How do you think the UK economy will perform over the next 5 years ?

[servodude]

A paid up socialist does not really believe in private wealth, free markets or for-profit enterprises at all. Or if they do they are only fans of small businesses whilst wanting the major companies nationalised. They see wealth as an obscenity and something to be confiscated.

I suggest doing some serious political research if you think that is anti-business. I'd start with the Anarchist government of Catalonia and their anarcho-syndics. Of course we do know that they were forcefully ousted by the "pro-business" fascists. I'd follow that up by reading "Homage to Catalonia", by a man famous for his warning books about the dangers of socialism taken to the extreme. Their basic view is that business should be there to support the working "man". Hence they are PRO-business. It's just who gets the benefit of business that differs.

In the words of an American, talking about the early soviet union, "I have seen the future and it works". Well it didn't, but that may be due to the way that it evolved. Arguably central planning was the issue, sounds a bit like what our current government seems to be trying.

I'm really surprised he'd never heard of Keynes; though there do seem to be plenty that pretend he didn't identify as a socialist!
In the same way a similar tranche pretend the suffragettes weren't self avowed terrorists

Err, you do know that they were actually friends, despite public disagreements on their shared subject.

Sorry I must have missed off my winkie

[Lootman]

You can add the rabid left of the Labour Party. That includes some MPs but possibly a majority of its members.

A paid up socialist does not really believe in private wealth, free markets or for-profit enterprises at all. Or if they do they are only fans of small businesses whilst wanting the major companies nationalised. They see wealth as an obscenity and something to be confiscated.

The topic is about the UK economy, and the fallacy here is to directly equate the economy with (private) business and (private) wealth.

While businesses are a part of the economy and certainly play a significant role, the economy is a larger and more comprehensive concept that encompasses all economic activities within a country (or region). It's interesting to see the number of more socially minded European countries up at the top end of the GDP per capita tables, intermixed with (and in many cases, beating) some more capitalist minded countries.

https://www.google.com/search?q=countries+by+gdp+per+capita (choice of source left to the reader)

Your enthusiasm for socialism notwithstanding, I would argue that a healthy business sector is at least as important as your apparently favoured GDP measure. I would have chosen GNP rather than GDP in any event, but personally I find business sentiment to be a good correlative factor to economic success.

[mc2fool]

The topic is about the UK economy, and the fallacy here is to directly equate the economy with (private) business and (private) wealth.

While businesses are a part of the economy and certainly play a significant role, the economy is a larger and more comprehensive concept that encompasses all economic activities within a country (or region). It's interesting to see the number of more socially minded European countries up at the top end of the GDP per capita tables, intermixed with (and in many cases, beating) some more capitalist minded countries.

https://www.google.com/search?q=countries+by+gdp+per+capita (choice of source left to the reader)

Your enthusiasm for socialism notwithstanding, I would argue that a healthy business sector is at least as important as your apparently favoured GDP measure. I would have chosen GNP rather than GDP in any event, but personally I find business sentiment to be a good correlative factor to economic success.

The initial GDP per capita chart I posted was in answer to TJH's claim, and I used it as it was the one I found that covered a decent period and was both per capita and in GBP (many GDP/GNP/GNI charts are in nominal US$), with it being in real GBP also being very useful. For the purpose of the post (replying to TJH) it was "good enough", rather than being "favoured", and the use of GDP per capita has just flowed over from that.

If you can find an equivalent decent period GNP per capita in real GBP chart do feel free to post it or link to it, if you feel that the difference is important.

And if you'd prefer to compare countries by GNP instead, here you go: https://www.google.com/search?q=countries+by+gnp+per+capita

Irrespective of that, it's clear that business sentiment/economic success and a more socially minded government/society are neither mutually exclusive or contradictory, as plenty of more socially minded more economically successful European countries show.

[scotview]

The topic is about the UK economy, and the fallacy here is to directly equate the economy with (private) business and (private) wealth.

Your enthusiasm for socialism notwithstanding, I would argue that a healthy business sector is at least as important as your apparently favoured GDP measure.

Attached is my simplified graphic of the "economy". It shows that the entire system is supported by private sector taxation or borrowing (the main two inputs). Is the graphic wrong ?

[Lootman]

it's clear that business sentiment/economic success and a more socially minded government/society are neither mutually exclusive or contradictory, as plenty of more socially minded more economically successful European countries show.

It might well be clear to you. And no doubt a metric can be summoned from the deep to support that opinion.

But from my perspective if the business sector is not vibrant then the economy cannot be successful, unless you cram into the concept of "success" all kind of fuzzy feel-good social factors.

