How Thatcherism Failed The Majority

[steve99]

What thatcher did and is still an ongoing story is put into action the plans of the US based right wing think tanks which conjured up thier utopia of the future sometime between the 1950's and 70's. Regan first, folowed by Thatcher and so on accross the western world to one degree or other.

Main aims were this:

Destroy union (people)power with force or other underhanded measures that come into being (how lucky they found mass immigration and offshoring)

Give banks permission to operate as they choose, loans to punters to substitute pay rises etc. (banks were big sponsors of these think tanks)

Pay as you go education

Privatisation of everything possible

Globalisation for the low to mid level workers

The idea behind all this was to re-assert the power of the wealthy who were falling back in comparsion to the prolls getting a decent standard of living for a change. Amazing that we all vote for governments who always govern for the 1%ers

A few other things were in there but we can see the agenda is well on track. No real time frame but the graph has pointed downwards for real people for the last 3.5 decades now.

We need a big dose of socialism instead of this corrupt crony capitalism. (and no, bailing out the banks is not socialism)

[byron78]

Exactly my point. The New Deal was in the 30s. Before that time period none of the things you cite existed. No NHS, no social housing, no extremely high income taxes, not even state pensions if you got slightly further back. We have not always redistributed on grand scale, and it is not the human norm or an intrinsic task of government.

Surely redistribution is the norm - it's just that historically the redistribution went upwards (to the monarch/landowner)? The government redistributing downwards is new certainly. Oddly that downward redistribution also coincides with the greatest period of human social and technological growth ever (probably dwarfing anything achieved during thousands of years of upward redistribution), so it can't all be bad.

You're way off on income tax btw.

Yes, it was low for ordinary folk (I think only 1 in 10 actually paid it), but the top rate was 30% (that none of the rich could loophole quite as easily as they can now) and there was also the Super Tax/Surtax.

http://en.m.wikipedia.org/wiki/Surtax

Your pre-1930s/new deal alternative is basically "tax the rich and no one else".

I reckon it'd be popular...

Are you referring to the New Deal in America BTW? You know that came about after a small period of low top rate taxation imploded spectacularly in 1929 yes?

US tax rates here:

http://i.imgur.com/3gcfT.png

Surely ordinary people in this country were best off post WW2 and pre-Thatcher? (The boomers in other words). We do best when the rich pay their way and folk feel they really can get on in life through hard work.

Edited May 20, 2014 by byron78

[Neverwhere]

Exactly my point. The New Deal was in the 30s. Before that time period none of the things you cite existed. No NHS, no social housing, no extremely high income taxes, not even state pensions if you got slightly further back. We have not always redistributed on grand scale, and it is not the human norm or an intrinsic task of government.

Sorry to wiki bomb you but...

The origins of the Old Poor Law extend back into the 15th century with the decline of the monasteries and the breakdown of the medieval social structure. Charity was gradually replaced with a compulsory land tax levied at parish level.

...

Relief under the Old Poor Law could take on one of two forms^[10] – indoor relief, relief inside a workhouse, or outdoor relief, relief in a form outside a workhouse. This could come in the form of money, food or even clothing. As the cost of building the different workhouses was great, outdoor relief continued to be the main form of relief in this period.^[10]

Relief for those too ill or old to work, the so-called 'impotent poor', was in the form of a payment or items of food ('the parish loaf') or clothing also known as outdoor relief. Some aged people might be accommodated in parish alms houses, though these were usually private charitable institutions. Meanwhile able-bodied beggars who had refused work were often placed in Houses of Correction (indoor relief). However, provision for the many able-bodied poor in the workhouse, which provided accommodation at the same time as work, was relatively unusual, and most workhouses developed later. The 1601 Law said that poor parents and children were responsible for each other – elderly parents would live with their children.

The 1601 Poor Law could be described as 'parochial' as the administrative unit of the system was the parish. There were around 1,500 such parishes based upon the area around a parish church. This system allowed greater sensitivity towards paupers, but also made tyrannical behavior from overseers possible. Overseers of the Poor would know their paupers and so be able to differentiate between the "deserving" and "undeserving" poor. The Elizabethan Poor Law operated at a time when the population was small enough for everyone to know everyone else, so people's circumstances would be known and the idle poor would be unable to claim on the parishes' poor rate.

