back to article So, was it really the Commies that caused the early 20th Century inequality collapse?

What with both the Corbynistas and Sandersistas on their various sides of the pond bringing back into the political mainstream the somewhat discredited ideas of state directed economies and socialism lite, perhaps it's time to have a look at one of the arguments used to bolster those ideas. Which is that post World War Two …

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  1. Nick Kew Silver badge
    Pint

    Post-war 90/10 story

    We in technology talk of 90/10 scenarios. The first 90% of a project takes 10% of the effort, and vice versa. Post-1945 was a 90% time: there was lots of low-hanging fruit, not least because we'd bombed each other halfway back to the middle ages. A big chunk of growth from there was just a matter of replacing the (infrastructure) growth of about two preceding centuries, with the addition of electricity. Also a fertile time for individual careers, as "dead mens shoes" opportunities helped with corporate (and other institutional) career ladders.

    Does the fact you never mention that mean that we've put the Ballsian stimulus behind us? The one they put into practice in 2004/5 to ... um ... see us through an economic slowdown, and called for again when Osbourne pretended to give us austerity? I seem to recollect Balls in particular trying to suggest that more government spending could lead to growth by analogy to post-1945.

    [edit to add] Oooh, first reply to a Worstall article. This calls for a pint!

    1. J.G.Harston Silver badge

      Re: Post-war 90/10 story

      Have an upvote. All through the article I was thinking: the post-WW2 boom was because we'd all bombed ourselves halfway into the stone age and had to rebuild all the infrastructure. People forget that 70% of 1945-1965 was a under a Conservative government. Hardly hard-on socialism.

      1. DougS Silver badge

        Blowing things up

        Tim may downplay the "blowing things up" economic growth during the war - after all if we produce billions in bombs and other military infrastructure that is either destroyed during the war or has greatly reduced utility after the war, that part of GDP is simply a mirage.

        However, all the civil infrastructure that is damaged or destroyed and needs to be replaced, while having a bit of the 'broken windows fallacy' about it, still needed replacement after the war. So you had much of Europe needing to rebuild that infrastructure, and less damaged countries providing the industrial products to aid it. Thus the growth in Europe fixing/rebuilding things, and the growth in the US supplying a lot of the manufactured goods to help that effort.

        While the US didn't have the damage Europe did from the war, consumer spending had slowed greatly, to only the necessities. Factories that had produced cars, radios, and whatever had converted to producing tanks, military radios and so on. The population had been buying war bonds with their surplus income instead of spending it on that stuff. Once the factories went back to consumer products, there was a lot of pent up demand and a lot of savings to spend on it. Though this probably only accounts until the early to mid 50s in the US.

      2. WalterAlter
        Pint

        Re: Post-war 90/10 story

        You said hard-on, huh huh...huh huh...

      3. Anonymous Coward
        Anonymous Coward

        Re: Post-war 90/10 story

        Conservatives in the period 1945-1965 were pinkish tinged. And Heath's lot were outright Euro-Communists. Ask any Thatcherite stooge.

    2. Charles Manning

      Re: Post-war 90/10 story

      The idea that fixing up stuff creates wealth is known as Broken Window Fallacy. Sure a lot of spending goes on, but it does not create value and therefore does not create wealth.

      It does create wealth for some players though. USA made a mint (from both sides) selling war goods during the war. They were not bombed to hell, so when their men came back from war they were immediately able to become highly productive - supplying both local demands suppressed by the war economy as well as supplying other countries that were recovering. Since they sold a lot of stuff on tick, that gave them leverage to sell their own goods.

      This also gave USA their ability to flex their imperial muscle. They were the only nation that was not hammered and they had all this money to throw around.

      But was there really a huge boom in Europe after the war? Not so sure. I have never been to Europe myself, I've spoken to people from both sides of the conflict. The 1950s were a hard time for England, Germany, France and Italy at least. All these countries had post-war rationing. UK only stopped rationing in 1954 - 9 years after the end of the war.

      HTF can you say they're booming when there's rationing?

      1. Nick Kew Silver badge

        Re: Post-war 90/10 story

        Post-war reconstruction is not at all the broken window fallacy. Noone is suggesting that the war damage was a good thing. The point is that, being so very much more than just broken windows, it had reduced us to a shadow of where we should have been.

