Foundations: Why Britain Has Stagnated

This website makes some claims about what has caused both growth and decline that are pretty contentious.

I think that many would argue that the growth following the second world war was the result of massive state investment in public services like creating the NHS and the building of council housing.

They baffelingly attribute yhat growth to the Conservative Govrernment of the 1930s rather than the post war labour government.

Similarly this page attributes growth in the 80s to the Conservative government privatisation program. Again many would argue that was actually the start of the decline which we are feeling the pain of now with things like a terrible and fractured rail service and not enough housing.

I think a perfect example of this is our water companies that have been private since the 80s and have done nothing but pay dividends to shareholders and now we have a disaster with shit being poured into all our rivers and costs to households rising dramatically.

Edit: I read on and they use the drop in passengers in the railway in 1965 as an argument against nationalisation of the rail service, somehow neglecting to mention the beeching cuts! That is incredibly missleading given 55% of stations were axed due to a /reduction/ of state infrastructure at that time.

"It may have been the greatest rapid expansion in a given economic sector in British history, and it was the key reason we didn’t experience a Great Depression while Germany, the USA, and France did. "

But Great Britain (as it was then) did experience a great depression. 3.5 million people were unemployed in 1932.

Ok - one could say that the depression in GB was less pronouced vs. the situation from 1918 on, but I think that there is a lot of cherry picking & spin in this article. Comparisons are not made consistently and the context from history mean some things matter less in the UK and matter more, and have happened for particular reasons. For example folks often talk about reservoirs, but fundamentally the UK's reservoirs were largely built to support an industrial demand that is simply not there - and this capacity remains despite the loss of demand.

There are some good points, but I think they are obscured by the polemic.

> Nor can austerity or the hangover from the financial crisis explain Britain’s malaise. The financial crisis was at least as turbulent in the United States as here.

Yes it can. For the UK the financial sector was a dramatically important one, more so than practically for any other major country. London was the undisputed financial center for whole Europe and beyond, a legacy of Empire days, the pound as reserve currency etc. This had serious distorting effects: Abysmal center-periphery inequalities; the fatal attraction of talented people to lucrative but mostly pointless financial engineering games; the neglect of "bricks and mortar" etc.

The financial crisis and Brexit demolished this fragile, hyperconcentrated economic posture. Not in the sharp and seemingly recoverable fashion that, e.g., COVID damaged the tourism industry of various countries but in a chronic, gentle decline kind of way.

In the long-term one would think that the immense cultural heritage of Britain across pretty much the entire knowledge spectrum would somehow translate into a way forward. But as we increasingly get to know all too well, the problems of modern societies are self-inflicted and they reflect fundamental breakdowns of social contracts. Yes, despite what that British lady said, there is an emergent phenomenon called "society" and if you deny its existence you will get devoured by demons of its own creation.

This is pretty bleak reading for a resident of the UK! It's a good explanation for why there's stagnation (generally not allowed to build here). I'm a fan of their work (see the housing theory of everything [1] which is also good).

I'd be interested to read what they think can be done about the planning issue. The new government hasn't really come through on their promise to address it. They ran out of low hanging fruit pretty quickly. They're focusing more on rental reform rather than on supply. Gov modified the NPPF in odd ways (e.g. reduced targets in London, where need is highest). They set up a panel to look at new towns which will report back in a year.

This bit at the end made me laugh:

> it need simply remove the barriers that stop the private sector from doing what it already wants to do

Unfortunately these supply-side policies causing stagnation are representative of what our ageing population actually wants. The average 50+ voter thinks demand is too high and should be cut until supply catches up (in 33 years) [2][3].

[1]: https://worksinprogress.co/issue/the-housing-theory-of-every... [2]: https://yougov.co.uk/topics/society/trackers/the-most-import... [3]: At the current rate of house building it would take 33 years for the UK to reach France's current dwelling to person ratio, assuming UK's population growth stops.

I left the UK almost 20 years ago, and cannot imagine returning for any length of time.

