WSJ: US Companies Outsourcing White-Collar Work to UK in Search of Lower Wages

[jojoju1998]

I actually wonder why the UK hasn't been able to develop it's own industry. It has alot of good companies right ? rolls Royce. Shell. Unilever. Why can't it harness those companies ?

[jojoju1998]

Over the last 35 years, the US has pursued a far more capitalist set of policies than the UK. We are now seeing the consequences of that when combined with modern technologies. Great thanks must of course also be given to our constitutional structure, which has stopped attempts at expanding the size of our government.

Well it's also the fact, that the UK Upper Class is not that....  modern. It's basically a bunch of land lords, so they have no incentive, or don't feel the need to invest in industry.

The American Upper Class, or at least the main bulk of it, was created through the industrial revolution. Look at Andrew Carnegie for example. And compare him to say this guy here, https://en.wikipedia.org/wiki/John_Crichton-Stuart,_3rd_Marquess_of_Bute#Interests.

Two very different sources of wealth. John Crichton Stuart's wealth was inheritated through land holdings. Andrew Carnegie built his wealth through industrizalition.


I reccomend everyone read this article here that talks about the aristocratic land holding nature of the British Upper class, and how that has led to the UK's decline. https://www.palladiummag.com/2023/04/27/britain-is-dead/

"Britain’s culture of governance expresses the culture and priorities of its political and administrative elite. Questions about that culture are ultimately questions of elite sociology. Entrance into the British elite has slowly become more meritocratic over the generations in a formal sense, with the imperial Chinese exam system influencing the Northcote-Trevelyan Report of 1854. This in turn led to the removal of informal patronage structures. But an informal system of social selection persisted long into the twentieth century, minimizing the potential costs to institutional memory and group social engineering. British institutions continued to prioritize a humanist and professional elite in running a vast industrial, scientific, and commercial empire.

What differentiated the British elite of this time from most of Europe was the embrace of capitalist production by much of its aristocracy. Despite disputes on protectionism, the emergent middle class never experienced the same level of conflict with the nobility as their French or American counterparts. Compare, for instance, the backgrounds of two elite class premiers: George W. Bush and David Cameron. Bush’s patrilineal great-grandfather Samuel P. Bush established the family’s political dominance through technical education and the management of a firm that manufactured steel railway parts.

In contrast, Cameron’s father, paternal grandfather, and great-grandfather were all Oxford-educated partners in the stockbroker’s firm Panmure Gordon & Co, while another Sir Ewen Cameron was chairman of HSBC. His maternal grandfather came from a family of minor titled gentry and military officers. The differentiating factor between the two major factions of the British elite was whether they derived rents from aristocratic land holdings or professional-class financial speculation. Neither built their fortunes on the industrial basis that enriched the Bush family and many of their American peers.

The British analogs of the Bush clan—manufacturing and infrastructure-owning families—were often nonconformist protestants excluded from the Church of England and thus from educational routes into administration and politics. Instead, they either collaborated with the state at a distance or sought to join it by phasing out manufacturing and using the profits to buy land and professional education. It was not until the late nineteenth century, by which time the UK was falling behind the U.S. and Germany, that non-elite merchants like the Liberal MP, Unitarian, and screw manufacturer Joseph Chamberlain found a way into political office.

The resulting British state was over-geared towards non-productive economic rent-seeking. In effect, Britain didn’t have an incentive to chase development for survival, because it was the dominant power of early industrialization. Consequently, it never produced an elite whose primary base of power and wealth was industrial production, and which thus had a strong stake in developing and maintaining an industrial society.

Religious and social exclusion from Oxford and Cambridge meant that the middle classes did not share the generalist education of most British elites. The avenue into power for this synthetic class had for much of the nineteenth and twentieth centuries been the Oxford literae humaniores course in classical Greek and Latin, often supplemented by study for civil service exams focused on British constitutional history. These exams, both old and new, have produced a generalist administrative class with institutional and humanistic knowledge but little technical skill. Even after such restrictions were lifted, however, tensions kept rising between the old preference for general education and the bourgeois need for technical expertise."

[jojoju1998]

It should be noted that in countries where industrilization was successful like the US, or even Germany, the power of the " aristocratic " land owners was greatly reduced, by ironically, Government mandate, or in the US's case, revolution/civil war.

In Germany for example, they had the junker Class, aristocratic landowners, and they were forced by the Government to basically give up their lands.

The UK never had that. The UK Government never forced it's land owners to give up land. And so the land owners still to this day, have far more power than they should.

