Surely an improvement in the lower levels of income is the main concern? “Inequality ratios” mean nothing; everyone in Britian could be deeply and equally impoverished and that’d be you satisfied.

There’s something of a problem here – inequality is currently at its lowest levels in the UK since the mid-90s.
http://www.ifs.org.uk/publications/6196

So that’s great right? Problem solved? No, because it turns out that the best way to “address inequality” is for everybody to get poorer. I suspect that Matt’s right, and it’s better to concentrate on reducing absolute poverty than to try and fiddle with equality ratios.

Exactly. Thatcher and Ray-gun marked the end of post war consensus. And began turning the clock back to the gilded age. Very regressive tax regimes were put in place. Income tax and, and capital taxes were to be slashed , while consumption taxes were massively increased. These policies have, by and large continued under successive govts, terrified to upset the global elites and army of right wing media propaganda outlets.

Corporation taxes in the US are at a 70 year low and the elites are making so much money they can throw billions at keeping their puppet politicians in power. And yet still they whine that taxes are too high and must be cut further.At the same time labour is taxed higher than capital (so a billionaire pays a lower tax rate than a cleaner) All this tax cutting has now lead to a situation where govt spending must be now slashed to pay for ever more tax cuts for the elites. The military industrial complex must not be cut. (That keeps the plebs in line) So it must be social programs, like health, and pensions. And the unions have been all but destroyed. What will now follow for the next 20 years is the hollowing out of the lower and middle class. What is funny is these people will vote for their own destruction.

I think Sally has hit the nail on the head. But the big problem I have is the assumption underlining all these blogs is in the final instance political power matters. There is this preeminent idea that there is political choice and having made that choice the politicians can in some way re-engineer the economy in the way they want.
I would suggest that Thatchers success,if you can call it that,was like breaking a dam. She was in every sense going with the flow of lassie faire capitalism. What politics under capitalism cannot now do ,in my opinion, is to easily reverse that for two reasons. The seat of power in western capitalism isn’t political its economic.The post thatcher PM’s such as Blair/Brown and now Dave unsurprisingly reflect the post Thatcher politics of how best to manage capitalism. Whether the silly party or the sensible party attain power is largely a matter of luck because apart from the smiley faces there is pretty much no difference. The second element is that under current international tax law the ability for Corporations to offshore their tax liabilities is immense and ultimately will erode the ability of the state to function in social affairs. It is interesting to see what decisions Birmingham will be making in the near future regarding their social provision but that’s probably the kind of thing that will happen nationwide. But the biggest underlying issue is money equals power. That’s why ,even when grannies are dying in their homes,which they will,in droves I suspect, the rich will be quietly impervious in their yachts supping a glass or two of bolli.

Pity these figures only go back to 1977. For we’ve exactly the same problem about the 70s as we have with the profit share and labour share figures.

We know absolutely that they were an unsustainable set in the 70s. Even Brendan Barbour has said it about those profit and labour shares.

What we’d really like to see is these numbers for, say, the entire post war period. To see whether it’s the 70s that were the blip, not now.

Strictly Tim, it should the figures need to go back to the 1920’s to get the full cycle. The current under regulated behaviour of bankers, speculators and their like with their snouts still in the trough, behaviour unchanged, no one held to account, and calling for an end to Banker Bashing is more akin to this period than the likely over regulated 1970’s

….also, can we compare with other countries please? The presence of Mrs Thatcher could be relevant, or not. The onset of Globalisation could just as easily be causal.

4 very good. I agree. Thatcher was NOT something new, she pushed the old policies of the 19th century. The very polices that created socialism in the first place. (Always worth remembering that neo liberal economics created socialism in the first place) However with the collapse of Communism in the east in the early 90s ushered in a belief that there was now no alternative.

Full steam ahead to the promised land of free markets. China came up with a novel approach. Free markets with no democracy. And the right went wild for it. This was the ultimate return to the 19th century. No unions, and no voting for the people. American democracy has long since been hollowed out to remove any possible change to the economic system. You can vote for local dog catcher, but not change of economic system.

I very much agree that the power is now in the hands of the elites and not the politicians. Most of the public has not grasped this yet. The politicians are still important because they write the laws, but they answer to the corporate elites, not the public. In the last 10 years we have seen GWBush run as a moderate and then u turn and move to the right. Cameron did the same. And we had Blair and Obama all pretending to be more liberal, but in fact continued along the same path. The latest great pretenders are the lib dems, who now carry out policies they never ran on.

Nothing can now stop the mass race to the bottom. The rich hated FDR for his great society, but he saved the idle rich from being hung from lampposts, and he saved capitalism. Next time the global elites destroy the economy for their own greed, they may not be so lucky.

To be of any real use to policy makers – or to policy wonks – we need to know specifically what Thatcherite policies were responsible for the increase in inequality (before or after taxes and benefits) and the extent to which the increase differed from trends in other affluent market economies. I’m more concerned about reports in 2010 of this OECD finding:

The chances of a child from a poor family enjoying higher wages and better education than their parents is lower in Britain than in other western countries, the OECD says
http://www.guardian.co.uk/business/2010/mar/10/oecd-uk-worst-social-mobility

Still talking about Margaret Thatcher?

C- Can do better.

Everything the mainstream believes about Thatcherism is a lie. She didn’t reverse Britain’s decline because there was no such thing. Britain was doing fine till 1973, when along with the rest of the world we were inevitably badly affected by the Oil Price Shock. At least the governments between then and 1979 tried to deal with the crisis, whereas Thatcher presided over the wholesale destruction of the British economy. Britain today is far, far worse than it would be had the Tories lost in 1979.

Unfortunately, 18 years of access to the machinery of government allowed the Tories to spread their propaganda to such an extent that people began to actually believe it.

We must undo everything Thatcher did.

Chris – presumably you would like the stranglehold the print, coal, etc unions had on the country back then returned? Given that they brought us to the edge of ruination, why do you want this?

12 Zzzzzzzz?zzz

Oh look a tory butler troll spinning for his corporate masters.

“We must undo everything Thatcher did.”

Everything? Does that include going back to a top rate of income tax of 83p in £1 for “earned” income, reintroducing exchange controls on capital movements and undoing the Big Bang on the Stockexchange?

According to the IFS: “During Margaret Thatcher’s premiership public spending grew in real terms by an average of 1.1% a year, while during John Major’s premiership it grew by an average of 2.4% a year.”

It was James Callaghan who delivered the obituary on demand management at the Labour Party Conference in 1976:

“We used to think that you could spend your way out of a recession, and increase employ­ment by cutting taxes and boosting Government spending. I tell you in all candour that that option no longer exists, and that in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of infla­tion into the economy, followed by a higher level of unemployment as the next step. Higher inflation followed by higher unemployment. We have just escaped from the highest rate of inflation this country has known; we have not yet escaped from the consequences: high unemployment.”

Sam Brittan in the FT: “The relative decline of the British economy in the century up to the late 1970s has been reversed. Since then, the UK has caught up with and even overtaken its principal trading partners. The previous two sentences are neither a typing mistake nor a daydream. They are the sober conclusions of the country’s leading quantitative historian, Prof Nicholas Crafts”
http://www.samuelbrittan.co.uk/text399_p.html

@8 Sally,

” Free markets with no democracy. And the right went wild for it. This was the ultimate return to the 19th century. No unions, and no voting for the people.”

You really need to read up on 19th century history. You will find that the legalisation of union activity and a massive extension of the franchise took place during that period.

The elephant in the room is the role of mass unemployment in pushing wages down for those at the bottom. The author of this article has failed to address this.
After mass unemployment was deliberately reintroduced in the 1970s & 80s through a combination of cuts and high interest rates Conservative politicians feigned surprise at the unemployment they`d created and started to blame it on the welfare state. They told us that there was too little incentive to work because the gap between benefit levels and wage levels was too small. But it was the wages of the lowest paid that had been affected most by the very unemployment the Thatcherites had brought back. We were then told by the Right-wingers that benefit levels had to be cut to “make work pay” – it`s no surprise of course that there was no wish to introduce a decent minimum wage to “make work pay”!!

The clever bit was to convince enough of the electorate that unemployment wasn`t the intended result of government policy but instead was the fault of the unemployed! No one would have been fooled by this in the 1970s and 80s, but with the passage of time and the massive propaganda from the media and all 3 main parties, many people have learned to blame the victim, and governments now promise to reduce unemployment through dismantling the welfare state. This is already leading to tragic results.

The reintroduction of mass unemployment in the 1970s & 80s has been documented here:
http://thetruthaboutunemployment.wordpress.com/2012/09/17/the-reintroduction-of-mass-unemployment-in-the-1970s-80s/

Job Seeker

The annual inflation rate hit 25pc in the mid 1970s. Curbing that was bound to cause social pain. The Labour government’s incomes policy at that time was intended both to curb inflation and to protect jobs.

The factor often left out of damning Thatcherism was the huge appreciation of the Pound in the foreign exchange markets at the start of the 1980s as the Pound became a petro currency as North Sea Oil came on stream when world oil prices were at record highs. That made a whole range of Britain’s exported industrial products uncompetitive. Another forgotten factor was productivity in several key industrial sectors in the 1970s – car making, steel, coal – had fallen on trend.

