The decline and fall of the British economy (2022)

86 pointsposted 8 months ago
by MrBuddyCasino

82 Comments

Animats

8 months ago

Much of Britain's early industrial success came from having coal, iron ore, and water power all close to each other. That's a rare situation worldwide. That closeness allowed starting up a high-volume iron industry. Once railroads came in, and heavy low-value materials could be moved cost-effectively, such centralization wasn't necessary.

Iron-making goes way back, but mostly it was powered by charcoal made from wood. Most of the labor was in digging out ore and cutting wood. Once coal was used to make coke, the process worked much better.

(This is all pre-steel. Steel is another story. Steel production in volume only began in the 1880s, and Britain led only for a few years until passed by the US.)

switch007

8 months ago

The article avoids the most interesting period of the decline and fall of our economy which is post-WW2, a period in which America played a substantial role

philwelch

8 months ago

WW1 was the critical period. Part of the reason Britain was so insistent on high levels of reparations from Germany is because they needed the money to pay their war debts to the US, which they ultimately defaulted on at the start of the Depression.

wqaatwt

8 months ago

Also Britain sacrificed its industry in favor of the banking sector (there were of course other more complicated factors) by refusing to devalue their currency like France did.

orwin

8 months ago

1915 was peak coal in England , 2004 peak gas and 2008 peak oil in the north sea.

user

8 months ago

[deleted]

switch007

8 months ago

Ah. I'm biased by my younger age and more interest in WW2

vishnugupta

8 months ago

The word colony appears just once. Britain's economy was built on extracting resources from her colonies around the world. Surely what was happening in India, African continent, and elsewhere had some bearing on rise/fall of their economy? Perhaps they got spread too thin trying to administer so many colonies with so few people? Perhaps colonies started exerting more and more resistance?

daedalus_f

8 months ago

The British empire reached its territorial peak in about 1921. This article is more about its domestic economic decline during the late 19th century.

mytailorisrich

8 months ago

The insistence on explaining every successes of the UK/Europe with its colonies is politically orientated, not factual. It seems to be a common trope in India, I'd say intended for domestic political consumption.

The industrial revolution and the birth of the modern economy were not caused by the colonies.

Likewise, the decline of the UK's economy was not caused by the loss of colonies.

Hence a single mention in the article, which discusses many reasons and potential reasons of the decline relative to the US and Germany (Germany never had a significant colonial empire and what it had was lost at the end of WWI).

surgical_fire

8 months ago

> The industrial revolution and the birth of the modern economy were not caused by the colonies.

Perhaps not directly, but the influx of gold and silver from Spanish and Portuguese colonies to Europe would later pump up the economy of other countries - such as England and Netherlands - that would eventually lead to things such as the industrial revolution.

I'd say that rejecting that much of Europe's success during that time was a direct consequence of extracting a large amount of resources from oversea colonies is a common trope in Europe, perhaps for internal political consumption.

fmajid

8 months ago

> The insistence on explaining every successes of the UK/Europe with its colonies is politically orientated, not factual.

And where do you think the capital to fund all the investment came from? Colonization mostly benefited the elite at the expense of the state and majority of the people, but those are also the people able to invest.

Now, if you meant that beyond the colonies we should not discount the role of obscene profits from slavery, foremost the royal family, then yes, I agree with you.

inglor_cz

8 months ago

Spain had a very extensive colonial empire. So did, in fact, Turkey.

They didn't manage to build anything modern over it.

Putin's Russia rules over 17 million sqkm which were once conquered by the tsars, and it is an economic backwater.

bell-cot

8 months ago

> ...once conquered by the tsars, and it is an economic backwater.

By some metrics, perhaps.

But consider (per Wikipedia) -

> The mineral-packed Ural Mountains and the vast fossil fuel (oil, gas, coal), and timber reserves of Siberia and the Russian Far East make Russia rich in natural resources, which dominate Russian exports. Oil and gas exports, specifically, continue to be the main source of hard currency.

> Russia has been widely described as an energy superpower;[33] as it has the world's largest natural gas reserves,[34] the second-largest coal reserves,[35] the eighth-largest oil reserves,[36] and the largest oil shale reserves in Europe.[37] It is the world's leading natural gas exporter,[38] the second-largest natural gas producer,[39] the second-largest oil exporter[40] and producer,[41] and the third largest coal exporter.

tedeh

8 months ago

Not mentioned more because it probably just wasn't that important.

fujincodes

8 months ago

The UK has always been a poor country except for a few hundred years when they were propped up by enslaving other people and looting them.

inglor_cz

8 months ago

England in the Early Middle Ages was rich enough to attract Vikings both to plunder and settle, and Normans to conquer it.

In the High Middle Ages, it was capable of maintaining pretty expensive wars on the continent without going bankrupt.