A decent indicator might be the valuation of the stock market relative to GDP, where I think you will find that the UK (and the US) score quite high. And those over-governed social-democratic nations of middle Europe that you seem so besotted with do not score so well.

Under that metric, top nations (not in order) are Switzerland, Hong Kong, Taiwan, Singapore, Japan, Canada, South Korea and the US. The UK is higher than most countries in Europe. That seems more intuitively correct to me, and of course the UK has easily the most valuable stock market in Europe, although well down in relative terms as the UK has continued to decline.

But sure, if you include things like how industrialised the UK is then we fail. But I thought that being post-industrial was a good thing?

[mc2fool]

Attached is my simplified graphic of the "economy". It shows that the entire system is supported by private sector taxation or borrowing (the main two inputs). Is the graphic wrong ?

Over simplified and incomplete. For one thing, people that work in the public sector also generate wealth. Try this one instead.


https://www.futurelearn.com/info/blog/how-does-the-economy-work

That's a more or less standard-ish view of the flow of economic activity as you'll see at: https://www.google.com/search?q=flow+chart+of+economic+activities&tbm=isch. Some are more detailed than others but you'll see the commonality.

[Lootman]

people that work in the public sector also generate wealth.

Ooh, that one statement alone warrants its own topic.

Although I suppose it depends how you define "wealth". If my local authority's Director of Diversity could be said to be "creating wealth" then I suppose that everyone and everything does.

[scrumpyjack]

people that work in the public sector also generate wealth.

Ooh, that one statement alone warrants its own topic.

Although I suppose it depends how you define "wealth". If my local authority's Director of Diversity could be said to be "creating wealth" then I suppose that everyone and everything does.

Yes, just as the 'director of digging holes and filling them in again' is generating economic activity

[mc2fool]

it's clear that business sentiment/economic success and a more socially minded government/society are neither mutually exclusive or contradictory, as plenty of more socially minded more economically successful European countries show.

It might well be clear to you. And no doubt a metric can be summoned from the deep to support that opinion.

Yeah, you just need to look at the league table of your favoured GNP per capita figures.

A decent indicator might be the valuation of the stock market relative to GDP, where I think you will find that the UK (and the US) score quite high. And those over-governed social-democratic nations of middle Europe that you seem so besotted with do not score so well.

Under that metric, top nations (not in order) are Switzerland, Hong Kong, Taiwan, Singapore, Japan, Canada, South Korea and the US. The UK is higher than most countries in Europe. That seems more intuitively correct to me, and of course the UK has easily the most valuable stock market in Europe, although well down in relative terms as the UK has continued to decline.

Not stock market valuation relative to GNP then? So, by your cherry picked metric France and Germany are less economically successful than the UK, eh? Well I reckon we can all take that with a large pinch of salt....

[Urbandreamer]

people that work in the public sector also generate wealth.

Ooh, that one statement alone warrants its own topic.

Although I suppose it depends how you define "wealth". If my local authority's Director of Diversity could be said to be "creating wealth" then I suppose that everyone and everything does.

Err, don't you remember our discussion upon the "education" system. Arguably training a new workforce, which undoubtedly currently IS part of the public sector, over the long term generates wealth. Less obvious to some would be the construction of roads to carry goods and public transport to get people to work.
Currently weights and measure, trading standards and the safety of food establishments is part of the public sector. I would argue that they provide services that aid in wealth creation.

Politically I happen to think that all such public services could be done by the private sector, but currently they are not.

Tell me, just for clarity, before the cleaning of hospitals was privatized, did it perform the same function? Does it now generate wealth when previously it did not? Or is it simply that the "wealth" can by measured as company profit?

Note that I'm not arguing for nationalization, just trying to get you to clarify your position on public sector wealth creation.

[Jam2Day]

For reasons I do not really understand, the economy seems generally to keep rising (as measured by GDP) and yet most of us do not feel any better off than we were say 5/10 years ago. Are our expectations too high?

Dod

Yes indeed. 'Curiouser and curiouser' cried Alice. I would suggest facts and stats are too readily and conveniently confused. I prefer Dow's favoured litmus test of counting smoking chimneys, metaphorically speaking, of course. I would always trust the reporting and guidance of a reputable business management over the 'spintwin talents' of fickle government and a bloated civil service .

[Lootman]

A decent indicator might be the valuation of the stock market relative to GDP, where I think you will find that the UK (and the US) score quite high. And those over-governed social-democratic nations of middle Europe that you seem so besotted with do not score so well.

