Why Britain is poorer than any US state, other than Mississippi

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    Aug 27, 2014 4:40 PM GMT

    Now and again, America puts its inequality on display to the world. We saw it after Hurricane Katrina and we have seen it again in the unrest in Ferguson, Missouri. A white police offer shoots dead a black man, after having stopped him for jaywalking. Britain’s police don’t have guns, so these scenes are unthinkable to us. But American-style inequality? We have plenty of that too, we’re just better at hiding it – as I say in my Telegraph column today.

    I came across a striking fact while researching this piece: if Britain were to somehow leave the EU and join the US how would we rank? The answer is that we’d be the 2nd-poorest state in the union, poorer than Missouri. Poorer than the much-maligned Kansas and Alabama. Poorer than any state other than Mississippi, and if you take out the south east we’d be poorer than that too.

    I’ve been asked (on Twitter) to link to my source, but I’m afraid there’s no study to point to. It’s original research. But it’s also a fairly straightforward calculation. You take the US figures for GDP per state (here), divide it by population (here) to come up with a GDP per capita figure. Then get the equivalent figure for Britain: I used the latest Treasury figures (here) which also chime with the OECD’s (here). A version of this has been done on Wikipedia, but with one flaw: when comparing the wealth of nations, you need to look at how far money goes. This means using a measure called Purchasing Power Parity (PPP). When this is done, the league table looks like the below. I’ve put some other countries in for comparison.

    It’s not surprising that America’s best-paid 10 per cent are wealthier than top 10 per cent. That fits our general idea of America: a country where the richest do best while the poorest are left to hang. The figures just don’t support this. As the below chart shows, middle-earning Americans are better-off than Brits. Even lower-income Americans, those at the bottom 20 per cent, are better-off than their British counterparts. The only group actually worse-off are the bottom 5 per cent. Here are the figures:-
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    Aug 27, 2014 5:01 PM GMT
    pazzy saidaren't you from canada though? you sure seem to be interested in what's going on everywhere BUT your own country. your country has problems too. would like to see you talk about that for a change instead of constantly criticizing countries that you don't live in.

    But there's so much low hanging fruit shooting down the bizarre extremist views that you hold...

    Incidentally I did comment on the tax inversion deal where Burger King is buying out Canada based Tim Hortons and moving its own headquarters to Canada partially because of the punitive taxes in the US.
  • jaroslav123

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    Aug 27, 2014 5:47 PM GMT
    ...For starters, Britain's police force do carry guns.

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    Aug 27, 2014 5:52 PM GMT
    jaroslav123 said...For starters, Britain's police force do carry guns.


    Tell that to the BBC icon_rolleyes.gif:

    (the policy shift that allows for a small number of beat cops to carry guns is a very recent one:
    http://www.bbc.com/news/magazine-28656324 - "While some in London were issued with revolvers before 1936, from that date only trained officers at the rank of sergeant or above were issued with guns. Today only a small proportion of officers are authorised to use firearms.")
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    Aug 27, 2014 6:49 PM GMT
    Britain Is Poorer Than Any US State: Yes, Even Mississippi


    Fraser Nelson, over at the Spectator, has a little post about how the UK, Britain (the native home for both of us), is actually poorer than all but one of the US States. Tucking in right behind Alabama and just above Mississippi. Despite the fact that he once fired me from the employ of that fine magazine he’s a nice guy so I’ll point out that he’s largely correct but falls over in one final detail. For Britain is actually poorer than all US States, all of them bar none.

    We should point out that this doesn’t mean that the median income in all US States is either higher or even equal to UK incomes. For while that’s limited by the GDP per capita, properly adjusted for price differentials (ie, by PPP), there are also other influences. For example, the percentage of national income that flows to capital is a little higher in the US than the UK. Further, the US is a more unequal country (the properly adjusted gini is some 0.38 there, to 0.33 for us) meaning that the rich are taking a larger portion of that national income. So this is not a measure of median incomes and living standards although it is a useful guide to them.