I just knew that this number was going to get bandied about. All the usual suspects will lie about it all. And here\’s one more of them, the retired accountant from Wandsworth known as Ritchie:
In the 60s and 70s wages took around 60% of GDP.
Now it’s about 53%.
That’s a massive shift away from the reward to work in the economy.
That means people are paid less for the value they create.
But it also means that value is taxed less as profit is now (unlike the 60s and 70s) much less taxed than labour.
And this is despite a real rise in the population.
The result is there is more demand for public services and less to pay for it. So we have a government funding crisis.
This is, quite simply, bollocks. Complete, total and utter bollocks.
As I explain in exhaustive detail here.
He\’s making the idiot mistake of thinking that the labour share of income and the profit share of income constitute unity.
Which they do not.
Has the labour share of income fallen? Why, yes, it has. Has the profit share of income risen? Not from the 60s it hasn\’t, no. And even Brendan Barber says that the 70s numbers were unsustainable.
What has risen since then? Why, that would be self employed income, a little bit. And taxes minus subsidies. The largest part of which is the rise in VAT over the decades.
So, far from the fall in the labour share of income being responsible for a fall in tax revenues to pay for public services the fall in the labour share of income is a result of a rise in tax revenues to pay for government services.
Normally with Ritchie I\’m willing to assume that his mistakes are due to his ignorance. This one though, this one I think rises to the level of an outright lie. A deliberate one.