European Tribune

We Stopped Blair!

L'Etoile de Martin
Home
Booman Tribune
We Need a Public Option to Stop ThisFroggy Bottom CafeCasual Observation RIP John MurthaWhat's So Hard About This?Steve Clemons and the Chicago GangObama's Big MeetingSuper Bowl ThreadSerious QuestionGreatest QB'sQuote of the DayTea Party Cat FightOpen ThreadThe Economist: Socialist RagBlizzard
New User? Welcome & Click!
 Recent Comments Diaries

Anglo Disease - symptoms of failure

by Jerome a Paris
Mon Jan 14th, 2008 at 07:13:20 AM EST

This may sound like petty gloating, but given how much the reverse argument has been used to promote the neoliberal, deregulating, finance-focused economic agenda, this is worth flogging again and again:

UK slips behind France on economy

The size of the British economy has slipped below that of France for the first time since 1999 thanks to the slide in the value of the pound.

(...)

The US, Japan, Germany, China and France all had larger economies than the UK in the third quarter of 2007 – and in 2006.

The figures represented a “political economic cataclysm” for Britain, said Martin Weale, the director of the National Institute of Economic and Social Research, who noted that the UK government often boasted of Britain’s being the fourth largest economy.

Just like the UK economy being bigger than France's was an obvious sign of the superiority of the UK-promoted economic model ("markets provide"), thus its shrinking size today should be seen as a most conclusive sign that this was a temporary phenomenon and that statist, socialist governments are more successful.

Previous "Anglo Disease" content: Earlier work:
Menu
. Home
. About
. Contact
. New User Guide
. FAQ
. ET Editorial Guidelines
. Search
. Search (Google)
Login
. Make a new account
. Reset password

Display:
Anglo Disease - symptoms of failure | 29 comments (29 topical, 0 editorial, 0 hidden)
Re: Anglo Disease - symptoms of failure (4.00 / 9)
I fully expect to start seeing articles explaining how silly such international comparisons are turning up in the English-speaking press any day now.
by Colman (colman at eurotrib.com) on Mon Jan 14th, 2008 at 07:26:56 AM EST
Re: Anglo Disease - symptoms of failure (4.00 / 7)
Well, if you're going to go saying what I was going to say it isn't worth me saying it.

When locusts move on, they leave nothing behind
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Jan 14th, 2008 at 08:36:00 AM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 4)
There are some problems with the delivery... they are having a special meeting where I have a spy in digsguise...and some nutty people is saying that there is no way people are going to buy that stuff..

Luckily the rest of serious people in the room bat the crap out of him.. and after coming to his sense he claimed

"who reads the editorial anyhow...? They are already convince....."

Oh and day is night and night is day.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Mon Jan 14th, 2008 at 09:54:51 AM EST
[ Parent ]
Au contraire (4.00 / 8)
My money is on a flood panicked articles about how the UK is about to go surging down the t00bs and the only way to save the nation is to enact "far-reaching economic reforms that will unleash the nation's full entrepreneurial potential".

That and indefinite detention of "terror" suspects without charge.

There's no such thing as original sin - Elvis Costello

by dvx (dvx.clt ät gmail dotcom) on Mon Jan 14th, 2008 at 11:36:21 AM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 4)
The silliness derives from Europe going the path of Reaganomics, a B movie actor, who allegedly got his economics platform from a second-rate, no-name economics dabbler in a restaurant in Washington DC. Why can't we hear it from you? Trickle-down was its name, even if you want to discuss concepts like market oriented or greed oriented or Friedman's folly, whatever you want to call it.

Make the rich richer and everyone will get richer. Can we see the data, please?

by shergald on Mon Jan 14th, 2008 at 05:38:06 PM EST
[ Parent ]
"Friedman's folly" talking point (none / 1)
Failure usually has a LOT of related causes.  but in Friedman's case, he would sum up his insanity in one memorable talking point.  During a TV interview, he would turn his face to the camera like a professional and say with all the earnestness he could muster, "A corporation has only one duty and that is to make money for the shareholders."  In fact, he got this point across so well, it actually became enshrined in USA law.

For some reason no one stood up to this fool and said, "No! NO! No!  The primary function of any enterprise is to stay in business--there is a REASON why governments grant corporations eternal life.  And the BEST way to stay in business is to make your customers happy.  If anyone is first in line, it is they"

No Friedman!  The corporation owes a LOT to a LOT of people--it's suppliers, its workers, it's community, and the infrastructure that makes its existence possible.  While lenders are important, to suggest that their agenda should dominate all others is pure, unadulterated madness.  And the amount of destruction to the very fabric of industrial society that inevitably flows from such a monomania has been literally incalculable.

If Friedman doesn't go down in history as the biggest fool ever, the rest of us have not been paying attention.