The act levied a poor rate on each parish which Overseers of the Poor were able to collect. Those who had to pay this rate were property owners, or rather, in most cases, occupiers including tenants.^[5]

The 1601 Act sought to deal with 'settled' poor who had found themselves temporarily out of work – it was assumed they would accept indoor relief or outdoor relief. Neither method of relief was at this time in history seen as harsh. The act was supposed to deal with beggars who were considered a threat to civil order. The act was passed at a time when poverty was considered necessary as it was thought that only fear of poverty made people work.

In 1607 a House of Correction was set up in each county. However, this system was separate from the 1601 system which distinguished between the settled poor and 'vagrants'.

http://en.wikipedia.org/wiki/Act_for_the_Relief_of_the_Poor_1601

In 1692 Parliament introduced a national land tax. This tax was levied on rental values and applied both to rural and to urban land.

...

When the United Kingdom of Great Britain came into being on May 1, 1707, the window tax that had been introduced across England and Wales under the Act of Making Good the Deficiency of the Clipped Money in 1696,^[2] continued. It had been designed to impose tax relative to the prosperity of the taxpayer, but without the controversy that then surrounded the idea of income tax.

...

Income tax was first implemented in Great Britain by William Pitt the Younger in his budget of December 1798 to pay for weapons and equipment in preparation for the Napoleonic Wars. Pitt's new graduated (progressive) income tax began at a levy of 2 old pence in the pound (1/120) on incomes over £60 (£5,348 as of 2014),^[5] and increased up to a maximum of 2 shillings (10%) on incomes of over £200.

...

The general election of 1841 was won by the Conservatives with Sir Robert Peel as Prime Minister. Although he had opposed the unpopular income tax during the campaign, an empty Exchequer and a growing deficit gave rise to the surprise return of the tax in his 1842 Budget. Peel sought only to tax those with incomes above £150 (£11,956 as of 2014 ^[10]), and he reduced customs duties on 750 articles out of a total number taxed of 1,200. The less wealthy benefited, and trade revived as a consequence.^[11] Peel's income tax was imposed for three years, with the possibility of a two-year extension. A funding crisis in the railways and increasing national expenditure ensured that it was maintained.

...

Most companies were taken out of the income tax net in 1965 when corporation tax was introduced.

http://en.wikipedia.org/wiki/History_of_taxation_in_the_United_Kingdom

It was not until 1885, when a Royal Commission was held, that the state took an interest. This led to the Housing of the Working Classes Act 1890, which encouraged local authorities to improve the housing in their areas. As a consequence London County Council opened the Boundary Estate in 1900, and many local councils began building flats and houses in the early twentieth century. The First World War indirectly provided a new impetus, when the poor physical health and condition of many urban recruits to the army was noted with alarm. This led to a campaign known as Homes fit for heroes and in 1919 the Government first required councils to provide housing, helping them to do so through the provision of subsidies, under the Housing Act 1919.

http://en.wikipedia.org/wiki/Council_house

The modern welfare state in Great Britain started to emerge with the Liberal welfare reforms of 1906–1914 under Liberal Prime Minister Herbert Asquith.^[23] These included the passing of the Old-Age Pensions Act in 1908, the introduction of free school meals in 1909, the 1909 Labour Exchanges Act, the Development Act 1909, which heralded greater Government intervention in economic development, and the enacting of the National Insurance Act 1911 setting up a national insurance contribution for unemployment and health benefits from work.^[24][25]

http://en.wikipedia.org/wiki/Welfare_state#Great_Britain

[EUBanana]

Surely redistribution is the norm - it's just that historically the redistribution went upwards (to the monarch/landowner)? The government redistributing downwards is new certainly. Oddly that downward redistribution also coincides with the greatest period of human social and technological growth ever (probably dwarfing anything achieved during thousands of years of upward redistribution), so it can't all be bad.

You're way off on income tax btw.

Yes, it was low for ordinary folk (I think only 1 in 10 actually paid it), but the top rate was 30% (that none of the rich could loophole quite as easily as they can now) and there was also the Super Tax/Surtax.

http://en.m.wikipedia.org/wiki/Surtax

Your pre-1930s/new deal alternative is basically "tax the rich and no one else".

I reckon it'd be popular...

Are you referring to the New Deal in America BTW? You know that came about after a small period of low top rate taxation imploded spectacularly in 1929 yes?