My personal take on this is the UK got so used to having an empire, and specifically India, which could absorb more British bureaucrats than the UK could possibly produce. Consequently when Indian independence occurred this massive pipeline of producing people for running colonies had nowhere to go, and a large number moved back to the UK. What you have now is a class of people have been trying to run the country as a colony of itself with rather predictable results.

The UK has a broken culture, and until they start valuing things appropriately they will stay that way.

I’ll need to sit down and read this properly, but I would say there is a real stench of decline in England at the moment and pretty much everyone here would agree. It’s readily apparent the new government won’t save us already.

Public services in particular: 2 weeks to see a Dr, a year for an operation, unlikely for the police to attend your call out, stagnant economy, high cost of living and low wages. And all whilst we have one of the highest tax burdens in our history.

Really interesting and well researched read. The main take away seems to be that Britain has seen a lack of state funded infrastructure development and it's paying the price for this, especially in the energy sector.

I'm obviously oversimplifying, but I think that's an ok rough summary. I think it's well argued and evidenced in the article, but I'm interested in this question: why isn't the US stagnating?

My understanding is that it has had a similarly low infrastructue development, but conversely is doing well economically. What's the deal?

> 800,000 British families have second homes compared to 3.4 million French families.

Why the focus on second homes? I would care more about utilisation of homes by home-owners: walk around London at night, so many apartments are dark. The locals say investors own them.

We have fully embraced the parasite economy in the UK, however unlike big American tech we feed on one another. The safest business for a long time has been property, poor quality reno-flips and rentals, which adds nothing except burden to the people who might bring foreign income through being entrepreneurial.

This graphic[1] show how insane the European electricity market regulation has been for both France and the UK: going from electricity prices on par with the US to 2-3 times the price in less than a decade !

[1]: https://datawrapper.dwcdn.net/7SNeG/full.png

Similar points were covered in the recent Tyler Cowen podcast with Tobi Lütke[1] regarding economic stagnation in Canada & Germany (relative to the US).

The UK has a cynical view on progress, likely leading to a self-fulfilling prophecy. The US seems to have a contrasting view with an optimistic by default outlook.

1. https://conversationswithtyler.com/episodes/tobi-lutke/

How can there be a 360, 000 page document to build something. That number seems so outrageously high. Is the font size massive or something?

Long essay.

TL;DR the UK planning system is too restrictive and is stopping investment.

However, some of the comparisons made don't really stack up.

Yes. France has a better housing supply, and roughly the same area. But France has over twice the area, and under half the population density, even before you account for the almost uninhabited mountainous areas in Wales, Northern England and Scotland. So our populations are squeezed into smaller areas.

There are some good points made though. The gold plating of a lot of projects is ridiculous. And don't get me started on the Elizabeth Line. I get it, it is clearly hugely beneficial and I have no doubt it pays for itself. But then you visit places like Maerdy in the Welsh valleys, devastated by the closure of the coal mines, and it seems obscene to spend all that money in so small an area.

why was this flagged ?

there is no poor energy rich country. with the U.K having expensive energy it means they're slowly becoming a poor country. it already feels poor as it is. But this will accelerate the rate

The main reason Britain is failing is it wiped out its industrial base.

Without that, it cant build anything effectively.

The UK was, and to some senses still is, a culture that strongly values who your parents are vs what you’ve personally accomplished. The head of state is the child of the previous head of state. The House of Lords is still a thing. Prestige based on family lineage is considered a big deal.

In the US and other parts of Europe it’s very different. People value you a lot more because of what you’ve done vs who you are and, with some exception, nobody cares who your parents were. If you have a rich daddy most people don’t care. If you’re rich because you inherited wealth vs earning it that’s see as “less” than those who are self made. While there are certainly exceptions, most of our richest people are in the self-made category and that’s a source of pride. “The American Dream” while a bit of a glossy story is generally a very real thing.

Passing off wealth and prestige by lineage has long been shown to be a bad idea. The next generation typically just screws it up.

