point, but I'd argue it's fundamentally a social issue, related to a perceived quality of life and a lack of perception of a larger group as being part of "your community."
I digress.
Thanks for sharing the link, and I hope others with more of an economic / politics background might have more fruitful critique.
> What's the underlying mechanism that got them to that state?
It's the people behind the ukfoundations.co site who got Britain to its current state. The site is literally the work of Adam Smith Institute members whose Thatcherite neoliberal policies have dominated the UK since the 70s.
> What's the underlying mechanism that got them to that state?
The Foundations essay discusses that. It's a combination of a big overhang of very socialist regulation from the 1940s, especially related to construction, combined with the lack of a big enough libertarian faction in the right wing party that would fix it. America has a strong Republican movement that pushes for pro-capitalist, pro-freedom outcomes (or did pre Trump), and inter-state competition makes it easier to compare outcomes. The UK had such a government for a while in the 1980s but British society didn't produce enough Thatchers to keep it up and the reforms were never completed. Blair accepted the 80s changes were necessary but didn't continue, and after Blair stepped down Labour shifted to the left (reverting to its historical mean). Cameron took advantage by steering the Conservative Party towards being continuity New Labour i.e. a center left party. They found that maintaining and doubling down on super strict building regs satisfied both the left wing greens and the right wing pensioners/house flippers, making it into a winning electoral strategy. They didn't have enough people making the long term arguments about the economic damage of that strategy, and indeed the Conservatives set things up to suppress their own right wing in the belief that this would yield bigger victories. Everything continued to drift ever more listlessly to the left until their activists, funders and ultimately voters basically gave up on them. Labour won more or less by default (not because they became more popular) and is now acting much like they did in the 1970s, so it looks like history travels in a loop and things will get worse for Britain before they get better, unfortunately.
> NIMBYism is brought up as "logical" given the incentives at one point, but I'd argue it's fundamentally a social issue
It's mostly not a social issue but financial. The USA has unusually sophisticated investing culture, it's common for people to understand and engage in stock trading there. In the UK it's normal for people's only investment to be their houses, and the social expectation that house prices always rise is abnormally strong. Therefore, anything that could lower house prices became political death -> NIMBYism.
Republican Party definitely ain’t pro-freedom or pro-life.
I do think it's potentially fair to say that some of those effects aren't relevant for this particular article or discussion, due to the recency. The movement around it didn't arise out of nothing, after all.
The expectation of long term effects comes, as far as I know, only from the same people who were wrong last time and are trying to save face by making new predictions with effectively unfalsifiable timelines.
Now watch as China scoops up more land to develop another 1000 miles of HSR...
Democracy's greatest failing is that it does not favor self solutions over public rigamarole. China isn't why Americans are ignorant, confused, and not the fountainhead of solutions.
We have lost our way, turn from your incredulity to the path of the undeceiver.
https://web.archive.org/web/20240923160828/https://www.edwes...
Britain has roughly the same population as France, but France is approx 5 times the geographical area. This matters wrt building infrastructure.
[edited to make clear the France is a larger country than Britain]
I don't know that this really points in one direction or another. The UK might have more difficulty doing large projects due to being relatively "crowded" and having less free space, but on the other hand it might also benefit from needing to build less total mileage of road and rail, and for amenities which are mostly bound by the travel distance to them being needed in less quantity.
Your point about total mileage of road/rail etc is interesting though isn't that contrary to the point the OP is making - building more stuff makes you richer?
Germany has Community Banks that lend money to local entrepreneurs to make things. UK Banks (highly centralized and Big) only lend money to buy assets.
Lately though I took a look at
https://www.amazon.com/Between-Two-Ages-Americas-Technetroni...
and a conference proceedings about Brzezinski's ideas that came out in the next few years. Partially I wanted to roll my eyes at times because my interests have moved on but something that struck me was an essay by Paul Goodman which reflected a sentiment that was really common at that time to the effect that people were dogpiling into urban areas, that large cities were becoming unmanagable, that the exodus into urban areas had to be stopped, etc. This report was a relatively late one on the topic
https://www.amazon.com/Dispersing-Population-America-Learn-E...
which did not have any 1960s radical positioning but rather saw it is an almost universal political problem that the UK was too concentrated in London, France too concentrated in Paris, etc. All of these countries saw some need to do something about it.
That kind of talk stopped abruptly circa 1980 when we got Reagan and Thatcher and competition between international economic centers seemed too fierce for, say, the UK to give up any competitiveness at all by dispersing its financial sector out of London.
Today the message is overwhelmingly that people are more productive when they live in big cities thus it is an economic necessity for population to concentrate. There's a counternarriative now which is not positioned as a counternarriative that housing has become unaffordable in places with vibrant economies.
As I see it is the old "large cities have become unmanageable" theme that's become crystalized.
Right now it can seem like a political problem (e.g. existing residents, landlords, etc. profit from the current situation) but since growth is prevented through this mechanism there are many other problems we're not seeing (if California was adding as much population as it could could they afford infrastructure investments, could they handle environmental impacts, provision social services, etc.)
The article might as well have tried to explain why all senior citizens have syphilis these days.
The people behind Foundations (and this author, since he's their buddy) are beating the same old drum: deregulation blah blah blah if only we cut the red tape and pave over everything with concrete then we'll all be rich!
This essay is not that "groundbreaking" and their proposed solutions have been tried. We did Thatcherism!