US tax rates here:

http://i.imgur.com/3gcfT.png

Surely ordinary people in this country were best off post WW2 and pre-Thatcher? (The boomers in other words). We do best when the rich pay their way and folk feel they really can get on in life through hard work.

Look at the tax rate for the US in 1910... looks to me like WW1 fecked everything up, they tried to go back as it was, and it asploded. I guess cutting tax exacerbated the credit boom as well.

Either way, my point isn't really a value judgment on those times per se, but more a statement that the Golden Era of Redistributive Government in the UK happened between 1945 and 1980 pretty much, so a single generation, not exactly the ancient and natural order of things.

Given that period was pretty calamitous for the UK overall, though perhaps not for those receiving the largesse, I'm not sure we really want to have another go at post-war consensus socialism.

[EUBanana]

The Poor Law was nothing like on the scale of what we have now though. Back then a pauper was a proper pauper. Even things like defence budgets were far less burdensome back then.

Personally I'm more interested in factoids like the massive scale of 19th century philanthropy. It seems to me like for a while there really was a genuine libertarian society, and even a caring one (if a severe one) at that. And debunking the myth that we've been socialist forever, when Before Socialism is still within living memory.

Edited May 20, 2014 by EUBanana

[Neverwhere]

The Poor Law was nothing like on the scale of what we have now though. Back then a pauper was a proper pauper. Even things like defence budgets were far less burdensome back then.

Personally I'm more interested in factoids like the massive scale of 19th century philanthropy. It seems to me like for a while there really was a genuine libertarian society, and even a caring one (if a severe one) at that. And debunking the myth that we've been socialist forever, when Before Socialism is still within living memory.

The point was that redistribution was already well in evidence regardless of scale. Redistribution of wealth is inherent to all political systems that require the existance of a state of any kind as to have any state at all there must be some redistribution of wealth from the citizens to the state so any political spectrum that requires even the smallest of states to exist must be in some way redistributive.

Redistribution is not necessarily socialism. For instance an LVT as advocated by Adam Smith, Winston Churchill, etc with a commensurate CI would be redistributive but given that the notion of restricted land use is a government construct (without which we would freely build houses on unoccupied plots of land) such redistribution would be fair payment for giving up access to natural resources that we would otherwise have free (but possibly bloody) access to were the state not in existence. Though not often acknowledged by libertarians the concept of private land and the removal of natural resources from free circulation inherently involves the restriction and removal of liberties from the general populace.

[byron78]

Given that period was pretty calamitous for the UK overall, though perhaps not for those receiving the largesse, I'm not sure we really want to have another go at post-war consensus socialism.

1945-1980 was calamitous? When compared to what? Now? Pre-WW2?

We're 35 years on, and I'd happily take the former 35 years.

Redistribution has existed since the dawn of time so I'm not sure why you automatically brand it socialist.

As I said, all that's changed is that some money is redistributed down now. Far far more (still) follows the classic redistribution route, which is up.

The only time I can think of in history where things have (arugably) operated differently was in the very early years of America where land and resources were very much up for grabs. Now they're grabbed it's not so much the land of opportunity, it's the land of predisposition.

Edited May 20, 2014 by byron78

[wonderpup]

Back then a pauper was a proper pauper.

Yep- the good old days. Will we ever see their like again? We can but hope.

[Liquid Goldfish]

Given that period was pretty calamitous for the UK overall, though perhaps not for those receiving the largesse, I'm not sure we really want to have another go at post-war consensus socialism.

We had a serious labour relations problem - and then there were the particular problems of stagflation in the 1970s following the oil price shocks - but otherwise the idea that this was a bad era is a revisionist myth IMO. The 50s and 60s and the start of the 70s are looked on by many as a golden time (although by different groups for diferent reasons).

[EUBanana]

Yep- the good old days. Will we ever see their like again? We can but hope.

We're 20 times richer now. Shame the government gets it all.

[alexw]

We're 20 times richer now. Shame the government gets it all.

Absolute nonsense. What the government does is redistribute. Thus it is the people that get it. It might be different people than you'd like to have it, or it might be in a different form (roads vs cash). But it is nonetheless people.

Edited May 20, 2014 by alexw

[alexw]

We had a serious labour relations problem - and then there were the particular problems of stagflation in the 1970s following the oil price shocks - but otherwise the idea that this was a bad era is a revisionist myth IMO. The 50s and 60s and the start of the 70s are looked on by many as a golden time (although by different groups for diferent reasons).

