What caught my eye this week.
One big driver of the thousands of young economic migrants who’ve come to Europe and the UK over the past decade is said to be the spread of social media.
Now that the developing world can see – it all its influencer-filtered glory – how the West has been living all these years, many of world’s poorer citizens want a piece of it.
Wouldn’t you?
Of course we might say they should look to pull their own countries up instead. Strive for freer markets, better governance, more education, stronger property rights, and whatnot.
I agree but it’s easier said than done. While globalisation and capitalism have done a decent job of alleviating true poverty since the 1970s, from memory only a dozen or so developing countries have made it to developed status since the 1990s.
Also you don’t need to be an 18-year old student activist at SOAS [1] to see the West still has multiple embedded advantages, which it strives to protect.
It’ll even adopt the role of victim to do so. Just consider the spectacle of the world’s richest nation bemoaning bullies and vowing to be make itself great again.
Get up and go
The point is though that as an individual the situation can look even more hopeless.
You have to rely on your country’s politicians and institutions to do the right thing. We increasingly [2] can’t even rely on ours for that.
Indeed isn’t there an ironic tension that it’s the champions of individualism in the right-wing media who are the ones who most bemoan young men taking it into their own hands [3] to try to better their lives?
Of course understanding their motivations – and even extending our sympathy – doesn’t mean we should let them act against the law.
Illegal immigration is an overblown and politically weaponised issue, but it’s a real one. Not only does it erode trust in our multicultural social fabric in the short-term, it can only scale badly in the long-term, given the disparity in global demographics.
So we have to draw the line somewhere. Much of the nastiness we’re seeing these days is a reflection of the developed world’s struggles to do just that. (Though to be clear plenty of it is stoked by opportunism from a resurgent far-right, too.)
Would you like an extra zero with that?
All that said, perhaps Barry Blimp [4] – or at least his more hard-pressed children – might be finding it a bit easier these days to empathise with economic migrants motivated by unimaginable wealth abroad.
Because the fact is the West is not a homogenous bloc. And it’s becoming ever-clearer that the US and the UK in particular have been on very different trajectories.
Of course there are millions of poor and struggling people in the US as well as here. And at least ours have better healthcare.
But this Tweet [5] that went viral from Monevator contributor Finumus highlights a real contrast:
[6]If you consume US personal finance and investing media, you’ll come across this wealth disparity all the time. Casual references to $1,000 splurged at a casino or $20,000 spent on a jet ski on a whim or $500 concert tickets as part of an everyday Friday night out.
It’s not that we don’t ever spend like this in the UK. It’s that there seems to be a zero tacked onto the end of the typical well-off American’s fun budget.
Their truly disposable income comes across as an order of magnitude higher.
Mickey Mouse budgets
Here’s an interesting example [7] from the past couple of weeks. The writer Aaron Renn bemoans a ‘middle-class squeeze’ that has created Have-VIP-passes at Disney World and Have-Nots:
[…] there are just a lot of people making a lot of money today.
A couple where I live who are both middle managers at Eli Lilly could easily have a household income north of $350,000. The median individual employee at Facebook makes $379,000.
This has produced asymmetric financial competition. It used to be that there were rich people, but the middle class wasn’t really competing with them. Rich people bought mansions or luxury cars, but it didn’t affect the average person. There weren’t enough rich people to affect how long it took you to get through the line at Disney World, for example.
Today, there are so many people with so much money that the middle class is now in direct competition with people who have vastly greater financial resources.
You might argue Aaron’s take undermines my point. Sure there are lots of richer people in America, but that’s because of growing inequality there too?
Well yes, except that here in the UK we don’t even really have much in the way of wage inflation at the top. And on average we have had stagnant real wages [8] since the financial crisis:
[9]
That chart is from last year, but it’s too striking not to use – and nothing much has changed since except more of us are paying higher-rate taxes and there’s a bigger tax burden on employers.
Again, I know and appreciate the US has plenty of poor people. But Britain is frequently compared [10] to the poorest State in the US – Mississippi – and in doing so we’re found to be worse off, per capita.
Not a good look for a nation that still considers itself amongst the leading ranks.
A plague on all your over-priced houses
What’s to be done about? Well plenty that isn’t. But just not shooting ourselves in the foot would help.
You wouldn’t want to make it more expensive to hire people, to overburden development [11], or choose to depress our wealth creators. And of course as a trading nation you wouldn’t impose [12] permanently higher costs on the economy by deciding to leave the vast and prosperous free market on your doorstep.
At this point you might be hurrying to the comments to post your political point of view. But let’s face it, both sides have done poorly over the past few years.
Team Blue must take the lion’s share of the blame, thanks to their lengthy and shambolic stint in power that left us in this mess [13]. But Team Red has been to the cavalry what Jar Jar Binks was to the war effort on Naboo.
Fortunately it’s still possible in the UK to get ahead financially, if you’re say a well-educated Monevator reader who saves and invests hard, uses tax shelters to the max, and you had the good fortune to be born before 1990.
However you can understand why some people jump on boats in despair at their own political systems.
Just be aware if you are tempted to cut corners that the US is destroying [14] boats it doesn’t like in international waters. (It’s also urging we do [15] the same).
Ho hum.
Have a great weekend.
p.s. We were a bit too imprecise about passwords in The Realist’s excellent debut article [16] on preparing your paperwork ahead of your death. So please note it may be against the T&Cs – and even the law – to access some accounts after your loved one has died, if they were held in their own name. See this commentary from the Bereavement Advice Centre [17].