        If you're measuring economic growth from a starting point that's (for the sake of argument) half what it was just a few years earlier, then merely repairing the damage gives you 100% growth from that reduced startingpoint, which gives a major part of post-1945 growth. The broken window fallacy is only relevant if you measure from before the damage happened. And Balls's preposterous suggestion was that you can get something like that same growth from an undamaged startingpoint.

        1. Quip

          Re: Post-war 90/10 story

          " repairing the damage gives you 100% growth from that reduced startingpoint,"

          And, if at that starting-point things were not new but rather worn and outdated, demolition and reconstruction does give real growth even from a starting point before the damage occurred.

      2. Mark Dempster

        Re: Post-war 90/10 story

        You're forgetting that a HUGE amount of money was spent straight after the war (by a Labour government) on nationalising industries, creating the welfare state, setting up the NHS, etc. And while none of these systems is perfect, you won't find a better health & welfare system that's free at the point of access anywhere in the world.

    3. LucreLout Silver badge

      Re: Post-war 90/10 story

      Also a fertile time for individual careers, as "dead mens shoes" opportunities helped with corporate (and other institutional) career ladders.

      Quite. Willets book, The Pinch, also makes an interesting point about generational demographics and the wage pyramid. Essentially, due to the boomers being a large generation and Gen X being a small one, the wage pyramid should have inverted such that the young would have earned better pay than their parents due to competition for their time, similar to the post war dead shoe gig.

      Mass immigration and globalisation were brought about as a means to prevent that inversion, and continue to ensure that while national GDP rises ever higher, GDP per capita does not. That is either a good or bad thing depending on what you earn/own/and any emotive or philosophical preferences you may hold.

    4. Naselus

      Re: Post-war 90/10 story

      "Post-1945 was a 90% time: there was lots of low-hanging fruit, not least because we'd bombed each other halfway back to the middle ages."

      Except that story doesn't actually match the statistical evidence. The world economy grew more between 1951 and 1970 than it did between 1800 and 1951. And again between 1971 and 1980. 'Low-hanging fruit' and 90/10 scenarios don't come close to explaining that.

      It's also worth noting that, while Tim chooses to ignore economic growth that displeases him (so let's ignore the fact that building all those bombs is what put America back to work in the '40s), that economic growth was actually very important - a classic Keynesian stimulus which took the US from a depression to a sustained, lasting boom, through big-government government tax-and-spend. Which is exactly what he would like us to forget.

      1. Peter2 Silver badge

        Re: Post-war 90/10 story

        "Tim chooses to ignore economic growth that displeases him (so let's ignore the fact that building all those bombs is what put America back to work in the '40s), that economic growth was actually very important - a classic Keynesian stimulus which took the US from a depression to a sustained, lasting boom, through big-government government tax-and-spend. "

        Except that much of the military equipment produced in the US was then sold to Britain and Russia in cash (ie gold, diamonds etc) deals, and only went to credit once said nations had completely expended all of their hard cash.

        In case your not getting my point, the taxing (and repayment) was done on different economies to the spending which somewhat invalidates it as an argument for tax + spend within the same economy?

  2. Boris the Cockroach Silver badge
    IT Angle

    The growth

    post 1945 came as a result of 2 things.

    1. the huge leap in technology due to ww2 and the return of an upskilled labour force

    2. More importantly, many middle and senior managers had been conscripted into the armed services and felt akin to the men they now employed because they had faced the same risks their employees had.

    Its very hard not to care about Joe bloggs the employee after he'd been Flt. Sgt J. Bloggs the tail gunner and had saved your life from a FW190 attack.

    Plus you had capital controls to stop vast sums of money being sent out of your economy unless the government approved it.

    1. graeme leggett

      Re: The growth

      I'll add to that the "ability" of the war to produce managers of men and material (materiel) and the recognition of their merit.

      Their is also a supply of resources produced at the nation's expense made available at discount.

      Eg post war air travel in ex-military DC3s (technically C47s). Aircraft designs built on work began during the war. Britain's temporary lead in jets.

      1. John Brown (no body) Silver badge

        Re: The growth

        "Eg post war air travel in ex-military DC3s (technically C47s). Aircraft designs built on work began during the war. Britain's temporary lead in jets."

        That's an almost perfect example of civilian industry built out of war. I'd go further and suggest the entire civil aviation industry was built on the back of bomber development in the 14-18 war.

