This is amusing

London has been dubbed the world’s “talent capital”. The accolade has been awarded by business advisers Deloitte after a survey of 22 high-value sectors ranging from banking to telecoms and digital media.

The results put London comfortably in the lead, with 1.5m people apparently employed in the “high skill” sectors, compared with 1.2m in New York, 784,000 in Los Angeles, and 630,000 in Hong Kong.

Deloitte researchers delved into official employment data in the cities to arrive at the conclusion that London employed the most people in 12 of the sectors, such as banking, legal services and digital media, while New York was ahead of the field in just seven.

The amusement comes from the fact that various leftoids keep telling us that we must build a high wage, high skill economy. But they absolutely hate London which is a high wage high skill economy.

Sorta time to make up your minds about what you actually want, eh?

25 thoughts on “This is amusing”

  1. The question is whether this is some kind of marvellous free market activity, or a regional boom clustering around the source of State patronage and largesse. Capital cities have traditionally attracted such people- Dick Wittington and all that- because of the presence of the Royal household, parliament, etc. In a modern state which pours government money in a constant torrent, it is hardly surprising if the people in receipt of it, either directly or indirectly, are doing rather well.

  2. Ian B,

    Indeed. If government pours close to a billion quid into a swimming pool in London, where are the architects going to be? Llaneli, or London? When the opera house gets a new paint job are you going to be hiring painters from Dundee, or somewhere in the South East?

    The £10bn/annum of housing benefit and £3bn subsidy to London Transport per annum shouldn’t be overlooked either. Or projects with big spending like £10bn on the Olympics, £12bn on Crossrail, or however many billions HS1 was and HS2 is.

    There’s some free market activity in London. The digital media thing they mentioned? There’s a load of CG houses in London. It’s one of the centres of it in the world, and some of that is about hip people like being in London. Although, if we cut the 50% arts subsidy to London that makes it hipper, what would be the result?

  3. Jim,

    The report captures spending as being the region it’s designed for, and takes no account of which region does the work, which is what Ian and I are talking about.

    If some minister for public health thinks up some nonsense fake charity and throws millions at it, it might be for the country, but where are the web design team going to be? In Aberdeen, or somewhere near London? OK, you might outsource the coding somewhere else, but the design team that have to do face-to-face meetings with the Whitehall team are going to be based near London.

  4. Jim, it’s not just government spending. I’ll put on my Austrian Economics hat here, and point to the fact that a major form of State patronage is the State-sponsored inflationary (central) banking system which is in London. Government borrowing, interest payments, quantitative easing, bailouts, fractional reserve, the right to print money. It’s a lot of wonga.

    The “neoliberal” stylee is strongly mercantilist. The notionally private sector companies benefitting from that cluster around the source of the patronage. This is all very hard to measure in quantitative terms, but it must at the very least be a significant effect. To put it mildly.

  5. The problem with high skill high wage economies is obviously that they discriminate against the low skilled and indolent who can’t live there, which is terrible in leftoid world. Also London has a higher-than-average proportion of the ‘wrong’ kind of immigrant – namely the type that works hard, pays taxes but wishes they were lower, resents rather than depends upon government intervention, learns english, and doesn’t commit lots of crime which is clearly society’s fault.

  6. Well you lot can pretend we’d all be better off without the SE if you like, I for one are very happy there’s so much wealth creation going on there, some of which finds its way spread across the rest of the UK, especially as London is a total shit hole I wouldn’t live in if you paid me. So the fact I don’t have to live there to benefit from it is a double bonus.

  7. Which leftists hate London? As far as I can tell, they love London: its multiculturalism; its radical politics and its artistic depth. I think London is overrated in all of those senses, though it would be foolish to deny its economic importance.

  8. Jim, the question is how much of it is actually wealth creation- in the sense of you get more consumer goods and services at the end of it- and how much of it is statist money transfers that look good for the GDP figure, which is something different.

    It’s possibly worth quoting Tim’s (correct) slogan- “Jobs are a cost, not a benefit”- and consider that in terms of whether some minority in one place are earning a lot of money is automatically indicative of economic good. People often think naively that rising prices are indicative of economic good times; as with the cheers when house prices rise. Well, incomes are prices too, and we just shouldn’t automatically assume that bankers, lawyers and the like earning more money is a benefit, rather than a cost.

    Was just going to post there; but I’ll add that lawyers is a very good example which should cause our eyebrows to raise. The law is always a cost; having to pay for a lawyer never increases your economic activity. So if lawyers are earning more money, that’s not a Good Thing at all. Every penny paid to a lawyer is, in terms of national production, money down the drain.

    In that sense, the law is like healthcare. We wouldn’t be glad that doctors have more work. We should be sad that more people are ill.

  9. sam,

    “The problem with high skill high wage economies is obviously that they discriminate against the low skilled and indolent who can’t live there, which is terrible in leftoid world. ”

    Let me know when some Londoners start designing chips for iPhones, F1 cars or the next Airbus.

    My experience of working with London companies, going on London conferences and going to London restaurants is that the place is hugely overrated. When you eat at a 1* Michelin restaurant in London, you’re getting the same thing as a 1* Michelin restaurant in Wiltshire. Except that you’re paying more because the restaurant is having to pay London rents. I know software freelancers that have worked in Bristol and then London, and they charge much more for London. They aren’t doing anything different, though.

    And that’s why I’m highly skeptical of London as a free market location except in a few specialist areas. Using a London company is just not better value than using companies outside London.

