Britain’s regional divide is smaller than you might think

In London, the median household has a disposable income before housing costs that is only 21 per cent higher than the weakest area, which is in the north-east England. After paying a lot for very small homes, Londoners have no higher incomes than the UK average. Most inequality occurs within regions not among them — the Institute for Fiscal Studies says that if average regional income differences were eradicated, 95 per cent of UK income inequality would still exist.

That is from Chris Giles at the FT.

Comments

'Britain’s regional divide is smaller than you might think'

Sinn Fein and the SNP just might disagree with that assessment, though admittedly neither seems primarily interested in using median household disposable income as a measurement or basis for their political goals.

Plaid Cymru might as well, but then you perpetually forget the Welsh, Clockwork.

Well, forget might not be the right word - though Plaid Cymru certainly has dreams of freeing Wales from the UK (though without using the methods employed by Sinn Fein to achieve that goal), they are a minor political party, unlike Sinn Fein or the SNP. https://en.wikipedia.org/wiki/Plaid_Cymru_election_results#2017_general_election

I also ignore the UK Greens for that matter, though they have roughly the same current political strength in UK politics (in part by not being a regional party, of course). Wales, like England, voted to leave the EU. And much like Labour, Plaid Cymru seems to have no real consistent position in regards to Brexit, in contrast to both Sinn Fein and the SNP.

And to keep going with the sort of detail often scorned here, Sinn Fein is a special case in terms of how it approaches politics in the UK - that is, by essentially rejecting them, at least when it involves the UK, which Sinn Fein wants to have no part of. Nonetheless, of the three current parties dedicated to leaving the UK, only Sinn Fein actually is connected to a party in the country Sinn Fein would like to (re)unite.

Basically, Plaid Cymru is about as relevant to UK politics as the Parti Nationaliste Basque is to French politics. Where Sinn Fein represents a party that mainly succeeded in having Ireland leave the UK, while the SNP is currently the single largest political party in Scotland, Plaid Cymru may have a long history, but basically never much real political influence.

Because they *don't* have a silicon valley blowing up the stats?

(San Francisco has highest density of billionaires of any city in the world)

Nope. Billionaires have virtually no effect on *median* income stats. And after you've adjusted for differences in cost of living, you get a very interesting distribution of median income purchasing power in the U.S. as well. Would you have guessed that Delaware is #1 and 'rust belt' states of the Midwest make up of 6 of the top 13? And that California and New York are way down at the bottom?

That is an interesting table, but isn't the England paper using very local medians? They might be more effected by local success - San Francisco vs Salinas

Effected - pre coffee word choice

Yes, but Londoners get to sell those small homes for a mint and buy in the country and retire on the difference.

Good point.

"In short, Britain has managed to create the worst of all worlds in its regional divide. Most Londoners spend so much on rent that they do not feel they have, in the words of Harry Enfield, “loadsamoney”. Meanwhile, the rest of the country resents the employment and business opportunities they see in the capital which do not exist in their towns and cities." - this seems wrong (as usual with the FT). Other regions in the UK do not seem at all resentful of London via the happiness data published yesterday by the same newspaper. In fact they are happier. And there is an very good solution for any Londoner tired of his commute and high rent - move.

My take is that the UK has actually created a fairly good balance between people who are highly career driven and ambitious and those who value other things in life. The former can go and live in London where they can mix with similar people, the latter get to live in a low cost environment where they can have a much better standard of living for the same effort.

The fact that people have different incentives and motivations often seems to pass by these inequality worriers. There are always going to be people who prefer other things other than increasing their income beyond that absolutely necessary to live. And there are always going to be people who sacrifice everything for another dollar (or pound in this case). As societies get richer the gap between the former and the latter must increase over time. It is the same with wealth, some people want to save, others spend. I certainly wouldn't want to say either are wrong.

That is entirely reasonable. A low earner may be an excellent snowboarder or free climber. So we need a better metric, for the pluggers who nonetheless feel they are failing.

Homelessness must be the base metric. On that I think the US sucks, but the UK is actually worse.

https://ourworldindata.org/homelessness

Fix that first?

While the figures can't be directly compared I see homeless rates in Australia may be nearly as high in the United States. That's not good. Of course the UK homeless rates are a shocker given how bloody cold it gets there.