    2. John Brown (no body) Silver badge

      Re: The growth

      "Plus you had capital controls to stop vast sums of money being sent out of your economy unless the government approved it."

      I'd add in Tims point of "pent up" technological change still in the "lag" period from the 30's which should have made it into the economy during the 40's but was either held back due to lack of a commercial economy/materials or being used purely for the war effort.

      I'd also add in the technological leaps that were hot-housed because of the war and the enforced efficiencies and improvements made to the entire productivity of the UK brought on by the war. Prior to that period we were still very much living on past achievements using outmoded factories and labour relations.

    3. a_yank_lurker Silver badge

      Re: The growth

      I think point 2 may be overlooked. In combat, everyone depends on each other to survive. It is very difficult to understand the bond of combat veterans and understand that many owned their lives literally to actions of a private bravely doing his job.

  3. Will 28

    Destructive growth?

    A good article Tim,

    I did like the point about making things to blow things up not being economic growth. It made me think as to whether or not the arms trade is contributing to growth or not. Is the net effect of the arms trade on the global economy a positive or negative one? On one side we have the obvious advantage that we've made something (for example a bomb), on the other hand we've got the disadvantage that it will ultimately destroy something. In between we have the potential advantages/disadvantages that our "will" is being enforced, and we perhaps get global security.

    I suppose it actually comes down to a basic question of "is it ever necessary to fight a war". Still, got me thinking, which is sometimes a good thing.

    1. Nick Kew Silver badge

      Re: Destructive growth?

      The arms trade is a big part of the UK economy. And others, but the UK is (proportionally speaking) #1 amongst big/developed nations[1]. So the end of the Cold War hit our economy harder than other Western economies. That's also why the UK and US have driven so many smaller wars (arms industry trade fairs) since 1989.

      [1] The US has three times more arms exports, but I believe their total economy is more than three times ours. Noone else comes close: the next two (France and Russia) are a small fraction of ours.

    2. John 209
      Meh

      Re: Destructive growth?

      For better or worse, we measure economic health and growth with GDP, but that only takes into account current expenditures - and makes no place for existing asset evaluation, its increase or decrease. That, in turn, makes any expenditure a gain, and lack of expenditure a loss, so that a natural disaster, or artificial one such as war, that destroys assets but elicits recovery effort, is a gain or growth in the economy even though expensive assets, including infrastructure, may have been wiped out in the process. That is, the economic base may be substantially reduced, but if that elicits a recovery effort involving expenditures, the reduction goes unaccounted in GDP, and only the ongoing recovery expenditures are recorded. One might argue that a substantially reduced base would be indirectly reflected in a lower GDP, by taking away the potential for expenditure by all, but if the recovery effort is sufficiently robust, it won't count for much. There are other national accounting statistics that would reflect the asset losses, but they don't get nearly the attention or the identification with "economic health", "growth", "stagnation", or "decline", as GDP.

  4. Anonymous Coward
    Anonymous Coward

    A bit simplistic

    "the somewhat discredited ideas of state directed economies and socialism lite"

    To a degree this is done by cherrypicking. Much of Chinese industry and infrastructure is in fact owned by and run by the Communist Party, so we tell ourselves that China is "really" capitalist. Parts of India too have had successful socialist administrations. And capitalism has had its huge failures, WW1 and what followed being an example.

    1. Richard 12 Silver badge

      Re: A bit simplistic

      I'd argue that all economic theories are simplistic.

      The socialist ones are possibly the worst, as they assume (almost) everyone is happy to be a "worker bee".

      The capitalist ones are possibly the worst, as they assume (almost) everyone cares the most about accumulation of wealth.

      Reality is neither of these things.

      1. LucreLout Silver badge

        Re: A bit simplistic

        @Richard12

        The socialist ones are possibly the worst, as they assume (almost) everyone is happy to be a "worker bee".

        The capitalist ones are possibly the worst, as they assume (almost) everyone cares the most about accumulation of wealth.

        The most important differentiator in what you have said is that socialism pretty much forces everyone to be a worker bee and to accept less. The less comes from the fact that a hard working person will slack off if all he is to earn is the rate of the slacker, thus everyone produces less on average.

        Capitalism does not demand that anyone give a shit about accumulated wealth, but allows those that do to accumulate it. Everyones a winner, in that sense.

