nation: Britain/the U.K.

Cross-posted at Reports from the Economic Front.

The British economy is a disaster.  Oddly enough most analysts find it difficult to explain why.

Actually the reason is quite simple. The British government responded to its own Great Recession by cutting spending and raising taxes.  The result, which is anything but mysterious, is that the county remains in deep recession.

Matthew O’Brien, writing in The Atlantic, describes the situation as follows:

…public net investment — things like roads and bridges and schools,  and everything else the economy needs to grow — has fallen by half the past three years, and is set to fall even further the next two. It’s the economic equivalent of shooting yourself in both feet, just in case shooting yourself in one doesn’t completely cripple you. Austerity has driven down Britain’s borrowing costs even further, but that’s been due to investors losing faith in its recovery, rather than having more faith in its public finances. Indeed, weak growth has kept deficits from coming down all that much, despite the higher taxes and slower spending. In other words, it’s economic pain for no fiscal gain.

Below is a chart taken from The Atlantic article.  It shows that:

Britain’s stagnating economy has left it in worse shape at this point of its recovery than it was during the Great Depression. GDP is still more than 3 percent below its 2008 peak, and it hasn’t done anything to catchup in years. At this pace, there will be no recovery in our time, or any other time.

 gdp to december 2012

In other words, while the British economy suffered a deeper decline during the Great Depression period of 1930 to 1934 than to this point in the Great Recession which started in 2008, the economy recovered far more quickly then than now.  In fact, it doesn’t seem to be recovering now at all.

Perhaps the most surprising thing about the situation is that political leaders appear determined to stay the course.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

A set of photos, taken by Ian Mansfield, are a neat illustration of how culture can coordinate human action.  They capture London on Christmas morning.  Said Mansfield:

Apart from the emptiness of the city, it is the silence that makes the experience such an addictive one for me.

London is never silent, not even at 3am, but on Xmas morning, it is almost silent. The background drone of aircraft approaching Heathrow has gone, and away from main roads, the streets lack the sound of car tyres rolling over tarmac.

Heading home, also a sound you never really hear now – the pealing of church bells. Not just coming from a single church you are nearby, but from all over the city as the sound carries far further than usual and surrounds you from all sides. Magical.

More at Ian Mansfield’s website (via BoingBoing).

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Cross-posted at Montclair SocioBlog.

Back in June, Mitt Romney said:

I want to make sure that we keep America a place of opportunity, where everyone… get[s] as much education as they can afford

After all, Mitt got as much education as he (his parents, really) could afford, so he thought it best if everyone had that same opportunity.

Opportunity – How much is that in American money?

Yesterday, Planet Money  posted this graph showing the costs and benefits of a college education in several countries.

The title of the post summarizes the interpretation of the college-educated folks at Planet Money:

“College Costs More In America, But The Payoff Is Bigger”

But what if you look at the data from the other side?  Here’s the half-empty-glass title:

“College in the US Costs a Lot, and If You Can’t Afford It, You’re Really Screwed”

…or words to that effect.

What the chart seems to show is inequality — specifically, the inequality between the college educated and everyone else.  In advanced economies, like the those of the countries in the chart, education is important. But some of those countries, like the Scandinavian countries, have reduced the income sacrificed by non-college people relative to the college educated. Other countries favor a more unequal distribution of income.

To look a little closer, I looked at the relationship between the payoff of a BA degree for men and a country’s Gini coefficient, a measure of inequality.  I used the ten countries in the Planet Money chart and added another ten OECD countries.

The correlation is 0.44.  The US is the clear outlier.  In the land of opportunity, if you’re a male, either you pay the considerable price of going to college, or you pay the price for not going to college.

With this inequality come the kinds of social consequences that Charles Murray elaborates in his latest book about non-educated Whites — disability, divorce, demoralization, death.

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Jay Livingston is the chair of the Sociology Department at Montclair State University.  You can follow him at Montclair SocioBlog or on Twitter.

Cross-posted at Montclair SocioBlog.

The poverty rate in the US in the mid-2000s was about 17%.  In Sweden, the poverty rate was 5.3%; in Germany, 11%.   That was the rate after adding in government transfers.  In Germany, the poverty rate before those transfers was 33.6%, ten points higher than that in the US.  Sweden’s pre-transfer poverty rate was about the same as ours.

Jared Bernstein has this chart showing pre-transfer and post-transfer rates for the OECD countries (click to enlarge):

Three  points:

1.  Governments have the power to reduce poverty, and reduce it a lot.  European governments do far more towards this goal than does the US government.

2.  It’s unlikely that America’s poor people are twice as lazy or unskilled or dissolute as their European counterparts.  Individual factors may explain differences between individuals, but these explanations have little relevance for the problem of overall poverty.  The focus on individual qualities also has little use as a basis for policy.  European countries have fewer people living in poverty, but not because those countries exhort the poor to lead more virtuous lives and punish them for their improvident ways.  European countries have lower poverty rates because the governments provide money and services to those who need them.

3.  The amount of welfare governments provide does not appear to have a dampening effect on the overall economy.

Cross-posted at Montclair SocioBlog.

