What was wrong with Britains Economy 1945-81?

We may never know.

Seems simple enough to me. It was fashionable and modern to believe the state could do better than the market, and Fabian anglo-socialist ideas suited a population traumatized (or at least pissed off) by the 30s depression and the deprivation of the war years.

By the time it became apparent that state control of big parts of the economy (nationalization of mines/transport/heavy industry) simply meant subsidy of uneconomic activities by the rest of the economy, public-sector unions had a stranglehold over the Labor Party and much of everyday life. It took the 1970s for people to grow sick of it. Enter Maggie. Thank god.

(Yes. I’m biased.)

Also, we’d just pretty much bankrupted ourselves fighting the second world war. The supplies from you Yanks whilst we were fighting alone didn’t come cheap, y’know; apparently, though, the debt should be paid off by 2006, so you won’t have to send the bailiffs round after all.

So why didn’t the government of the late 40’s and 50’s concerntrating on creating a new industrial base for it to profit from using american loans? It would be better than spending large amounts of money on apartments and a shiny new national health service.

What was the economic situation after the war? (1945-50)

Despite the current anti-Thatcher received wisdom, she will probably be remembered as the greatest post war PM of the UK for her social and industrial reforms.

Most people who criticise her don’t have real, wealth creating jobs - e.g. civil servants, media in general, education establishment. People who created wealth and paid the taxes supporting all the others (private as opposed to state owned industry, the City) were generally in favour of her. People who consumed wealth (civil servants, media, BBC, education establishment) generally weren’t. The anti-MT message was hammered into the population for years and not surprisingly it was eventually believed. The current economic success of the Blair governement is a direct consequence of carrying on MT’s policies. As Gordon Brown trashes the reforms, the economy will deteriorate all over again.

As an example - before MT it took weeks to get a phone. It was expensive and admitting to having one implied you were the possesor of extreme personal wealth. Post privatisation of British Telecom it suddenly became possible to get one in days. Nowadays, not having a phone is considered a sign of extreme personal poverty or, at best, extreme eccentricity.

Another example - the accepted myth is the the miners’ strike of the 1980’s was a great struggle in defence of traditional communities against right wing oppression. It was nothing of the sort. It was an onging insurrection by one section of the population in an attempt to extort money out of the rest of us, which was successfully dealt with without recourse to extreme violence, i.e. the army in the streets.

So what is exactly Gordon Brown doing that will mean the deteriation of the economy again?

(I didn’t start the thread, BTW, in case anyone thought that was the OP)

Where the hell’s my original OP?

In my Original post I said what happened to Britains economy in from 45-81? It pretty much shrank from 3-4 position and went a downward spiral towards 9th place I wanted to know why Britains economy was lagging behind those of Europe and america, was it the political obligation of providing ‘Full employment’ or the power of the unions to destabilise the country every othe month(70’s) what was the cause of this 30 year decline?

I ate it.

Sorry, I was hungry.

(Original OP?!?)

Woah! That sounded a bit rushed ! Sorry guys

Over taxation & over regulation. The never ending stream of regulations for businesses diverts resources to filling in forms instead of running the business. Read Simon Booker in the Sunday Telegraph for examples.

The more money the government takes out of the GDP (up to around 40% IIRC), the less available for investment and further wealth creation. The government creates no wealth - it consumes it.

A subtle effect of GB’s stealth taxes is the taxation of dividends remitted to pension funds. Raises over £5 billion p.a. You and I don’t seem to feel the direct effect, so what’s the problem? Well, if GB takes the money, the pension fund doesn’t get it. If the fund doesn’t get it, it has less money to invest. If it has less money to invest, then the value of pensions is reduced. Also, if the money isn’t invested in the stock market, the value of shares will not be as high as they could be. With lower capital growth and lower investment, the return on capital is lower so the whole economy suffers as well as our pensions. By “our”, I mean everybody who has a personal pension. They all invest, once removed, in the stock market.

