IF THE UK JOINED THE USA, OR WHY THE UK ISN'T POORER THAN EVERY US STATE OTHER THAN MISSISSIPPI

Back on August 22, 2014, The Spectator  published a work by Fraser Nelson whereby Nelson claims Britain is poorer than every state of the USA except Mississippi. Many have doubted Nelson's claims.

While working on the World Economy League, I decided to check out Nelson's claims using 2014 GDP data annualized and dispersed to regions or states in the same proportion as held for 2013 GDP.

Nelson almost has it right. However, he is quite off in his reckoning.

Unlike Nelson, the data presented here consists of the latest available GDP, latest population estimates, and the latest cash exchange rate.

For your convenience, I present to you a few tables, each with slight difference so you can better understand how the countries of the UK would rank against the states of the USA as well as how the countries would stack up against regions of the USA along with how the country of England broken out by region would stack up against the USA.

Taken as a whole, if the UK were a state, it would rank 43 ahead of eight states.

Table 1. UK vs the states of the USA


Here you can see, the UK as a whole ranks 43. And here is how the UK stacks up when split into its constituent countries.

Table 2. Countries of the UK vs the states of the USA


The English rank 41st, ahead of such fixed-income, retirement states as Arizona, Florida and South Carolina as well as much of forever-poor Appalachia. The Scottish rank 49th. The Northern Irish and Welsh come in next to last (53rd) and dead last (54th).

And here is how the regions of England stack up along with the remaining countries of the UK against the states.


Table 3. England Regions, Remaining Countries of the UK vs the states of the USA


 With England broken out into regions, we see Greater London comes in an impressive 4th. At last, Brits have something to cheer about, at least Londoners do.

And here are the countries of the UK against regions of the USA.

Table 4. Countries of the UK vs the regions of the USA


Neither the U.S. Congress nor its agencies recognize these regions as official. However, these regions best reflect allied trade activity.

To give you perspective, Americans living in Greater New York have more than twice the income of Brits living in Northern Ireland or in Wales, on average. Overall, Americans about 1.3 times the income of Brits, on average.

Americans living in Greater New York have about 1.6 times the income of Americans living in Appalachia. However, Americans living in Appalachia have 95% of the income of Brits living in England. Said another way, Brits living in England have a scant 5% more income than Americans in Appalachia, the poorest region of the USA.

On average, a Welshman Brit has half the income of an American living in New England and about three-fourths the income of an American living in Appalachia.

Back on October 25, 2014, I published WAKE UP BRITS. MEMBERSHIP IN THE EU MAKES YOU POORER BUT DOESN'T MAKE YOU ANYMORE EUROPEAN AS ANYONE ELSE, in which, tacitly, I stated that Brits ought to exit the EU and enter into an Anglo-American commonwealth. Without doubt, it doesn't seem that EU membership has made the wage-earning working-stiff Brit richer.

After seeing the foregoing numbers, it puzzles why Brits want to keep riding the wrong horse.

I'm sure glad that my nine-times great-grandfather left Kent, England, behind in 1630 and came to America.

BONUS FOR AMERICANS

Table 5. Income per Head Adjusted by Projected RPP for 2014



I'm not a fan of regional price parities for the same reason I am not for purchasing power parity (see below). That said, I've included the calculated numbers for Regional Price Parities (RPP), using a trend line estimate for the 2014 RPP percentages.

However, for a smartly constructed basket of goods — gasoline, milk, hair cut — for alike-sized markets by population with the same demographic profile, it might be possible to see the effects on prices caused by government bureaucracy stepping in and skimming from the top.

What About PPP?

Some might, "What about PPP?" Purchasing Power Parity is a flawed concept.

PPP reflects the flawed beliefs of academic economists and their pseudo-science of economics rather than reflecting the reality of commerce.

Purchasing power parity involves a wishful hypothetical versus the actual — what the exchange rate ought to be between the cash of two banking systems giving anyone the same buying power anywhere versus what cash exchange rates are.

In the reality of commerce, all prices adhere to the one, true, infrangible law that governs all of trade — the Law of Prices. The Law of Prices of holds the winning bids of purchase and sale for what is on offer set the price. Prices reflect buying power and willingness to bid.

Producers get constrained by the great Axiom of Profit. The Axiom of Profit holds the sum of sales must at least equal the cost of production otherwise producers go to ruin.

The whole trick of business is producing so that one can adhere to the Axiom of Profit on given prices set by winning bidders. The prices set by winning bidders determine the sum of sales for producers. At whatever price winning bidders set, those producers whose costs are higher than their sales get forced out of production.