    2. Tim Worstal

      Re: A bit simplistic

      I generally argue that capitalism v socialism isn't the important part. It's markets v not markets that are. And yes, the SOEs are a large part of the Chinese economy and they are state owned enterprises. But they're also competing in what is possibly the most vicious free market on the planet currently.

      1. Anonymous Coward
        Anonymous Coward

        Re: A bit simplistic

        "I generally argue that capitalism v socialism isn't the important part. It's markets v not markets that are."

        On this I am in complete agreement.

        The controlled economies of e.g. Babylon depended on central warehouses, a scribe army, and a lot of planning. They led to cultural and economic sterility. The Greek agora led to a cultural explosion - it brought together a commercial market and access to information, since news and learning was also traded there. And the WWW is basically a world wide agora.

        I do think that WW2 gave a huge shakeup to power structures and reduced state control so that technical discoveries could be exploited far more efficiently. I also wonder if the Cold War was actually a brake on this expansion - military activity in support of anti-piracy and free movement of goods can be very valuable, but much of it in the late 20th century was mere R&D willy-waggling, and the cost of Trident could imho be much better employed in surface naval capacity to deal with localised threats.

        So with TW's clarification I suspect we are singing from the same hymn sheet.

        1. Alan Brown Silver badge

          Re: A bit simplistic

          "much of it in the late 20th century was mere R&D willy-waggling"

          and into the 21st.

          It was trying to respond to the willy waggling which sank the Soviet Union, and it's the continued willy waggling which may well result in chunks of the US economy tanking - there are large parts of the country whose entire economy is geared around the war machine (North Dakota being a classic example) to the point that they would be third world countries if not part of the USA.

          "Superior" Military tacticians and planners have always planned for the next war using what worked in the last one. The problem is the enemy may not cooperate and the increasing use of asymetric warfare means that a bunch of guys with cheap weaponry and hit-n-run tactics can keep a larger bunch of guys with extremely expensive weaponry busy for a very long time until they run out of money.

          1. This post has been deleted by its author

          2. midcapwarrior

            Re: A bit simplistic

            Agriculture is the largest industry in North Dakota, although petroleum, food processing, and technology are also major industries. https://en.wikipedia.org/wiki/North_Dakota

            I must have used the wrong citation as "war machine" didn't make the list.

      2. itzman

        Re: A bit simplistic

        The model that I find most attractive is that an economy is essentially a complex dynamic system and a very non linear one at that. Any attempt to 'control' it is useless as the only way to do that is to damp down its ability to respond to almost anything, so command and control economies are OK if nothing changes, but will be inefficient in times of rapid (technological?) growth.

        Laissez faire capitalism doesn't attempt to control, it just follows.

        And that may ultimately be the least worst of all approaches. In the absence of an external moral standard, one can only judge attempts to control economies on the moral standards of those who have imposed them. That is, for example, did the application of communism result in the sort of world those that espoused its principles wanted? I would say not.

        In the UK 15 years of Labour has resulted in a less, not more, equal society.

        And there I find myself poised on the horns of a dilemma. Those that espouse the sort of Corbynist policies are all good well meaning people for the most part: They see politics as a means of expressing ideals about the nation state, and ideals about human progress that are arguably laudable.

        Those that decry them, do so on the grounds that such an idealistic approach is not only massively implausible, but, if implemented, would lead to in many cases the reverse of the 'ideal' solution.

        We have in effect a battlefield between idealism and pragmatism in terms of the political map, and that strikes at the very heart of the matter, which is I believe expressed very simply: What, in the final analysis, is the point of government at all?

        To the Left it would seem to be a moral instrument tasked with presenting a hope filled picture of human endeavour. To the pragmatic right, it is merely a necessary evil that should impinge upon the freedom of the individual only so far as to ensure some form of social stability and cohesion.

        Pragmatists are more humble: They do not presume to know what the fate of Man should be, nor seek to dictate its terms. Merely that men do not routinely slaughter each other, steal from each other, and obey the minimal set of public codes that seem reasonable to the majority.

        To me the flaw in the Left's model is that if people do not willingly follow its tenets, they insist on enforcing them, by diktat, legislation or deep moralising. In so doing they oppress the very class they claim to represent, because they 'know better' than the people themselves 'what is good for them'.

        If we, the people , do not know what is good for us, why on earth do we have a vote at all?

        And indeed, we can see that where Leftish power structures really rule, that democratic right becomes an irrelevance and a nuisance. As the standing joke goes:

        "Democracy means one man, one vote. And I am that man" (attributed to a fictitious Robert Mugabe).