The UK as a whole exists only since 1707, and by that time, it was already a major power. Did it have a numerous poor population? Yes, much like the US now does. But that is not the same as being a poor country in the sense that Somalia or Timor Leste are.

sph

8 months ago

Yes, the British empire has been very poor except when it was rich.

Veen

8 months ago

Well, that and the Industrial Revolution.

Earw0rm

8 months ago

That doesn't really make sense historically. "The UK" is a modern concept relatively speaking, the Act of Union didn't pass until long after the slaving and looting got going.

wqaatwt

8 months ago

Can you name a single non-tiny country that became rich prior to the 1900s using any other means?

t43562

8 months ago

The UK spawned a bunch of successful countries. Since it lost control, some have been wildly successful and all have developed. So there's something about them and their way of operating that worked. Part of that has to be location - the Dutch were in the wrong place and got stomped on by Spain to their detriment but I think they had the same attitude to enterprising/adventuring/financing - perhaps even more so.

As a colonial myself the bit about exploitation is just so much cheap envy/sour grapes/whatever. All over the world people get exploited by someone and get conquered by someone. A "country" is just a lot of bits that someone conquered. In the ancient world I don't think anything was great but it was probably better in the end to be conquered by the Romans than many others. In the same vein the British weren't the worst and got a bit smarter over time. What they really did was open the world to trade, of course in just as unfair a manner as any other colonial power ... but it was both good and bad for them. Initially they had the industrial revolution, but they couldn't stop the same thing happening elsewhere once they turned on the flow of trade.

Now a university degree isn't a guarantee of a great job - because many people have one. Similarly many countries have industrialised economies with an educated population now. Europeans or any other formerly advantaged country find it harder to command high prices for their own products while enjoying the products of less advanced countries at a discount.

Countries with large scale like the US and China can make the incredible investments needed to make the next advancements. Countries like Britain can only do it when they team up as in the EU. The Brexiters are essentially luddites who cannot see this writing on the wall - they desperately believe that scaling up is something they can avoid. They want to retain control of something that shrinks until it is nothing because they are scared utterly **tless of the changes that might happen if they aren't in control. It's like trying to climb back into the womb.

mike_hearn

8 months ago

With you until the last paragraph. It's unclear what you mean by "investments needed to make the next advancements", but be aware that the UK is back in the EU Horizon Research programme. It rejoined that part only a year or so after leaving, something the Remain campaign and the EU's negotiators insisted would be impossible, and the Brexit campaigners said would be an obvious and common sense move for the EU. Turned out the latter were correct, the Remainers were wrong and the EU itself was bluffing.

That said, it's not very likely that teaming up with the EU makes any difference. The UK was a full member during a time of economic stagnation. The EU is not outperforming it.

Dalewyn

8 months ago

>Countries like Britain can only do it when they team up as in the EU. The Brexiters are essentially luddites who cannot see this writing on the wall

The UK remains one of the world powers and the Pound Sterling one of the reserve currencies thanks to their familial ties with the Five Eyes and the Commonwealth Realm, and select friends like Japan.

Island country and continent countries bloody hating each other is a tale older than history. If anything, it's the EU (namely France and Germany) who need to figure out how to get countries fully on board with them.

dijit

8 months ago

> The UK remains one of the world powers and the Pound Sterling one of the reserve currencies

With every passing year this becomes less true.

The UK is in managed decline, the entire world knows it; its only brits themselves who see themselves as exceptional.

(I’m British, living in Sweden).

tim333

8 months ago

Yeah I was against Brexit as it was a huge upheaval that made trade with our main trading partners harder but small independent countries can do very well if they are open to trade and are run sensibly. Look at Singapore for example.

eesmith

8 months ago

> and all have developed

Isn't that true of pretty much every country, even the few that were never colonized by European powers?

I mean, Afghanistan developed since its independence in 1919, but that's hardly attributable to some sort of intrinsic Britishness.

Same for Egypt, with its 1922 independence, or Libya in 1951.

Just like how Vietnam developed after independence from France.

While we've seen how Japan developed without being part of any colonial system. ("it was probably better in the end to be conquered by the Romans than many others" rejects the idea that it might have been better to not be conquered at all.)

> A "country" is just a lot of bits that someone conquered.

The modern definition of a "country" also requires a permanent population and a government, along with recognition by other countries. Note that this definition is of fundamentally European origin.

