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Thread: UK Living Standards Outstrip US

  1. #1
    Senior Member Capn_Birdseye's Avatar
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    Default UK Living Standards Outstrip US

    Can this really be true? Having just returned to the UK from a prolonged Christmas/New Year break in the US I find it difficult to believe - the cost of petrol, eating out, clothes, electricals, etc seem so much cheaper than in the UK even taking into account the current favourable sterling/dollar rate. People in the US seemed to be out there spending as though there was no tomorrow!

    From The Sunday Times
    January 6, 2008
    UK living standards outstrip US

    Living standards outstrip those across the Atlantic for first time in over a century


    David Smith, Economics Editor

    LIVING standards in Britain are set to rise above those in America for the first time since the 19th century, according to a report by the respected Oxford Economics consultancy.
    The calculations suggest that, measured by gross domestic product per capita, Britain can now hold its head up high in the economic stakes after more than a century of playing second fiddle to the Americans.
    It says that GDP per head in Britain will be £23,500 this year, compared with £23,250 in America, reflecting not only the strength of the pound against the dollar but also the UK economy’s record run of growth and rising incomes going back to the early 1990s.
    In those days, according to Oxford Economics, Britain’s GDP per capita was 34% below that in America, 33% less than in Germany and 26% lower than in France. Now, not only have average incomes crept above those in America but they are more than 8% above France (£21,700) and Germany (£21,665).
    “The past 15 years have seen a dramatic change in the UK’s economic performance and its position in the world economy,” said Adrian Cooper, managing director of Oxford Economics. “No longer are we the ‘sick man of Europe’. Indeed, our calculations suggest that UK living standards are now a match for those of the US.”
    Although many people will be surprised by the figures, Americans have long complained that average incomes have been stagnant in their country. One often-quoted statistical comparison suggests that in real terms the median male full-time salary in America is no higher now than it was in the 1970s.
    Oxford Economics says that while the comparisons are affected by sterling’s high value against the dollar, they also reflect longer-term factors. “The UK has been catching up steadily with living standards in the US since 2001 � so, it is a well established trend rather than simply the result of currency fluctuations,” its report says.
    It concedes, however, that a significant fall in the pound against other currencies would push Britain back down the ladder. It has assumed an exchange rate of just over $2 for the purpose of the calculation but in recent days the pound has slipped below that level.
    The Oxford analysts also point out that Americans benefit from lower prices than those in Britain. With an adjustment made for this “purchasing power parity”, the average American has more spending power than his UK counterpart and pays lower taxes. (In the run-up to Christmas many Britons travelled to New York and other American cities to take advantage of the strength of sterling against the dollar and those lower prices.)
    However, the British typically have significantly longer holidays than Americans as well as access to “free” healthcare.
    The figures may be of small comfort to Britons worried about house prices and facing a severe squeeze on their incomes this year as a result of record petrol prices and rising energy bills.
    Citigroup, which was the most accurate forecaster of Britain’s economy last year, predicts the slowest rise in consumer spending this year since 1992.
    “After the credit-fuelled boom in domestic demand and asset prices, the UK economy now faces a hangover, with slowing credit growth, falling property prices and tightening lending standards,” said Michael Saunders, its UK economist.
    Last week oil prices hit $100 a barrel, presaging a rise in petrol and diesel prices on the fore-courts. Npower, Britain’s fourth biggest energy supplier, announced that energy prices would go up sharply, raising the prospect of the average household bill rising above £1,000 for the first time.
    America overtook Britain economically in the final years of the 19th century, during the so-called second industrial revolution, which brought mass manufacture and sharply rising prosperity to the United States.


    http://business.timesonline.co.uk/to...cle3137506.ece

  2. #2

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    You can buy close to twice as much stuff with $23,250 in the U.S. as you can with $23,500 in the U.K.

    Also, both those figures are highly suspect. https://www.cia.gov/library/publicat.../2004rank.html

  3. #3
    Disgruntled Optimist lofter1's Avatar
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    Default

    Quote Originally Posted by Capn_Birdseye View Post

    ... People in the US seemed to be out there spending as though there was no tomorrow!
    And saving ... nary a dime

  4. #4

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    Americans have more expendible income but I think the point is that doesn't necessarily equate to the standard of living.

  5. #5
    Disgruntled Optimist lofter1's Avatar
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    I 'm not so sure that Americans really have more "expendible" income ... they just spend it, whether they have it or not, with the blessing of short-sighted banks and credit card companies.