        What ultimately do we expect a government to deliver in economic terms, and what ultimately is its scope?

        The Assumptive Close of the Left has been to skip over the question of whether or not it is a valid thing for a government to engage in social and economic engineering at all, to move the agenda to the exact means by which it shall do it.

        It may be time to challenge that assumption, because in times of rapid change and deep political instability and economic fragility, it is possible that government's role must needs change to simply ensure political stability at almost any price, or risk being swept aside by forces who have no intention of preserving social order, freedom or democracy, but imply using force of arms or naked economic power to dominate for the narrow interests of a very few.

        Finally, in the context of economics, the real correlation of 20th century growth has been one single fact alone. Petroleum.

        Lightweight independent machines to replace the sweat of the working man's brow (or his horse) , running on dirt cheap fuel, allowed a complete and total transformation of production and transport (and war)..

        Electricity generation followed by cost reducing the application of that fuel. The devastating combination of fossil fuel and electrical energy means that anywhere any time you have a power source to do the 'heavy lifting' at far far less cost than human energy. Toss in computer technology and robotics, and that's another layer of white collar work that simply vanishes. Add expert systems to THAT and good bye to many skilled jobs as well - how much of e.g. general practice of doctors is matching a reported set of symptoms to an internalised database of disease knowledge and producing a diagnosis and a treatment plan? How hard is it to make a driverless train or car that is safer than a human driven one?

        No, the reality of the 20th century was nothing to do with politics, or economic theory, and everything to do with the rapid exploitation of technology, especially power technology, and post WWII the IT revolution.

        Nobody intended it to happen, no one designed it on ideological grounds: It happened because it could.

        Ex of the sort of totalitarian systems that would e.g. Ban the Wheel in a hugely Luddite system that would 'restore the dignity of human labour' and keep peasants in their place forever we are stuck with a population level that can not be sustained without the application of massive amounts of energy and highly developed technology.

        All those urban Greens who dream longingly of windmills and solar panels would be dead within a week if that was all we had to rely upon.

        And that is the irony of politics. The urge to achieve idealised solutions, and the transformation of politics into a battlefield of morally inspired ideals, is ultimately the gross decadence of the West. Before you can go chasing ideals, first of all you need a society and infrastructure that actually works well enough to keep its population alive. And defend it from those who see it as nothing more than a morally decayed occupier of a bit of real estate that would be highly welcome to them.

        Economic growth is more or less a symptom that you have such a system in place. Economic growth relies on a very few things, and none of them are ideals.

        It relies on a sufficient resource base to draw upon, and sufficiently sophisticated population to understand and maintain the system that exploits those resources and just enough political authority to ensure that the fruits of that exploitation are distributed sufficiently to avoid major political instability, or, failing that, a sufficiently cynical 'peacekeeping' force that divides the world into those that shall have, and those that shall not, on pain of death.

        Economics and economic theory is almost irrelevant in that picture. As are emotional ideals.

        And the philosophy of Marxism, that drives the left, is almost utterly irrelevant in a world in which there are no human workers, only machines.

        1. Crumble

          Re: A bit simplistic

          "And the philosophy of Marxism, that drives the left, is almost utterly irrelevant in a world in which there are no human workers, only machines."

          Ever since I was a boy reading science fiction, I have struggled to see how such a world could work. How do you get the output of the machines to the people?

          The best I can come up with is, take all the money, give it to the people, they use it to buy the output of the machines. Then you have to take all the money off the owner of the machines and give it back to the people to keep the cycle going. I don't think you can dispense with money and give the goods directly to the people, how do you know which people need stuff? At least money allows the people to choose which goods to obtain.

          If we could only work out where we're headed, the path ahead would be a lot clearer!

          In Kurt Vonnegut Jr's debut novel "Player Piano", central planning allocates goods to people, who mostly work in either the army or the "reconstruction and reclamation corps". It turns out not to be a great solution (although it's an excellent novel).

          Meanwhile the Star Trek universe survives fine without money, although sadly Mr Roddenberry didn't go into sufficient detail as to how this works.

          1. Ben Bonsall

            Re: A bit simplistic

            Meanwhile the Star Trek universe survives fine without money, although sadly Mr Roddenberry didn't go into sufficient detail as to how this works.