From your source UK has 5,000 people sleeping rough at any one time - in a population of 60 million. This doesn't seem very high to me. I would guess that most of these are voluntary as well, I think everyone in the UK is entitled to housing benefits if they are poor. Believe it or not there are some people who like sleeping rough and I believe that this is a good begging approach especially in a big city like London.

Of course in a totalitarian state they would be rounded up and sent to a work farm. Maybe this is your preferred approach?

It appears to be a hard problem to solve, given the resources spent and the almost uniform failure in US cities. I don't have a solution, but what we are doing now is not working - for them or the rest of the population.

That's not good. Of course the UK homeless rates are a shocker given how bloody cold it gets there.

No, people starving or dying of exposure is a shocker. Vagrancy and skid row are what you get when people fail spectacularly at life. The scale of the problem (even in the U.S.) is small enough that private charities running shelters and soup kitchens and community food cupboards can handle the problem with some assistance from local government to provide security and order. Some of these people might at one time have been candidates for asylums or workhouses and the chronically schizophrenic among them should be coercively confined if they're a public order problem. Most of them are just unlucky, eccentric, and willful. We need volunteers to help them keep body and soul together and keep from getting gangrene. We don't need local governments providing rental housing for 50 million people in order to avoid having 500,000 vagrants.

What? Most of these people have severe mental health and/or addiction issues. This is 90% a health care and wraparound social assistance issue. Some countries do better than others and the US is certainly one of the worst among rich countries.

What? Most of these people have severe mental health and/or addiction issues.

No, maybe 20% have a history of schizophreniform episodes. 'Addiction' is a behavior problem. Addicts may benefit from the application of medical arts now and again, but their problem isn't medical. Schizophrenia has neurological signatures, but medical treatment for it is symptomatic.

If anyone doesn't believe addiction is a behavior problem and not a medical problem, just consider the case of a concussed football player. It is obvious that a football player with a concussion doesn't have a medical problem, but instead has a behavior problem stemming from his refusal to not play football.

I gather you thought this made some sort of sense when you wrote it.

A football player has a discrete injury. Addicts injure themselves in a metaphorical way. But mostly they behave badly. Again and again. Several times a week. For years and years on end. That generally leads to medical problems. The behavior itself is not a medical problem.

If a smoker got lung cancer that would be a medical condition, but their chronic increased blood clotting tendency is a behavior problem because it stems from their unwise behavior of smoking every day?

People who smoke cigarettes commonly have medical problems. The habit of smoking cigarettes is not a medical problem. This isn't that difficult.

Smoking is definitely a behavior that causes problems. For one thing it results in tolerance to the effects of nicotine in the alpha-4 beta-2 nicotine acetylcholine receptors after repeated exposure. Is this tolerance a medical or a behavioral problem? I'd call it a medical condition that is a direct result from the cigarette smoking behavior.

What you're saying is not true, at least if you consider the trained medical community to be the experts on what constitutes disease and health issues. Addiction is of course a chronic diseases, and behavioral health issues go way beyond schizophrenia.

+1. https://www.manhattan-institute.org/what-nyc-must-learn-from-seattles-homeless-struggle

Vagrancy and skid row are what you get when people fail spectacularly at life.

" We speak of a person being “under the influence” of alcohol, or heroin, or amphetamine, and believe that these substances affect him so profoundly as to render him utterly helpless in their grip. We thus consider it scientifically justified to take the most stringent precautions against these things and often prohibit their nonmedical, or even their medical, use. But a person may be under the influence not only of material substances but also of spiritual ideas and sentiments, such as patriotism, Catholicism, or Communism. But we are not afraid of these influences, and believe that each person is, or ought to be, capable of fending for himself. "

"Psychiatrists look for twisted molecules and defective genes as the causes of schizophrenia, because schizophrenia is the name of a disease. If Christianity or Communism were called diseases, would they then look for the chemical and genetic “causes” of these “conditions”? "

Thomas Szasz

Szasz had some arresting observations to make, as did Ivan Ilich. They were both cranks, however.

crank: an eccentric person, especially one who is obsessed by a particular subject or theory.

In other words, a specialist.