We need to be very clear about which Thatcherite policies were harmful. Rewriting history is not a sound basis for reforming policies. There’s a good case for saying the 1981 budget was too deflationary. Monetarism – the Medium Term Financial Strategy – was formally abandoned in the autumn of 1985 because it wasn’t meeting its own money supply targets.

2 and 5 well said, teh fact is that inequality has decreased (socially not finacially) not due to thathcerism but despite of it, Equality maybe be better now, But Had their not been the harshness of some of the more extreme Thathcerite policies, equality would be better still,

15. Richard Carey

You really need to read up on 19th century history. You will find that the legalisation of union activity and a massive extension of the franchise took place during that period.

I think the legal ability for Unions to strike was won in 1906. Prior to that under the Combination Acts it was illegal. The liability and compensation issue was won by the Industry as late as 1901 in the famous ‘Taff Vale’ case.

I would be interested in which bit of History you think Sally has left out.

18. john reid

That’s a nice piece of New Lab jiggery pockery if I may say so. Inequality has decreased (socially not financially).
Its nice to know one can join the back of the food queue and still be middle class. Top Ho!

11. Chris

You need to bear in mind that Britain was only economically great due to its empire and the huge subsidies derived by yoking local colonial labour to the cash nexus. In reality by the 1890’s America ,Germany and others(I think) were surpassing British output in Key areas. Of course a combination of the US,deliberately attempting to bankrupt us during WW2 and Churchill’s decision to declare war on the Jerries,against the appeasing principles of much of the tory cabinet who would lose out financially. Since then its just been a steady decline with a few bumps along the way until the funny money started cutting in.

Bob B @ 17

Your love for neoliberal dogma means you left the huge rise in the price of oil in the 1970s out of your “analysis”!!! (must have slipped your mind)

The inflation rate was caused by the huge rise in the price of oil which rose from $3.35 per barrel in January 1970 to $32.50 per barrel by the end of the decade.
When manufacturers responded to increased non-labour costs by jacking up prices to preserve their profit margin, workers rightly saw no reason why an investor`s unearned dividends should be preserved from the ravages of inflation at the expense of workers` ability to provide for their families. At that time strong trade unions and a post-war tradition of low unemployment meant governments were well aware that cost of living wage increases would be fought for. Incomes policies were imposed, with wages ostensibly indexed to prices, conveniently leaving profits gained through productivity increases to flow to owners, not workers.
Despite your rewriting of history Thatcher made precisely zero impact on the inflation rate, the period of falling inflation in the UK just happened to coincide with the steep decline in the price of oil which, by the Spring of 1986, was below $10 per barrel. Once the oil price ceased its fall, inflation in the UK started to climb, during what became known as the “Lawson boom”. By the time Margaret Thatcher left office in November 1990, the annual RPIX inflation (Retail price Index excluding mortgage interest payments) was the same, at 9.2%, as it had been in May 1979 when she entered office – the failure of her inflation-fighting policy could therefore be measured to an accuracy of one decimal place!

http://thetruthaboutunemployment.wordpress.com/2012/09/17/the-reintroduction-of-mass-unemployment-in-the-1970s-80s/

@2 Tim J

No I don’t think that is right. Unequal societies make very bad societies. Also, by looking at the absolute poverty line means you are essentially locking generations out of mainstream society.

I would suggest that that is probably not a good idea if you want these people not to act a drag on the rest of society.

Probably good for the security industry however.

14. Bob B

Everything? Does that include going back to a top rate of income tax of 83p in £1 for “earned” income, reintroducing exchange controls on capital movements and undoing the Big Bang on the Stockexchange?

Ok so whats wrong with attempting to make the tax system fairer. Shouldn’t tax be more progressive? Tax should grow exponentially with the more you earn.

Exchange controls on capital movements are great for capitalists who like to export capital out of the country for tax purposes. Not so great for the state attempting to balance the books however.

The big Bang – great wasn’t it . All that make believe money and the salaries that sprang from it. A perfect chimera .

I am surprised you didnt include Tax havens as a benefit from the 80’s although to be fair to you that did start in London in 1946.

Income tax is a fascinating subject. For example The American right wing constantly eulogies 1950s America. This was the ideal Conservative utopia according to them. What they don’t like to tell you is how high top rate of tax was. Almost 70% at one stage.

Thatcher and her sycophants like Lord Powell have been great supporters of the China model. Low tax, no regulation,and no unions,and no democracy. Of course they fail to admit their real motive behind this right wing wet dream. Namely how it destroys all the freedoms and improvements the western worker has enjoyed over the 20th century. China is doing their work for them.

In fact it is fascinating watching the cold war warriors, who talked constantly about freedoms and democracy during the Communist threat, have now become very indifferent to democracy if it gets in the way of capitalism. In recent weeks the grandson of Milton Friedman, (who is currently in Honduras, with a plethora of right wing fanatics from the heritage foundation trying to turn it into a libertarian utopia ) has mused about how democracy might even have to be removed if it gets in the way of libertarian free market capitalism. Talk about jumping the shark. These people are now more dogmatic than the Stalinist they once hated.

@19 Man on Clapham omnibus,

“I think the legal ability for Unions to strike was won in 1906. Prior to that under the Combination Acts it was illegal… I would be interested in which bit of History you think Sally has left out.”

Shall we start with the repeal of the Combination Acts in 1824?

Sally,
You can’t blame the “right” for China for crying out loud.

What is true is that Chinese living standards are being raised as a result of liberalising some aspects of their economy.

With any luck, they’ll eventually see some of the benefits of democracy as well; the far left won’t be able to cling on there forever.

MOCO @ 23:

“Unequal societies make very bad societies.”

Are you making a factual claim or a moral claim or both? I hope you aren’t relying on ‘The Spirit Level’ to make that judgement, because the authors cherry-picked their data. Even the liberals at the BBC were ultimately sceptical…

‘Equality’ is a mathematical notion that has been imported into politics with very confusing results. If equality is your aim, then this can be (easily) achieved by making us all poorer – even those at the bottom of the heap – with high taxation and wealth expropriation. In theory, you could ‘level up’, but in practice you run into problems about incentives and differentials. So egalitarianism as a principle of distributive justice is useless in societal terms. So what principle can we use? Leftists often refer to their desire for a “more equal” society, which is conceptually odd as equality does not admit of degree. Apparently, what they mean is that society should be “fairer”. But what can this mean in principle and in practice? Compression of income bands and high levels of taxation bring problems of differentials and of incentives, and such measures soon make most of such societies economically poorer and less efficient. For a while, such polities can perhaps borrow money – ie defer taxation and hand the bill to future generations – but eventually creditors refuse to lend…In other words, socialism does not work, and free-market capitalism is the only game in town. And, in this context, the only viable principle of justice is ‘maximin’ – forget the 0.5% with multi-million £ incomes, maximise the minimum, and ensure that those at the bottom of the heap have the highest income possible consistent with economic efficiency. Germany seems to manage to achieve this rather well…

26

Unfortunately, the repeal of The Combinations Act did not deter the deportation of hundreds of Chartists, some for the practice of ritualism, well so they say!

@ 29 steveb,

transportation; another practice ended in the Victorian era (1868, although by then quite rare).

Are you sure ‘hundreds’ were transported?

22 Job Seeker: “Your love for neoliberal dogma means you left the huge rise in the price of oil in the 1970s out of your “analysis”!!! (must have slipped your mind)”

It didn’t slip my mind and my post @17 includes: “The factor often left out of damning Thatcherism was the huge appreciation of the Pound in the foreign exchange markets at the start of the 1980s as the Pound became a petro currency as North Sea Oil came on stream when world oil prices were at record highs.”

I have no special affection for “neoliberalism” and over the past several years have often posted comments deriding “free market capitalism”. I’ve also posted that I agree with Bob Diamond when he said in a BBC Today interview broadcast on 4 November last year that the banks must accept responsibility for what went wrong.

In the interview – which I listened to – he repeatedly said that banks must work towards a situation where banks could fail without taxpayer support and without causing systemic instability.

Job Seeker: “Exchange controls on capital movements are great for capitalists who like to export capital out of the country for tax purposes. Not so great for the state attempting to balance the books however. The big Bang – great wasn’t it . All that make believe money and the salaries that sprang from it. A perfect chimera .”

I don’t really think you have an effing clue as to what you are on about. The combination of abolishing exchange controls on capital movements, in 1979, and the Big Bang on the stockexchange, in 1985, contributed to making London a major, if not the leading, global financial centre to rival New York. That generated lots of profits and lots of extra tax revenues in Britain which the New Labour government 1997-2010 duly spent on boosting the NHS and education – as well as financing a few wars on the way. Shortly before the election in 2010, Brown said in Parliament that said the Iraq war had cost Britain £8bn and the total cost to the UK of the wars in Iraq and Afghanistan had been £18bn.

London’s population was in long-term decline from before WW2 until about 1988 and has been growing since then. It’s reported that there are more foreign banks represented in London than in any other financial centre. Frankfurt and Paris would dearly love to attract business away from London.