Until the UK truly does away with its still quite hereditary ways and focuses a lot more on valuing individual achievement it will likely only continue to stagnate against other economies that have long since broadly moved on from such archaic mental models.

Type of article: country X or company Y or city Z has it bad for such and such decisions, policies, culture. My rule of thumb for these kind of articles: if they don't mention external factors they are not worth reading.

An entity's situation is influenced by much more than its agency. There's competition from other similar entities, historical circumstances, geography, weather, happenstance, the list goes on and on and on. We like to think that everything depends on what we decide when in reality it's far from it.

These observations have been triggered in myself by reading history. Leadership is always blamed in difficult situations even if they were not (or not completely) responsible for the situation.

Ctrl-f "class" -> "world-class". Checks out.

One thing I will never forget from my short time living in London is how un-insulated the homes there were. Single or thin double-glazed windows, full-brick homes without a hint of thermal insulation. Sure there were exceptions but not many. At the time in Central Europe the movement to heavily insulated, nearly-passive homes was already in full swing. Many central European countries were much poorer than the UK, not even mentioning London, and energy prices were lower, so, naively I thought, everyone with an old house in the UK should be busy insulating it. It would pay off in a few years. Why didn't they?

And I think one of the reasons is that the governments, indeed the ruling class as a whole, just didn't care that the commoners are paying over their heads for energy and are freezing in moldy houses, because the class divide is just so big. It would be interesting to live in an alternate universe where Karl Marx would live in a different country - perhaps his theory would place a smaller emphasis on social class.

The way rail project costs are totalled up is different from one country to another -what costs are included and excluded.

In other words this website is making enormous oversimplifications and not bothering to explain or justify them.

The reason that Britain has stagnated is the same reason most of western Europe has stagnated (in that GDP per capita hasn't increased for around a decade): continuously increasing debt and an aging population. It's a classic empirical economic result that a high enough level of government debt leads to reduced growth rates, and it's also well-known that growth rates decrease as the average age of the population increases. Over the past couple decades the UK population has been getting older and older on average and the national debt has been getting higher and higher.

The article is fairly misleading. Despite claims to the contrary the list of facts is nothing more than "disconnected observations". They lack any serious context or nuance. For every single one it's possible to ask whether the observation is a fair comparison or something that should be the case. Take the number of second homes relative to France. Is more second homes a good thing? Take electricity production, might we not argue that the UK uses energy more efficiently rather than lagging what other countries generate?

The climax of this system where the wealthy control everything is that the wealthy grab literally all of the wealth, spending that wealth in their endless competition with each other, leaving only scraps for the rest of us. And then the rest of us fill all our time stressed out and squabbling over crumbs with no time to do something better.

That's Britain.

I think Britain has got rich during early 18 century by dominating and getting into other countries like India, Africa and now nothing has left in the world to concur, that's why they're stagnated (maybe for forever)

On a tangent, what is astonishing to me as an outsider is the cultural stagnation. Even in times of economic decline Britain was a cultural powerhouse. Modern music, theater, cinema, tv, literature, sports, etc. were permanently shaped by post-war Britain (especially in Europe). Whatever the cultural norm dictated by the behemoth that is the USA, Britain always had something new, something fresh to give. There's no point listing specific examples, they are numerous.

What happened in the last 15 years is a mystery to me. I doubt it's economic stagnation (been there before) and I doubt it collapsed under the weight of US culture (which is still enamored with anything British). Maybe the modern internet and social media diluted everything. I don't know, but I miss it. (sorry for the off-topic)

> With almost identical population sizes, the UK has under 30 million homes, while France has around 37 million. 800,000 British families have second homes compared to 3.4 million French families.

I'm not sure that's a fair comparison, France has double the area of UK, and more of it is usable.

I loved this paper, it's full of new ideas.

My main question/challenge would be: if the problems have been constant since the 1950s-1980s - e.g. planning and failure to build - then how come we were doing so well until 2008? Why did problems only start biting then?

The list of issues that the article list seems very ad hoc. Some are compared to EU countries, but apparently only where this makes the UK come out worst.