No, a crank. Szasz was a psychiatrist who earned his living from talk therapy. His views on schizophrenia were crucially shaped by assiduously avoiding schizophrenics during his medical residency. See Clayton Cramer's research into the subject of Szasz's time as a resident.

Looking between countries, I would expect some cultural confounds.

I'd expect Britain to in the longer term have more young folk who leave the family home, regardless of whether they have the means to do so, because of the cultural tradition. Contra Spain or Italy, in which young people without the resources leaving home probably less likely to do so.

Share of population ever having been homeless, by telephone survey, may sadly have some element of survivor bias as well - if Brits who are homeless more likely to be reintegrated into society (and survive) than Germans (more likely to die young), then you'll get telephone survey differences, but not for the reasons you'd think.

Still, likely to be a housing costs:income ratio effect, for sure.

I was thinking that Spain, and even more Portugal, might be like Italy, where so many leave the villages that there are cheap empty homes, and so fewer homeless.

From what I know, homeless people aren't typically people who are employed, particularly in declining regions, and who could afford some sort of even cheap home, but don't have enough for an expensive one. There aren't "employed homeless".

They tend to be people who can't really retain employment due to various problems, and then have dispute with people who put them up or they are people with marginal and precarious employment who have migrated far from where anyone they know who *would* put them up, and unemployment pushes them into homelessness. That's the majority I think, and there is a minority that chooses to live on the street or have no fixed abode.

>>As societies get richer the gap between the former and the latter must increase over time.

Its the same in the USA. You can be highly ambitious by moving to a blue state or a blue city. Or you can enjoy a less ambitious life by moving to a red state.

Really moving to *a* city is what does it, and cities trend blue, in national vote, and to quite a lesser extent in mayors.

Differences between states are quite small, outside cities, but to the extent they exist, red states are less compressed in income so the highly ambitious have a bit more chance to earn a high one. The ambitious don't move to the East-Central region.

You probably see the same dynamics of migration to more unequal regions by ambitious people with marketable skills within the US that you see between countries - https://blogs.lse.ac.uk/businessreview/2018/05/04/skilled-migrants-have-higher-earning-potential-in-countries-with-more-inequality/. Many of those are cities, and hence blue, but blue areas that are not cities tend to be more compressing, so probably tend to attract more unskilled migration and lose talent.

My take is that the UK has actually created a fairly good balance between people who are highly career driven and ambitious and those who value other things in life.

From the Onion Unambitious Loser With Happy, Fulfilling Life Still Lives In Hometown.

The truly odd thing now, though, is that the ambitious can decide to move to London (or New York or San Francisco) with the idea of making their fortune, but chances are, even with higher incomes, they'll end up substantially poorer. Not just with smaller, crappier housing and time-consuming commutes (that's pretty much a given) but also with less disposable income left over to spend on other things.

isn't that hometown camden maine
where they gotta lotta ex cia people!
we been there
its a nice little place on the coast

@Slocum - "chances are, even with higher incomes, they'll end up substantially poorer" - probably in the short term, but longer term working in a big city gives you substantially more opportunity. Some of the people moving to a big city are going to become mega wealthy by doing so.

"Some of the people moving to a big city are going to become mega wealthy by doing so."

Sure, some will. But the vast majority won't -- those who eventually become mega wealthy represent a very small fraction. And, of course, some who don't move to big cities become mega wealthy as well. You might find them in Midland, TX or Bentonville, AK, or Omaha, NE or Kalamazoo, MI.

I suppose this phenomenon is equivalent to that between developed and developing countries: even as the global economy has reduced inequality between developed and developing countries, inequality within developing countries (and within developed countries) has been rising.

The weakest region is Wales.

Yeah, especially the Cwtchwylcnco region.

I believe the USA is internally similar as well - substantial intra-individual income inequality (and this is long standing US phenomenon, high even during the US's supposed egalitarian mid-century, see - https://ourworldindata.org/income-inequality#inequality-of-disposable-incomes-over-the-long-run), but little structured inequality between regions and states.

https://blogs.worldbank.org/growth/europe-unequal-us - "Europe is the land of generous social programs with not as much inequality as in the U.S., right? It is fair to say that low interpersonal inequality in general remains fundamental for most Europeans, while part of the American dream is to pursue social mobility based on entrepreneurship and equality of opportunities rather than income. Nevertheless, if the European Union (EU) is taken as a single country, economic data show that the EU and the U.S. have similar levels of inequality."

