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Britain: A Cautionary Tale for America

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Re: Britain: A Cautionary Tale for America

#11

Post by pjc50 »

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")

Re: Britain: A Cautionary Tale for America

#12

Post by pjc50 »

spacedcowboy wrote: post #8
barry-cotter wrote: post #2

> 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 Amer…

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, t…

> 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)

Re: Britain: A Cautionary Tale for America

#13

Post by pjc50 »

jpfromlondon wrote: post #6
barry-cotter wrote: post #2

> 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 Amer…

>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.

> 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.

Re: Britain: A Cautionary Tale for America

#14

Post by ahartmetz »

mytailorisrich wrote: post #10
ahartmetz wrote: post #7

Earlier quoted context omitted.

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.

It is policy to ban shale gas and more North Sea gas. In Germany it is also policy to exit nuclear, like it was policy to depend on Russia. VAT is policy. The Ukraine War is a convenient way to deflect from all the policy choices made over the last 20+ years, while still achieving the aim of high prices.

No, the goal of German policy isn't to kill its energy-intensive industry. Like in all countries, the conservative party, biggest member of the governing coalition, has strong ties to the local industry, and the social democrats have no interest in the loss of jobs. "The aim of high prices" is conspirationalist nonsense.

The aim of Nordstream (however misguided that turned out) was low prices.

Minor point: companies get the VAT back or don't pay it in the first place.

Re: Britain: A Cautionary Tale for America

#15

Post by mytailorisrich »

ahartmetz wrote: post #14
mytailorisrich wrote: post #10

Earlier quoted context omitted.

It is policy to ban shale gas and more North Sea gas. In Germany it is also policy to exit nuclear, like it was policy to depend on Russia. VAT is policy. The Ukraine War is a convenient way to deflect from all the policy choices made over the last 20+ years, while still achieving the aim of high prices.

No, the goal of German policy isn't to kill its energy-intensive industry. Like in all countries, the conservative party, biggest member of the governing coalition, has strong ties to the local industry, and the social democrats have no interest in the loss of jobs. "The aim of high prices" is conspirationalist nonsense. The aim of Nordstream (however misguided that turned out) was low prices. Minor point: companies…

However you look at it they don't want fossil fuels to be cheap, as demonstrated by all the policies I mentioned. So the aim is indeed high prices (because this makes other energy sources more attractive) within the constraints of public opinion and the economy Although the economy is suffering because this is all not well thought-out.

Again, saying it is politically suicide so they don't (mostly, Greens are open about it) but actions speak louder than words.

Re: Britain: A Cautionary Tale for America

#16

Post by jpfromlondon »

pjc50 wrote: post #13
jpfromlondon wrote: post #6

Earlier quoted context omitted.

>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.

> 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.

Counter-cyclic fiscal policy and QE does work, absolutely, but it's likely dependent on size of economy because in most cases austerity works better...but in most cases the economies are much smaller than America's; Ireland, Estonia, Latvia, Lithuania, Italy, Greece (since austerity was forced upon it), HK, Britain could likely've been more austere during the GFC and seen more growth.

Then again although not comparable to America's it's possible that the British economy was/is large enough to sustain even more liberal fiscal policy but given the dependence on import and that it's primarily a service economy I doubt it.

America is truly exceptional.

Re: Britain: A Cautionary Tale for America

#17

Post by brooksyd2 »

mytailorisrich wrote: post #4
benj111 wrote: post #3

>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 m…

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.

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.

Re: Britain: A Cautionary Tale for America

#18

Post by ahartmetz »

mytailorisrich wrote: post #15
ahartmetz wrote: post #14

Earlier quoted context omitted.

No, the goal of German policy isn't to kill its energy-intensive industry. Like in all countries, the conservative party, biggest member of the governing coalition, has strong ties to the local industry, and the social democrats have no interest in the loss of jobs. "The aim of high prices" is conspirationalist nonsense. The aim of Nordstream (however misguided that turned out) was low prices. Minor point: companies…

However you look at it they don't want fossil fuels to be cheap, as demonstrated by all the policies I mentioned. So the aim is indeed high prices (because this makes other energy sources more attractive) within the constraints of public opinion and the economy Although the economy is suffering because this is all not well thought-out. Again, saying it is politically suicide so they don't (mostly, Greens are open abo…

So what is the hidden agenda then, and by which actions did the government raise prices to 14 cents during the Ukraine war and 10 cents now? Why did they run a crash program to build LNG terminals, which lowered prices?

By all indications, "5-6 cents high" was politically desired, "10-14 cents high" isn't.

Re: Britain: A Cautionary Tale for America

#19

Post by spacedcowboy »

pjc50 wrote: post #12
spacedcowboy wrote: post #8

Earlier quoted context omitted.

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, t…

> 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)

That seems quite a claim from one datapoint...

Re: Britain: A Cautionary Tale for America

#20

Post by tonyedgecombe »

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).

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