Monday, 22 December 2014

Not the Road to Wigan Pier

What with it being a time for peace, joy, goodwill and whatnot, I think it is worth drawing to your attention (a) that Britain is not going back to the 1930s although (b) that would not be such a bad thing. Details below the break.

As for point (a), the point is that Government's plans are to reduce state spending to 35% of GDP. I'll believe it when I see it, is the correct response. But if that were to happen, it would be a pretty low amount by historical standards. It would not, however, be very like the 1930s: "In the year with the highest rate of spending, 1939, the government consumed only 30% of national income. And almost half of that—14% of output—was spent servicing the national debt accrued during the first world war, running Britain's empire and paying for its military and postal service. That only left 16% in 1939 for everything else—health, education, social security, policing, local government, infrastructure and so on—compared to around 30% in Mr Osborne's plans for 2020. In short, the story is not that Britain will be spending as little as the 1930s—but that in 2020 it will still be spending almost twice as much as a share of national income on public services and the welfare state as it was when "The Road to Wigan Pier" was penned."

Still, you might say, only twice as much spending on the welfare state as in the 1930s as a proportion of national income - that's not a lot, is it? Well, "Stripping away the hyperbole about Mr Osborne's plans shows that in reality they only amount to a reduction to the levels of public spending seen in 2002-03 in real terms, or 2001-02 in real terms per capita." So it's back to the bad old days of Cool Britannia.

All of that is much as one would expect. Much more interesting, in my view, and a striking example of how much Americana we take in without thinking about it, is point (b). In short, it was not the same here in Britain in the 1930s as it was in America.

Here's Daniel Hannan, taking the story up with the Wall Street Crash: "When the crash came, Britain’s deficit rose to £170 million – a trivial sum by today’s standards, but regarded in that prudent era as calamitous. Philip Snowden, the Labour Chancellor in the National Government, made everyone in the state sector, from cabinet ministers to benefits claimants, accept a cut of between 10 and 20 per cent. The one exception was the judges who – precisely as they did in Ireland during the recent austerity measures – declared themselves to be constitutionally exempt.

...  By 1934, the economy was running a healthy £31 million surplus, and Chamberlain was able to cut taxes. “We have finished the story of Bleak House,” he told the Commons, “And are sitting down this afternoon to the first chapter of Great Expectations.”

The Economist gives us some more data: "The economy grew by more than 4.5% a year between 1932 and 1939—at a faster rate than it had for several decades—and output per person surged from 79% of the American level in 1929 to 97% by 1937, in effect reversing 50 years of comparative economic decline in just eight years. Outside the few areas of high unemployment Orwell visited, by the outbreak of the second world war the average British worker had never had it so good."

Perhaps all that time English spend reading Of Mice and Men at school has affected their politics. (Perhaps it is meant to.)

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