[jojoju1998]

Over the last 35 years, the US has pursued a far more capitalist set of policies than the UK. We are now seeing the consequences of that when combined with modern technologies. Great thanks must of course also be given to our constitutional structure, which has stopped attempts at expanding the size of our government.

Thirty five years ago the British Prime Minister was Margaret Thatcher, who had recently entered her tenth year in power. She was replaced the following year by John Major, whose government pushed through some of the most radical and controversial of the 1979-97 Conservative privatizations and expanded further on Thatcher's marketization policies in parts of the public sector. The Labour government in officer from 1997 until 2010 (under Tony Blair's leadership until 2007 and thereafter under Gordon Brown's) pursued a policy of implementing traditional socialist goals using market mechanisms and the fruits of the deregulated financial services sector. Social spending increased significantly as did some regulation in certain fields, 'yet' the period was marked by widespread prosperity up until the financial crisis of 2008. Since 2010 we have had Conservative governments under an embarrassingly lengthy list of Prime Ministers (Cameron 2010-16, May 2016-19, Johnson 2019-22, Truss 2022, Sunak 2022-present). All of these Conservative Prime Ministers have had right-wing economic agendas, with the Cameron era policy of 'Austerity' being particularly significant, along with Truss managing to spook the markets so severely during her extremely brief period in office that a major run on the pound was triggered almost immediately. If the present government lacks much room for maneuverer on this front, it is largely due to the social damage done by 'Austerity' coupled reduced credibility with the markets due to 'Liz Truss', along with the post-pandemic issues that have been a problem everywhere.

1. I am well aware! Hence why I dated the change to 35 years ago, when Thatcher's liberalizations ended with Major replacing her.

2. And yes, Blair "pursued socialist goals using market mechanisms." While that is preferable to pursuing socialist goals with socialist mechanisms, pursuing socialist goals tends to hurt economic prosperity when compared to a country like the US that pursues mostly market goals using stronger market mechanisms.

3. Economic growth is not perfectly related to government policies at any given point, hence why Venezuela didn't collapse until 2014. Hence why broader comparisons can also often be of help -- like, say, comparing a country that has historically pursued a relatively degree of greater economic freedom than European economies, including the UK, and has also pulled ahead even on a relative basis over the last 35 years, to one that has not. 1. Do you agree that the US has on average had a smaller government and freer market than the UK? With a smaller social safety net?

4. No, they haven't. Johnson expanded regional transfers. Cameron's austerity was a myth. But more importantly, none of them did anything to change the broader system. Have they been more right wing than Labour governments would have been? Sure.  But that doesn't change that -- even after 14 years of Tory governance -- the UK still has a bigger government and lesser economic freedom than the US does today, even with Biden as President.

1. I'm not entieely sure that the size of a social safety net is correalted with a freer market or lack thereof.

For one thing, social welfare spending in the UK is only marginally higher than the US's. And both countries spend far less than countries like France, Italy. Austria.  https://en.wikipedia.org/wiki/List_of_countries_by_social_welfare_spending

2. There are at least 24 countries ahead of the US and the UK on economic freedom. https://www.heritage.org/index/pages/report According to the heritage foundation. And they measure more things than just small government, and welfare state size. Things like property rights, a strong and independent judiciary, low corruption, busienss, trade, labor, and investment freedom, as well as financial freedom. All of that is taken into consideration.

[jojoju1998]

Aside from the sheer hysterical madness of believing that Major reversed Thatcherism or that Truss did not cause the financial crisis that was a direct result of her budget. Or the brazenness of claiming that there was no austerity and supporting this with a bunch of charts showing big drops in public spending as a percentage of GDP. Well...

In the mid-19th century, before introducing their welfare states (the early 20th century US was actually rather more interventionist, trust busting, or the new deal...) France and Germany had GDP per capita of around or even less than half of what it was in the US. During the post-war era social democratic era, with a more redistributionist state in place in Europe, this rose to 80% of the US's levels. In fact, productivity in those two countries actually caught up with the US, and is more or less equivalent today, just the French and Germans work far less. Which seems like a win in terms of who has better lives.

The UK admittedly has done worse, but boy did it take a hit under Thatcher.

The US has indeed performed much better since the financial crisis, even more so at the moment. But this is down to Europe's obsession with fiscal austerity and reducing budget deficits, whereas the US has generally engaged in much more fiscally expansionary policies. Rather succesfully and diametrically the opposite of what you appear to believe.

To be fair; and to be frank, Europe doesn't have that much wiggle room when it comes to fiscal policy since almost all of the EU is tied to the Euro, a common currency.