            He did. As much free power as you need, (only Scotty never had enough,) and a way of transporting things and making things using nothing but the free energy. Your standard post-scarcity sci-fi economy.

            1. scrubber
              Alien

              Re: A bit simplistic

              "post-scarcity sci-fi economy"

              And yet the Ferengi use Latinum.

              And the Federation use Credits.

              And the Klingons use Darsek

              Since the dawn of technology every society 100 years ahead appears to be post-scarcity from the old POV, but they never actually are.

              1. LucreLout Silver badge
                Joke

                Re: A bit simplistic

                @scrubber

                And yet the Ferengi use Latinum.

                And the Federation use Credits.

                And the Klingons use Darsek

                To paraphrase some religious text or other:

                And ForEx trading spivs will ever be with you.

          2. LucreLout Silver badge

            Re: A bit simplistic

            @Crumble

            The best I can come up with is, take all the money, give it to the people, they use it to buy the output of the machines. Then you have to take all the money off the owner of the machines and give it back to the people to keep the cycle going.

            In that scenario, who generates the wealth to invest in the machines initially, and why would they do so? If there is no economic incentive to do anything then people will do nothing - pop into any Wetherspoons about now and watch the tax payer funded welfare system at work. My local one has a sign restricting those with children to two drinks maximum, which is a very sad state of affairs.

            The transition from where we are to the "Star Trek" universe you mention, assuming it comes, will be more painful than any in human history. Until the robots and the AI are truly commoditised, someone will own their output, and that person will no longer seek to pay for your output. Worse still, they will no longer seek to pay for mine!

    3. streaky Silver badge

      Re: A bit simplistic

      The problem is they're not actually discredited per se. Communist governments work like other governments; they're magnets for corruption and incompetence - this is what is actually discredited but we've known this for a long time and it's still happening if you're capitalist, communist or anarchist.

      The directed economies generally can work as long as you assume that government is capable of actually planning ahead. In a perfect system (which I'm not suggesting can actually exist for a second) there's nothing preventing a government reacting to reality and also correctly planning ahead. China didn't come out of bouts of mass starvation because it embraced capitalism (frankly, it still hasn't; it's embraced other people's capitalism) - it happened because it's directed economy was directed towards the tech sector and making enough food to feed themselves and because they allowed people to do things like buy cars.

      Their directed economy is running round the world happily swapping natural resources for infrastructure and weaponry, then eating those resources and spitting out phones and computers to the rest of us. If the UK's economy was directed it'd be way more broad-based than it is and it'd still be worth getting a job in mechanical engineering.

    4. Anonymous Coward
      Anonymous Coward

      Re: A bit simplistic

      Yes, a lot of Chinese industry is owned by the State, and that's the huge and failing part of the Chinese economy. It's a big chunk of the heavy industry and other wealth consuming parts of their economy. The growth comes from the more entrepreneurial (and market oriented and capitalistic) part of their economy.

      India, the patterns the same. They were very "socialist" and state lead development oriented, and then the moved partially out of that straight jacket and started to grow a good deal faster.

      To see the socialist ways as a genuine growth path is self-deluding at best.

      1. Alan Brown Silver badge

        Re: A bit simplistic

        "To see the socialist ways as a genuine growth path is self-deluding at best."

        It's not socialism which is the problem.

        It's bureaucracy. Governments (of whatever stripe) and civil services in particular will keep growing unless ruthlessly culled.

        Unbridled capitalism (mercantilism) has been tried and doesn't work - it leads to inefficient monopolies operated by bloated private interests.

        Communism doesn't work either - it leads to much the same thing, only it's bloated government.

        Even if you avoid both of those paths, history shows that bureaucracy will always expand unless you periodically declare open season on the civil service.

        There's a need for a middle economic path. There's nothing wrong with embracing some socialist and some capitalist principles. The "free" market is nothing of the sort, because it takes government intervention to keep it free (of distortions and monopolies), but a market free of government intervention would cease being competitive in a short period of time - history has proven that several times over.

        The hard part is keeping within reasonable limits and finding where the distortions from corruption are buried (there is _always_ corruption - even if it's just politicians avoiding alienating their voting base) in order to ensure it can't spread.

    5. CN Hill

      Re: A bit simplistic

      " And capitalism has had its huge failures, WW1 and what followed being an example."

      WW1 was a consequence of capitalism? If you say so.