For PPP to hold true, output, working-age demographics, return on capital, cash-to-deposits, and the various kinds of credit (commercial, realty, personal) credit would need to be proportionally the same in every comparing country. In short, countries would need to be fractal images of each other exhibiting self-similarity, varying only in size by the power law.

PPP cannot account for the commercial reality of return on capital, which gets driven by working-age demographics. Differences in capital structure shall govern differences in efficiency and hence output. Differences in output shall drive differences in prices.

Those who believe in PPP and calculate PPP focus upon a hypothetical, non-existent, so-called market basket of goods. Even in the same country, no two have the same market basket of goods purchased in any period.

Every market for every good has its own make. Legal boundaries, territorial demographics and trade activity affect supply and thus prices winning bidders must pay.

Far worse, almost always, PPP figures fail to account for taxes, often the largest expenditure of any individual. Sales taxes range from none to almost 9% levied on every purchase.

You can't buy Italian marble in Alabama. You must import it. You can't buy a beach-front rental on the Pacific in Nebraska. You can't buy black diamond lift tickets in Orlando, Florida.

As well, everyone's cost of living differs from everyone else. Some eat a dozen eggs a week, others, a dozen a month.

Cost means outlay. Cost does not mean price. Cost is the sum paid. Price is the rate paid.

When anyone conflates cost with price, you can be sure that one doesn't understand commerce and reality.

Methodology

The GDP for the UK consists of the latest available quarterly current price gross domestic product for the United Kingdom, seasonally adjusted in billions of British pounds, as published by the OECD and re-published by the Federal Reserve Bank of St. Louis, and then annualized. 

For each region, the total, annualized GDP has been apportioned by the same ratio as the reported 2013 GVA by country of the UK and by region of England. 

The GDP for the US consists of the latest available quarterly current price gross domestic product for the USA, seasonally adjusted in billions of U.S. dollars (Table 1.1.5. Gross Domestic Product) as reported by the Bureau of Economic Analysis of the Department of the Commerce.

For each state, the total, annualized GDP has been apportioned by the same ratio as the reported 2013 GDP by state by the BEA. 

The population for the USA comes from the Census Bureau's Population Clock. The population for the UK comes from Country Meters. As with GDP, population has been apportioned by the 2013 ratios of the respective countries, states and regions.

The Cash Exchange Rate for U.S. Dollars to one British Pound comes from latest available public quote. 

The RPP adjusted data comes from the U.S. Bureau of Economic Analysis.


New England: Maine, Massachusetts, New Hampshire, Rhode Island, Vermont
New York: Connecticut, New Jersey, New York
Mid-Atlantic: Delaware, Maryland, Pennsylvania, Virginia, West Virginia
Appalachia: Alabama, Kentucky, Mississippi, Tennessee
Southeast: Florida, Georgia, North Carolina, South Carolina
Great Lakes: Illinois, Indiana, Michigan, Ohio, Wisconsin
Plains: Iowa, Kansas, Minnesota, Missouri, Nebraska, South Dakota
Greater Texas: Arkansas, Louisiana, Oklahoma, Texas
Mining: Colorado, Montana, North Dakota, Wyoming
Southwest: Arizona, California, Nevada, New Mexico, Utah
Pacific Northwest: Alaska, Hawaii, Idaho, Oregon, Washington 

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SCOTS RULE OUT ALEX SALMOND AND HIS SNP VISION FOR A SCOTTISH VENEZUELA

Yesterday, the majority of voting Scots soundly rejected Scotland becoming an independent country. Had Scots said yes, the Scottish legislature would have gained control over regulating others and their property in North Sea oil.

A whopping 84.5% of the electorate turned up and voted. 55.3% of the 3,619,915 who voted checked the no box. 44.7% voted yes. Sadly, 3,429 Scots could not check either a yes box or a no box. So they had their ballots rejected.

Upon closer look, 28 of 32 voting councils voted to be British. Notably, the majority of those in Glasgow voted in favor of independence.

The Scottish National Party (SNP), currently the dominate party of the Scottish home parliament, pushed for an independent Scotland. The SNP is a leftist/socialist party, which pushes for punitive, progressive-era exponential rate taxation on incomes, free-to-everyone welfare that they claim would would erase poverty, magically, and free-to-students tertiary education.

Those of the SNP sought full reigns of legislative power while sticking with the British banking system and EU membership. As well, oddly, they wanted the Queen to be their head of state, which would have meant answering to a governor-general.

