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

[EastAnglianLefty]

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.

And in any case the divergence of the UK economy from the American one dates to approximately 2008-2010 and was not visible for the preceding two decades.

[omar04]

The calculation - for a while a very successful one - was that most of "their" voters would not be very affected, and to the extent they were could be fobbed off with stories about how various "out groups" were to blame (maligerers/benefit scroungers, wasteful Labour councils and so on)

However, the decay of Britain's public realm is now obvious to all but the most blinkered boomers.

How credible do you find the accusation of pork barrel spending in Tory constituencies? I recall reading a FT article of Labour claiming this was happening a while ago with the Leveling Up Fund.

[EastAnglianLefty]

Poorer and more Labour-inclined areas have seen their funding from central government cut more, but everywhere has seen cuts that are impacting satisfaction with public services so in practice the Conservatives are no longer deriving any electoral benefit from that.

The distribution of money from the Towns Fund was certainly partisan, but again the sums concerned were too small to really make a big difference.

[CumbrianLefty]

Yes, a few more hanging baskets - however nice - can only get you so far in terms of voter gratitude.

[Libertas Vel Mors]

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. 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.

[parochial boy]

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.

[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.

[Silent Hunter]

This has been happening in the movie industry since the 1950s, due to our tax breaks.