Oh dear Seumas, oh dear

Her government\’s savage deflation destroyed a fifth of Britain\’s industrial base in two years, hollowed out manufacturing, and delivered a \”productivity miracle\” that never was, and we\’re living with the consequences today.

Strange that manufacturing output was higher when she left office than before she took it really.

What she did succeed in doing was to restore class privilege, boosting profitability while slashing employees\’ share of national income from 65% to 53% through her assault on unions.

And you don\’t know your economic statistics, do you?

GDP does not split into labour income and capital income.

A goodly part of that fall in labour income is in fact the introduction of VAT, the raising of VAT, the raising of employers\’ national insurance payments and the rise in self-employment.

One day, if I get bored enough to work out how to use Excel, I\’ll prove it too.

11 comments on “Oh dear Seumas, oh dear

  1. As it was me who pointed out the VAT thing, I don’t understand why you mention NI, as that is included in the ‘total compensation of employees’ which gives the 65% to 53% figure, no?

    Tim adds: No, employer paid (ie, employment taxes nominally paid by the employer) taxes are a separate line item. They are not part of the labour share of income.

  2. Another of the leftie drones droning on about a history more than a generation ago. Every one else has moved on, even the current Labour Party, to the realisation that the recent 13 years of Labour Gumm’nt IS the greatest disaster, especially the Brown years of misrule.

  3. They’re a separate line item (D12) but they are included in D1 “compensation of employees”, which is what gives the 65% to 53% figure.

  4. Yeah manufacturing grew steeply in the latter half of her premiership, while manufacturing stalled and went into decline during the heady Blair years.

  5. It is quite clear from government statistics published under New Labour that manufacturing industry employment shrank by more under Blair/Brown in 13 years than under Thatcher & Major in 18 – and the largest single part of the fall in manufacturing employment in the 1980s was getting rid of redundant employees in denationalised industries. BT removed FIVE layers of management National Power claimed it had the largest redundancy programme in history until I pointed out to Chairman that Julius Caesar had a bigger one (I didn’t have data for the post-1945 redundancies in various armies).
    Labour share of national income did fall under Thatcher because she balanced the budget and capital’s share moved from less than zero under Wilson to something positive. But a youngster like you may not have noticed than Wilson’s price controls locked a lot of companies into making losses under honest (inflation-adjusted) accounting.
    You’re quite right about self-employment.

  6. “Her government’s savage deflation”

    Hang on a minute, deflation? I didn’t think that there was ever any deflation during any government of the post war era.

  7. @ Matthew
    Depends on your definition of manufacturing. It’s more that BT and National Power were the examples that immediately jumped to my mind 30-odd years later, but there also lots of redundancies in British Steel, British Aerospace etc., but they were “not memorable” – scientific research found that only 1066 and 55 BC were memorable.
    One of my friends worked for BT personnel department and got made redundant in his late 50s due to the reduction in the number of BT managers.
    @ chris strange
    Some people don’t know the difference between deflation, disinflation and a deceleration of inflation.

  8. Well, I think it would be interesting to compare british manufacturing performance during the 80s and beyond with that of other OECD economies. I recall Bob Rowthorn doing this in his Kalecki memorial lecture from some years back (still available online), and the interesting thing is that UK manufacturing employment and aggregate output fared much much worse than that for other OECD economies, despite all the talk of a manufacturing renaissance under Thatcher.

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