But note: The problem now is that the pre-crisis pattern of pro-convergence EU regional growth has shown to be unsustainable in several regards. Labor productivities in poorer countries did not rise as fast as it would have been necessary to underpin the apparent income convergence. . Regional convergence between states is not happening.

And regional inequality within states in the EU is growing - https://voxeu.org/article/return-regional-inequality-europe-1900-today

Plus income inequality *within* most EU states seems to be rising faster than in the US - https://ourworldindata.org/income-inequality-since-1990 (only flat in the interval 1990-2015 in Britain and France...).

'Nevertheless, if the European Union (EU) is taken as a single country, economic data show that the EU and the U.S. have similar levels of inequality.'

And which part of the U.S. was part of the Soviet Empire a generation ago? Comparing the current EU to the U.S. requires a number of caveats, if only for those people unaware what the Cold War involved (the iron curtain being a lovely description) and which side won - and thus inherited the satrapies of a failed empire.

That 1990 statistic would be fully in keeping with the West winning the Cold War, by the way, and a welcome result of that victory. One can be confident that income inequality in the Czech Republic or Poland or Bulgaria is much higher today than 3 decades ago. And that it is unlikely that anyone in those countries is complaining about leaving the era of a worker's paradise behind, or are yearning for the Soviet Union to come back to restore the old order.

Certainly they were, but if you can't ignore that parts of the EU were part of the Soviet Empire two generations ago (roughly 30 years = two generations), you also can't ignore that the Western and Northern EU's local within state income inequality compression as intimately intertwined with its use of an an east that has served as a source of labour in the subsequent 30 years (and this is intimately entwined with apparent ability of EU states to remain "competitive" while compressing incomes).

Though note regional income inequality doesn't just exist because of the east (as you seem to imply), but also the south (Spain, Southern Italy, Greece).

Also, income inequality has not grown since 1990 in: Czech Republic, Slovenia, Ukraine, Estonia, Russia (and in fact has fallen), while even in the states it has grown in (Lithuania, Poland, Croatia, Latvia, Hungary, Bulgaria, Romania), other than in Romania, growth in income inequality is lower than in Sweden, Italy and Spain. Income inequality within states has fallen in the west of Europe only in Portugal. Income inequality within states of the EU is not just, or even primarily, because of convergence of Eastern states to Western and Northern norms, but because of EU wide increases in income inequality within the west, north and south.

'roughly 30 years = two generations'

Maybe it is an American thing, but 30 years is considered a generation.

And a link would be nice for income inequality, since all the worker's paradises essentially paid everyone basically the same, with minor variations (and lots of ways for the nomenklatura to benefit in other ways than income).

In other words, the difference between a worker on a state farm in Czechoslovakia (and Slovakia seems to be missing) and a worker at Skoda would likely not have been very large in 1988. The difference today would be considerably larger, if only because working for VW is more lucrative than working on a farm.

glassdoor com seems to suggest 28,000 dollars for a Skoda assembly line worker, while an agricultural workers is paid (on average) 8,000 dollars - http://www.conbiz.eu/information/articles/salary-gaps-in-the-czech-republic (however, that link does also note that a typical blue collar worker is paid less than a farm worker).

At least in the DDR, according to people from there, there was no such large difference in pay, as state enterprises were the only employers. The East European countries were not identical, of course. However, it is hard to imagine how income equality could have decreased in states which officially provided essentially identical wages to everyone (with a few exceptions - the East German doctor I know did get paid a bit more than a waiter, though not by much - the opportunities for remuneration where not based on income scales set by the state, per se).

I linked the ourworldindata information on income inequality shifts in the original post. It's in the final line, so follow that if you want a link source.

"Generation" tends to be about 15-20 years in most "generation theory" (Millennial = 1985-2000, Gen X = 1964 to 1984, Baby Boom = 1945 to 1963), but it's not hugely standardized. Not 30 years, for sure.

The headline numbers have it that there is rather less spatial inequality here than in Europe. In terms of real income levels, the gap between Wales and the mean is similar to that between Mississippi and the mean. Shy of 5% of Britain's population is in Wales. Shy of 1% of ours is in Mississippi. Regional differentials are more pronounced in Italy than they are in Britain.

