Refusal is lamenting the decline of manufacturing in the UK compared with Europe. Alternatively, you could describe it as the rise of services (finance, insurance, accounting, software developmet, entertainment, tourism, consulting, etc) in the UK.
The UK is on to a winner here. Commodities (food, fuel, minerals) and manufactured goods (cars, PCs, clothing, stuff you can put in a box) are declining in price worldwide. Services are rising in price. The UK enjoys falling prices for her imports (raw materials and manufactured goods) and rising prices for her exports (services). Bingo!
The idea that services are “wealth-creation, but not creating anything of practical value” (Refusal’s term) is complete rubbish. They don’t employ people who wear cloth caps and clogs and belong to big labor unions. Boo-hoo. They make the UK economy grow faster than European economies full of rusty factories, farms and mines, as the UK’s unemployment rates show.
Manufacturing and extraction is menial labor - it’s for the 3rd World. The brainpower makes the big $$$$. Welcome to the 21st Century.
Germany’s current economic problems are due to reunification - the costs of dealing with the legacy of East German Communism, rather than West German Social Democracy
Britain seems to have suffered a double whammy of an overlarge and incompetent public sector AND an incompetent and underskilled private sector.
It’s too easy, and too glib, to say that Britain’s relative decline was due to a succession of more or less leftist policies from successive governments. Consider: both the UK and Germany had their capital base very severely depleted by the war, Germany probably even more than the UK. In addition Germany had to deal with the stresses caused by (a) partition, and (b) reunification. In the decades since the war, Germany pursued a “social market economy” which involved, as judged necessary, either maintaining nationalised industries (railways, telephones) or regulating industry sectors and insulating them from competition (agriculture, road transport, housebuilding). Over time, generous health and social security systems were established (or re-established). Personal taxes were high. Germany has a strong and influential trade union movement. It is a highly regulated and bureaucratic society.
In short, it committed most or all of the sins of which Britain is accused in this thread. And yet, unlike Britain, its economic performance since the war is regarded as little short of miraculous.
Am I overstating the similarities between British and German economic policies? Or is there some other factor which explains the relative underperformance of Britain?
This is way out of my area of expertise, but I find it fascinating.
Could the Marshall Plan be a contributing factor? Did Germany, France, Italy et.al. get more aid from the US after the war than the UK? The UK might have been seen as less of a basket case because unlike most of Continental Europe they were not occupied or overrun.
The UK actually received more Marshall Plan dollars than any other recipient (though it also had heavy overseas commitments - Greece, Palestine, etc).
It should be remembered that all of W Europe enjoyed what we now think of as impressive economic growth in the 50s and 60s (including the UK, although the latter was starting from a less decrepit base and had slower growth than the continent).
The UK’s overseas military commitments and weaker industry contributed to forex problems, resulting in the devaluation of the pound in 67 (IIRC). The failure of statism only really became apparent in the 70s, with horrendous inflation and profits being diverted into overmanned and outdated loss-making car factories, mines, etc etc.
The lesson still hasn’t been learned. The Singapore government centrally plans its economy. Thanks to a slick PR program, most people there and overseas think of Singapore as an amazing success story. It’s actually in a very serious mess, stuck with a large manufacturing base that seemed “hi-tech” 10 or 15 years ago, but which now belongs in China. Hong Kong, meanwhile, has no industry left on its territory - it’s pretty much a pure services-based economy, serving a manufacturing base that it owns in the Mainland.
Germany got about 12% of the Marshall Plan fund, Italy about 11%.
The Marshall Plan was the main reason the UK developed the ability to repay Lend-Lease and other loans (UK got about 25%, equal to about $50-ish per head, France about $70 per head) – without it, the US would have been far from sure of getting its money back (was it one of the main reason for the Marshall Plan ? lets not go there…). Not something the US wanted to repeat after the post-WW1 Reparations/War Loans disaster and the subsequent world banking collapse.
One could argue, IMHO, that the UK performed surprisingly well in the period 1945-65 given its relative affluence at the end of that span and the amount it had repaid – Lend-Lease was repaid, I believe by '65, consuming just about all surplus GNP in that 20 year period.
BTW, I heard a statement just the other day that claimed WW1 and WW2 consumed the entire wealth created by Britain in the hundred years up until 1945. Seems extraordinary ?
I feel obliged to point out that Britain was under Conservative governments for the majority of the period in question. Or are we subscribing to the rabid Thatcherite view of history here, in which Ted Heath, Alec Douglas-Home, Harold Macmillan, Anthony Eden and even Winston Churchill were all low-bred Socialist wastrels, and Britain groaned under the iron heel of the Stalinist jackboot until the sainted Margaret descended from the heavens to save us all from Satan’s power? (You may correctly assume that I do not subscribe to this viewpoint…)
No, but one doesn’t need to be a ‘rabid Thatcherite’ to believe that the Conservative governments of the 1950s and 1960s followed economic and industrial policies which were, in practice, not that different from those of their Labour counterparts, which, in any case, never amounted to ‘the iron heel of the Stalinist jackboot’. (Heath is, of course, a more complicated case.)