"Remember the I35W bridge--who needs terrorists when there are Republicans"

by techno (reply@elegant-technology.com) on Tue Jan 15th, 2008 at 06:01:20 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 4)
Well, honesty forces me to point out that, officially, France has 5 million more people.

Now, I realise that if you were to count the actual number of people in the country, things may be different. And anyway, a lot of the UK economy is boosted from the simple fact that they are native English speakers, and that British law is used a lot internationally, rather than from the excellence of their system.

"The womb that spawned that thing is fertile yet"

by Cyrille (cyrillev domain yahoo.fr) on Mon Jan 14th, 2008 at 07:47:49 AM EST
What? (4.00 / 4)
UK census: In mid-2006 the resident population of the UK was 60,587,000 (...) The UK has a growing population. It grew by 349,000 people in the year to mid-2006 (0.6 per cent). The UK population has increased by 8 per cent since 1971, from 55,928,000.

French Census: Au 1er janvier 2007 (...) la population de la France est estimée à 63,392 millions de personnes dont 61,538 millions en France métropolitaine.

So less than 1m difference, and possibly less if you take into account all the UK expats throughout the commonwealth, who are often in and out of the country.

For practical purposes, the populations are similar enough for overall economy comparisons to make sense. In any case, it is the relative trends that matter (and these cannot yet be ascribed to the effects of one country being run by a "dynamic" president and the other by a "crypto-socialist" PM...)

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (jeromeguillet@yahoo.fr) on Mon Jan 14th, 2008 at 08:12:23 AM EST
[ Parent ]
Re: What? (4.00 / 2)
OK, I trusted Wikipedia which seemed to overstate the difference.
And I didn't disagree with your assessment. I just meant that population size should not be ignored. And however much I'd like a conclusion to be made, I don't want to sacrifice analytical neutrality in the process.

On the official figures, it's still more than 1M difference by the way, the French economy is not the mainland France economy. But again, I suspect (and gather from articles) that there are many more illegals in the UK than in France.

Officially, per capita GDP is still higher in the UK. I don't think it will still be the case in 12 months time though. This despite having fewer holidays. So, yes, the figures do go against the dogma, and I won't complain. But I always though that they were not particularly useful when using exchange rates in any case. Fluctuations are much too high for the comparison to be significant between two countries that are of similar weight. Let's see in PPP. Looking at the London housing prices, it may not be pretty.

"The womb that spawned that thing is fertile yet"

by Cyrille (cyrillev domain yahoo.fr) on Mon Jan 14th, 2008 at 08:35:40 AM EST
[ Parent ]
Re: What? (none / 1)
On the official figures, it's still more than 1M difference by the way, the French economy is not the mainland France economy.

You have a point, however, look at the regional data at INSEE:

  1. the €1,792 billion final total quoted by FT seems to cover DOM-TOM incompletely,
  2. using €1.32 = £1 (the current price is even below that), Metropolitan France's €1,762 billion total for 2006 equals £1,335 billion, still well ahead of the UK's £1,304 billion.


*Traitor*, n.
A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.
by DoDo on Mon Jan 14th, 2008 at 12:43:50 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 3)
On Britain's "actual" population, see Helen's London - Dying like a Dinosaur
Officially, the population of Britain is about 65 million, with estimates of increase suggesting that it might rise to 70 or maybe 75 million by 2030, or 2050 or some other fantasy time in the future we don't have to plan for.

However, even that may not be the end of the story, the Independent claims that the present real population may be much higher.

It is the statistic that dare not speak its name, though eventually it must. ......So don't forget you read it here first: the population of the UK is presently somewhere between 77 and 80 million.

Consumption - that's the thing. Based on what we eat, one big supermarket chain reckons there are 80 million people living in the UK. The demand for food is a reliable indicator; as Sir Richard Branson says, you can have all the money in the world but you can only eat onelunch and one dinner. I have a second, respectable, source. A major, non-commercial agricultural institution reckons there are 77 million of us in the UK. Again, its reckoning is based on what we eat.

However, whether the population is 65 million or 80 million, the reason why most commentators complain is that at least a third of that population, and probably the majority of that phantom population, are crammed into the south east. As that is where the commentators are also based, their impression is of a country desperately over-crowded.



We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Mon Jan 14th, 2008 at 01:36:34 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 4)
Makes this foreigner wonder what the French see in Mr. Sarkozy's "reform" program.  What do working people in France imagine the benefit to be?  Perhaps they are unaware of what other countries farther down this road have become.  I wonder what the Gini index will be for France after 10 years of Sarkozy.
by bellumregio on Mon Jan 14th, 2008 at 08:01:53 AM EST
Re: Anglo Disease - symptoms of failure (4.00 / 5)
I'm afraid that some of Sarkozy voters may not have been driven by economical issues only but also by racial/xenophobic ones.