Under that metric, top nations (not in order) are Switzerland, Hong Kong, Taiwan, Singapore, Japan, Canada, South Korea and the US. The UK is higher than most countries in Europe. That seems more intuitively correct to me, and of course the UK has easily the most valuable stock market in Europe, although well down in relative terms as the UK has continued to decline.

Not stock market valuation relative to GNP then? So, by your cherry picked metric France and Germany are less economically successful than the UK, eh? Well I reckon we can all take that with a large pinch of salt....

That would be double-counting since GNP already counts overseas investments profits not included in GDP, but you get the general idea.

Glad to see you see the flaws in "carefully" curated data. But as it happens I do prefer the UK economy to that of France and Germany. If I thought I could make more money in those nations I would have moved there long ago. I am financially better off here, just as you have evidently also decided.

[mc2fool]

people that work in the public sector also generate wealth.

Ooh, that one statement alone warrants its own topic.

Although I suppose it depends how you define "wealth". If my local authority's Director of Diversity could be said to be "creating wealth" then I suppose that everyone and everything does.

As much or as little as a Director of Diversity and Inclusion at a private company I'd imagine.

You can do a very simple mind experiment to see that "wealth creation" (or not) isn't dependant on it being public or private, per se.

Suppose for a moment that the government auto-magically nationalised everything overnight (and putting aside the matter of competence). Nothing else changes. The same people would carry on doing the same work at the same locations, creating (or not) the same wealth as the day before.

[Lootman]

You can do a very simple mind experiment to see that "wealth creation" (or not) isn't dependant on it being public or private, per se.

Suppose for a moment that the government auto-magically nationalised everything overnight (and putting aside the matter of competence). Nothing else changes. The same people would carry on doing the same work at the same locations, creating (or not) the same wealth as the day before.

It is more a matter of looking at a country and seeing what percentage of its total economic activity is within the public sector. That is usually a sign of a poor economy.

So for example pre-Thatcher I recall seeing reports that up to 60% of the economy was in the public sector. Most people believe that reducing that percentage, and the economic advantages that accrue from that, was a key achievement of Thatcher.

Again, look around the UK. The south, and particularly the south-east, is generally considered to have the most vibrant economy. Those areas like North Wales or Teeside that struggle tend to have a higher dependence on public sector largesse, either through government jobs or benefits.

So a larger and more confident private sector is a key indicator of a successful economy. Those places with a bloated public sector typically do worse, even if they do not have directors of diversity and guys digging holes and then filling them in again.

[mc2fool]

Not stock market valuation relative to GNP then? So, by your cherry picked metric France and Germany are less economically successful than the UK, eh? Well I reckon we can all take that with a large pinch of salt....

That would be double-counting since GNP already counts overseas investments profits not included in GDP, but you get the general idea.

Glad to see you see the flaws in "carefully" curated data. But as it happens I do prefer the UK economy to that of France and Germany. If I thought I could make more money in those nations I would have moved there long ago. I am financially better off here, just as you have evidently also decided.

And overseas investment profits don't count? Right, so if comparing with GDP we should slash the market cap of all of the FTSE 100 to compensate then, as most of their profits come from overseas.

But glad to hear that you acknowledge the flaws in your ... well, you haven't actually presented any data, just an assertion.

Anyway, we're not talking about where you prefer, we're discussing whether a more socially minded mixed market economy can be as successful as a less socially minded mixed market economy, and it looks pretty clear, even using your favoured GNP, that's it's six of one.

As to where people prefer, there are, as you have pointed out yourself before, a large plethora of reasons why people choose to live where they do. Money isn't everything ... well, not for everybody, indeed, not for most people.

[Lootman]

Anyway, we're not talking about where you prefer, we're discussing whether a more socially minded mixed market economy can be as successful as a less socially minded mixed market economy, and it looks pretty clear, even using your favoured GNP, that's it's six of one.

As to where people prefer, there are, as you have pointed out yourself before, a large plethora of reasons why people choose to live where they do. Money isn't everything ... well, not for everybody, indeed, not for most people.

No, in case you did not notice, this board is within the category of Investors' Roundtable. So this topic is absolutely about discussing The Economy from an investment perspective i.e. how can we make money from it?

So whether a "socially minded" (whatever that means) economy is "better" in some political sense is neither here or there. Investors don't care - they just want to be shown the money.

So yes, money isn't everything. I would not live in France because I don't like the French and have no interest in learning French. But on an investment basis what matters is whether the French economy being "better" (on some shrewdly massaged basis) has any relationship with whether it is better to invest there than in the UK.