Agreed you only need to look at the GDP per capita growth rate of that time. It was really really good. It's an absolute revisionist myth that this was a bad time for the general population. For the vast majority living standards improved much more 1945-1980 than they did 1980-2014.

Of course average living standards are higher in 2014 than 1960, but then they were higher in 1960 than in 1905. So it's nonsense to just try and compare living standards directly and say neoliberalism is good and socialism is bad or visa versa.

What should be compared is the rate of improvement of living standards for the masses, and hands down the socialist era wins.

One persons average salary to buy a home with job security thrown in? Sign me up.....

Edited May 20, 2014 by alexw

[Neverwhere]

Agreed you only need to look at the GDP per capita growth rate of that time. It was really really good. It's an absolute revisionist myth that this was a bad time for the general population. For the vast majority living standards improved much more 1945-1980 than they did 1980-2014.

My dad recently gave me a lecture about how I should stop trying to replicate the quality of life that he enjoyed on average wages over this time period as it's no longer possible to have that standard of living unless you're in the top couple of percent of PAYE earners. His message was: give up, it's over, find something else to value beyond work and a home because neither of these things are realistically going to offer you anything but insecurity and worsening conditions for the forseeable future

I think he's being a little overly pessimistic - a HPC would do a lot to help out younger people's living standards - but it's interesting how starkly he portrays the difference between relative conditions over these two time periods.

[silver surfer]

My dad recently gave me a lecture about how I should stop trying to replicate the quality of life that he enjoyed on average wages over this time period as it's no longer possible to have that standard of living unless you're in the top couple of percent of PAYE earners. His message was: give up, it's over, find something else to value beyond work and a home because neither of these things are realistically going to offer you anything but insecurity and worsening conditions for the forseeable future

I think he's being a little overly pessimistic - a HPC would do a lot to help out younger people's living standards - but it's interesting how starkly he portrays the difference between relative conditions over these two time periods.

Basically I think he's right!

Owner occupation rates are falling, I used to think they'd fall to continental European levels of 50-60%, but I'm coming round to the view that they may fall further, say 40-50%. Only then will the political consensus finally do the right thing, the thing they should have been doing for the last twenty years, which is to crank up house building to over 300,000 properties a year and keep it at that level for decades.

Hey, look on the bright side, no one's being conscripted into a shooting war.

[cybernoid]

My dad recently gave me a lecture about how I should stop trying to replicate the quality of life that he enjoyed on average wages over this time period as it's no longer possible to have that standard of living unless you're in the top couple of percent of PAYE earners. His message was: give up, it's over

Thats the spirit !

I don't see how advising that a PAYE employee drone is something to aspire to is helpful either.

Home ownership isn't the be all, it needn't be insecure we just need better laws to protect tenants like on the continent. I expect a correction to take care of it actually but if it doesn't theres worse things to be than a non mortgage holder.

[cybernoid]

Of course average living standards are higher in 2014 than 1960, but then they were higher in 1960 than in 1905. So it's nonsense to just try and compare living standards directly and say neoliberalism is good and socialism is bad or visa versa.

Rather a simplification, but then it needs to be doesn't it, the alexw filter don't do complicated do it.

The advances that lead to a higher standard of living won't come about in a socialist society to begin with, there'll be no wealth to spread around. Its kind of failed you know. Theres been some history books and stuff where they mention it.

[byron78]

Rather a simplification, but then it needs to be doesn't it, the alexw filter don't do complicated do it.

The advances that lead to a higher standard of living won't come about in a socialist society to begin with, there'll be no wealth to spread around. Its kind of failed you know. Theres been some history books and stuff where they mention it.

I'm sorry but that really is a daft point (and a bloody simplistic one given you're lambasting someone for making a point you deem to be simple!)

Obviously there's no wealth to spread in a purely socialist society.

But there's no wealth to spread around in a purely capitalist society either.

Because, ultimately, the end game there is one very rich person has everything.

The trick is getting the mix right.

Closest we've come is definitely 1945-1970ish in the UK.

Edited May 20, 2014 by byron78

[thecrashingisles]

I'm sorry but that really is a daft point.

There's no wealth to spread around in a purely capitalist society either.

Because, ultimately, the end game is one very rich person has everything.

Utter rubbish.

