Britain: A Cautionary Tale for America

https://www.noahpinion.blog/p/the-uk-is-a-cautionary-tale-for-the

by barry-cotter • 3 days ago

13 41 3 days ago

Whether or not the Brits need our advice, we need to have our own internal discussion about what’s going on over in the UK and how we can use it to inform our own choices. And although there are still a few things to admire across the pond, the UK mostly now functions as a cautionary tale for the U.S. — yes, despite Trump, and guns, and high health care costs.
Whether you think the UK has been falling behind America economically for a decade or for two decades depends on which set of prices you use to measure living standards. If you use the two countries’ national price indices, the UK has been growing slower than the U.S. since the financial crisis of 2008; if you use PPP prices, as Paul Krugman prefers, the UK’s relative stagnation has come only since Brexit in 2016:

jpfromlondon3• 3 days ago

if you use PPP prices ...

it was still on the uptrend until 2020 when switching off the economy squashed all growth and not just in Britain but other major continental economies too, Germany has actually been in and out of recession multiple times since.

2016 added some turbulence to domestic politics and econ but until then our recovery from the GFC had been fast, occasionally faster than the rest of the G7.

ahartmetz4• 3 days ago

Germany isn't doing great, but these current recessions are low grade. Nothing like mid 90s and mid 2000s, unemployment data: https://www.wsi.de/de/erwerbsarbeit-14617-arbeitslosenquoten...

pjc506• 3 days ago

2020 when switching off the economy squashed all growth

The exception here is the US, again. And what did they do differently? Massive QE and "helicopter money". Anti-austerity worked extremely well for growth, even if the debt went up.

spacedcowboy3• 3 days ago

As someone who moved from the UK, to the US and back to the UK, my money goes a lot further in the UK.

I can afford to not work at all here. With health insurance, property taxes, and general outgoings per month being so much higher in the US (California, at least), there was no way I could retire early over there.

And whereas it's easy to hand-wave away "Trump, the healthcare, guns, ... " in a dismissive sentence, those things have real impact on a society and on the individuals living in that society. There's a reason [1] I moved away from the US, and will never return. Money-über-alles has its downside.

It's also worth noting (since the author brings it up) that the Mississippi comparison is pretty bogus. According to data from the Office for National Statistics and the US Census Bureau, median household wealth in Great Britain is substantially higher (around £300,000, or $403,000)[2] compared to the US ($175,000) [3] and Mississippi ($59,000). GDP and personal wealth are not the same thing.

1: https://news.ycombinator.com/item?id=44217106

2: https://www.ons.gov.uk/peoplepopulationandcommunity/personal...

3: https://www2.census.gov/library/publications/2024/demo/p70br...

pjc506• 3 days ago

there was no way I could retire early over there.

It seems that the UK is becoming the new Portugal (warm retiree destination with stagnant non-retiree economy)

benj111• 3 days ago

and with natural gas now extremely expensive due to the Ukraine war, the UK has been forced to rely on hideously expensive offshore wind power

But the wind is cheaper than gas. Yes you could argue that if we had stuck with coal that would have been cheaper than gas or wind, but the long term threat and the long term most expensive option is clear. Wind and solar gives energy independence, so we aren't reliant on a market that could be turned upside down by one country invading another.

mytailorisrich3• 3 days ago

Even the popular claim that "natural has is extremely expensive due to the Ukraine war" is misleading. In the UK and Europe high prices are by and large the result of policy and in fact high prices is exactly the aim.

ahartmetz4• 3 days ago

In Germany: 0.06 € / kWh was policy, 0.14 € / kWh was mainly Ukraine war. It's currently at about 0.10 € (policy + Ukraine war + Iran war). Taxes are fairly low: 0.0055 € / kWh and the usual 19% VAT.

brooksyd2• 3 days ago

I'm not sure that is true. The reason prices are high in the UK is that the government guarantees specific strike prices to investors to bring investment into new renewable infrastructure. So if someone builds a new offshore windfarm, they are guaranteed a certain return. The underlying strike price is calculated from the cost of natural gas, and therefore the price is being effected by various things, such as the US-Iran war. It is not designed to be a high price, it is just how the government has chosen to attract investment, specifically keeping the underlying price linked to gas.

tim-projects• 3 days ago

Britain and the US are nothing alike in the sense that in Britain, if you are valuable high earning worker you get actively punished for it with heavy and arguable unjust additional taxes. There are real incentives to working less and retiring early in Britain, so that's what most do.

pjc506• 3 days ago

Note on the economics here; why don't we look at the whole picture rather than one or two countries? Clearly America should be top of this list, right? https://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28no...

.. no, that's Monaco. OK, so clearly we should exclude "microstates which are tax havens for billionaires" from the list. Does raise question about whether "excessive financialization of the economy" is actually bad: Monaco is entirely finance and tourism.

We then have to decide whether "finance microstate doesn't count" applies to Ireland and Switzerland. Let's give ourselves the benefit of the doubt and say yes; we're trying to get to a table where USA #1 and UK #2 appears.