Moreover, I feel that France has been a bit slower in the uptake of "deregulation is good" theories, and that France will now be a bit slower to reverse its economical myths.

A free fox in a free henhouse!

by Xavier in Paris on Mon Jan 14th, 2008 at 08:10:25 AM EST
[ Parent ]
It won't be ten years n/t (4.00 / 2)


Let's Go Red Wings!
by redstar on Mon Jan 14th, 2008 at 12:55:03 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 2)
Anybody else remember when Italy's economy was bigger than the UK's?

Take away Scotland and I bet England is behind Spain. Too bad Spain doesn't have an Armada anymore.

Let's Go Red Wings!

by redstar on Mon Jan 14th, 2008 at 12:33:19 PM EST
Re: Anglo Disease - symptoms of failure (4.00 / 3)
The UK also includes Northern Ireland and Wales.

Now the problem is that regional GDP data has been discontinued, instead, they track GVA (gross value added), and I'm not sure what everything constitutes the difference.

  • UK 2006 GVA: £1,155 billion
  • Scotland 2006 GVA: £91 billion
  • England 2006 GVA: £969 billion

From this, in Euros at £1 = €1.32:
  • UK 2006 GVA: €1,525 billion
  • UK minus Scotland 2006 GVA: €1,404 billion
  • England 2006 GVA: €1,279 billion

Now for comparison, according to Eurostat:
  • UK 2006 GVA: €1,779 billion (at the 2006 exchange rate!)
  • France 2006 GVA: €1,600 billion
  • Spain 2006 GVA: €874 billion
  • Spain 2006 GDP: €981 billion

...so England is still comfortably ahead of Spain. You forgot that much of the UK economy is not production or local services, but financial sevices in the City.

*Traitor*, n.
A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.
by DoDo on Mon Jan 14th, 2008 at 01:06:46 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 2)
I'm not sure that GVA quite captures the wealth that Scotland generates.

Think of all that oil and gas. It's not England's.  I'm therefore quite sure GVA understates Scotland's contribution to GDP.

Let's Go Red Wings!

by redstar on Mon Jan 14th, 2008 at 01:19:29 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 2)
  1. Could you define GVA for me? At least in terms of the difference that might be important for both Scotland and England? Wiki is no help here.

  2. Will you submit that even just the England's GVA is the major part of the UK GDP (and larger than Spain's even at today's exchange rate), or does GVA include something GDP doesn't and which is significant for England?


*Traitor*, n.
A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.
by DoDo on Mon Jan 14th, 2008 at 01:31:10 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 3)
Gross Value Added is a UN stat, if memory serves. It's like value added for the purposes of VAT, ie selling amount less cost of production/inputs, but with an added twist for national accounting - it also deducts national consumption of the good or service produced.

Since much of UK production of gas and oil is also used as intermediate production inputs for other goods and services, this would discount the portion of oil and gas production on those portions not consumed (ie not ending up in another state as finished goods or services) or exported. And, since much of the transformation of oil and gas as intermediate good occurs in England, then the understating is simply compounded.

Account for it the way countries are accounted for rather than regions within the UK (and, perhaps for further measure, put Scotland on the Euro) and I strongly suspect Scotland's GDP would be closer to Norways' than the GVA statistic London puts out.

Let's Go Red Wings!

by redstar on Mon Jan 14th, 2008 at 01:46:25 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 2)
Actually, if I am not mistaken Gross Value Added is a little easier to understand than GDP.

Suppose you just take the prices and quantities of all goods and services exchanged over a reference period within a reference region, and add them up. The problem with that is that tehre is double-counting. If I produce a piece of cloth and sell it to you for 100 and you make a shirt out of it and sell it on for 150, the sum of the exchange values is 250, but the 100 of materials is double-counted.  So, you can do one of two things. Either you only count the goods and services purchased for comnsumption (i.e., that don't get used to produce something else that is then sold) or you consider the value added which is 100 for me, but 50 for you.

So each transaction has a price, but also a value added which is the price minus the cost of all the inputs that were used in producing the good or service traded.

So you tally not price and volume traded, but value added and volume traded. That is GVA.

GDP requires you to subtract imports, add exports, and so on, so it is not quite as simple to understand as "just tally everything and add it up".

We have met the enemy, and he is us — Pogo

by Migeru (migeru at eurotrib dot com) on Mon Jan 14th, 2008 at 01:47:32 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (none / 1)
Nevermind:

National Statistics Online

How does GVA relate to GDP?
The link between GVA and GDP can be defined as:
GVA (at current basic prices; available by industry only)
plus taxes on products (available at whole economy level only)
less subsidies on products (available at whole economy level only)
equals GDP (at current market prices; available at whole economy level only).

