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Comment by verbify | Hacker News Reader

I spot checked some of this and from what I can find, the median salary in London is about $12k more than Mississippi, and the median house price in London is about $100k less than California.

Bear in mind that obviously the mean salary in London is going to be far higher than the median (the finance industry will skew it), while I'm not sure that's as extreme as Mississippi. Additionally median salaries reflect a lot of service jobs and similar labour. Dubai has a lower median wage than either London or Mississippi, but people don't think of it as economically broken.

Comparing California (an extremely large state that I presume has cheaper housing outside major urban areas) to a city seems a bit of a poor comparison.

I don't disagree that the UK has high energy costs.

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If you’re trying to do a rebuttal, saying that wages are slightly higher than Mississippi and house prices are slightly lower than Cali doesn’t refute anything, it just serves to make the example more extreme and concrete. Look at house prices in Mississippi in relation to their income and then compare the same ratio for Cali and for London.

Also, taxes?

tax numbers are irrelevant except as part of a takehome pay calculation.

at the very least, pretending that health insurance isnt another tax is a common way to derail these discussions.

That’s right if the quote is net of income tax, but that wasn’t clear. While we’re on the subject we should include the 20% VAT (delta 5-10% sales tax in the states) which is the most regressive tax on the poor there is.

No vat on the majority of spending - from rent to food.

But buy a £50k Rolex and yes there is vat.

Roughly the same with sales tax, it's just 1/3rd of that number.

> But buy a £50k Rolex and yes there is vat.

This is wildly ignorant of how less fortunate people live. They are hit with VAT on many daily expenses. Ignoring that fact and "tsk tsk"ing them for being frivolous is the [British] way.

> the European way

There we go, the European monolith strikes again. Because the UK and Germany and Spain and Italy and Poland and Finland and and and are just so alike.

For purposes of this discussion, I believe VAT is roughly uniform across the EU + UK and some other European jurisdictions. Correct me if I'm wrong, but I did update the comment to limit the critique to the UK.

Many daily expenses, yes. Before I left the UK, IIRC there was some campaign about tampons.

But "majority" just means half.

Between "The standard rate of VAT is 20 per cent, with around half of household expenditure subject to this rate." - https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/...

And Figure 10.2 on page 6 of https://researchbriefings.files.parliament.uk/documents/SN05...

I'd say it's very close to even odds that the other poster is correct to say "No vat on the majority of spending".

I'd also say that VAT should be reduced to encourage domestic spending and local growth, but I did leave the country for various reasons that can be simplified as "I do not expect the UK government to do the right thing".

Tampons, toothpaste, soap. Yes it’s all crazy, but that’s maybe £5 a week in vat.

Compare to £250 a week in rent and £100 a week in food and it’s peanuts.

Yes, but you're not contradicting anything here. £5/week in VAT is what I'd expect roughly bottom 5% by income to pay, because of limited disposable income.

If you eat in a restaurant, IIRC that's VAT-rated. A meal for two coming to £20? That's £3.33 of VAT you just paid. Poorest 5% can't afford to eat out basically at all, but it quickly adds up the moment you can start affording that.

I'm not sure why we're doing states vs cities. Jackson (the largest city in Mississippi) has a population of 150k. If I find a non-commuter belt town in the UK with a size of 150k, then the house prices will be dramatically lower. An analysis of London house prices needs to take into account that major urban areas in general command a premium (for reasons other than the ability to earn more).

If you compare SF or LA to London, then you'll find:

City | Median Wage | Median House Price | Ratio SF | 104k | $1.5m | 14.42 London | 67k | $890k | 13.28 LA | 73k | $1.1m | 15.07

London ends up being slightly more affordable despite lower salaries.

The whole analogy was a bit meaningless - it wasn't an apples to apples comparison. The writer mixed geographic and demographic scales to make a point that could just as well be about the unaffordability of large cities.

Fixed table formatting:

    City   | Median Wage | Median House Price | Ratio
    SF     | 104k        | $1.5m              | 14.42
    London |  67k        | $890k              | 13.28
    LA     |  73k        | $1.1m              | 15.07

Dubai is absolutely economically broken lol. The city was built on cheap foreign slave labor. And the luxurious amenities of the city are only for the wealthy royal and foreigners. Their main export besides oil is the illusion of a thriving metropolis

The example I like to use to demonstrate how broken labor vs. service costs are in the UAE is to compare the price of a Big Mac meal to the price of a standard manual car wash (closer to detailing tbh).

In the UAE, a Big Mac meal costs approximately 35 AED ($10). On the other hand, a manual car wash - approx. 1-2 hours of labor - can cost you around 20 AED.

In other words, you could get almost two manual car washes for the price of a Big Mac.

Can you elaborate? I would have thought the main driver for the price of a service is the labor?

You essentially have two stratums of society:

(1) the middle class (and above) who have money to spend on services

(2) the migrant working class, the bulk of whom send every last extra penny back home as remittances to support family

The second class of people are not considered as a market for the majority of services in the UAE. In the case of food, when they do eat out, they frequent traditional, low cost/quality establishments.

As for why a Big Mac costs that much, labor definitely doesn’t have much to do with it. My impression is that prices continued to get pushed up as long as sales didn’t take a hit, which means it’s mostly pure profit.

Keep in mind that the median salary isn’t that high. Without looking it up, I would guess it’s approx $25k USD/year, but I haven’t lived there in a while.

You can probably get that here in the US near a high school during team sports donation times.

Not a great car wash but probably $5-10 on the low end.

One should be uncomfortable the Arab States are doing so well. They have no democracy but seem to be thriving. Not expected post 9/11 imo.

Why should one feel uncomfortable?

To the extent that a dictatorship is doing well, it is evidence against the idea that democracy is the natural way to have a good economy.

That said, I don't think those states are doing *well enough* to justify such a fear. What we're looking at from the outside are basically the promo reels from a version of Disney Land made for people whose childhood dream wasn't to be a princess or a knight, but a CEO with a Lambo; what the kids see when they visit Disney has little in common with the effort needed to present the park.

AKA the most sensible economic model for Dubai. It's a nice enough metropolis for the desert, entices enough high end talent to live there to supplement frankly undereducated population a few generations away from nomads, and locals are comfy. What else they going to do with oil money in the desert.

They're just arbitraging cheap labour in your face instead of some farm field or factory overseas. For resource to local population ratio, it's supremely optimized - cheap migrant workforce does all the shit job locals don't want to do, don't have the numbers to do, without need for onerous social safety net of citizenship.

It's economically "fine", as in as "fine" as can be trying to pivot desert city from oil. It's morally broken because labours occasionally be slaves, even though largely everyone wins. UAE gets cheap labour, labour countries get remittance, labourers get life changing pay.

Like west already does this shit in some sectors (agri) and get cheap calories, UAE can't supply enough labour in all sectors and get cheap everything.

> Dubai has a lower median wage than either London or Mississippi, but people don't think of it as economically broken.

Dubai isn’t sold as a place to belong long-term. Most people move there knowing it’s temporary. The Bay Area is drifting in the same direction too with the increased cost of living around here. (but the same could be said about most big cities, maybe?)

If this was meant to be a rebuttal, it wasn’t.

Compare the housing costs of London to the housing costs of San Francisco and then swap out those Bay Area salaries with your “slightly above Mississippi” wages and you’ll see why London looks so broken to people used to LA/SF/NY.

The median home price in San Francisco is $1.5m. In London it's $893,000. These are not comparable places.

San Francisco is much much more expensive, I'm not sure why that means London is "broken". It's just got a different economic dynamic.

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