It also ignores the fact that the UK might do better in some area's than other countries, it would be fair to lists these as well. Otherwise you could make a list like this for any country in the world.

Also some issues seem irrelevant. E.g. the crime rate was given, and it was mentioned that this had been actually going down in the recent years. But then it was compared to the crime rate after WO2, and yes, compared to that it went up.

OK, why is this flagged?

Weird how Western Europe stagnated after 1990, only Germany get some more “gas” for growth thanks to CEE and cheap energy. now it seems that importing tens of millions of low skilled refugees and workers with high social benefits is killing any innovation while taxing middle class and all high skilled Europeans prefer to move to US or even east Asia.

Which makes whole industry lag behinds and UK is probably biggest example of that it is just big banking and service hub with no money for any investments in infrastructure outside London making it more and more depending on single city with legacy service sector. Even Poles are coming back to Poland a country that was 7-10 times poorer 20 years ago.

"But it remains doubtful that [Labour] will be any better at delivering on those ambitions than the Conservatives were."

This one sentence in the introduction belies an article not entirely based on factual evidence.

It's OK if history is not in our favor, we will just rewrite it.

Funny how everyone in the West was dependent on Russia si much. People weren't thinking at all?

Rightoid propaganda

The list of things the consider is long almost exhaustive. Most of the points have already been made, some by other people too, if you follow these things online. While there is nothing there earth-shattering, it's good to see it all nicely laid out. People dismissing everything with a sentence, are not doing it justice.

However. The report is thin on recommendations "What is to be done now?", or did I miss them really!? That really surprises me. If I were to define it in two sentences: UK central gov is ultra centralised in Whitehall (#1) (almost Stalinist in that respect!!), and then that centralised power is further held in a strangle hold by the Treasury Brain - Deep State - OBR complex (#2). So together they are like Centralisation^2.

Atm that ensures - #1 nothing can be done by anyone else, and #2 they've settled on "do nothing" b/c everything costs money, and #2 care disproportionally more about that cost, and much less about what capability assets etc that cost buys UK. Once nothing tangible is done, laziness is naturally encouraged, activity punished, and every promotion every jostling in the hierarchy becomes entirely a beauty contest, divorced from any real-word results. All this seen afar by outsider without any insider knowledge. Just listening to Rory Stewart and Dominic Cummings relying info about the inner workings of UK gov machine.

So any intervention would have to come (walking backwards) into point #2, and or at point #1.

Point #2 means smashing the power of the Treasury. They are good servant, but a bad master. No.10 (the PM) needs to re-assert itself over and above No.11 (the FinMin) by 1st-ly taking decision powers out of No.11 hands. No.10 would have to work much more on getting things done, take interest in that, and leave behind the media PR Circus it's totally devoted to atm. Just assume you will serve 1 term (or less!), drop the "permanent electioneering mode" (that nowadays the position goes into while in gov??), don't think of re-election and try get stuff done, assuming you've run out of time. Can't see how a change like that can come but directly from the top, from the PM. Supported by legislation and votes to dismantle the 1000 roadblocks, via the political power of MPs voting in Parliament.

Point #1 means decentralisation of power. UK for a long time used to have vigorous local authorities that could innovate in various ways. Admired once at the riches of local gov building in Birmingham (UK 2nd largest city). The idea that some pimply fresh graduate 20yo SpAd 120 miles away in London would be telling these people how many pencils they should buy I presume would have seemed to the people running the City gov absurd, like a Monty Python sketch to us.

Mid-term UK needs to build another 10mil strong cities agglomeration, e.g. Liverpool - Manchester - Leeds - Sheffield - Hull, by connecting them with transport links, and building housing along the links for commuting whichever way people fancy. With Birmingham half-way between this new MegaCity and the old London. So London gets some competition, and raises its game too. Atm feels London is coasting because TINA.

14 years of Tory rule.

TL;DR: you need energy if you want to build/transform/produce/transport things

I once held a British passport, I'm glad I now hold another.