      1. Fraggle850

        Re: A bit simplistic

        Yes, I thought much the same. WW1 was a family squabble at the end of the dynastic imperial period, capitalism merely capitalised on it (or got destroyed if you happened to live in Russia).

        WW2 was just the denouement of unfinished business from WW1.

  5. David Roberts Silver badge

    Correlation?

    The slowdown in the 20s and 30s may also match the decline of the British Empire as the US and Germany became the leading world industrial nations.

    It could have taken the second world war to make the UK self reliant and invest desperately in manufacturing, instead of relying on sucking the rest of the world dry.

    Post war economic boom because everyone was so relieved to have survived, and the end of rationing made pay and conditions look good?

    Pick your isolated facts to fit your theory.

    We did get a boost to the work force in the late 60s and early 70s with the Asians being chased out of Africa.

    As far as I can tell none of these factors seem to relate to high taxation and strong unions.

    Global mobility of wealth and labour should prevent any attempt to recreate the 90% tax rates that drove some into tax exile.

    1. graeme leggett

      Re: Correlation?

      Britain had a reasonable manufacturing industry pre-war. Just not big enough for the demands of total war. And war brought specialisation - an aero-industry turned entirely to combat aircraft with no thought to civilian/transport until the end is in sight.

      Ditto the vehicle industry (Leyland, Rover, Morris Vauxhall) turned over to armoured vehicles.

  6. Anonymous Coward
    Anonymous Coward

    Scarcity of resource

    Doesn't this all just come down to globalization and ease of resource mobility?

    Technology means you need less people, and in many industries also means you need less skilled people, which means it is easier to move around the world to places with cheaper labour costs (over time these places skill up, and get more expensive, so it moves elsewhere). Modern cargo ships effectively make transport free except for the in-country part to and from the dock (which you would have to pay anyway shipping local goods around the country), so there is little penalty to globalization unless there are border tariffs.

    The end result is a massive oversupply of blue collar workers, which is only really offset by the fact that we have enough income in the rest of economy to fund a lot of services jobs which can mop up people (restaurant staff, coffee shop baristas, next day delivery drivers for Amazon, call centers for your iThingy tech support). The major downside is that most of these services are "luxuries" and so as soon as globalization catches up and a chunk of the "middle class" white collar jobs start to move overseas then the whole pyramid collapses, because services industry based economies are reliant on someone at the top of the pyramid pushing money in to it so the guys at the bottom get paid (vs. just having something in the ground to dig out and put on your market barrow - vegetable or mineral).

    I think boom really came from three things:

    * Post-war work ethic - people wanted to put the country back together again.

    * Integration of technology - drives productivity

    * Exploitation of world resources - the industrial societies dug up a lot of resources elsewhere in the world which makes them cheap. Since China started hoovering up more and more of them, physical resource costs have gone up somewhat, making goods more expensive.

    I think the basic question here is "how does a western services-based capitalist society survive in a situation with a global oversupply of labour and improving skill sets up in Asia and Africa?" Personally I think the answer is "it can't", at least not at the current standard of living everyone expects, and at that point I think it stops being about economics and starts being about religion ^H politics - because you can't have 75% of the populus being "poor" - that is the thing that revolutions are made of.

    1. a_yank_lurker Silver badge

      Re: Scarcity of resource

      As someone who has worked importing German goods into the US manufactured goods cost money and time to move from factory to store. It is roughly a month by ship from German port to US port. Secondly duties and freight are not necessarily trivial costs either. At some point the manufacturing costs will rise to a point when it is cheaper to move manufacturing back to the consuming country.

      Also, do not underestimate the problems of managing a global workforce and contractors. Outsourcing is not a panacea nor is offshoring. Both have hidden risks from issues like difficulties in coordinating meetings, travel costs, cultural issues, and political stability in some countries.

      1. Anonymous Coward
        Anonymous Coward

        Re: Scarcity of resource

        Time is "free" provided your planning is good enough, so taking a month to deliver goods isn't usually a problem - at least not for bulk industrial stuff once you have built up a stock in country (it's just a question of pipelining delivery so there is always a "big enough" stock in country until the next boat arrives). Less true for smaller orders, of course.

        Duties sure - that why I said border tariffs - but on the whole they are reducing over time world-wide as most countries realise that on the whole trade goes up with less tariffs in place.

