Luke Johnson: Self-employment isn't bad - and London is the best city in the world

Young people have rejected the left-wing old guard's pessimistic outlook on starting a business.

by Luke Johnson
Last Updated: 19 Feb 2016

This summer, the left-wing British newspaper the Guardian reported in gloomy style that self-employment in the UK had reached the highest level since records began 40 years ago. Rather than celebrate the fact that the number of people who choose to be their own boss has doubled from 8.7% of the population to 15% – more than 4.5 million people – since 1975, it featured critical remarks and articles from those who oppose the idea of self-employment.

A union spokesperson and a think-tank scribe were quoted mourning the passing of traditional jobs in large organisations – mostly big companies and the government. They and the Labour party prefer a society where the vast bulk of the working population are yoked to giant institutions; they fear and despise the freedom and independence that working for yourself can bring.

Fundamentally, these representatives of the left are pessimists who harbour a nostalgic view of the world. They prefer the statist perspective, where an all-powerful Big Government runs as much as possible. They distrust change and technology, because it sometimes does away with unionised jobs, as with the London Underground, where the antediluvian RMT union fights tooth and nail to resist progress and protect its privileges, all at the expense of the travelling public.

Entrepreneurs and inventors challenge old models and compete with the establishment by delivering better, cheaper, quicker products and services. This leads to disruption and evolution: inefficient companies shut down, but new ones spring up to replace them. All across Europe, vested interests cling to their privileges, reflecting 'the tyranny of the status quo', as described by Milton Friedman. Countries such as Italy and France appear to be in unstoppable decline because bureaucrats, politicians and public-sector workers prevent real reform.

I am optimistic because the younger generation in Britain are economic liberals. They realise that the future lies with individuals taking control of their own destiny, rather than relying on jobs for life with the state or welfare payments. They are dramatically less collectivist than previous cohorts, and more resourceful, international and flexible than their predecessors. Accordingly to an RSA/Populus survey, more than 80% of self-employed people say they are more satisfied than they would be in a conventional job, and many even feel more secure. We cannot pretend globalisation and the digital revolution away: citizens and policymakers must adapt, rather than cling to old ideologies and outdated structures.

There are two dominant cities in the English-speaking world: New York and London. I have owned an apartment in Manhattan for more than 15 years, and used to dream of moving to New York from London, where I have lived for more than three decades. But these days I no longer harbour any ambition to emigrate across the Atlantic. This is partly because I have children, spouse, friends, home and work in Britain. Ultimately, however, it is also because the lifestyle in Europe is better.

Manhattan is a cramped island, full of towering buildings. While the skyscrapers are impressive, it is hard not to feel oppressed by their dominance. It is only accessible from the mainland by a handful of bridges and tunnels, which creates huge traffic bottlenecks.

London has vastly more parks and open spaces than New York, and considerably more history, from Westminster Abbey to the Tower of London. It has a world-beating array of museums and galleries, all of which are free, unlike such cultural attractions in New York. London's West End offers the best selection of plays in the English-speaking world. New York has the edge in musicals, but ticket prices are extortionate. And New York has nothing close to the National Theatre.

London has the burden of VAT at 20%, but New York has sales tax of almost 9% and NYC income tax and property taxes are at least five times the equivalent in London. And America has the expectation of 20% tips for serving staff, which means visits to restaurants, hairdressers and so forth cost more than it appears at first. Meanwhile, London's restaurant, bar and club scene at least rivals Manhattan's for quality, choice and innovation.

Both cities have patchy state-school provision and good but very expensive private schools. New York's elite struggle with the English disease over their children's education: they are all taught privately, so the establishment has little incentive to improve the state system. Both cities have outstanding universities, but the New York ones are far more costly.

The New York subway is cheaper than the Tube, but is dirtier and feels less safe. The Underground has improved its service vastly and is introducing air-conditioned trains and a very late service at weekends. Again, London taxis are more expensive than New York cabs, but are comfier and with more knowledgeable drivers.

A major reason why I've never relocated to New York is that winter there can be savagely cold and the summers suffocatingly hot and humid. London may have its rain, but the climate is never extreme. Crimes such as burglary, muggings and car break-ins are more common in London, but murder is much more frequent in New York. In both, crime overall is down dramatically over recent years.

I regret never having lived abroad, but for my money, London is the best city in the world.

Luke Johnson is chairman of Risk Capital Partners. Follow him on Twitter: @LukeJohnsonRCP

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