Steve Wright is making a good point. The “Conservatives” of the 50s and 60s had to accept a lot of quasi-socialist policies (eg the NHS, which they explicitely promised to continue). Maybe a bit like Labor today under Blair is quite Thatcherite. Can’t get elected otherwise. People like Keith Joseph reading Milton Friedman and Hayek pushed the Conservatives away from that, but wouldn’t have succeeded without the help of popular sentiment. That’s democracy. Something similar happened in the US with the supply-siders.
There is much truth in the previous posts…however, nobody has considered that Britain , from the 1880’s onward, invested more OUTSIDE the UK than within it! Very few Americans realize that almost all of the US railroads were financed and owned by British banks. So Britain was always prone to invest outside the counrty, and this lead to the obsolescence of most of the UK’s industrial base. This lead to some curious developments…while Britain declined as an industrial power, the investor-banker class in London grew wealthier and wealthier-and these people demanded free trade, so they could earn bigger profits (from manufacturing outside the UK). Their insistence (on maintaining the convertability of the pound at artificailly high value)led to the near-death of manufacturing in GB-even though British wages were low, the cost to make things was very high. Finally, maintaining the empire became an immense burden for the British taxpayer-keeping the Navy deployed around the world nearly broke them.
Of course, one possible interpretation of this is that the 1945 Labour government had the right strategy for national reconstruction after the war - or at least a good enough one that the Conservatives couldn’t think of anything better.
Actually, I’m inclined to suspect that a strong “statist” model was necessary in the post-war years, if only because private enterprise tends to act to minimise perceived risks - or, to (over?)simplify, given a choice between investing in the rebuilding of Britain and retiring to the Bahamas, private enterprise would pick the risk-free option B nine times out of ten. I wonder if it’s possible to draw a parallel here with America’s response to the Great Depression? - arguably the only time in US history when a strong statist model (can we call the New Deal that?) had popular support.
I’ll concede the difference between old-fashioned “one nation” Conservatism and the hard-line monetarists… but I’m still pretty sure I could tell the difference between, say, Harold Macmillan and Harold Wilson. Two out of three times, anyway.
Fascinating discussion this one. Question I have is what would have happened to the UK if Maggie did not do what she did (break the unions)? Did she do the right thing, or if not, why not? In South Africa we seem to be heading in a similar direction: powerful unions that look out for the interests of workers but don’t seem to care where that job comes from. Effect is that unemployment has reached almost 40%.
I don’t think that anyone could have won the 1979 election if they didn’t make a firm commitment to curb the trade unions - apart from the hard Left, and the union leaders themselves, just about everybody in the country was bloody sick of them. It’s one area (possibly the only one) where Thatcher really did have whole-hearted public support.
A Labour government in 1979 wouldn’t have gone as far as Thatcher did, certainly… not necessarily a bad thing. We would have seen more emphasis on employment rights, and more support for manufacturing industry (I think Hemlock would call that a bad thing, but I’m not sure I’d agree). But it wouldn’t have happened; Labour in 1979 consisted, effectively, of Callaghan/Wilson era politicians (whom nobody would trust to deal with the unions) and the hard left who took over afterwards (and made Labour unelectable for the next decade or so).
(Of course, the unions only caused problems because their leaders forgot the good of the state overall and started fighting for their own personal interests… in short, acted like capitalists.;))
You nailed it, brother. Capitalists sabotage the domestic economy when the working class gets too much power; then start a huge campaign in their press attacking the workers and the labor movement.
I wouldn’t doubt that the average person in Britian now has a lower quality of life than thirty years ago, as in the USA
Its nice to see some folk blaming socialism for the contraction of the UK economy during the period mentioned, but how many realise that two thirds of that time was in fact under Conservative administration.
Among the usual susptects are overpowerful unions, greedy non productive workers and the like, oh yawn!!
I’m going to make a far more considered reply to this, but for now ,just think a little about the British motorcycle industry and what happened to it, then work out with whom the repsonsibility for that debacle lay, and then repeat for pretty much the rest of British manufacturing industry.
Lazy British investors have always been far more interested in obtaining the maximum gain for the minimum outlay, or for that you can read, take out as much as possible and invest as little as possible.
Nonsense. While only a child in 70’s Britain, I certainly don’t recall anything of the sort. Phones were universal amongst people we knew and we certainly didn’t know anybody of “extreme personal wealth.” Indeed I’d hazard that the statement above has never been true for landline phones in Margaret Thatcher’s lifetime, never mind just before her premiership (she was born in 1925).
Yes, the Thatcher government conspicously avoided spending money on defending our territories overseas and nuclear weapons, while pouring investment into IT and education. They may have been correct, but they weren’t that far-sighted