From Monevator
Expected return estimates for your financial planning – Monevator [18]
When I die: financial affairs fit for the afterlife – Monevator [16]
From the archive-ator: Optimising the All-Weather Portfolio – Monevator [19] [Members [20]]
News
Bank of England holds base rate at 4%… – Which [21]
…with UK inflation stuck at 3.8% as food prices surge – BBC [22]
Reeves mulls staggered stamp duty payments to boost housing market – City AM [23]
Bank of England eases quantitative tightening to avoid massive losses – Sky [24]
Households put a record £103bn into cash ISAs – Guardian [25]
US tech firms pledge £150bn of investment in UK… – BBC [26]
… and the US and UK have also signed a big nuclear power deal – Guardian [27]
Half-a-million house sales collapse a year due to ‘antiquated’ process [Paywall] – FT [28]
Taxpayers have lost £400m on Rishi Sunak’s Covid-era Future Fund – Guardian [29]
Rolling Stone owner sues Google over AI summaries – Tech Crunch [30]
[31]
The problem with taxing the rich [Paywall] – FT [32]
Products and services
Nationwide Switch offer (3 x £175) – Be Clever With Your Cash [33]
Valour debuts Bitcoin staking ETP on London Stock Exchange – Parameter [34]
Get up to £200 cashback when you open or switch to an Interactive Investor [35] SIPP. Terms and fees apply, affiliate link. – Interactive Investor [35]
How do the free childcare hours work? – This Is Money [36]
Nationwide cuts mortgage rates despite BoE keeping rates on hold – This Is Money [37]
Get up to £100 as a welcome bonus when you open a new account with InvestEngine via our link [38]. (Minimum deposit of £100, T&Cs apply, affiliate link. Capital at risk) – InvestEngine [38]
How to collect and spend Boots advantage points – Be Clever With Your Cash [39]
Are you owed a pension tax refund? – Which [40]
Homes for sale for first-time buyers, in pictures – Guardian [41]
Comment and opinion
Global trackers could make investors nothing over next ten years [Managers talking their book, but compelling graphs] – Trustnet [42]
Investing long term is great. It also means you’ll see a crash – Chart Kid Matt [43]
What’s going on with the stock market? – Darius Foroux [44]
Assessing gold’s portfolio value [Good but nerdy] – DE Shaw [45]
How to invest like it’s 1725: the revival of Lloyds ‘names’ [Paywall] – FT [46]
Does financial success come at a social price? – Life After The Daily Grind [47]
Tax strategies property investors should be using [Podcast] – The Property Podcast [48]
Does it still pay to go to university? It’s complex – Guardian [49]
Stress-testing the [US] 60/40 portfolio over 150 years – Morningstar [50]
Navigating the unknowns of financial decisions – Humble Dollar [51]
Compounding versus capacity – Arcadian [52]
Thinking big as you approach retirement [Podcast/transcript] – Morningstar [53]
Naughty corner: Active antics
A long interview with out-of-favour fund manager Nick Train [Podcast] – B.T.B.S. [54]
Investigating tight credit spreads – Behavioural Investment [55]
The risks of extreme concentration… – Verdad [56]
…albeit some “have always been paranoid about size” – Harvey Sawikin [57]
Starting a hedge fund: one year in – Bristlemoon Capital [58]
(Properly) comparing bond yields across markets – FT Alphaville [59]
The ins and outs of distressed investing [Podcast] – My First Million [60]
Kindle book bargains
Flash Boys by Michael Lewis – £0.99 on Kindle [61]
Alchemy by Rory Sutherland – £0.99 on Kindle [62]
The Green Budget Guide by Nancy Birtwhistle – £0.99 on Kindle [63]
Techno Feudalism by Yanis Varoufakis – £0.99 on Kindle [64]
Browse our all-time favourite investing books – Monevator shop [65]
Environmental factors
Can we feed 10 billion people without destroying the planet? – Mother Jones [66]
UK could raise £2bn by taxing SUVs in line with Europe – Guardian [67]
How will Peak District carbon capture plan work? – BBC [68]
China is quietly saving the world from climate change – Noahpinion [69]
How the UK’s largest lake became an ecological disaster – Guardian [70]
Climate scientists saw the future before it arrived – Quanta [71]
Robot overlord roundup
Google DeepMind claims ‘historic’ breakthrough in problem solving – Guardian [72]
How people actually use ChatGPT… – Forked Lightning [73]
…such as to get advice about personal finance and investing – NYT [74]
Perplexity: an untidy history of AI across four books – Hedgehog Review [75]
AI skepticism and Oracle’s big risk – Eagle Point Capital [76]
Why one of the world’s most brilliant AI scientists left the US for China – Guardian [77]
AI will change jobs before the data shows it – Kate Capital [78]
This fairytale may shed light on how AI will change humanity – Guardian [79]
Not at the dinner table
All the sad young terminally online men – Derek Thompson [80]
Trump’s most brazen attack on free speech yet – Vox [81]
Political violence and the role of public leaders – Strength in Numbers [82]
Not since WW2 has the fight for liberalism been this urgent – Big Think [83]
Less wrong – The Pursuit of Happiness [84]
From Colombo to Kathmandu, youth movements topple elites – Guardian [85]
Off our beat
Inside the [physical] Bank of England – BBC [86]
Happier families: new ways of living – The Observer [87]
The British war on slavery – Marginal Revolution [88]
When Britain seized tiny island Rockall to foil the USSR – Guardian [89]
If nothing changes, nothing changes – We’re Gonna Get Those Bastards [90]
How Joseph Wright of Derby put science at the centre of his radical art – Aeon [91]
And finally…
“Remember, things are never clear until it’s too late.”
– Peter Lynch, One Up On Wall Street [92]
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