  6. #6
    Forum Veteran MidtownGuy's Avatar
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    Default

    Will the dollar keep falling? Will it get below 2:1 with the Euro? Is America on the decline permanently when compared to Britain, Europe, etc?
    They've really managed to screw things up BIG TIME and I just can't see it getting much better.

  7. #7

    Default very dubious

    If we just measure currency exchange rates and how much milk a British person can buy, this might be correct. But outside of a few cities on the coasts, housing is still very cheap in the US. By contrast, almost 20 percent of UK residents living in metro - London, a brutally expensive area. I think when you factor in big ticket items like housing costs, Americans are better off on average.

  8. #8
    Forum Veteran MidtownGuy's Avatar
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    Not just Britain, I observe that most Europeans have a much better life than Americans.
    Unfortunately most of the traditional indices of "quality of life" don't even consider a lot of aspects that I consider important.
    We could start with the food supply in America. It's mostly genetically poisoned frankenfood. If you want to actually eat healthy in America, you pay much more than in Europe.
    They have better vacations, better urban spaces, better nightlife, better education, better eveything!
    Plus, America is a giant bubble of debt swirling right down the toilet.
    We just spent 1 trillion in Iraq. This kind of lunacy will not pave a better tomorrow.
    In fact, I don't see the dollar ever being on par with the Euro again, much less the British pound. The US might be the Brazil of the 21st century. If you are in the minority of the wealthy here, life will be just peachy keen. For most everyone else, especially the dwindling middle class, life will be getting worse.

  9. #9

    Default those points are a very hard sell

    Europeans have better vacation packages, but the other points are silly and in certain cases factually incorrect. Also, just a note about an American paradox is that rich people cluster in places like Manhattan where there is kind of a self imposed poverty, but middle income people can get a big house and a life similarly rich people in Europe can hardly imagine. America is surprisingly equal in that respect, for all our talk about rich and poor. Anyways - here's some rebuttals on your specific omparisons.

    Food: Check out a Zagat guide and it will always point out that even though Americans think New York dining is expensive, its cheaper than comparable places anywhere in Europe. Besides, America is a diverse country and we have restaurant variety here, which I like. London has decent ethnic food but most of Europe doesn't. In America, even second tier cities like Dallas and Atlanta have great food and great variety. We do have a portion control problem - but our issue isn't frankenfood - we just eat too much because food is so much cheaper than it is elsewhere in the world.

    Education: The US indisputably has the worlds best univesity system. Also, we don't force people in high school to make vocational choices but rather encourage them to broadly explore a liberal arts education and pursue their dreams. Finally, on the one issue Americans like to worry about, poor people in the US go to school and consistently achieve happier and better outcomes as fully integrated members of society than anyone gives them credit for. In Europe, poor minorities are basically screwed for life in most places - something Americans like to worry is true but the reality is Europe is worse.

    Nightlife: When European cities start running their subways 24 hours, come back and we'll talk. And have you ever heard of Vegas?

    Parks: Yosemite, YellowStone, etc.

  10. #10

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    A couple of notes.

    First of all, the article seems to be comparing nominal GBP/USD amounts of GDP per capita.

    1. This does not take into account (glaring) price differences and
    2. GDP per capita is a pretty poor measure on quality of life once you are talking about small differences at the upper end (it’s a good proxy if you are going from, say, 10K to 20K).

    MidtownGuy wrote:

    “…most Europeans have a much better life than Americans.”

    Not by all measures, surely.

    “They have [better food], better vacations, better urban spaces, better nightlife, better education, better everything!”

    Arguably true, though not sure about the nightlife or education, overall.


    investordude wrote:

    “…but middle income people can get a big house and a life similarly rich people in Europe can hardly imagine.”

    Where? In some culturally/culinarily/urbanistically wasteland of nowhereness?

    “though Americans think New York dining is expensive, its cheaper than comparable places anywhere in Europe.”

    No. London, maybe. Certainly not southern Europe. How can you even think that is the case, man?


  11. #11

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    I agree with everthing above however:

    The average American family does have much more space.

    If the comparison is not between cities, Euros have more nightlife.

    Dining: in the US you get LOTS of cheap food cheap... but to eat the way we do, in my neck of Europe, it costs a fortune in the US. Food is expensive here but the quality is high.

  12. #12

    Default asia has best nightlife by the way

    As long as we're comparing continents, its so obvious Asia has the best nightlife among continents. Just curious if anyone disagrees?

    They also have the cheapest food (excluding Japan, where food is admittedly very expensive). Fabrizio, I wonder if the issue is you like French and Italian food specifically. The US has a lot of "fancy" French and Italian restaurants which are overpriced and emphasize ambiance.