What does GB care? Sweet f.a. His pension is index linked, paid directly by the tax payer (no investment required by GB or his employer) and for each year as an MP he gets one fortieth of his final salary as a pension. Out - bloody - rageous! The best you can get in industry is one sixtieth.

If governments treated people as ends instead of means, we’d all be a lot better off.

I also am biased - I hate governments of any stripe.

I thought Mangetout’s non-OP was pretty good.

I would recommend “Labour in Power 1945-52” by Kenneth Morgan to get a flavor of the times. The UK was totally bankrupted by WW2. (Bear in mind they could have taken the easy way out and signed a peace treaty with Hitler, but chose to endure rationing, bombing etc.) It’s not at all surprising that they wanted a break. Trendy, semi-socialist ideas were a big attraction - roughly as in the US, with FDR winning 4 elections. People wanted security, and they believed government could deliver the goods.

We think we know better now, but with Bush’s protectionism, the EU’s interference in trade and labor markets, Gordon Brown’s incessant additional hidden taxes, who knows?

Hey - for what it’s worth, the UK has come back from 6th place in terms of GDP to 4th (bye bye France and Italy) in recent years, in US$ terms, partly thanks to not adopting the Monopoly money.

Montezuma, sorry about hijacking your thread. :o

Regarding the original post, IIRC the UK economy is back around 4 in the world after USA, Japan & Germany. Mind you China is probably up there these days.

Between 45 and 81, successive UK governments deluded them selves into believing we were still a “Great Power”. We weren’t. We wasted money we’d borrowed from the USA on defending the Empire, nuclear weapons, Concorde, teh sacred cow of the national health service supporting bankrupt industries (coal mining), instead of investing in the right new industries (IT) and education. And having acquired the habit of meddling in everybody’s private lives during the last war, governments became more interested in social engineering and slicing up the shrinking cake instead of worrying about making a bigger one.

While the pro-Thatcherite rants are entertaining, they don’t explain the disparity between Britain and the rest of Western Europe, which also tended to adopt social democratic policies, but which still have their own car industries, for example.

One alternative thesis I’ve seen advanced (sorry I can’t remember by whom) is that the British financial markets have traditionally been hostile to industry, in contrast to those in France or Germany. Instead of investing in manufacturing, the British financial institutions have concentrated their attention on financial services and overseas investments (wealth-creation, but not creating anything of practical value) which have brought wealth to the already wealthy but have not resulted in the development of an industrial base. Lack of investment and poor research and development would therefore be key factors in the decline of British industry.

http://econ161.berkeley.edu/TCEH/Slouch_British7.html blames lack of investment in Britain by British financial institutions, a poor education system and the absence of investment banks comparable to those in Germany or Japan, and marks the decline as beginning in the late 19th century.

http://65.107.211.206/history/barnett.html The anti-technological bias of British society, going back to the Victorians, is also blamed.

The problems are far more deeply rooted historically than anything which could be blamed on post-WWII factors.

Good point, Refusal. However, in Euroland now, the high cost of welfare is starting to hurt. It has resulted in 4 million unemployed in Germany, around 20% unemployment in Spain, sclerotic industries that are uncompetitive. The EU’s instinct is protectionism and subsidy instead of reform and openness.

Euroland also suffers from unfunded pensions schemes (that may be a sweeping generalisation) - where the state pays all pensions out of general taxation rather than people investing for themselves. It will all end in tears when the demographic timebomb explodes. We shouldn’t be keeping immigrants out, we should be inviting them in and getting them to work. If we did, there’d be lots of new wealth created by first and second generation immigrant entrpeneurs.

To compare the post-War UK to post-War France isn’t very meaningful - the French economy was not nearly so buggered as the British one, owing to the fact that they surrendered without putting up a long-drawn out fight like Britain, and (AFAIK) didn’t bother to pay back their war debts to the US.

I think to a large extent that’s true in the UK too, with the caveat that we have been increasingly urged to provide personal pensions for ourselves. Certainly most recent changes to pension law that I’m aware of (with the exception of GB’s egregious pension-robbing mentioned above) have been designed to have the effect of making it easier for Joe Public to set up and maintain a private pension.