Further note the difficulty of using your definition for "Northern Cyprus" and "Sealand", much less the "Sovereign Military Order of Malta".

physicsguy

8 months ago

Japan was a colonising state, Korea, Manchuria, Taiwan

Anotheroneagain

8 months ago

I don't get why so many such analyses get so focused on the textile industry, as if it was the only thing that mattered. It was the time of the rise of electricity, chemistry, and internal combustion engines. And England was an especially slow adopter - the traffic in London was entirely based on horses into the 20th century, long after many major cities adopted electric trams.

imtringued

8 months ago

Reading about urban life in Berlin during the 1920s was kind of wild. It is so surprisingly relatable.

thomassmith65

8 months ago

Apparently, the 'high order bits' for a nation to gain economic supremacy are boring things like raw materials, land, size of work pool... and less so lofty things like culture, demographics, system of government...

rich_sasha

8 months ago

Well, in an epoch where these things matter. I can imagine we're entering an epoch where access to battery tech/resources, GPUs and cheap energy is what matters. Plus good teaching universities...

thomassmith65

8 months ago

That's probably more the case now that there aren't any new resource-rich continents to colonize.

Maybe in the distant future, some country will claim a passing asteroid full of rare metals and gasses, and become the economic superpower of its era.

1oooqooq

8 months ago

except gpu etc are the tulip equivalent. only matters as speculation between the already richm

the new fortunes are all based on rent today. including colonialism. every south America and Africa country privatized all their infrastructure to American or European companies in the last 10 years. telephone, water, power, transportation, banking.

user

8 months ago

[deleted]

ezconnect

8 months ago

They transitioned from manufacturing to financial engineering.

vishnugupta

8 months ago

It can be argued that financial engineering is what enabled their trading operations to begin with. Long distance voyage was an extremely risky venture and only a ruling king/queen had money and risk appetite to finance it. The joint stock corporation enabled spreading of that risk across thousands of investors and East India Company was one of the first joint stock corporation. What's more one could sell their equity holdings in exchange for cash so one wouldn't have to wait for years before getting return on investment.

We tend to forget the financial engine along with changes to contractual laws to only focus on daring voyages, military etc.,. But of course all of that had to be financed.

jsnell

8 months ago

In the 19th century?!

rapsey

8 months ago

Of course UK has been a major financial hub (banking and insurance) for centuries. Look at the history of the Rothchilds for instance. You can not be a naval power without a finance sector. It is way too risky and expensive.

achow

8 months ago

The London Stock Exchange was founded in 1773.. Amsterdam saw its first stock market appear in the early 1600s. But the modern stock exchanges only emerged later during this era in London and New York.

https://www.strike.money/stock-market/history

EVa5I7bHFq9mnYK

8 months ago

What about slave labor? Looks like significant economic advantage in US favor, at least until 1865.

bell-cot

8 months ago

In the correct circumstances, slave labor can be a considerable advantage. In other circumstances...not so much. Maintaining a slavery-based society is, socially, a huge hidden cost. (That's everything from shouting down objecting moralists to putting down slave rebellions.) And for socioeconomic reason, slave labor societies often trap themselves in a relatively crappy local maximum. Such as the American South's plantation-based and agriculture-dominated system.

fmajid

8 months ago

If so, the South would have been more economically developed than the North.

EVa5I7bHFq9mnYK

8 months ago

ChatGPT:

The average wealth of a free person in the South was significantly higher than that of a free person in the North. In 1860, the average wealth of a free Southerner was $1,042.74, while the average Northerner's wealth was $546.24 1. In the Lower South, the average wealth was even higher, at $1,508.61 1.

fujincodes

8 months ago

In a fair world, where there is equal access to basic things required for living life (food, health services, education), the UK has no business being a top economy. They don't have the land area, nor the population, nor the natural resources. They were propped up by the colonialism for a bit but now are fast going back to be a small inconsequential country.

weatherlite

8 months ago

Well in a fair world why do some countries get to have lots of land area and resources and some don't ? Because they "got there first"? Why should Saudi Arabia or Canada be extremely wealthy?

radicalbyte

8 months ago

You have it the wrong way around. Look at the US. They have it because they "got there LAST", took their diseases with them and wiped out the natives.

TeaBrain

8 months ago

The "fair world" positioning of their comment makes little sense. It reads as if they believe that a economy should be based solely on resource extraction and if a country doesn't have plentiful resources in their borders, then they don't believe the country should be a "top economy".

fujincodes

8 months ago

Yeah, luck plays a part too. Saudi Arabia got lucky with oil, without which it was just warring desert tribes. I happened to see pictures of UAE Sheikhs before the discovery of oil, and they were not very royal, to say the least.

Canada has a ton of natural resources, they ought to be wealthy.

brazzy

8 months ago

That's a bizarrely simplistic and reductive view. And, of course, entirely wrong.

Resources help with economic performance, but can also be a hindrance (see "Dutch disease"). Colonies were often acquired for prestige, but turned out an economic loss. They certainly did not play a part in the economic development of Germany, and countries like South Korea or Taiwan have very successfully grown their economies after being colonies.

What matters for long term economic growth is political stability and institutions that protect investments and limit corruption.

nindalf

8 months ago

I think simplistic and reductive views is what people are capable of adopting unless they really make an effort and invest time in understanding. Most of the time most people will take the simplistic view.

mdp2021

8 months ago

> hindrance

...The mismanagement of inflationary gold extraction from the Americas by Spain...