        > Also, do not underestimate the problems of managing a global workforce and contractors

        There are plenty of multinationals around who prove it works, and globalization doesn't mean I necessarily need my company to do all the out-of-country work. I don't need to have an overseas branch to benefit from overseas labour - I just need to buy materials or finished components from someone who does (directly, or via an importer).

    2. veti Silver badge

      Re: Scarcity of resource

      You totally can have 75% of the populace being poor. History shows us that's the norm - the golden age of the middle class in the late 19th-20th centuries is an outlier - and make no mistake, if the invisible hand is allowed to govern everything in its own way, we'll be back there in no time.

      The question is whether that's what we want. Because we have the tools, now - democracy, economic models, government infrastructure (or "bureaucracy", as Tim would probably call it) - to do things differently.

      If we want to.

    3. Alan Brown Silver badge

      Re: Scarcity of resource

      "at least not at the current standard of living everyone expects"

      Western industry and technology has largely been built on the back of cheap (carbon sourced) energy.

      You're quite right that 75% of the population being poor is revolution fodder. One of the answers is to ensure better access to cheap energy resources.

      Unfortunately.... that can't be done by burning carbon-based fuels, unless you want to poison the world's oceans (this will happen far sooner than global warming does us in, there are already indications of a spreading global anoxia event, so it may be too late) and subsequently do most of the land-based species on the planet in too.

      The answer (for better or worse) can only be nuclear power, preferably thorium based - which will keep Tim happy - and the only sustainable choice is to pretty much give it away to developing countries in order to avoid a carbon apocolypse.

      Interestingly, the solution to global human overpopulation is also contained in this energy solution: Put simply, poor people have more children and around the world the trend is very clear that as people become better off, they have fewer of them. In countries without meaningful welfare systems you need your kids to look after you in old age and if there's a chance that some won't survive (ie, you don't have access to healthcare and clean water, etc) then you'll have enough to ensure some do.

    4. itzman

      Re: how does a western services-based capitalist society survive..

      ...in a situation with a global oversupply of labour and improving skill sets up in Asia and Africa?"

      By going massively hi-tech. And having the arms to defend its wealth against those who would seek to take it from them.

      De Gaulle built the French Nuclear industry largely on the basis that he didn't want to be dictated to by OPEC.

      If you want a nation to survive and prosper when global forces are turbulent, you isolate it, and make it as self sufficient as possible.

      And throw money at real education, as opposed to political indoctrination, to assist the best and brightest to construct things that will make use of low resources and be very effective,

      In that process sadly, the not so best and not so brightest will have to accept that they sadly didn't get the best education, and there are not necessarily the top jobs available.

      However there are always the arts...and humanities, and so on.

      As the old Jewish joke goes :

      "This is my eldest son, and we are so proud, he is the finest concert pianist of the decade.

      And this is my daughter. She is a writer and her books are acclaimed everywhere.

      This is my youngest son. Sadly he is only a tailor.

      But he feeds the whole family"

      1. Anonymous Coward
        Anonymous Coward

        Re: how does a western services-based capitalist society survive..

        > By going massively hi-tech. And having the arms to defend its wealth against those who would seek to take it from them.

        This doesn't solve the economic problem though. We live in a society where we have more people than jobs, population nationally and globally is increasing, and everyone in the UK wants to get paid more. "Going high tech" just means you need even less people to do the same amount of work. It's good on paper for the companies involved, but what does the country do with the burgeoning supply of unemployed (or at least underemployed). If you just tax the companies or people in work then you take away all incentives to going high tech in the first place, as you are effectively paying for the staff you lost anyway as the state has to support them, and the only way to do that is via taxation.

        What wealth? We have no natural resources, and burgeoning national debt which is still increasing, albeit at a lesser rate. The only "resource" in Britain is a large supply of people, which as per the above argument is increasingly an economic cost not a benefit in a massively mechanised society.

  7. Anonymous Coward
    Anonymous Coward

    all very simple

    Two massive World wars in the space of a generation decreased the male work force along with explosive global industrialisation. Since the 80s the industrialised labour market has now rebalanced and inequality is a natural consequence.

    1. Fraggle850

      Re: all very simple

      Certainly in the case of the two wars a generation of male workers was significantly reduced in both cases, which presumably had an effect on supply and demand and therefore pay. It's a grim fact but large scale death is often good for workers wages when stability returns, I believe that the black death in 14th century England had a similar effect.

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