So then we get to .. Norway? Not often held up as an economics model, more of a social model. It turns out that being a low population petro-state is also great for GDP. Let's rule those out as well, which takes care of Qatar. Finally we get to the US.

We're then left with only Denmark, Netherlands, Australia, Sweden, Israel (!), Austria, Germany, and Belgium above the UK in the table.

So I would say the lesson is not necessarily US exceptionalism or expensive European gas (which affects half that list, and note Israel is famously almost the only non petrostate in the Middle East), but that the UK is actually doing a lot worse than we realize for idiosyncratic reasons (probably including, but not limited to, Brexit).

Should we look at this table and copy whatever Ireland is doing to have twice our GDP? Would the average Brit recognize that Ireland is twice as rich as the UK? I'm not sure.

(The list of problems in the article is fairly valid, but they're unable to synthetize between "everything is underfunded" + "debt is bad" => the only arithmetically possible solution, "raise taxes")

inigyou3• 3 days ago

Israel (!)

What did you mean by that (!)?

pjc506• 3 days ago

Very different economy from the rest of that list. Economically it's like an Ireland (high tech and services) that spends 8% of its economy on war. And receives significant foreign aid.

tonyedgecombe4• 3 days ago

I generally agree with the article but there are a couple of issues.

France has roughly the same population as the U.K., but almost 50 percent more homes.

France also has four times the land area compared to the UK.

The Economist ties Britain’s energy scarcity to its overly rapid and haphazard push for decarbonization; having banned coal, and with natural gas now extremely expensive due to the Ukraine war, the UK has been forced to rely on hideously expensive offshore wind power.

The dash for gas came about well before decarbonisation was on the agenda. It was instituted by Thatcher after the coal miners strike and because we had an abundance of it in the North Sea.

https://en.wikipedia.org/wiki/Dash_for_Gas

The NHS is struggling because we have an unhealthy population. A lot of that can be put down to behaviours we have adopted from the US (poor diet, car centric lifestyles and lack of exercise).

pjc506• 3 days ago

The NHS is struggling because we have an unhealthy population

I think we should stop pretending the NHS doesn't have quality and availability issues, which are validly pointed out in the OP article. I was shocked to discover that the NHS is paying out £60bn in compensation: https://www.bmj.com/content/391/bmj.r2211

Some of that seems to be claims inflation, but it also has to indicate a very real problem. The NHS runs an extremely "lean" system where people are triaged and it errs on the side of under-treatment. That saves money on treatment, but has other costs that don't immediately appear.

There are whole areas which are systematically under-funded to the point of nonexistance. If you're going to try for an adult ADHD or autism assessment, you're going to wait a very long time.

I don't have any answers myself, but I do wonder if going for the sacred cow of "free at the point of use" might work. But NHS dentistry isn't free and still experiences massive funding problems.

roryirvine2• 3 days ago

The problem with changing the 'free at the point of use' principle is that under any likely replacement it would continue to be free for expectant mothers, children, the disabled, and the elderly - precisely the people who consume the largest proportion of healthcare resources.

And that means that introducing per-appointment charges would likely have only a very minor effect on reducing waste & improving availability. Healthy people of working age would see it as imposing extra charges for no tangible improvement.

Either that, or you'd need to be looking at introducing a two-tier NHS, which I don't think many people would be happy with - "it might work in Europe, but what if it ends up being more like America?" would be the worry.

I think your point about the importance of triage to being able to running "lean" is a better place to look for improvements. The Single Patient Record ought to make automated triage a lot more reliable, for instance. And taking a broader view of ongoing health & economic impacts would help with your ADHD/autism assessment use case, as well as similar issues affecting people of working age (maternity care, being another obvious example).

tonyedgecombe4• 3 days ago

I think we should stop pretending the NHS doesn't have quality and availability issues, which are validly pointed out in the OP article.

I don't think anybody is pretending it doesn't. We just need to ask why it has got so bad since Covid and why we seem to be struggling more than similar European countries.

ben_w5• 3 days ago

France also has four times the land area compared to the UK.

This is not by itself of great importance.

There's several different meanings of "built on", but even with the most expansive definition for this purpose, the UK could double how much is "built on" at a cost of around a tenth of what isn't: https://fullfact.org/economy/has-92-country-not-been-built/

There's other reasons to say "perhaps not a good idea" to a higher population (food security, energy security), but the land is there for more (or simply bigger) housing.

tonyedgecombe4• 1 day ago

That land use has to compete with other uses such as agriculture, leisure and wildlife so the smaller available area is important if you want to make that sort of comparison.

lou1306• 3 days ago

Another lesson that Americans have already learned is the peril of excessive financialization of the economy

Don't mean to be blunt, but when did that happen? How has a country where you can finance your burrito [1] "learned the perils of excessive financialization"?

Also, a lot of this (especially the slower recovery after 2008) reads more as the perils of being the periphery of an empire vs being the core.

[1] https://finance.yahoo.com/markets/stocks/articles/uber-techn...

Britain: A Cautionary Tale for America

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