On that matter can you tell us your percentage allocation to the UK and French markets respectively?

[ReformedCharacter]

Comments here about the public sector make me think of a conversation I had with a friend (I'll call him Paul) a couple of nights ago.

Paul is a musician and some years ago he had a job working for his local council doing musical workshops with some of the local youths, I can't remember the exact details but I think they were 'troubled' or had been involved with low level crime, dealing cannabis, that sort of thing.

Anyway, Paul was made redundant and the council kindly offered him another part-time job. His new job, for which he had no experience, was to sit in front of a computer and answer calls and emails from social workers who needed help with processing their reports and 'paperwork'. Several years ago I was talking to Paul and he said 'I get tired and go to a 'special room' at work and have a nap'.

Since Covid, Paul 'works' from home. I said to him 'that must be nice, not having to commute' and he said 'Yes, I get up and log in at 8.30 and spend an hour and a half answering queries and sorting things out. Then I might go for a swim or up to my allotment. Then I check to see if there's any more work and carry on for a bit if it's busy'. I said something like 'That must be good, if you can get away with it' and he said 'Yes, I'm an expert with the system now and all the social workers thank me for sorting out their problems so quickly, but I missed a meeting the other day because I forgot about it and was at my allotment, I just said that I had to pick up a prescription'.

RC

[mc2fool]

You can do a very simple mind experiment to see that "wealth creation" (or not) isn't dependant on it being public or private, per se.

Suppose for a moment that the government auto-magically nationalised everything overnight (and putting aside the matter of competence). Nothing else changes. The same people would carry on doing the same work at the same locations, creating (or not) the same wealth as the day before.

It is more a matter of looking at a country and seeing what percentage of its total economic activity is within the public sector. That is usually a sign of a poor economy.

I'm sure all of the countries with a larger public sector yet better GNP/capita than us will be interested to hear that they have a poor economy.

But, ok, so you at least now acknowledge that wealth creation (or not) isn't actually dependant on it being public or private.

[mc2fool]

Anyway, we're not talking about where you prefer, we're discussing whether a more socially minded mixed market economy can be as successful as a less socially minded mixed market economy, and it looks pretty clear, even using your favoured GNP, that's it's six of one.

As to where people prefer, there are, as you have pointed out yourself before, a large plethora of reasons why people choose to live where they do. Money isn't everything ... well, not for everybody, indeed, not for most people.

No, in case you did not notice, this board is within the category of Investors' Roundtable. So this topic is absolutely about discussing The Economy from an investment perspective i.e. how can we make money from it?

Oh, so now you're saying you've been OT for most of your posts in this thread then! Well I guess that's one way of backing out of a debate!

So whether a "socially minded" (whatever that means) economy is "better" in some political sense is neither here or there. Investors don't care - they just want to be shown the money.

No, we were talking whether they were better/worse/as good economically, not politically.

On that matter can you tell us your percentage allocation to the UK and French markets respectively?

(a) I don't see what relevance that has to the discussion.
(b) I don't jump to your nosey demands.
(c) I can't be bothered to do the "look through" on my ETFs, ITs, etc.
(d) I purposely have no specific Euro exposure (e.g. no Europe ETFs or the like) 'cos the great majority of my income is in Euros, from state pensions from when I worked there some decades ago (you've known that already.)

[Lootman]

It is more a matter of looking at a country and seeing what percentage of its total economic activity is within the public sector. That is usually a sign of a poor economy.

I'm sure all of the countries with a larger public sector yet better GNP/capita than us will be interested to hear that they have a poor economy.

I never said that GNP was an indicator of whether a nation is a good investment. I merely said it was better than GDP.

No, in case you did not notice, this board is within the category of Investors' Roundtable. So this topic is absolutely about discussing The Economy from an investment perspective i.e. how can we make money from it?

So whether a "socially minded" (whatever that means) economy is "better" in some political sense is neither here or there. Investors don't care - they just want to be shown the money.

No, we were talking whether they were better/worse/as good economically, not politically.

You might have been. I was always conscious that this is an investment board and not a social/political/academic board. If an economic attribute has no investment perspective then it is OT here.

On that matter can you tell us your percentage allocation to the UK and French markets respectively?

I don't see what relevance that has to the discussion.

If you think that France has a better economy than the UK BUT you prefer to invest in the UK then EITHER you do not think a "good economy" is relevant to investors OR you do not really think it has a good economy at all OR you think that other factors are more important to investors.

And in all three cases it would appear that traditional measures of a "good" economy are not that helpful to investors.