    All I know is everything I ate in Italy was exorbitantly expensive except for the pasta. This may be in part because it was in tourist zones, but still, I was surprised by how high the prices were.

    One note about US food - the east coast has mysteriously bad fresh produce compared to the rest of the country. Go to California and incredibly good fresh fruits and vegetables (far better than Europe) are cheaply available in the supermarket. Overall, I'm still with my assessment, outside oddball markets like New York food is very cheap in the US. Try a Costco or Sam's - hard to beat those prices in the developed world.

  13. #13
    Forum Veteran MidtownGuy's Avatar
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    Europeans have better vacation packages, but the other points are silly and in certain cases factually incorrect. Also, just a note about an American paradox is that rich people cluster in places like Manhattan where there is kind of a self imposed poverty, but middle income people can get a big house and a life similarly rich people in Europe can hardly imagine. America is surprisingly equal in that respect, for all our talk about rich and poor. Anyways - here's some rebuttals on your specific omparisons.
    And here are mine:

    Food: Check out a Zagat guide and it will always point out that even though Americans think New York dining is expensive, its cheaper than comparable places anywhere in Europe.
    What I said was: "We could start with the food supply in America. It's mostly genetically poisoned frankenfood. If you want to actually eat healthy in America, you pay much more than in Europe."

    First, New York is not typical of America. Restaurant prices/quality, even if what you said were true, is not the aspect of the food supply that I was talking about; I specifically mentioned food supply in regards to genetically modified crops and the price of eating healthy food that isn't stewing in a soup of chemicals. Don't even get me started on the meat supply in America. Crap food is plentiful and cheap, fresh healthy food costs a premium.
    Your focus on restaurants is puzzling until it is considered that you're a New Yorker and probably eat out more than you eat home cooked food. So that's what you're thinking about when you read my comment. Again, we in NYC are not typical of people outside the City or in most of Europe. Or the world for that matter. More relevant than Zagat restaurant ratings might be an examination of the prices/offerings in supermarkets. In America, they are huge, with so much variety on offer, but like I said the wholesome stuff is ridiculously overpriced.

    I spend quite a bit of time in Europe and much of it is not in hotels or tourist zones but in self-catering apartments or with friends, so you might say I've shopped in many, many supermarkets there. The variety is smaller, but the standards are higher and the prices for wholesome foods are lower. (increasingly not for us though, with the dollar sinking like Titanic.)
    In Dusseldorf, for example, you find stores selling "bio" food (organic) for amazingly low prices all over the place.


    Besides, America is a diverse country and we have restaurant variety here, which I like. London has decent ethnic food but most of Europe doesn't. In America, even second tier cities like Dallas and Atlanta have great food and great variety. We do have a portion control problem - but our issue isn't frankenfood - we just eat too much because food is so much cheaper than it is elsewhere in the world.
    Again, restaurants seem to be your main concern. And yes, frankenfood IS an issue if you are paying attention to what is legal and typical in Europe compared to here.

    Education: The US indisputably has the worlds best univesity system.
    If you are rich or willing to submit to outrageous loans.

    And what about our public schools, before you even get near a university? I was really talking more about public education, which is what matters as an average child growing up when you are stuck in a place. If you were lucky enough to go to a public school with computers and books more important than security guards and metal detectors I suppose it all looks peachy keen. There are two Americas.

    Also, we don't force people in high school to make vocational choices but rather encourage them to broadly explore a liberal arts education and pursue their dreams.
    huh?

    Finally, on the one issue Americans like to worry about, poor people in the US go to school and consistently achieve happier and better outcomes as fully integrated members of society than anyone gives them credit for.
    Any facts to offer, or are you giving us personal impressions? Are you just talking about universities again? The American public school system is crap in so many communities (not the rich ones, of course). SO much inequality and underfunding. Just really pathetic for a country like this.
    Your defense seems limited to such a narrow realm of existence and, perhaps, experience.

    Nightlife: When European cities start running their subways 24 hours, come back and we'll talk.
    Doesn't matter. We run the subways 24 hours a day, but run our nightlife industry into the ground.

    Anyway, most cities in America shut down by 2 am. And don't have a subway at all.
    In Madrid or Athens, people are still having their after dinner drinks.

    And have you ever heard of Vegas?
    Ever heard of someone NOT actually interested in giant silicone tits or plastic versions of the real thing in actual cities?
    I've been to Vegas 4 times for menswear industry conventions and I can tell you that the nightlife there is not great unless Celine Dion, erotic dancers or the Hard Rock Cafe are what you get into to.