Bob B,

Yet again you`re pussy-footing around the issue. You`ve said that “social pain” was bound to be caused by curbing inflation, what you mean is mass unemployment and its consequences – which leads to marriage break-up, poverty, mental illness, suicide and other ills. Economists have a vivid term term in their sociopathic lexicon for the effectiveness of unemployment – the “sacrifice ratio” measures how much unemployment has to increase to bring inflation down by 1 percentage point. I pointed out to you that by the time Margaret Thatcher left office in November 1990, the annual RPIX inflation (Retail price Index excluding mortgage interest payments) was the same, at 9.2%, as it had been in May 1979 when she entered office.
Like you, Thatcher didn`t like to talk about the necessity of mass unemployment for neoliberal capitalism, and when she was put on the spot by monetarist economist & journalist Peter Jay in a February 1985 Channel 4 TV interview she told a whopping lie on camera! Here`s what she was asked about the failure of here inflation-fighting policy:

“monetarist economists believe in something called the natural rate of unemployment which is supposed to be the rate at which inflation stops or ceases to accelerate. Now do you think that we Prime Minister with all-time record unemployment figures this week have yet reached that natural rate even though inflation is still proceeding sufficiently to halve the value of money every 15 years?”

Thatcher replies with breathtaking audacity:

“It’s not a doctrine to which I’ve ever subscribed; It’s one which I think actually came in with Milton Friedman; I used to read about it; it’s a theory to which I have never subscribed.”

http://thetruthaboutunemployment.wordpress.com/2012/09/17/the-reintroduction-of-mass-unemployment-in-the-1970s-80s/

The second comment you attribute to me was actually made by Man on Clapham Omnibus @ 24. I realise accuracy & research is not your strong point!

Job Seeker

I’m not here to defend Thatcherism – whatever that is – but to explain.

“Yet again you`re pussy-footing around the issue. You`ve said that ‘social pain’ was bound to be caused by curbing inflation, what you mean is mass unemployment and its consequences ”

Sadly, curbing roaring inflation at an annual rate of 25pc is bound to lead to social pain. World commodity prices as well as oil prices reached record highs in the mid to late 1970s. That meant average living standards were bound to fall. Britain’s predicament was compounded by the poor performance of Britain’s industry during the decade – productivity fell on trend in what were then several key industrial sectors – steel, coal, cars.

For an assessment of the many factors contributing to the poor performance of Britain’s economy relative to peer-group countries in western Europe, try: Britain’s Post-war Economic Decline by Nicholas Woodward
http://www.users.globalnet.co.uk/~semp/bdecline.htm

As my earlier post @14 commented, the evidence is that the relative decline of the British economy stopped after the 1970s.

Man of the Clapham Omnibus

The main criticism of the Thatcherite management of Britain’s economy in the late 1980s is that through Lawson’s mismanagement, the economy went into a roaring unsustainable boom because interest rates were kept too low for too long to ensure a “competitive exchange for the Pound” on the road to putting the Pound into the European Exchange Rate Mechanism (ERM).

That boom led to record levels of employment and resurgent inflation. In 1988/89, Bank Rate was hiked to 12pc and then to 15pc to curb the boom. The house price bubble bust and negative housing equity became the plight of millions. Yet with all that, the Conservatives were returned to government in the election in April 1992 with a record vote of 14 millions.

The Pound depreciated by about 25pc on being forced out ot the ERM in September 1992. As a result of that and lower world oil and commodity prices, by the final quarter of 1995, Britain’s standardised unemployment rate was lower than that of France, Germany and Italy and its employment rate was higher.

20 if you read what I said ,surely it would be the other way around

the divide between rich and por has increased teh divide on equality has decreased, so finscially biegn middle class would be harder but there’s more rights for minorities

BobB @ 33 and preceding:

That’s game, set and match to you!

@11

Exactly, the oft-mentioned IMF loan that the Tories use as a stick to beat Labour with, was actually paid off in 1979.

Myth becomes nature.

FWIW I think that there’s lots to learn from what went right in Thatcher’s time as PM as well as what went wrong – and the detail matters.

It’s usually overlooked that Major’s government privatised the railways, not Thatcher’s. That’s because Nicholas Ridley, whom Mrs T acknowledged as her chief mentor on privatisation issues, after stints as minister in departments responsible for transport, concluded that railways would always be run at a loss for social reasons and that was better managed with accountability to Parliament in public ownership. The railways were privatised by the Major government in the year that Ridley died.

Lawson, as Chancellor, rated his expertise on economic issues but overlooked Tinbergen on policy assignment – a policy instrument should only be used for one policy target otherwise policy conflicts and confusion could arise. For all that, Lawson was using Bank Rate – then effectively set in the Treasury by the Chancellor, not by an independent BoE – to target both inflation and the Pound exchange rate. The trouble is that higher interest rates were needed in the mid 1980s to rein back bank credit that was likely to generate an unsustainable boom – which is what happened. But Lawson wanted lower interest rates so the Pound could be put into the European Exchange Rate Mechanism (ERM) at a more competitive exchange rate. Labour learned from that fundamental policy mistake. When the BoE was made operationally indpendent in 1997, the BoE was set to target inflation. The exchange rate was left to market forces.

Btw in October 1990, Labour’s Treasury front bench – John Smith and Gordon Brown – cheered on John Major, as Chancellor, when he announced that the Pound was being put into the ERM.

The first privatisation of the Thatcher government was British Telecommunications (now BT). Probably few readers here can recall how difficult it was in the 1970s to get a new telephone line on starting a new business or on moving to a house which had no telephone installed. Residential lines often had to be shared – which happened to me in the early 1970s. It took weeks of pleading and waiting to get a telephone. And you couldn’t go out and buy a telephone handset in the shops. Suggestions that BT should be renationalised to reverse Thatcherism are just laughable. Other governments soon adopted the policy of privatising state-owned industries.

New Zealand had pioneered the reform of tax systems in the 1970s to cut out absurdly high income tax rates but the Thatcher government was an early follower. The inspiring motivation was academic papers on optimal taxation by James Mirrlees, for which he was awarded a Nobel laureate in 1996. Try NG Mankiw: Optimal Taxation in Theory and Practice:
http://dash.harvard.edu/bitstream/handle/1/4263739/Mankiw_OptimalTaxationTheory.pdf?sequence=2

There aren’t many advocates nowadays of returning to a top rate of income tax on earned income of 83p in £1. The detail matters. Using Thatcherism as a vague term of abuse is just infantile.

37
‘It’s usually overlooked that Major’s government privatized the railways’. And it is sometimes overlooked that Thatcher supported Major for the leadership bid, because he was a Thatcherite.

We can draw nothing from Thatcherism, it was built on selling off the national assets, the fact that market rhetoric was bandied about as the economy grew created the illusion of causality, she could just as well attribute the growth to reading crystals.

And inferring that the privatization of telecommunications was the reason why BT could subsequently improved the service is nonsense – commercial digital technology emerged in the early 1980s just prior to privatization.

Steveb

It’s true – Mrs T regarded John Major as her preferred successor in the utterly mistaken belief that he shared her values and political priorities. She was intellectually much sharper than he is but Major was a good conman in duping her into believing that he agreed with her.

At least, she had the sense to not to privatise the railways and much of her cabinet’s revolt in the late 1980s was over her unease about the good sense of putting the Pound into the ERM because of the (sound) advice she had from Alan Walters. That is why Lawson wanted him fired from his position as her personal economic adviser.

In the event, Lawson resigned as Chancellor in October 1989 and Walters stood down as Mrs T’s personal adviser. John Major succeeded Lawson as Chancellor – and duly put the Pound into the ERM in October 1990.

That was a big mistake – it turned out that Walters was absolutely right about the wisdom of keeping the Pound out of the ERM. Recall that Milton Friedman – the founding inspiration for modern Monetarism – advocated maintaining flexible exchange rates. Putting the Pound into the ERM was the very antithesis of maintaining a flexible exchange rate. A large part of the Eurozone’s present problems are due to rigidly fixing the exchange rates of national currencies of Eurozone members against the Euro.

Btw it was Major’s government which privatised the state-owned coal mines, not Mrs T’s government. Major was the real sucker for unthinkingly following dogmatic ideological prerogatives.

Bob B,

The most important characteristic of neoliberalism is mass unemployment, which you clearly support as a policy instrument. In doing so you also clearly support the interests of capital over labour i.e. the interest of 1% over the 99% – a fundamentally undemocratic position. Your coyness on this subject is a tacit acknowledgement you are aware no politician can dare to be honest about the “need” for mass unemployment to ensure the “posh boys” can continue to dominate the “plebs”.

The increase in oil prices in the 1970s only caused price inflation because capitalists put their prices up to retain their profit levels, this led to workers “striving” (to use a politically topical word!) for wage increases to preserve their standard of living. There is an obvious moral entitlement for workers to have a living wage – there is no moral entitlement to high levels of profitability being preserved through a cut in real wages.