  10. Stig,
    There’s no reason to choose a London company over a provincial one if they both provide the same product or service. The trouble is that many things simply can’t be bought outside London. If you need a team of international lawyers to draft a contract between you and a Chinese supplier, you won’t find it in Wiltshire.

    Just look at “revealed preferences”. London’s property market (both residential and commercial) is phenomenally expensive precisely because millions of individuals and businesses want to be there.

  11. Which is why we get a chicken and egg situation of wondering why everyone is crowding into one little area of the country.

    The point maybe is this; Britain used to be a polycentric economy, with economic centres all over. Great industrial cities, coal fields, the potteries, ports in the North, all over. Now, everyone’s clustering desperately around the Square Mile.

    So then we might ask what is so special about that one location, and one reasonable suggestion (which is basically the Austrian view) is that that is where the government is pouring the money in. As I said above, there is always some cachet about the capital city, but something has gone into overdrive over recent decades. I don’t think in unreasonable to say that London is rapidly turning into a city of two classes; an oligarchy and its servants. We really should analyse why.

  12. Andrew M,

    OK, I sort of get that. And curators at the Science Museum. And the sort of security specialists that sit in COBRA meetings with the PM.

    But if it’s full of all these high value specialists, why do they need so much in housing benefit and London underground subsidies from the rest of the country?

  13. Ian B,

    There’s definitely been centralisation over the last few decades because of how we’ve changed spending in the country from being localised to nationalised.

    It used to be that rates were a large part of people’s taxation, as that then went on local services, like schools and repairing roads. So, if people lived in an expensive place, they had to pay for the expensive road cleaners and teachers.

    We’ve changed that so that most local government spending now comes from general taxation, and as a result, London is the third recipient per head from the Barnett formula after Scotland and Northern Ireland, getting over £2000/head more than the South West.

    Then there’s housing benefit, which replaced people building council houses and that also comes from central government which didn’t exist so much in the days of council housing, and so of course, that’s another massive transfer of wealth from the rest of the country to London that didn’t used to be there.

    All of this will distort the value of land in an area, which means house prices will go up.

    It’s unsustainable on its present course. People in the provinces are rebelling in enough numbers against the current metrocentric Conservatives and towards UKIP that spending on London will have to fall.

  14. Stigler, I’m sure you realise that the “high skilled, high waged” types don’t actually _live_ in London, and why would they, it’s a real sh*t hole.

    (ex-Hackney resident).

  15. It’s worth comparing with other parts of the world. New York City is going from strength to strength, despite being as expensive as London, and it’s neither the national capital (Washington DC) nor even the state capital (Albany). Toronto attracts all of Canada’s wealth and talent, despite it not being the capital. Likewise Sydney for Australia. Even Barcelona is generally doing better than Madrid.

    London isn’t a great place if you’re British and have other options; but if you’re arriving fresh off the Easyjet flight from a collapsing southern European economy, it’s the only place to be. Your average Greek worker would rather live in north London and commute to Milton Keynes than the other way around, because he or she values being close to the Greek community there.
    Even a native Brit might prefer living in London (and having a short commute & low travel costs) rather than living in the home counties and spending 2-3 hours a day in standing room only.

  16. Communication is the reason why London dominates – the road and rail network radiates from London and government is based in London. Can any of you remember the fuss when the elected politicians wanted to relocate chunks of the civil service to the provinces? I can – and that when one set of victims were offered a choice of Glasgow, Teesside or Liverpool they voted 1) Teeside 2) Glasgow, 3) Liverpool: so Wilson sent them to Liverpool. The Civil Service wants to commute into London from Surrey.
    A minority of finance (Lloyd’s) is in London for historic reasons but nearly all major LSE-quoted companies have to have an office in London from which to talk to the government and investors and the press. LSE dominates UK investment thanks to being in walking distance of the Bank of England prior to the creation of the internet.
    Being the capital is not the only thing that London has going for it but it makes a lot of difference – Washington DC, Canberra, Brasilia, St Petersburg, Novosibirsk are all major cities built on waste ground as national (regional for Novosibirsk) capitals whose existence is solely due to being a capital (admittedly Canberra is only 0.37m but it is already the largest inland city in Oz).

  17. One of the reasons London is so expensive is the amount of dodgy foreign money coming in…any Russian or Nigerian who has looted state or private coffers and wants a nice, easy place to move his ill-gotten gains to out of reach of those who they’ve just ripped off looks to London. Not as hot as Dubai, and nobody asks any awkward questions. Or if you want to spend some of your billions on a nice comfortable pad for sonny when he’s “studying” abroad? Buy in London, every time. Paris is nice, but you need to speak French, so not as convenient.

    I’ve met some of these people, and they never decide to buy in Liverpool. It’s always London, and in Zone 1.

  18. Andrew M-

    New York is the USA’s financial centre. Toronto is Canada’s financial centre. Sydney is Australia’s financial centre. There seems to be a bit of a trend here.

  19. When you eat at a 1* Michelin restaurant in London, you’re getting the same thing as a 1* Michelin restaurant in Wiltshire.

    Probably too late for you to read this reply, Stig, but notwithstanding your other points, this one is not true. Not true at all.

    Speaking with a certain amount of experience, you will always pay more for decent food outside London. Any London restaurant has to contend with every other restaurant in walking, taxi and tube radius. If they have a Michelin star but they overcharge, then they are competing with someone with two or even three. Even in Bray and Ludlow, there is some competition. But your Wiltshire restaurant (the Harrow?) has a captive audience. The nearest competition in any sense will be a half hour drive away or more. People will go there specially, and suck up whatever the prices are.

    I have eaten very well outside London. But almost never more cheaply.

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