    Plus, they don't even run subways at all in Vegas

    Parks: Yosemite, YellowStone, etc.
    Those aren't urban spaces so that isn't a rebuttal to any of my points.

    All I know is everything I ate in Italy was exorbitantly expensive except for the pasta. This may be in part because it was in tourist zones, but still, I was surprised by how high the prices were.
    Yes, you must have stayed in tourist zones. Understandable, and typical for most Americans with their small vacation packages; you didn't have the chance or the interest to see the real neighborhoods.

  14. #14

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    Investordude: "Fabrizio, I wonder if the issue is you like French and Italian food specifically"

    No. Specifically, I like good produce. Meat not filled with hormones. Cut in front of me as I request. Whole fish (or cut by the fish monger). Artisinal cheeses of a wide variety, both fresh and aged. Artisinal cured meats... ham, salami... handmade sausages. Bread that has been baked the day that I buy it (wood oven baked if possible). Extra virgin olive oil. Butter that is sweet, fresh and of high fat content. Fruit and vegetables that are locally grown and in season. Wine that is produced locally without additives. etc. and etc.

    In other words, the way most of the people I know eat. And we are not talking about schooled gourmands. We are talking about a culture.

    As far as "fancy" restaurants go... I frequent them, if for some reason, I must. "My" places are simple and chef/owner run.

    I agree with you about the wide variety of ethnic food avaiable to all in the US... it's wonderful and something I really enjoy when I visit.

    Tourist food in Italy can be very bad and expensive, a rip-off all the way around. And even in "good" touristy restaurants, you must understand how to order.

    Prices: with the dollar so low, everything is expensive here for Americans.


    ---
    Last edited by Fabrizio; January 14th, 2008 at 02:19 PM.

  15. #15
    The Dude Abides
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    I realize I might be stepping into a polarizing argument here, so I will keep my comments anecdotal and objective. (I am NOT trying to start a back-and-forth with anyone.)

    Since the majority of points seem to center around food, here's my take:

    In America, I think eating out is undoubtedly cheaper than it is in Europe (even adjusting for exchange rates). Whether it's better, nutrition-wise, is up to debate: there are just way too many restaurants to make a broad generalization. And I'm not talking about fast-food. We have literally thousands of full-service, very affordable restaurants that serve a wide range of cuisines. Places like Friday's and Applebee's offer perfectly good food, IMO: they've caught on to some of the healthier trends, and if you order a dinner without alcohol, you can eat a full meal for 10-15 bucks in many cases, with tip.

    Raw food, I'm not so sure about. My experiences in Europe with supermarkets are limited to Poland, where, I can say objectively that food is almost as expensive as it is here (despite the much lower wages there). And quality is lacking in many areas, especially meat and produce. Talking to friends and family there, most people think the supermarkets are very under par. That being said, you can still get good, reasonably priced food items at specialty stores. Bread is excellent there, if it comes from a local bakery. As are some other things like butter, eggs, potatoes, and mushrooms.

    I don't know how expensive, relatively, food is here in the US. I do know that prices vary widely (as with other things like housing). Costs of living are far lower in places like Denver, Dallas, Charlotte, and Minneapolis than they are in New York and San Francisco. I think that, specifically, Whole Foods has been a tremendous success in bringing high-quality, organic and fresh foods to almost every major market in America. It is undoubtedly more expensive than your local supermarket, but I think it's worth going to occasionally for that good piece of steak, fish, or cheese (and they've got great selection). They also have great working relationships with local suppliers of bread and produce. If food quality really is a problem for a lot of America, I hope that Whole Foods (and other chains like it) will help to raise the level generally by not only expanding but also putting pressure on others to change their standards.

    Quick note about education: from the statistics I've seen, we still have one of the best primary education systems in the world. Our 4th graders score as well as anyone else, and 8th graders are just a bit worse. The real trouble comes in after 8th grade: high school is where our education system fails children. The biggest problem is the lack of qualified math (and to a lesser extent, science) instructors. We need to find a way to change the pay structure (which right now pays an English teacher just as much) to attract more qualified people with Math degrees who choose to work in the private sector where their skills are well compensated. This will ensure our students will be able to pursue the advanced degrees in engineering, math, and computer science to stay competitive for skilled jobs.

    In addition, widespread zoning reform should be undertaken to eliminate de facto segregation of minorities and whites in the public school system. It's a tremendous failure on the part of policymakers to have perpetuated such a grave inequality, and it's one of the biggest reasons I despise zoning as it currently works in the US.

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