Last year the mainstream economist Steve Nickell spoke with evident satisfaction of the ease with which real wages can now fall in the face of the recent rise in oil prices – as compared with 1970s:
“now, for example, we can have real wages falling as they are at today without any great difficulty. Real wages, of necessity, have to fall again because of the huge rise in oil prices”
http://www.chu.cam.ac.uk/archives/exhibitions/1981_Budget.pdf

No wonder we have widespread fuel poverty which even affects those in work!

As Australian economist Bill Mitchell has pointed out there is an issue of human rights violation in the maintenance of a “reserve army of labour” in the form of mass unemployment, he writes:
“In 1945, the Charter of the United Nations was signed and ratified by 50 member nations. Article 55 defines full employment as a necessary condition for stability and well-being among people, while Article 56 requires that all members commit themselves to using their policy powers to ensure that full employment, among other socio-economic goals are achieved.”

http://thetruthaboutunemployment.wordpress.com/

Hang on. You always have to put issues into context. Something I find is often forgotten.

There was an increase in the income of the wealthy during Thatcher. Mostly to do with taxation, rather than actual earnings. We cannot only look at the increase in wealth of the rich however, you have to look at the increase in wealth of the country.

Thatcher was in government from 1979-90. During this time, the average earnings (adjusted for 2010 prices) went from 14,895 to 18,791. An increase of 3,896 in a 12 year period.

In the 12 years before Thatcher, when the country was running an increasingly destructive socialist policy, the average wage went from 11,730 to 14,627. An increase of 2,897. Almost exactly 1,000 less.

Similarly, in the period following Thatcher (for the next 12 years). Average wages went from 19,116 to 22,778, an increase of 3,662. Still short of the 12 years of Thatcher.

This question cannot be looked at only in the light of the gap between the rich and poor, but also has to consider the rate at which the average worker got richer. So while the gap did grow, the average worker also got richer at a faster rate than he had previously.

Also bare in mind that inflation during the socialist period of the 60’s and 70’s peaked at 26.9%, and rarely fell below 8%. Under Thatcher inflation quickly dropped and rarely got above 5%. This increased the purchasing power of the average worker.

I do believe that there is a working crisis in this country. I also believe there is a benefits and taxation crisis. However, you have to make sure that you identify the causes and the whole picture, rather than simply take small pieces of information and think they answer the problem.

We are never going to rid the world, or indeed this country of poverty all together. Such an ambition would be foolish. However, what we can do is identify the reasons why more jobs aren’t being created, why people don’t have more disposable income, why prices are rising more quickly since 2009, and most importantly looking at how we can make sure that the population can feed, clothe, and house themselves without the need to resort to the increasingly burdened state.

For income source see: http://www.measuringworth.com/ukearncpi/

For inflation source see: http://www.guardian.co.uk/news/datablog/2009/mar/09/inflation-economics

steveb at 38:

Please can you explain in what way nationalized industries that were run primarily for the benefit of those who worked in them, and that were a cost (and so an opportunity cost) to the Exchequer, were “national assets”?

As for your claim that it is “nonsense” to say that privatisation improved telecom service standards in the UK because “digital technology” (just) preceded it, what makes you think that the availability of a new technology would change the culture of a producer-led, overstaffed, bureaucratic monopoly like the GPO? It took 6 months to get a new ‘phone line in the 1970s and 3 months to take over a line when you moved house!

40

It’s an interesting fact that digital technology was developed by the state not private companies.

You have just repeated the same assertion as Bob B @37 and my answer will be the same – digital technology was not available in the 1970s it was in the 1980s just prior to BT taking over.

Steveb @ 41:

“It’s an interesting fact that digital technology was developed by the state not private companies.”

So what? We are not talking about the role of the state in R & D, but whether the state should own the service delivery vehicle for telecoms. The state had a role in the development of computers, but you can’t conclude from this that Microsoft, Apple etc should be state-owned.

Also, digital technology was applied, not developed, in the UK from the 1960s, not the 1970s. And the development took place in the US and Japan.

Moreover, you have not answered my questions:

1.what makes you think that the availability of any new technology would change the culture of a producer-led, overstaffed, bureaucratic monopoly like the GPO?

2. in what way were nationalized industries “national assets” when they were run primarily for the benefit of those who worked in them, and when they were a cost (and so an opportunity cost) to the Exchequer?

There were two immediate and beneficial changes as a result of the BT privatisation:

1) The introduction of competition (Mercury). This was limited, but opened the door for wider competition later on.

2) It became possible to own your own phone (!) This created an entirely new market, and also significantly reduced the cost of phones.

Bob @39,
Thanks for the reminder. As I recall, there was massive pressure on the UK government to join the ERM to avoid, or rather reduce, accusations of being anti-Europe, difficult, trouble-makers etc. (They had trouble from all over at the time, so, perhaps, closing one front was a relief).

I think this affected decision-making.

For my own part, I thought the idea of a fixed and yet floating exchange rate (or was it floating and yet fixed?) was illogical. This followed Lawson’s mistaken attempt to track the D-Mark, and the subsequent and ruinous implementation of the Euro.

At some point the penny may drop.

42

Never having worked within the GPO I cannot answer that question, however, as the technology wasn’t available in the 1970s obviously it couldn’t be used. As it was available in the 1980s BT were able to gain from the development.

2. I would suggest that there were many companies/private individuals willing to purchase those assets, unless they were worthless and the purchasers had the same business acumen as many of our bankers.

steveb @ 45:

“Never having worked within the GPO I cannot answer that question…”

A feeble response. The same question applies to any nationalised industry – steel, coal, gas, telecoms: how would any new technology change the culture of a producer-led, overstaffed, bureaucratic monopoly?

“as the technology wasn’t available in the 1970s obviously it couldn’t be used. As it was available in the 1980s BT were able to gain from the development.”

It’s not clear precisely what “technology” you are referring to. Also, the GPO’s huge delays in installing new lines in the 1970s were not a result of analogue technology but of an organisation that was grossly inefficient and unresponsive to customer needs because there was no competition and it was run primarily for the benefit of those who worked in it.

“there were many companies/private individuals willing to purchase those assets, unless they were worthless and the purchasers had the same business acumen as many of our bankers”

Sure, they had a value to those prepared to invest in them and run them commercially, and they had a capital value in the national accounts. However, in revenue terms, they were a huge cost, and they were inefficient and not customer-friendly.

An analogy might be with an old lady living in care home who owns a dilapidated house which she lets out. She does not have the capital to renovate the house – indeed, she’s overdrawn a the bank – and the annual repair bill is greater than the rents she receives from her tenants. So she sells her property to a speculative builder, who restores the house and makes a huge profit. On your logic, the old lady (the state) should not have sold her asset (the GPO) even though it was losing her money…

@42. steveb

I am sorry but I was not referring to BT, or indeed technology on its own. Again, that is looking at one issue and failing to consider the big picture. The greatest advancement in the integration of technology into business and peoples lives came in the mid 90’s anyway, and the greatest economic impacts were not felt until the early 2000’s.

I think it also quite dangerous to start asserting that the public sector is the only sector able to bring innovation. The vast majority of innovation has come from the private sector, and it is incorrect to say that tech has come from the public sector. They are for the most part responsible for the internet, but the US govt effectively ring fenced the net for their own usage for many years. Considering both the hardware and software used in tech is developed in the private sector it is odd that you assert that claim.

In any event, saying tech is the only relevant factor misses the fact that inflation fell from 25% to 5% when Thatcher came to power. That was not a result of technology, that was the effect of sound fiscal practices.

Anyway, I don’t see how my comments necessarily related to BT or technology only. Don’t remember saying they did, and I think you miss the point of what I said if thats what you read into it.

JC @ 43:

“There were two immediate and beneficial changes as a result of the BT privatisation:

“1) The introduction of competition (Mercury). This was limited, but opened the door for wider competition later on.

“2) It became possible to own your own phone (!) This created an entirely new market, and also significantly reduced the cost of phones.”

Elegantly and succinctly put! I well remember the Mercury Button, and being able to buy my own ‘phone for the first time.

Incidentally, I find it interesting how the culture of an organisation can survive numerous personnel changes and even a move from the public to the private sector. BT is a huge improvement on the GPO, but it still lacks the customer-focus of its competitors; and I fear much the same can be said for BA and British Gas.

47

I have never asserted that it is only the public sector which brings about innovation. And I agree that a lot changed under Thatcher, but failing to factor-in the sale of utilities, the accessibility of north sea oil and the innovation of new technology would make any comparison with the previous era futile. Also, you appear to have only written one post @47 unless you are also TONE.

46
You call my response ‘feeble’ and I call it honest, moreover, I suspect that you have never worked for the GPO and your argument is based as much on speculation as any objective fact.
The nationalized industries were purchased by the tax-payers of the 1950s and 60s, since privatization current taxpayers are footing a Housing Benefits bill of around £31billion and tax credits totalling a similar amount and that doesn’t include the unemployed. It seems your little old lady is paying for a house that she doesn’t now own and someone else has reaped the profit.

steveb @ 49:

“You call my response ‘feeble’ and I call it honest, moreover, I suspect that you have never worked for the GPO and your argument is based as much on speculation as any objective fact.”