This feels like some right-of-center mirror of "True Communism has Never Been Tried(tm)". If only we deregulate even harder we'll be like America.
When it costs over a billion to build a mile of railway, you do have to wonder about how much red tape there is.
It's easy to overlook how bad the situation was before Thatcher. Ed West has other articles where he talks about the situation in the mid 1970s.
https://www.edwest.co.uk/p/the-worst-year-in-british-politic...
in November 1973 ‘Heath announced his fifth state of emergency in barely four years. Floodlighting and electric advertising were banned; behind the scenes, the government began printing petrol ration cards. As the railwaymen voted to join the miners in pursuit of higher pay, it seemed that Britain was sliding into darkness. Offices were ordered to turn down their thermostats, while the BBC and ITV were banned from broadcasting after 10.30 at night. On New Year’s Day, with fuel supplies running dangerously low, the entire nation went on a three-day working week.’
As the new cabinet went to see the Queen, even the rooms at Buckingham Palace were unheated because of the energy crisis
https://www.edwest.co.uk/p/britain-on-the-brink
The capital had lost a million and a half people since its peak in 1939, and would continue its decline for another decade ... The country as a whole was haemorrhaging people, and in 1975 its population fell for the first time since records began. In the spring of 1974 applications for emigration to Canada went up 65 per cent, while New Zealand even felt compelled to put restrictions on people fleeing the old country.
In 1950 Britain had 25 per cent of the world trade in manufacturing; by 1970 it was barely 10%, half of West Germany’s. Britain was now the second poorest country in the European Economic Community, and Tony Benn remarked that it was ‘heading for development area status in the EEC… with Germany more than twice as rich as we are.’
Robert Moss of the Economist wrote in February 1977. ‘The more I compare Britain with the countries that it still regards as it peers, the more I succumb to the uneasy feeling that [it] is becoming a Third World country.’
Britain had even become a cautionary tale, so that President Gerald Ford warned Americans: ‘It would be tragic for this country if we went down the same path and ended up with the same problems Great Britain has.’
Other European countries have their urban/rural problems - France has the Paris problem like the UK has the London problem, Germany has the East German town problem like Dresden and Leipzig, but Germany at least has Urban transport sorted. (Long distance is falling to bits mind)
When the government doesn't spend, it makes people poorer. It's basic accounting.
The government spends money and then taxes it back, not the other way around.
The point here is tax revenue isn’t a blocker to smart investments in public services… Or at least it shouldn’t be.
Watch this short video about the subject by the late David Graeber https://www.youtube.com/watch?v=LxJW7hl8oqM
And meanwhile in America, we're propped up on debt. Federal debt*. Consumer debt. Thanks to such financial smoke & mirrors, our seats on the Titanic feel wonderful.
Yes, thank gawd we're looking down. Thank gawd we're excessively TikTok'ing. Thank gawd no one can be bothered to ask, "How did we get here?" Thanks gawd we have "leadership" and politicians who don't dare own their role in putting us on the road to nowhere.
* If you didn't catch the Steve Ballmer interview on Jon Stewart last week or so, highly recommended.
The sad thing is that American Corporate Media has gotten so bad I now have to resort to comedians to get insightful interviews and a "main street" perspective on the news.
Honestly, I didn't think Ballmer and Stewart disagreed all that much. Ballmer said, "I've got this data thing" and Jon's attitude was, "Great! But then how do we get off this crazy emotional-based cycle we're on now? Why is the media so shite?"
The idea that the UK should be looking to the USA to envy its (faux) prosperity is a sad sick joke.
The pessimist in me sometimes thinks the Boomers are kicking the can down the road so the worst effects will be felt after they're in the grave.
Yes, tho' perhaps not intentionally per se. At this point, there's simply no incentive for anyone to say "we've got to fix this sooner rather than later." It's easier to be silent and breathe sand. It's easier to push the "the Fed debt don't matter" narrative. It's easier to blame symptoms (i.e., certain political candidates).
Meanwhile, the middle class *is* being hallowed, and more and more are looking for a solution outside the traditional norms because that status quo is intentionally not serving them. The gaslighting is less and less effective.
What could go wrong?
p.s. Let's not forget what happens when The Fed pitches in to keep the gov running, service the debt, etc.
A more accurate title might be "Why is the US so rich?". The answer to this is simply that the US has profound natural resources, and the US did not have to engage in defensive total war during WW2 so all of those resources could be put to an economic purpose for the entire 20th century. The US never had to go through decolonisation because it long ago decided to exterminate the native people instead. Britain's wealth was tied up in far away colonial dominions that understandably wanted to take that wealth with them.
Anyone who has seen more of the world than the US and Europe can appreciate that Britain is not poor under any meaningful definition of the word. It's an economically average medium-sized Western European country.
The article has nothing to do with the US.
> Britain is one of the richest countries on Earth (21st in terms of GDP/capita, and many countries ranked above it are tiny ones). This compares favourably to its most similar neighbour, France (23rd), which also suffered the same economic shocks of WW2 and decolonisation.
And yet, as the article points out, the French populace and infrastructure is doing far better than the UK's.
Everything you point out (decolonization, etc) is as true of the French as it is of the British. Yet, one of the major themes of the article is comparing the UK with France.
Any citations on Britain's wealth being tied up? At least in case of India, it was reverse with Britain extracting wealth out of India for most of its stay.
It is like saying a thief's money is tied up in the house they wanted to robe.