The British Economy v. The American Economy

i posted a thread earlier about job/career opportunities in the UK, and the responses were not very encouraging sadly. the best i got was that one should re-adjust his or her standard of living on moving to the UK.

which is fine. except, i wouldn't have bothered pursuing higher education (at least to a post grad level) had i known that it's a bad investment. and further, i'm not prepared to put in 50+ hrs/week and be held to a high professional standard, and all the stress that comes with it, for an average salary ie 35K for a lawyer when i could earn 30K co-managing my father's pizza restaurant in poole with him.

for some reason the UK economy seems to not provide the standard of living that the US one does. 

but what i don't understand is this.  since everything costs more in the UK, then salaries (in proportion to costs) should be higher, and yet, salaries in the UK are lower than in the US. the US costs you less while paying you more, while the UK costs you more while paying you less. NYC is way more expensive than my home state, Utah, but as an eg lawyers earn twice as much in NYC than in Utah. moving to London from Utah is more or less like moving to NYC from Utah, and yet lawyers in London earn a lot less than Utah lawyers, in cost of living/purchasing power terms (exchange rates aside)

so, one would figure that the cost of hiring a lawyer is smaller, but it's not. they cost 200 pounds/hr in the UK!!

my only conclusion is ironically (because of the hypocritical shouts of anti-americans) that the US employers are more generous and that as a result wealth is distributed better in the US, not as a result of government intervention, but the free market.

in contrast, british employers are greedier and exploit their employees. further, their greediness coupled with a sense of pessimism and self doubt, causes them to raise prices to such a level that only wealthier people can afford their goods.

optimistic and confident americans on the other hand cut their prices knowing that affordability for the general public and resultant increased sales will bring in more revenue than larger profit margins obtained on fewer sales of more expensive products.

is that what it boils down to? is there something completely different in the US outlook on life or psyche than the british one? does that account for the great success of the american model in providing for a better standard of living for the vast majority than any other nation past or present?

tenthplanet,

I can't explain the reason for lawyers' salaries in London being so low.  But I want to mention that I have heard that greed theory before, as an attempt to explain the otherwise unexplainably high cost of goods in "the high street," and the high cost of food and drink in the UK.  (Coincidentally, the tourism authority in Ireland has also criticized the Irish tourist industry for price gouging.)  So you are on to something there.

I don't deserve credit or flames for that theory, it's just something I read.

Jim

Perhaps it has to do with different values placed on different occupations. For example, how much are teachers and nurses paid in the UK? They are underpaid in the US, and in my opinion, certainly  not less "valuable" than lawyers.

It also could have to do with the cost of an education.  In the US, it is expected that people with professional degrees, such as doctors and lawyers, will charge high fees to offset the cost of post-graduate education, and therefore clients will pay a lot of money for legal help.  Perhaps in the UK, an education in law doesn't cost that much, therefore, potential clients don't feel that a laywer deserves to be paid that much.

Am I wrong in thinking that the UK has a free market as well?

And since you grew up in Britain, didn't you know what kind of salary you could expect from diferent jobs?  I certainly would have checked before going to school, if it was that important.

in contrast, british employers are greedier and exploit their employees. further, their greediness coupled with a sense of pessimism and self doubt, causes them to raise prices to such a level that only wealthier people can afford their goods.

Not sure how you arrived at this one... 

Not sure how you arrived at this one... 

Me neither.

Lots of folks go through higher education and get advanced degrees.  It's no guarantee of monetary success and it's probably not a good idea to start a career you'll have to spend a lot of time at with material wealth as the sole goal.  IME, it makes for a pretty miserable person.

Hell, my dad got a master's in petro engineering whilst holding down a full-time job and supporting a wife and two kids; yet he still had to kiss some major a*** and take jobs in not-so-nice locales for a while when the oil crash hit in the 80s.  LOTS of folks working right alongside him w/similar degrees were made redundant. 

I went to school w/a lot of folks whose parents were major big shots in S. VietNam.  The government was overthrown and they were very lucky to escape with their lives, even if it meant that dad the former big shot Naval commander had to be a janitor for a while. 

Look at academics in specific fields.  Chemistry, for example.  Got PhDs and are yet there's currently a scramble for jobs in Britain b/c the subject has become cost prohibitive to offer. 

If there's anything I've learned from personal experience and the experience of other is that being flexible and having a good attitude is priceless in any career field. 

So some folks are greedy?  So some folks worked harder or got lucky and make mega bucks and I don't?  Is being bitter about that going to help me/teach me/pay my rent??  Deffo NOT. 

When you get cocky, you also get tunnel vision.  And a lot of career success if having an open enough mind to spot a good opportunity.