Your response is not honest: it is dishonest and evasive. You don’t have to have worked in an organisation to see what is wrong with it. – any more than you need to have written a play in order to see what is wrong with Shakespeare’s weaker efforts. Indeed, not having worked in an organisation often enables you to see more clearly what is wrong with that organisation. You may disagree; but then how can you support civil servants and politicians controlling through nationalisation vast tranches of the UK’s industrial base when they have never worked in those organisations?

My experience of the GPO was as a customer; and, as a customer of BT, I know that their customer service has improved hugely since privatisation. I also know that this was not due solely to “technology”.

50

My own experience of B.T. is poor, I left them a couple of years ago, although, BT have a monopoly on land lines.

I find your argument contradictory, firstly you state that you don’t need to work in an organization in order to know what is wrong and then you deride the GPO because it was run by people who knew nothing about it.

It seems that in the US, where telephone companies have always been in private hands, court cases and the emergence of anti-trust laws were required to stop those companies from thwarting competition. We’ve seen such measures in the UK since privatization, obviously passed by people who don’t know what they are talking about!

“My own experience of B.T. is poor, I left them a couple of years ago”

This, in a nutshell, is why privatisation improved service and reduced charges.

“My own experience of B.T. is poor, I left them a couple of years ago,…”

In the 1970s, you would have nowhere to go! There was no alternative! And if you socialists had had your way, there would be one state-owned supplier of telephony and broadband…

“although, BT have a monopoly on land lines.”

Yes, BT has a monopoly on landlines; but what is your point? Landlines are doomed. Increasingly, we’ll access the internet by 3G and 4G connexions.

“I find your argument contradictory, firstly you state that you don’t need to work in an organization in order to know what is wrong and then you deride the GPO because it was run by people who knew nothing about it.”

No, you misunderstand me.

Yes, I state that that you don’t need to work in an organization in order to know what is wrong with it. You, however, denied this, as you claimed you could not comment on the GPO because you had not worked there.

No, I did NOT deride the GPO because it was run by people who knew nothing about it! – Rather, you claimed that you could not comment on the GPO because you had not worked there, although, given your misplaced faith in nationalisation and socialism, you also believe that some people (politicians and civil servants) who have little or no experience of the industries concerned can control and direct these industries if they are nationalised.

The point is that you are trying to evade my question – viz. what makes you think that the availability of any new technology would change the culture of a producer-led, overstaffed, bureaucratic monopoly…? – by saying that you could not comment because you have not worked in those industries, and I am observing that if your knowledge of said industries is so limited, then the state’s knowledge is at least as limited!

In other words, you are contradicting yourself. You are holding two mutually contradictory propositions.

52, 53

Privatization required quite a lot of legislation in order to ensure that the privatized industries did not become a monopoly. Thatcher’s statement that she ‘would roll back the state’ actually resulted in more state involvement.

I cannot comment about the GPO because I had no first hand experience of it, this is an honest statement but @50 I am told this statement is feeble and that I am being dishonest.

I am accused of evading your question with regard to technology changing the culture of an organization that I have no experience of. And because I have no experience of said organization then you extrapolate from this that the state’s knowledge is at least as limited. I really don’t understand the thread of your argument anymore.

“Privatization required quite a lot of legislation in order to ensure that the privatized industries did not become a monopoly.”

Or abuse market power as a monopoly.

But the nationalised industries also needed regulatory oversight to prevent them from abusing market power as state-owned monopolies.

State-owned electricity generators were dependent on the nationalised coal industry because the generators were precluded from importing coal and coal provided 70pc of the electricity supply. This market power meant that the public consuming electricity could be easily ripped off.

Also, in addition, governments of both flavours had a habit of controlling the timing of price increases by the nationalised industries for electoral reasons.

The privatised utilities were set maximum prices on a (RPI – Xpc) formula by independent regulators.

@ TONE

“In the 1970s, you would have nowhere to go! There was no alternative! And if you socialists had had your way, there would be one state-owned supplier of telephony and broadband…”

That’s a big generalisation. Socialists don’t want to make everything publically owned, that sounds closer to communimism.

Broadly speaking, I’m in favour of state ownership in markets with natural monopolies – water, rail, that sort of thing. Letting one company run an entire sector leads to abuses. And I find the halfway stage we tend to use now a bit weird: instead of having privately run services with heavy regulation, why not cut out the middle-man?

“Socialists don’t want to make everything publically owned, that sounds closer to communimism.”

What counted as “socialism” was and is very elastic. The late Soviet Union officially classified itself as “socialist”, not “communist”, because it operated on the principle of: From each according to his ability, to each according to his work. See Lenin on: The State and the Revolution (1917) for the authoritative ideology of the distinction.

In the SU, state farms were regarded as ideologically superior to collective farms, as the latter were theoretically co-operatives in the nominal ownership of the workers. Even so, outside periods of prohibition, the workers on state and collective farms were permitted to sell the produce of permitted private small holdings at local markets but they were not allowed to employ anyone to work on their small holdings. Socialism has an infinitely variable geometry.

George Orwell had problems finding a publisher for his fable: Animal Farm until Secker and Warburg took it up. Gollancz, the publisher for the Left Book Club, turned it down and an offer by Jonathan Cape was withdrawn following pressure from the ministry of information.

@ 57 Bob B

Agreed, but given that “socialist” is a label commonly applied to moderate fiscal lefties, I personally think it’s a bad idea to use it to describe communist ideas.

Either way, unless steveb is a commie, TONE is equivocating.

Chaise

“I personally think it’s a bad idea to use it to describe communist ideas.”

Thomas Hobbes was right. What’s in a name? In the case of the Soviet Union, the Soviet Communist Party (CPSU) chose to claim that the SU operated on the “socialist” principle – as defined by Lenin – because they were well aware they couldn’t credibly claim to be applying Marx’s definition of “communism”: From each according to his ability, to each according to his needs.

In the mid 1960s I became aware of a Samisdat joke in circulation not long after Brezhnev became the general secretary of the CPSU after Khrushchev had been deposed in 1964. It went:

Brezhnev was showing his aged mother around his new country dacha. “But, Leonid,” she said, “what if the Bolsheviks come back?”

It seems not to be widely known that Khrushchev’s son is now a US citizen. The last I read, he had a teaching fellowship at Brown University.

CG @ 56 & 58:

“Socialists don’t want to make everything publically owned, that sounds closer to communimism.”

Sorry if I did not make it clear enough that I was referring to socialists in the 1970s, when the Labour Party and the TUC were committed to extensive and growing nationalisation. What you say is true now, but was not true then.

“unless steveb is a commie, TONE is equivocating.”

‘Commie’ is a term of abuse, but steveb does give the impression of being a 1970s socialist/communist – he once said he believed in the 1974 Plan for Coal.

As for equivocating, I don’t think so, at least not intentionally. I’ve used the term with reference to a specific decade. That said, all natural languages are significantly opaque, and the opacity of language means that unintentional equivocation is inevitable to some extent.

steveb @ 54:

My question to you is:

What makes you think that the availability of any new technology would change the culture of a producer-led, overstaffed, bureaucratic monopoly?

Please can I have an answer? You are an advocate of nationalisation; and “producer-led, overstaffed, bureaucratic monopoly” is an accurate description of all nationalised industries in the 1970s. So I am asking you how service delivery in a nationalised industry would change in response to technological developments. You are evading my question, I suspect, because you know that technological developments were not responsible for improvements in the GPO/BT service delivery and customer services after privatisation. You simply don’t want to admit that competition improves customer satisfaction…

“I cannot comment about the GPO because I had no first hand experience of it”

But you don’t need first-hand experience of an organisation to assess its competence or the impact of technological change upon it. We all assess organisations without first-hand experience of them: we look at their performance, reviews and customer satisfaction ratings…And many other people make assessments of technological change on the said organisations.

So your proposition

1. No-one can assess the competence of, or impact of technological developments on, an organisation without direct, first-hand experience of the organisation

is false.

Moreover, you are a strong advocate of nationalisation – that the (wo)man in Whitehall and the politicians in Parliament can and should run the country’s industrial base. However, this commits you to the following proposition:

2. Politicians and civil servants can assess the competence of, or impact of technological developments on, an organisation without direct, first-hand experience of the organisation.

(1) and (2) contradict each other: by the laws of logic, they do not form a consistent set. So which one will you jettison?

If (1), then please supply your answer to my question:
What makes you think that the availability of any new technology would change the culture of a producer-led, overstaffed, bureaucratic monopoly?

If (2), then you must abandon your belief in nationalisation.

Over to you, dear boy…

CG @ 56:

“Broadly speaking, I’m in favour of state ownership in markets with natural monopolies – water, rail, that sort of thing.

I can see that water might be a ‘natural’ monopoly, but not sure about rail – which seems to me, as a (former) rail commuter, to have improved hugely. When I commuted into London in the early 1990s from Cambridge, I would have gladly executed certain BR employees, given the delays, poor information, surliness and dirtiness. Today, I do the same run once a month, and the service, punctuality and cleanliness are vastly improved.

“Letting one company run an entire sector leads to abuses.”

Of course. Agreed. Statement of the obvious.

“And I find the halfway stage we tend to use now a bit weird: instead of having privately run services with heavy regulation, why not cut out the middle-man?”