A SNP-run independent Scotland would not have increased freedom. A SNP-run Scotland would have lessened freedom for each Scot. A SNP-run independent Scotland would have eroded individuals' property. A SNP-run independent Scotland would have returned Scots to life before Margaret Thatcher, a life of socialist-produced poverty.

As it is, many Scots are still poor. Rather than run to failed socialism, Scots ought to embrace property and profit-seeking through capitalism, which lifts wages. As I showed in SOPHIE'S CHOICE OF CAPITAL OR LABOR. A FREE-MARKETS LIBERTARIAN BECOMES AN ANTI-CAPITALIST AND PERPETUATES AN ECONOMICS MYTH, a true, increasing return to capital is the only means by which true wages and thus true buying power rises for any wage earners.



Scots were right to reject the foolery of the SNP offered to them, a sort of Scottish Venezuela and SNP head Alex Salmond.

Scots have been British for 307 years. Being British is all the current Scots ever have known.

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GROUNDSKEEPER WILLIE SAYS AYE

In a mere five days, Scots shall take to their voting booths to decide whether or not Scotland secedes from the United Kingdom.

The makers of the long-running FOX Television series the Simpsons have seized the day to promote their show with recurring character, Groundskeeper Willie, a fierce, ex-pat Scotsman living in the fictional world of Springfield, USA. Watch the clip below.

For a slightly serious view on the matter, check out BRAVEHEARTS. SCOTS SERIOUSLY SEEK INDEPENDENCE FOR THE FIRST TIME IN AWHILE.

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BRAVEHEARTS. SCOTS SERIOUSLY SEEK INDEPENDENCE FOR THE FIRST TIME IN AWHILE.

A poll for the Sunday Times declares that 51% of Scottish voters plan to vote for their independence from English dominance. This is the first time Yes voters have taken the lead since polling began. Sky News reports No voters lost a a 22-point lead within the past month.

Those seeking to maintain English sovereignty over the Scots desperately have taken to using ex-soccer players to pitch a no vote.

EU parliamentarians have tried to scare the Scots with the fear that a sovereign Scotland could get forced to wait five years before getting back into the EU. Scots should ignore that fear mongering and sign unilateral trade deals with the Norwegians, the Icelanders and yes, the English.

As I say always in such matters, it's not so much about territory. It's about people. The political establishment hates losing people because they hate losing the ability to control property of others and thus the ability to scoop up taxes, which are an unearned share of profits taken by force if necessary.

Englanders produce 85% of UK GDP. Scots produce 9%. No one has produced a study, much less a valid one, showing what part of England GDP arises from Scots and what part of Scotland GDP arises from the English.

The downside for Scots is a push by Scots to have a bigger, socialist state. Likely, the wrong Scotsmen would come to power and run into the ground an independent Scotland.

A recurrent theme expressed by likely YES voters in reporting is their anger of National Health Service (NHS) welfare spending cuts. Scots seem bent on more socialism and more political involvement in their lives and thus a weaker economy with less freedom for each man and each woman.

The Washington Post reports that if Britain were a U.S. state, it would be the second-poorest, behind Alabama and before Mississippi.  The Guardian reports that Scots GDP per head is $2,980 higher than British. Likely, the poorer Northern Irish, the Welsh, and every Englishman not living in London or South East are pulling down the British GDP per cap relative to Scots GDP per cap.

Should the Scots leave the UK, the EU overlords claim that action automatically kicks out the Scots from the EU. A Scots exit from the EU could mean a British exit from the EU. Together, both might be the tipping point for other exits.

Even if the Scots secede, the Scots, the English, the Welsh and Northern Irish have good reason to enter into a mutual defense union along with an open trade agreement as opposed to managed trade hiding under the rubric of "Free Trade Agreement". However, Scots would do better if they had their own banking system with their own cash.

Unfortunately, Scots have expressed the desire to remain in the British banking system with the British pound as their cash. Thus, Scots won't get the most important benefit from secession. In fact, without a standalone banking system, Scots won't gain true secession.

Perhaps, as an alternative to an independent Scotland, all Brits should gather around to hold a constitutional convention to instill liberty and hobble politicians, establishing a federal system for Brits along the lines of what Canadians have or Australians have.

Regardless of the outcome, Brits ought to exit the European Union. Instead, Brits ought to join the  European Economic Area (EEA) and the European Free Trade Association (EFTA), gaining all of the benefits of harmonized trade with other Europeans without the loss of sovereignty.

And considering the relative per capita income of the British, perhaps Scotland, England, Wales and Northern Ireland should dissolve the United Kingdom and become states of the United States.

Scots hold their independence referendum on Thursday, September 18, 2014.

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