Lots of folks go through higher education and get advanced degrees.  It's no guarantee of monetary success

I agree, I didn't get a degree, not even A Levels but I earn a lot more than the 35K quoted in this thread.  Qualification are less of a priority in the UK through my experience (this obviously excludes Dr's, Lawyers, etc)

Steve

I suppose cost of living is higher in places that are jammed with people? Rent in London or New York is going to be way higher than Utah because millions of people are scrambling to live there. Rent can be high because people will pay it in a heartbeat. Not so much for Utah where there is a load more space, a lot slower kind of lifestyle, etc. That is how I have always explained (in my head anyway) the cost of living difference. It all depends on the demand.

   My thought exactly.

I agree as well. I am moving from New York City to northern England, and my cost of living is going to decrease.

One more thing: perhaps I am mistaken, but isn't tenthplanet in the US on a work permit? And if so, doesn't that mean that there is a scarcity of people in the area of Utah where he lives who can do his job (otherwise they would have hired an American citizen)?

In a large city like London or New York, there are many people who are qualified to do the same job. Since there is more competition for jobs,  employers don't have to pay as much.  They can hire the employee who will do the best work for the cheapest salary. It's the law of supply and demand.  Why should a  law firm pay tenthplanet the salary he thinks he deserves when they can hire someone with similar qualifications to work for half as much?

Why should a  law firm pay tenthplanet the salary he thinks he deserves when they can hire someone with similar qualifications to work for half as much?

Good point. And I think it is fair to think that most places follow this policy, the US certianly not excluded.

The postwar British economy under Labour's Welfare State reconstruction was based on a variant of a worker-corporate/State accord that was a familiar pattern throughout the West. The British model is this: there will be public services available to the population (health, education, housing) paid for by the State, which will employ a sizeable percentage of the population. In return for the security of housing, education, and health services, the population will accept lower wages.

Until recently, professional education in medicine, law, and other academic fields was free and many students received a stipend from the State. The thinking was that if the State paid for your education, then your salary would be lower than what it might be in places like the US, where education is not free.

This system has held up pretty well until the last ten years or so, when there's been a disequilibrium between living costs and salaries. But to answer your question about employer's greed. The answer is no, for two reasons.

Firstly, as explained above, the postwar system wasn't meant to pay high salaries to professionals. Frankly I don't believe that professionals, legal, medical, or educational should receive any more, if not, in fact, less than sanitation workers or hospital orderlies. The benefit of a professional job is that one has more freedom for creative thought and self-management in the workplace. That's a freedom that one shouldn't then be over-compensated. Why should someon who went to law school deserve a better salary than someone who did not? Personally, I think that it's right that you should earn as much serving pizzas, since that's a less creative post, although certainly one that provides a greater benefit to society than being a non-public interest lawyer.

Secondly, the British system places a high barrier to adjudication as it allows the winner in a civil suit to demand their legal fees from the loser. This has meant that the British courts haven't become the casinos that they are in the US. Hence the lower salaries for a law profession, since lawyers income isn't based on speculative redress to the courts.

The benefit of living in London is that it isn't a society that is willing to allow as great a freedom for unfettered pursuit of market individuality as the US. That's ultimately the choice one has to make: society or the self.

i like your answer, though i may not agree with everything you say you sound quite learned. i really am not upset about things, i just have questions. i dunno, but for some reason i'm always questioning why things are such a way, the status quo etc. i want to know the reason for things, and perhaps how to change them. i really am not meaning to rub anyone the wrong way. economics and mass pyschology interests me. i guess people are free to ignore a certain thread if they want to.

i dissagree with your view as to how things should be. i don't think a lawyer should earn the same as a pizza delivery guy, but what an unfettered market will pay. in sum, i would chose the self over the kind of society the post war labour movement envisioned. i don't believe "G"overnment is necessary and that society and community can exist quite well without it, in a big G sense.

someone above stated that coz there are more lawyers (and other specialists) etc in big cities that they can therefore be paid less, but NYC is saturated with lawyers compared to Utah but NYC earm twice as much in numerical terms, though that doesn't equate to twice as much in purchasing power terms.

also, someone mentioned exchange rates, but when relocating it is purchasing power that most economists consider, which at the moment is about 1 pound to $1. if you take into account the cost of real estate, you actually end up with a purchasing power ratio of about 1.5 pounds to $1!

so, if everyone is willing to settle for low salaries, why are goods and services expensive?  where is all that money going?

wouldn't it be better to slash prices across the board and make up for lost profit margins via increased mass sales? i think this is how it works in the US absent antitrust violations.

and as for real estate, if 90% of the population cannot afford a 3/4 bedroom home, then either all the properties are sitting vacant (whcih they're not) or the "for sale" signs will be up for a long time until people realise how overvalued their homes are. maybe i've answered my own question?

i actually love my home country, but i want to see it move more in the direction of the US in economic terms. the american experiment/model is the greatest economic success in history i believe, though some may argue that the early christian pre-constantine church was the perfect model.


i want to see lower taxes, more privatization, the government providing only essential services like a police force, legal system (i would say that), military and defense.  i think the invisible hand of the free market (basically the collective psychology of the masses) is better able to work things out than the government can. and i want the government to leave me alone, to let me keep the fruits of my labour.