Because, as Bob B observes, even a public utility/service requires regulation. Free(er) markets require regulation to prevent monopoly, fraud etc. If you cut out the regulatory middleman, then, public or private sector, the customer will suffer…and, having lived through the 50s, 60s and 70s, I’d say that the customer would generally suffer more under nationalisation…

@ 59 Bob B

“Thomas Hobbes was right. What’s in a name?”

Cunning misrepresentation, a lot of the time. A rose by any other name would indeed smell as sweet, but a rose by the name of “mucus plant” would probably not sell that well.

@ 60 TONE

Fair enough – I didn’t realise it was a genuine interpretation of his position.

@ 62 TONE

“I can see that water might be a ‘natural’ monopoly, but not sure about rail – which seems to me, as a (former) rail commuter, to have improved hugely.”

It’s a natural monopoly given how ridiculously high the barriers to entry (i.e. building an entire new rail network). Obviously it competes to some degree with other forms of transport, but it’s still monopolyish.

“When I commuted into London in the early 1990s from Cambridge, I would have gladly executed certain BR employees, given the delays, poor information, surliness and dirtiness. Today, I do the same run once a month, and the service, punctuality and cleanliness are vastly improved.”

More expensive, though, with exploitative practices on intercity fares (the main thing I use it for), and I believe I saw figures showing that the punctuality hasn’t improved as much as people think, but I can’t recall where those figures are, so am probably not convincing you much.

Also, not apples and oranges. Modern services have the benefit of higher-tech equipment; older services probably had the benefit of less crowded rails.

“Because, as Bob B observes, even a public utility/service requires regulation.”

Sorry, wasn’t clear. I wasn’t talking about removing regulation, I was talking about removing the private firm. If we’re overseeing the industry to a high degree anyway, why not just run it ourselves, rather than having shareholders’ pay as a pointless money loss?

steveb @ 54:

“Privatization required quite a lot of legislation in order to ensure that the privatized industries did not become a monopoly.”

Yes. And nationalisation requires lots of legislation too – to ensure that the state has a monopoly.

“Thatcher’s statement that she ‘would roll back the state’ actually resulted in more state involvement.”

Have you any empirical evidence that you can cite to establish the proposition that the Thatcher reforms resulted in more “state involvement” than previously?

Moreover, markets – all markets – require regulation, as do nationalised industries. But, ceteris paribus, the best regulator is the choices of individual consumers – and nationalised anything is insulated from that choice.

CG @ 64:

“Fair enough – I didn’t realise it was a genuine interpretation of his position.”

No problem: easily done.

“It’s a natural monopoly given how ridiculously high the barriers to entry (i.e. building an entire new rail network). Obviously it competes to some degree with other forms of transport, but it’s still monopolyish.”

I see your point – but you are stretching the sense of ‘natural’ to the boundaries of meaninglessness. That said, yes, the barriers to new entrants are high, but not insuperable, given the global capital available. (And, tangentially, I understand – do correct me if I’m wrong! – that Japan’s privately run railways are a success…)

“More expensive, though, with exploitative practices on intercity fares (the main thing I use it for)…”

So charging what the market will sustain is “exploitative”, even though BR ripped off their customers by charging (relatively) high fares with poor service? Booking in advance, I find rail fares hugely reduced – in real terms compared to 20 years ago. Late booking peak-time travellers do take a big hit, though.

“…and I believe I saw figures showing that the punctuality hasn’t improved as much as people think, but I can’t recall where those figures are, so am probably not convincing you much.”

You are right: not convinced. Can you find the evidence on the internet? Anecdote alert: punctuality has definitely improved on the Cambridge-London lines, since I started using them in 1990.

“Modern services have the benefit of higher-tech equipment; older services probably had the benefit of less crowded rails.”

*sigh* This is what I might call the steveb fallacy:

‘state ownership would have worked just as well as privatised x, because the improvements in x are due solely to technological advance’.

But this is bizarre and untenable, because no amount of technological advance will improve customer satisfaction (indeed, it may decrease it) unless the management culture of the organisation becomes customer-focussed. And only profit-driven organisations are customer-focussed…

“If we’re overseeing the industry to a high degree anyway, why not just run it ourselves, rather than having shareholders’ pay as a pointless money loss?”

Because we’d have to pay an (ineffective) regulator of the nationalised industry in any event. Fares – and investment – would be a political football (with politicians, once again, bribing us with our own money). And, certainly, customer service would be of a lower standard.

@ 66 TONE

“I see your point – but you are stretching the sense of ‘natural’ to the boundaries of meaninglessness.”

Probably. It’s a word that’s sorta inclined to that.

“That said, yes, the barriers to new entrants are high, but not insuperable, given the global capital available. (And, tangentially, I understand – do correct me if I’m wrong! – that Japan’s privately run railways are a success…)”

I hear they are too, but I don’t know much about the system and don’t want to comment. It could be down to better regulation, or it could be down to different attitudes etc. I don’t know.

“So charging what the market will sustain is “exploitative”, even though BR ripped off their customers by charging (relatively) high fares with poor service? Booking in advance, I find rail fares hugely reduced – in real terms compared to 20 years ago. Late booking peak-time travellers do take a big hit, though.”

Charging what the market will bear can be exploitative. But I was in large part referring to that early-booking system. The way I see it, to get a price I would call reasonable, you have to book weeks if not months in advance. And you have to specify not only which day you want to travel, but which exact train (for the cheaper tickets).

I don’t know what the process is for cancelling a paid-for ticket, but I’m willing to bet you don’t get all of your money back, if any. And if you’re delayed and miss your train, you’ll have to pay anything up to the full ticket price, which IIRC is about £100 London-to-Manchester off-peak, one-way. That’s on top of what you paid already, plus whatever they make off you as a captive market for their on-board shop.

Yes, it’s not their fault if you miss your train. But I resent train companies setting up an unreasonable “full” price, making people jump through hoops to avoid it, and getting away with it because of their monopoly status. It’s not the worst form of exploitation, but I’d say it qualifies on the low end.

Let’s say that booking a ticket six weeks ahead will cost me £15, buying it on the day will cost £100. If there was another train firm that charged a flat fee of £25, I’d take it, because £10 is not a good enough saving to justify the restriction and risk of booking that far ahead. In an open market, there probably would be such a firm.

“You are right: not convinced. Can you find the evidence on the internet? Anecdote alert: punctuality has definitely improved on the Cambridge-London lines, since I started using them in 1990.”

Sounds like a trawl, so I’m going to abandon it unless I get a search-fu brainwave.

“*sigh* This is what I might call the steveb fallacy:

‘state ownership would have worked just as well as privatised x, because the improvements in x are due solely to technological advance’.”

No it isn’t. Firstly, please note that I mentioned an advantage enjoyed by the state-run service as well. Secondly, I’m not claiming it’s solely down to that, just saying it’s a likely factor. I wasn’t really around back before we privatised everything, but the impression I get is that the main problem at BR and BT was attitude.

“Because we’d have to pay an (ineffective) regulator of the nationalised industry in any event.”

So? You’d be saving on shareholders. Look at it like this:

If you, or I, or the government, do something ourselves, we pay the cost of doing it.

If you, or I, or the government, pay someone else to do something, we pay the cost of doing it plus whatever they take in profit.

That’s not a blanket argument for always doing stuff yourselves. Investment cost is an issue. So is specialisation: you don’t build a bakery just because you want a sandwich. But the rail industry is the same size regardless of who runs it, more or less.

“Fares – and investment – would be a political football (with politicians, once again, bribing us with our own money).”

Yeah, but I see this as a good thing. Companies are motivated to maximise their income. Customer service will be at the level needed to allow this, and no more. Fares will be whatever the market will bear.

Governments are motivated to not lose elections. Customer service will therefore be at a level actually considered reasonable. Ditto fares. In theory, anyway. You can call it “bribing us with our own money” (although I think this is right-wing speak for “don’t wanna share”), but you could also call it “holding the state over a barrel”.

“And, certainly, customer service would be of a lower standard.”

That’s not a certitude, far from it. Although obviously you’d want to look at our past failures and work out what went wrong.

Look at the US healthcare system. Customer service might be better in the relatively unimportant area of having smiley staff and so on. But it’s a lot worse in terms of actually providing healthcare.

Bob B @ 59:

“Thomas Hobbes was right. What’s in a name?”

What exactly are you referring to, Bob B?

Hobbes said:

“Words are wise men’s counters, they do but reckon by them; but they are the money of fools, that value them by the authority of an Aristotle, a Cicero, or a Thomas, or any other doctor whatsoever, if but a man.”

To me, that sounds less like ‘What’s in a name?’ and more like ‘beware the argument from authority’…

But perhaps you have another quote to support your use…

(Agreed, TH was a metaphysical nominalist…but that’s another matter.)

CG @ 67:

“Probably. It’s a word that’s sorta inclined to that.”

Agreed. I believe the late Margaret Masterman (a Cambridge University philosopher) once said she had identified 22 different senses of ‘natural’ in ordinary speech.

Regarding fares, you make some decent points. However, I suspect – do correct me if I’m wrong! – that you did not experience BR in the 1970s, so…

And now to the meat…

“… the impression I get is that the main problem at BR and BT was attitude.”