As I speculated years ago (here and here), it may be hard for Americans to imagine a world where the law guarantees them at least 20 paid vacation days per year.  But such a world exists.  It’s called Europe.*

Americans are the lucky ones.  As Mitt Romney has warned us “European-style benefits” would   “poison the very spirit of America.”  Niall Ferguson, who weighs in frequently on history and economics, contrasts America’s “Protestant work ethic” with what you find in Europe – an “atheist sloth ethic.”

The graph is a bit misleading. It shows only what the law requires of employers.  Americans do get vacations.  But here in America, how much vacation you get, or whether you get any at all, and whether it’s paid – that all depends on what you can negotiate with your employer.

Since American vacations depend on what the boss will grant, some people get more paid vacation, some get less, and some get none.  So it might be useful to ask which sectors of our economy are beehives of the work ethic and which are sloughs of sloth.  (Ferguson’s employer, for example, Harvard University, probably gives him three months off in the summer, plus a week or two or more in the winter between semesters, plus spring break, and maybe a few other days.  I wonder how he would react if Harvard did away with these sloth-inducing policies.)

The Wall Street Journal recently (here) published a graph of BLS data on access to paid vacations; they break it up by industry near the bottom.

Those people who are cleaning your hotel room and serving your meals while you’re on vacation — only about one in four can get any paid vacation days.  And at the other end, which economic sector is most indulgent of sloth among its workforce?  Wall Street.  Four out of five there get paid vacation.

How much paid vacation do we get?  That depends on sector, but it also depends on length of service.  As the Journal says,

Europeans also get more time off: usually a bare minimum of four weeks off a year. Most Americans have to stay in a job for 20 years to get that much, according to BLS data.

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* The graph is from five years ago, but I doubt things have changed much. The US still has no federal or state laws requiring any paid vacation days.

U.S. presidential candidate Mitt Romney recently traveled to Britain, Israel, and Poland, presumably to shore up his foreign policy credentials. Among a number of other statements that got a lot of attention, Romney praised Israel’s health care system, comparing it positively to the U.S. He stressed the cost differences, pointing out that Israel spends significantly less of its GDP on health care. This drew media attention because Israel has universal coverage provided by the state, and the glowing statements seemed a little odd in light of the Republicans’ opposition to the Affordable Care Act and the demonizing of the program as socialism.

But all that aside, how much do Americans spend on health care? Well…a lot. Elizabeth McM. sent us a link to a story at The Atlantic comparing U.S. medical spending to a number of other nations:

What are we spending it on? Hospital care is the single largest expense, followed by the cost of doctor/clinic visits. Another 10% is prescription drugs. The remainder falls into a variety of categories:

With overall spending distributed among so many different sectors of the health care sector, reducing costs requires more than just increased efficiency by hospitals or lowered drug costs — it requires changes and savings throughout the system.

Cross-posted at Reports from the Economic Front.

The Pew Research Center recently published a report titled “Pervasive Gloom About the World Economy.” The following two charts come from Chapter 4 which is called “The Causalities: Faith in Hard Work and Capitalism.”

The first suggests that the belief that hard work pays off remains strong in only a few countries: Pakistan (81%), the U.S. (77%), Tunisia (73%), Brazil (69%), India (67%) and Mexico (65%). The low scores in China, Germany, and Japan are worth noting. This is not to say that people everywhere are not working hard, just that many no longer believe there is a strong connection between their effort and outcome.

The second chart highlights the fact that growing numbers of people are losing faith in free market capitalism.  Despite mainstream claims that “there is no alternative,” a high percentage of people in many countries do not believe that the free market system makes people better off.

GlobeScan polled more than 12,000 adults across 23 countries about their attitudes towards economic inequality and, as the chart below reveals, the results were remarkably similar to those highlighted above.  In fact, as GlobeScan noted, “In 12 countries over 50% of people said they did not believe that the rich deserved their wealth.

It certainly seems that large numbers of people in many different countries are open to new ways of organizing economic activity.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

Many people around the world are eagerly awaiting the start of the Olympics next week.  A lucky few will compete and a small group of others will be there, in person, to watch.  Athletes and spectators, however, are just two of the groups that the games mobilize.  The Daily Mail reports on the large numbers of people hired to be temporary janitors, groundskeepers, maids, and other types of cleaners.  Many of these workers are migrants who have come to London hoping to work for a few weeks and return to their families having earned a little more than they otherwise could.

The story, sent in by Dolores R., focuses on the living conditions of these workers.  Most are paying rent to live in temporary trailers.  Packed together like sardines, the compound has been described as a “slum.” Pictures are available at the site.

Complaints include:

  • Crowded living spaces.  “Any accommodation where more than two adults have to share a room is considered ‘overcrowded’ under housing laws.”
  • Insufficient toilet and shower facilities that were “filthy” from overuse.
  • Leaking trailers that the workers are told to live with or fix themselves; stagnant ground water around some of the trailers has forced them to put together make-shift stepping stones.
  • Women are being placed in trailers with men they don’t know; at least two women have quit when they were told they had to stay with male strangers.

The Daily Mail says that the employees have signed gag orders that prevent them from talking to the press and that family and friends are barred from the camp for “security reasons.”

Via The Sociologist.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.