I suspect that any analysis of inequality in London vs the rUK needs to adjust for quality of life in London vs the rUK, and the quality of life impacts on travel costs to access the sort of amenities that Londoners can more easily travel to.

I thought this outstandingly dim. "Economic determinism would suggest London as a hotspot for populist and anti-EU sentiment. Instead, it is the part of the country that most epitomises global Britain rather than little England."

The notion that voting to stay in the EU is somehow a sign of being globalist is perverse. In the referendum campaign it was only the Brexiteers who made a fuss about wanting to have a more global economy, to escape from the parochial constraints of Brussels.

Chris Giles of the FT: "More inequality gives us more growth" ]discussion of policy options for UK]
Twitter guy: "Really?"
CG: "Yes, it's the classic trade off"
TG: "Any evidence for this?"
CG: "Communism"
TG: " But with in the bounds of western democracy?"
CG: Tumbleweed

You might like this book, in which the author gets to know the lesser known sides of London.

This is London: Life and Death in the World City http://www.goodreads.com/book/show/25874625-this-is-london

Doesn't London have more immigrants on average than the rest of England?

My impression is that the usual effect of immigration on otherwise wealthy Western cities like London and Los Angeles is more people sleeping in bunkbeds.

As I wrote in 2009:

British cabinet minister David Willetts nicely lays out one reason why the Blair-Brown Bubble in London did so little to alleviate unemployment among young Englishmen in blue collar cities like Liverpool (just as the Bush Bubble in Las Vegas didn't help American workers in Cleveland, as I pointed out in VDARE.com on July 7, 2006). He writes: "Quite simply, high house prices were one factor sucking in immigrants."

Willetts observes, "The young man from Liverpool does not see why he should live in more cramped conditions than his family back in Liverpool occupy". In contrast, the immigrant crams into a house with many others from his country. "His willingness to be under-housed gives him a labour market advantage and it is greater if house prices are higher". In turn, sucking in immigrants creates a vicious cycle, driving up housing prices, which drives out more natives.

Moreover, remittances sent home from London to Liverpool buy a lot less in Liverpool than remittances sent home to a poor country:

"So it is not that our Liverpudlian is somehow a bad person compared to our Pole. It is that he or she cannot capture similar benefits for their family by under-housing themselves in London."

Willetts sums up:

"The crucial proposition therefore underlying the economics of immigration in Britain is as follows. The larger the proportion of earnings consumed by housing costs, the greater the benefits of under-housing and the greater the price advantage of immigrant labour. It was not despite the high cost of housing that immigrants came to the house price hotspots in Britain to make a living—it was because of them."

He goes on to add:

"People are not willing to accept under-housing for ever. It may be bearable if you are single and in your twenties or early thirties. … But it is much harder having a baby in circumstances like that."

https://vdare.com/articles/david-willetts-the-pinch-u-k-cabinet-minister-s-discreet-but-devastating-dissent-on-immigration

Doesn't this argument suggest then that immigration is a good thing since the immigrants are better off and the people not willing to move are no worse off?

You mean there's no opportunity cost to anyone from more congestion in London?

Moreover, remittances sent home from London to Liverpool buy a lot less in Liverpool than remittances sent home to a poor country:

They don't. A different (and lower quality) commodity mix is present in that poor country. Also, greater marginal utility is to be had in that setting from the same increment of additional income.

This seems like a strong argument that inequality is not very geographic in its nature, but rather, driven by other factors.

Only if you assume that housing in London is somehow the same as housing in Newcastle (or wherever). It isn't. One gets you London, the other doesn't. The location & amenity value actually matters. What this means is mostly that London should build way more housing, but alas, mostly it'll lead people to ignore my first point.

Just did a quick image search of Newcastle. It actually looks quite lovely these days. And all the national parks are nearby. Give me the option of Newcastle or London, and think I'll take Newcastle (although those summer high temps -- brrr).

On the other hand it's spared those vile humid London summer days.

sweepstakesguide lists latest free sweepstakesguide, contests and giveaways. Enter the best online community to win cash, gifts and other dream prizes. sweepstakesguide is your complete guide to Online Opinion and Feedback Surveys.

Comments for this post are closed