OK, a factor, though not the main one. But what creates that “attitude”? And what, as a manager, can and would you do to change that attitude?

Please do spell it out here…

(The fundamental problem for the said manager is that public sector staff are not customer-focussed. As in all nationalised industries, they believe implicitly that the organisation exists (at least in part, if not principally) for their benefit. After all, the aim of nationalisation is not customer satisfaction but job creation and preservation.)

“If you, or I, or the government, pay someone else to do something, we pay the cost of doing it plus whatever they take in profit.”

No, their profit is not a cost to government! Doh!! Particularly if government (as is usual) cannot run it at a profit anyway.

“But the rail industry is the same size regardless of who runs it, more or less.”

Errr…have you looked at the increase in passenger numbers since privatisation? I leave you to do the googling…

“Look at the US healthcare system. Customer service might be better in the relatively unimportant area of having smiley staff and so on. But it’s a lot worse in terms of actually providing healthcare.”

Straw man, as I’m not arguing for US-style healthcare.

(I favour a French-style, insurance-based, government-subsidised healthcare system, rather than the sclerotic NHS. The French system is widely regarded as the world’s best, while no country has followed the UK’s model of the NHS’s command-and-control Stalinism.)

Planet earth to steveb…

Do you read me out there in socialist fantasy land?

Reality has replied to your 54 with 61…

Over…

Tone: “To me, that sounds less like ‘What’s in a name?’ and more like ‘beware the argument from authority’…”

Hobbes was implying IMO that what matters is what words refer to so we had better get agreement on the connotations of terms for effective communication. Words don’t have substantive value and are merely “counters” so we must be clear about what we intend the words to represent.

Hobbes fitted in with a long tradition of “nominalism” in English/British thought and philosophy. Recall Shakespeare in Romeo and Juliet: A rose by any other name would smell as sweet. Much later, Lewis Carroll in Alice through the looking glass:

‘When I use a word,’ Humpty Dumpty said, in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’

‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’

‘The question is,’ said Humpty Dumpty, ‘which is to be master — that’s all.’

This tradition in British empiricist philosophy had a special significance in a long-running theological dispute going back to medieval times over philosophical proofs of the existence of a deity. The existential proof went, roughly, I can envisage a supreme supernatural being and this supreme entity must therefore exist since non-existence would be a detraction from its supreme properties. In fairness, Aquinas explicitly rejected this as a valid proof but he did go on to endorse other proofs, such as the necessity of there being a first cause. We have much to learn from that history IMO.

Much continental and much political philosophy is preoccupied with (pointless) argument about the true or essential meaning of some word. Recall that Plato’s Republic opens with a long debate about the meaning of “justice”. Plato finally resolves this by advocating a cadre of philosopher-kings who would arbitrate such issues.

As for “socialism” in the present context, IMO there is no reason to suppose Lenin’s use of the term is ideologically superior or more authoritative than that of, say, Ramsay MacDonald. It’s up to us to decide on which use we prefer and then maintain consistency to avoid confusion.

@ 69 TONE

“Agreed. I believe the late Margaret Masterman (a Cambridge University philosopher) once said she had identified 22 different senses of ‘natural’ in ordinary speech.”

Doesn’t surprise me.

“Regarding fares, you make some decent points. However, I suspect – do correct me if I’m wrong! – that you did not experience BR in the 1970s”

Entirely right. I’m an 80s child.

“OK, a factor, though not the main one. But what creates that “attitude”? And what, as a manager, can and would you do to change that attitude?

Please do spell it out here…”

Well, you could start bollocking people for being complacent. The risk, of course, is that the manager is complacent as well.

“The fundamental problem for the said manager is that public sector staff are not customer-focussed.”

You’re generalising from the specific, and as I’ve already pointed out, this isn’t always the case (NHS vs private healthcare).

“As in all nationalised industries, they believe implicitly that the organisation exists (at least in part, if not principally) for their benefit. After all, the aim of nationalisation is not customer satisfaction but job creation and preservation.)”

These are two sweeping, unsourced statements. The first is psychobabble too.

“No, their profit is not a cost to government! Doh!!”

Um, yes it IS, because the government is paying them for the service and some of that payment is their profit. Or the government has handed control to them, and is paying the same money for less service. Unless the company is making 0% in profits, there’s a loss somewhere. Doh!

“Errr…have you looked at the increase in passenger numbers since privatisation? I leave you to do the googling…”

Congratulations. Deliberately misreading what people say in order to indulge in tangetal point-scoring is always the best way to approach an issue.

“Straw man, as I’m not arguing for US-style healthcare.”

1) It’s pretty funny you accusing me of straw men given your last paragraph.
2) It’s not a straw man, it’s an example of how private systems can provide worse results than public ones as a result of being private (i.e. money-focused).

“I favour a French-style, insurance-based, government-subsidised healthcare system, rather than the sclerotic NHS. The French system is widely regarded as the world’s best, while no country has followed the UK’s model of the NHS’s command-and-control Stalinism.”

I agree that the French system seems to work well, but fear for the future of this conversation if you’re going to start paranoid blathering about Stalin. Let me know when you uncover the secret NHS gulags.

70

Steveb back to TONE, am receiving you now, if you had my mobile number I could have replied sooner.
And you make the case for technology very well, because in the 1970s, without the internet or mobile phones, we would have had to conduct this debate by post, my family did not have a home phone. That would have involved quite a lot of the workforce with the possibility of error or even deliberate loss if the postie had been inclined towards such an action.

Now technology has steamlined the need for labour, and that really is the point – if BT had owned the telephone networks in the 1970s, and all was running at maximum efficiency, they would have still replaced the surplus workforce with the new technology. And do not suggest that I am attempting to brush aside your question, I really will not give an opinion about something that I know nothing about, the only contact I ever had with G.P.O. telephones was the use of public telephone boxes, which always delivered.

@61
You are jumping to a massive conclusion about what I believe about nationalization, my own view is that the state should stay out of the economic base except for things like infrastructure/military. I am against massive taxation to prop up employers who won’t pay the market rate because the state intervenes and pays benefits such as HB and tax-credits, consequently distorting the market process. New Labour certainly demonstrated to all socialists that the state was no friend, but of course, The Labour Party convinced many of us that the state would be able to deliver socialism, we should have listened to Marx.

That is the irony, most socialists are nearer to libertarians, on the state, than the majority of (fake) liberals. You will possibly remember that Tony Benn originally supported Thatcher, until he realized that she was the biggest fake liberal. You ask about state involvement after privatization, how about The Monopolies Commission, Ofwat, Oftel and all of the other regulatory bodies, I would certainly be in favour of abolishing them all. How about you?

CG @ 74:

“Well, you could start bollocking people for being complacent. The risk, of course, is that the manager is complacent as well.”

Tou are naive. I’ve been a ‘change-management’ consultant with a leading City firm, spent 10 years in local government, and I’ve run my own business for 10 years. Believe me, “bollocking people” does not work — at least, not for long!

To motivate people to provide their best, you need (at least) a mission statement that all staff commit to, regular management communications about targets, a pay structure that reinforces good performance…and the understanding that dismissal is a consequence of under-perfotmance by the organisation or the individual.

Almost all of those are missing in the public sector – from which my wife has just had a massive (and unnecessary) pay-off – for which you, your children and your grand-children, CG, will pay the bill! Thanks for the lifestyle!

“You’re generalising from the specific, and as I’ve already pointed out, this isn’t always the case (NHS vs private healthcare).”

No, I’m not. I visit the NHS quarterly – for cancer check-ups. Frankly, the service is poor.

“These are two sweeping, unsourced statements. The first is psychobabble too.”

Do you have any evidence to disprove said statements? As such they are not unreasonable?

“Deliberately misreading what people say in order to indulge in tangetal point-scoring is always the best way to approach an issue.”

Take a short course in accountancy!

“I agree that the French system seems to work well, but fear for the future of this conversation if you’re going to start paranoid blathering about Stalin. Let me know when you uncover the secret NHS gulags.”

No paranoid blathering here. Just saying that a centrally-directed health service will never meet the ‘needs’ and expectations of the electorate. So we need to move asap to a state-private insurance model (like France) asap….

@ 76 TONE

“Tou are naive. I’ve been a ‘change-management’ consultant with a leading City firm, spent 10 years in local government, and I’ve run my own business for 10 years. Believe me, “bollocking people” does not work — at least, not for long!

To motivate people to provide their best, you need (at least) a mission statement that all staff commit to, regular management communications about targets, a pay structure that reinforces good performance…and the understanding that dismissal is a consequence of under-perfotmance by the organisation or the individual.”

Sigh. I never said you couldn’t use positive incentives as well. Nor that structure isn’t important. Your whataboutery is not my retroactive naivity.

“Almost all of those are missing in the public sector – from which my wife has just had a massive (and unnecessary) pay-off – for which you, your children and your grand-children, CG, will pay the bill! Thanks for the lifestyle!”

Off on a tangent again.

“No, I’m not. I visit the NHS quarterly – for cancer check-ups. Frankly, the service is poor.”

You’re just going to flat-out ignore my point, then?