> What matters for long term economic growth is political stability and institutions that protect investments and limit corruption

...and especially, actively valuing competence...

01100011

8 months ago

So cultural, scientific and technical achievements should either bring zero economic benefits to a country or you believe in your fair world these things are evenly produced per capita/land area?

blackoil

8 months ago

That gives a temporary (relative) advantage but without any fundamental advantage, your competitor would copy and catchup.

zoky

8 months ago

> They don't have the land area, nor the population, nor the natural resources.

If those are the determining criteria, how do you explain Singapore?

defrost

8 months ago

Singapore's "natural resource" is location, location, location.

It secured early the role of small secure island for trade transfer and is now a massively automated transit hub for a huge regional population.

In world history choke points and traffic funnels have frequently been acquired, captured, secured for profit, control and influence.

mdp2021

8 months ago

The poster clearly speaks of «top economy» in terms of absolute GDP (and related), not per-capita; just observes that some powers are non-proportional. Of course history is magnitudes more complex than a sketchy model.

TeaBrain

8 months ago

Their only determining criteria is essentially internal natural resources, which excludes any advanced industries. You could also add Israel and Taiwan to the list of advanced resource poor countries.

realusername

8 months ago

Singapore is a tax haven first and foremost. Same reason why Luxembourg is wealthy. Their wealth was built on questionable origins, no matter how much they boast about governance.

m101

8 months ago

The UK is a large island nation with full access to the world's oceans. This is also the main geographical advantage that the US has. This is an extreme advantage. Look to Ukraine for proof.

mattlondon

8 months ago

It is not a fair world unfortunately.

Regardless, is it so bad if the UK becomes an inconsequential country? I feel like Brexit only happened because people here thought the UK was somehow special or important.

daedalus_f

8 months ago

I’d agree nationalism played a big role, but I’d also argue that was being driven by a right wing press that had used Europe as a scapegoat for decades to explain away economic disparity. Meanwhile there are legitimate complaints about the EU, its opaque democracy and extensive bureaucracy.

silisili

8 months ago

Land area, population, and natural resources have next to nothing to do with wealth or GDP.

The UK will never be a small inconsequential country in any of our lifetimes.

TeaBrain

8 months ago

>In a fair world, where there is equal access to basic things required for living life (food, health services, education)

>They don't have the land area, nor the population, nor the natural resources.

These two parts framing the idea about how the "UK has no business being a top economy" were complete non-sequiturs.

mdp2021

8 months ago

It takes more than systemic fair basic access for the population to make GDP results proportional to general resources.

YZF

8 months ago

Imagine there's no countries.. And no religion too. You may say I'm a dreamer...

The UK does have some natural resources, also they have an Island, from my memory of playing Risk that's worth something. Can be defended and not easily invaded. The UK was a place of importance well before modern colonialism, that's why the Romans and the Vikings visited.

Culture also plays a role. It's possible the UK will become less consequential but they'll probably still have some weight for some time. Their colonial past still plays some role in terms of their relationships with various countries, connections also matter.

tim333

8 months ago

Most economic growth seems to be driven by technology, both physical like machines and intellectual like legal and financial systems. For most of the world's history there wasn't much economic growth, things were much like they were a thousand years before. The UK got rich through the industrial revolution, but then other countries copied that which didn't make the UK poorer in absolute terms but did in relative terms as the rest of the world caught up.

There's a graph of that here https://www.visualcapitalist.com/wp-content/uploads/2017/09/...

A lot depends how you move along the curve. (graph is from this article https://www.visualcapitalist.com/2000-years-economic-history...)

The next thirty years of the curve should be interesting with AI and all that.

user

8 months ago

[deleted]

user

8 months ago

[deleted]

stann

8 months ago

The author's confidence in their conclusions hints at naivete at best

seanhunter

8 months ago

This website is produced by think-tank members who have an angle that the UK is in decline and needs to take specific (neoliberal lassez-faire) economic policy steps to regain its position in the world ie its a piece of political astroturf disguised as historical analysis. The same crowd also produced ukfoundations.co which is a similar sort of thing. For some reason people post their stuff on here from time to time.

user

8 months ago

[deleted]

user

8 months ago

[deleted]

blackeyeblitzar

8 months ago

The island itself does not have much in terms of resources. And it does not have a large competitive population like China or India. And it does not have the economic attractiveness like the US. And it no longer has a colonized commonwealth to exploit. Sure, London has fame, culture, and some economy. But it does feel like the last piece of a dying empire. I am often surprised when I watch videos of suburbs or rural areas in England, because it simply looks poor and trashy. Maybe that is true in most countries, but I somehow expected something different and … British?