And on the 1945-1979 period the UK compares very badly to the rest of Western Europe.

Edited May 20, 2014 by thecrashingisles

[cybernoid]

I'm sorry but that really is a daft point.

There's no wealth to spread around in a purely capitalist society either.

Because, ultimately, the end game is one very rich person has everything.

The trick is getting the mix right.

Closest we've come is definitely 1945-1970ish in the UK.

Any more complex and their heads explode, I neither have the patience nor inclination to speak in anything other than absolutes in order to make a point diametrically opposed to the over simplification we keep being presented with.

Either extreme is indeed wrong, the point of describing mine is to invalidate the other, which has been made, believe it or not, in all seriousness.

[cybernoid]

Utter rubbish.

And on the 1945-1979 period the UK compares very badly to the rest of Western Europe.

There is a tendency for those with no real world experience of much to apply their theories to unrealistic situations ; To make it an academic exercise, where this value rises and that value lowers therefore eventually that value gets to zero look see it stands to reason. Etc etc.

Its always an over simplification based on unrealistic models, where the real world is just not like that. And they don't know its not like that because they've never done anything in it. They don't know what they don't know. And yet they lecture.

Its amusing a lot of the time to pop up and quietly motion towards reality, I just hope no-one actually takes this kind of alexw crap seriously. I can't see how they could, but its easy to over estimate people.

[Neverwhere]

Basically I think he's right!

Owner occupation rates are falling, I used to think they'd fall to continental European levels of 50-60%, but I'm coming round to the view that they may fall further, say 40-50%. Only then will the political consensus finally do the right thing, the thing they should have been doing for the last twenty years, which is to crank up house building to over 300,000 properties a year and keep it at that level for decades.

Hey, look on the bright side, no one's being conscripted into a shooting war.

You know what they say about tempting fate?

I think a price correction will do a lot to sort out the reduction in owner occupation and this will probably come from another trigger rather than an increase in supply (here in London I constantly see both empty properties and new build developments going up all over the shop). Reducing or static living standards in other areas beyond housing will probably take a lot longer to reach a consensus on though (underfunded pension liabilities for older generations being funded by essentially overcharging younger generations for worse pensions for instance).

Thats the spirit !

I don't see how advising that a PAYE employee drone is something to aspire to is helpful either.

Home ownership isn't the be all, it needn't be insecure we just need better laws to protect tenants like on the continent. I expect a correction to take care of it actually but if it doesn't theres worse things to be than a non mortgage holder.

I know!

To be fair he was in medical research (at a university hence only average wages) so he actually enjoyed his PAYE position and had the benefit of its security at the same time.

[cybernoid]

To be fair he was in medical research (at a university hence only average wages) so he actually enjoyed his PAYE position and had the benefit of its security at the same time.

Things change, that route worked for him, doesn't mean it will work for the next generation. Im wary of some advice, you don't want to be 'fighting the last war'.

[alexw]

I'm sorry but that really is a daft point (and a bloody simplistic one given you're lambasting someone for making a point you deem to be simple!)

Obviously there's no wealth to spread in a purely socialist society.

But there's no wealth to spread around in a purely capitalist society either.

Because, ultimately, the end game there is one very rich person has everything.

The trick is getting the mix right.

Closest we've come is definitely 1945-1970ish in the UK.

His post is a load of crap anyway. GDP per capita grew at exactly the same rate for the USA vs the UK, vs Sweden vs Germany from 1980-2010 despite the varying amount of socialism in each of those nations systems. Piketty thankfully looked at all this via national accounts data and made it available to us in his book.

Thus we can go back to the degree of socialism and inequality we had in the 1960's and 70's substantially raising the living standards of the bottom 95% of society, with zero economic cost.

Edited May 20, 2014 by alexw

[thecrashingisles]

His post is a load of crap anyway. GDP per capita grew at exactly the same rate for the USA vs the UK, vs Sweden vs Germany from 1980-2010 despite the varying amount of socialism in each of those nations systems. Piketty thankfully looked at all this via national accounts data and made it available to us in his book.

Praise be to Piketty. The first man in history to calculate GDP for the last 30 years.

[alexw]

Praise be to Piketty. The first man in history to calculate GDP for the last 30 years.

GDP per capita not GDP. They are quite different things. You also need to correct for currency fluctuations and inflation.

And no, nobody else appears to have done this comparison between different nations.

I wonder why?