“Do you have any evidence to disprove said statements? As such they are not unreasonable?”

Ah ha ha ha! Remind me to introduce you to Russell’s Teapot sometime. For now, let’s just say that the burden of proof is on the person making the claim. I assume you just pulled that stuff out of your arse. That seems to be par for the course for you in this thread.

“Take a short course in accountancy!”

You’re just going to flat-out ignore my point, then?

“No paranoid blathering here.”

OMG – someone on here is posing as you and comparing the NHS to Stalin! You should report it to Sunny!

“Just saying that a centrally-directed health service will never meet the ‘needs’ and expectations of the electorate. So we need to move asap to a state-private insurance model (like France) asap….”

Very possibly. That was almost a sensible comment. Such a shame it was preceded by several paragraphs of point-dodging, fallaciousness and general intellectual cowardice.

You’re normally ok, TONE, don’t know what’s come over you here. Let me know if you get over your dizzy spell and get back to being a grown-up.

Now come on chaps.

One problem with state-provided service is that, almost by definition, there will never be “enough” allocated to you.

Who has the best refuse collection system of these 2 examples?

1) Southern France (possibly all of it): twice a week
2) UK: every second week

@ 78 Jack C

“One problem with state-provided service is that, almost by definition, there will never be “enough” allocated to you.”

That could be taken in a few ways; what do you mean, exactly?

“Who has the best refuse collection system of these 2 examples?

1) Southern France (possibly all of it): twice a week
2) UK: every second week”

I don’t wanna condemn Southern France without knowing much about it, but that seems like wasted money at first glance. Once-weekly works well, and is missing from your options. Or twice weekly, with bigger bins.

My point being that because the service is allocated to you, and because there is no direct link between the service and payment, the natural human inclination is to whinge about being short-changed.

My example is sort of relevant as the reduction in collections from once a week to once every second week in the UK caused a lot of heat.

Had the question been, do you want to pay 5 or 10 pounds? the reaction would have been very different.

@ 80 Jack C

“My point being that because the service is allocated to you, and because there is no direct link between the service and payment, the natural human inclination is to whinge about being short-changed.”

Sure; reckoned that was what you meant, but wanted to check. Often the people whinging about poor services are the same people who are outraged that they’re expected to pay taxes…

[Why does no spellchecker seem to accept “whinge”? Is there some secret correct spelling I don’t know about? While I’m at it, why doesn’t this spellchecker accept “spellchecker”?]

“My example is sort of relevant as the reduction in collections from once a week to once every second week in the UK caused a lot of heat.”

Yep. To be fair, there were things to complain about: it’s a bit silly when the rubbish van comes around too rarely to actually be able to take all your rubbish. But some people acted like it was the end of days. Even worse than the metric system!

The reason people whinge about rubbish collections is that for a sizeable chunk of the population – childless, in private housing, in good health – it’s the only regular, direct contact they have with a public service. They therefore compare the totality of the tax they pay to the quality of that one service. I know this because, before I had kids, I used to do it. Sensible councils would spend a fortune on a gold plated collection service, thus changing the publics perception of all their services, even if they never use most of the. Rubbish collection, more than any amount of twinning, centre of excellence, city of culture, type crap is the councils most enduring and visible brand

Indeed Derek.

In my own, fairly common case, I was for the reduction.

a) Because we also had a recycling collection, so not really a reduction,
b) It makes you more aware of the waste you generate,
c) The new regime was sufficient, and would cost less.

The problem is that where you break the link between service provided, and the amount you pay, there are negative consequences. (Also, between service provided and money earned as a result – look at GP’s).

83

But the same thing happens in the USA, most people pay health insurance and consequently they are not concerned how much any particular healthcare costs because it is the insurance company that pays. From my own experience of car repairs after an accident, the same thing happens with garages.
The net result is that premiums then cost more.

@84,
I take your point, but you can choose between insurers.

Those that don’t control costs properly should eventually lose out, though they are helped by buyer’s inertia

@84 jojo

Are you sure about the garages? I’ve had a couple of slow-speed prangs and my first thoughts there have been about the cost (in the form of lost no-claims discount, which obviously is the same regardless of the damage), but when I’ve had near-misses from more serious accidents, my thoughts have generally been “Oh thank fuck, we’re not dead”. Cost never entered my mind there.

I think you’re right to an extent with healthcare, but I think people deceive themselves more deeply than that. They think that bad things only happen to other people, or tell themselves they’ll stop drinking/smoking/whatever before it hurts them, or they just blank the issue out entirely because they don’t like thinking about it.

I mean, I try to be rational, but I smoke and drink too much and eat the wrong things, and I’m pretty sure that most of the time I put the long-term consequences out of mind.

However, when it comes to individual fun but dangerous activities in terms of injuries – skiing, for example – I reckon you’re right: people would be more careful if they had to pay treatment costs.

@ 83 But we don’t apply the “sufficient” test to other public services: schools have loads of computers, the NHS performs voulantary surgery, universities do reasearch, etc etc, so why that one ?
The real reason is some complete **** in a council somewhere stumbled upon a scientific paper which said that the larvae cycle of the fly was 2 weeks, hence they could reduce collections to fortnightly without adverse health consequences. It’s nothing to do with recycling or awareness of waste it’s about saving money.

There are many complaints about schools, hospitals and everything else provided free at the point of use.

The user has already paid, but without a guarantee of what they’re going to get.

The state giveth and the state taketh away.

A better example of the problem is this:

Somebody works out that refuse collections can be every two weeks, rather than just one, thus saving a load of money. You call him a complete ****.

A car manufacturer develops a car that only needs servicing every 20,000 miles, rather than every 10,000. Are they complete ****’s as well?

Or another (not based on real current life, but with a little inspiration from Gordon Brown):

Government A spends an additional 5% on the NHS. Fabulous! (However, nearly all went on above inflation pay increases, and additional unnecessary staff, leading to a fall in productivity. Net result: NHS 1% worse than it was, 5% more expensive).

Government B leaves NHS delivery at exactly the same level, but basic operational improvements result in an overall saving of 3%. Net result: NHS the same, but 3% cheaper.

Government A: caring, fabulous.
Government B: complete ****’s.

But the obvious difference is, as I don’t have to pay for the car, I am not taking the risk on spending money on the “wrong” thing, the car company (or more accurately its shareholders) are.

Some people think the problem with the NHS was that it started being responsive to central targets, which may or may not reflect its users priorities, rather than to users themselves. Hence you had a “choice” of hospitals, all of which served inedible food, every single time you had contact with any part of it you were quizzed on your lifestyle, etc etc. I take your point though, the increased spending on the NHS made no political or economic sense, and had more to do with the internal politics of the government at the time than anything else.

@ 88 Jack C

“A better example of the problem is this:

Somebody works out that refuse collections can be every two weeks, rather than just one, thus saving a load of money. You call him a complete ****.”

Derek has pissed me off in another thread, but I’ll back him on this. His point was that the decision was made for the wrong reasons, and not the reason presented to the public.

I don’t know if he’s right about the facts, but what he’s NOT doing is throwing rhetorical crap at people who make pragmatic decisions.

The reason given was cost reduction.

Regardless of which, if someone uses scientific research to reduce the cost of something they are not complete ****’s.

Or not for that reason.

Typing something like this might make you one:

“But the obvious difference is, as I don’t have to pay for the car, I am not taking the risk on spending money on the “wrong” thing, the car company (or more accurately its shareholders) are”.

@ 92 Jack C

If someone lies to the public about their motivation for instituting a policy, does that not make them an acceptable target for criticism?

No, for two reasons:

1) The reason given was cost reduction. There wasn’t any lying involved.

2) The person who discovered that collections could be done more cheaply without risk to health shouldn’t be villified for so doing. There’s nothing reprehensible about applying scientific knowledge, nor is there anything reprehensible in reducing the cost of something.

@ 95

Agree with (2) as a principle, obviously; if (1) is true then fair enough.

You have to be somewhat careful with comments about Thatcherism because a lot of the issues of the period actually have their roots back in the late 19th century, and with the destruction of British capital during the first world war, plus the loss of favourable trading agreements with the loss of empire. For example, 185,000 mining jobs were lost between 1984 and 2010; by contrast, 750,000 textile jobs were lost between 1918 and 1974. The difference? Mining was nationalised postwar, but Wilson refused to nationalise the textile industry, even when they came to him and said they were on their knees. When textiles went down, it took a hellova lot of other businesses and industries with it (both manufacturing and services) in a way that mining did not — incidentally, it also took down a lot of the public transport infrastructure with it as freight subsidised passenger services. No freight: no service.

I use this as an example to illustrate how “Thatcherism” is not responsible for a significant aspect of British postwar industrial collapse, particularly in the North; the collapse had already happened by the time she came to power. Many nationalised industries got a stay of reprieve purely because they were nationalised and it was then a political issue.

To my mind, the blame for Britain’s economic predicament at present lies somewhat in the mists of time with the loss of empire post war, a bullet from a Serbian anarchist and even the Long Depression of 1873-1897. Our present has long, long historical roots, and the idea that addressing or reversing “Thatcherism” will somehow reinvigorate the tree is rather shortsighted.