Digging further, I find that the oil & gas contribution to the GDP was just £2.3 billion in 1998, it shan't be higher now (I found no newer data on that crappy site). At least the mining industry index was decreasing.

*Traitor*, n.
A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.

by DoDo on Mon Jan 14th, 2008 at 02:01:28 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 2)
Are you using the GVA stat?

I'd have a hard time believing that number. Look accross the north sea to Norway to triangulate.

Let's Go Red Wings!

by redstar on Mon Jan 14th, 2008 at 02:05:04 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (none / 1)
No, that was a GDP stat, but now I got suspicious, too. Let's try something different, though crude: let's take the 2.9 million boe/day for 2006, that's c. 1 billion barrels, should mean $60 billion or £30 billion. Now half of that production is not oil but gas, and I don't know what's the benchmark for the UK.

*Traitor*, n.
A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.
by DoDo on Mon Jan 14th, 2008 at 02:15:20 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (none / 1)
Would GDP subtract expenditures in the oil & gas sector?

*Traitor*, n.
A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.
by DoDo on Mon Jan 14th, 2008 at 02:16:52 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (none / 1)
No. Simply put, GDP measures the sum total of private Consumption, business and private Investment and Goverment expenditures (the so-called "CIG") plus exports less imports.

My point here is that, if Scotland were an independent country, then Scottish oil and gas consumed in England, as either an investment (business input into production of other goods and services) or as private consumption, would be classified as an Export. And, if the UK did proper GDP by country (England, Scotland, Wales and the part of Ulster they still occupy) then this consumption or investment as input in England would also be classified as GDP. However, calculating via GVA, it would be classified as intermediate consumption and thus excluded, which understates Scotland's prosperity generation and overstates that of England.

Let's Go Red Wings!

by redstar on Mon Jan 14th, 2008 at 02:29:03 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 2)
Here is something I don't understand about GDP.

If an exchange is internal to the unit under analysis it is counted as GDP. If the same exchange happens between two units it is added to the GDP of the exported and subtracted to the GDP of the importer, so on a net basis it is zero.

For instance, Scotland selling oil products to England counts as UK internal trade and so increases the UK's GDP. However, if the UK broke up, Scotland selling oil products to England would add to the GDP of Scotland and subtract from that of England.

Therefore, Scotland selling oil to England contributes to world GDP through the UK's GDP, but Scotland selling oil to Ireland doesn't have a net effect on world GDP. Unless, of course, world GDP is the sum of national GDPs plus the value of international trade. Is that how world GDP is calculated?

We have met the enemy, and he is us — Pogo

by Migeru (migeru at eurotrib dot com) on Mon Jan 14th, 2008 at 05:51:08 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 5)
GWP or gross world product is defined as the sum of all national GDP accounts.

GDP = C + I + G + (X-M)
The X-M (export - import) difference is there just to adjust for the trade balance of the economy for a single country. Imports are in fact counted in the consumption (C) portion of the equation i.e. the exported Scottish oil to Ireland is consumed by the Irish and therefore raises their GDP at the C part.

Another way to write it would be to split consumption into endogenous and imported i.e.:

GDP = (Ce + M) + I + G + (X-M)
GDP = Ce + I + G + X

Hence trade does not need to be added again as it would be double counting.

Orthodoxy is not a religion.

by BalkanIdentity (balkanid _ at _ google.com) on Mon Jan 14th, 2008 at 07:59:49 PM EST
[ Parent ]
Re: Anglo Disease - symptoms of failure (4.00 / 3)
It is not gloating, it is survival instinct. Sort of Host vs. Parasite. Since 160 years ago, when the removal of the Corn Laws [1,2] marked the triumph of the Finance and Insurance  over Goods Production (Agriculture and Industry), England's economy has been losing its strength. Their Offshore economy - these are trades typical of islands such as Singapore, Manhattan - is feeding on continental economies.

{1]The Corn Laws were a protectionist imposition of tariffs to imported corn.
[2]At which time a magazine called "The Economist" appeared to champion those laws and free trade in general.

by findmeaDoorIntoSummer on Tue Jan 15th, 2008 at 03:59:47 AM EST
Re: Anglo Disease - symptoms of failure (4.00 / 3)
correction:

[2]At which time a magazine called "The Economist" appeared to abolish those laws and champion free trade in general.

by findmeaDoorIntoSummer on Tue Jan 15th, 2008 at 04:02:01 AM EST
[ Parent ]
Anglo Disease - symptoms of failure | 29 comments (29 topical, 0 editorial, 0 hidden)


Display:
Go to: [ European Tribune Homepage : Top of page : Top of comments ]

Blogroll Me!

© 2005 European Tribune Group
European Tribune Homepage
etg@eurotrib.com
powered by Scoop