This chart shows the labour share of GDP (or national income) over more than two centuries:
It comes from a speech by Andy Haldane of the Bank of England in case anyone suspects deeply suspect left-wing sources.
And that long-term downward trend is precisely why Labour has to take radical action now. People are simply not paid enough. And that has to end.
So when people say Labour will destroy the economy by giving people a fair share the simple response is, 'no they won't: they're repairing the damage that's brought us to our knees'.
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Define “fair share”.
Way above 55% labour share
Re tax – declaring how you pay appropriately
I don’t see how that can work.
If three people agree to share a cake, and each is to have their “fair share”, then by your definition, each person is entitled to 55% of the cake.
You can’t define “fare share” by use of a specific number. What you have done is given an example of “majority share” – which *is* numerically defined.
The labour share is singular
I despair if you cannot work that out and yet want to post here
@ Jonathan Sanders
For this exercise –
let income (on the Y axis) = “the total amount generated by the endeavour”
Let “% of income” = “the percentage of that total allocated to Labour”
Let 100-“% of income” = “the percentage of that total allocated to Capital”
You see, your “what if 3 men all demand 55%?” analogy doesn’t work. The 55% is the total distributable amongst your 3 men.
I suspect you knew that, though. It’s such a basic concept.
@Jonathan Saunders
“If three people agree to share a cake, and each is to have their “fair share”, then by your definition, each person is entitled to 55% of the cake.”
I believe that the description was relating to “fair share” and didn’t ever say “equal share”. If one of the people had made the cake then their fair share would be more than 33.3 % 🙂
Jonathan – why do you assume that the fair share of a cake must be the same as the fair share of income for labour?
Agreed !00%. Once again, it’s not revolutionary or even rocket science. For anyone with an iota of rationality the numbers – and consequences – speak for themselves. The past 40 years provide ample evidence of what doesn’t work in achieving higher productivity and more equitable sharing of wealth. So there’s no logic in tinkering with the same matrix. The prevailing economic model is not delivering what it promised. Having achieved some modest success for the bourgeoisie and an unprecedented accumulation of wealth for the 1%, the unequivocal evidence now is that it’s causing more problems than it can ever solve for society at large and the planet – our only known home in the universe. It is no longer fit for purpose (if it ever was) and must be replaced within a generation.
Next point: having listened to some of John McDonnell’s speech I’m convinced Labour has a ‘marketing’ problem. If one accepts that there is much to be encouraged in its proposals, which could appeal to a voting majority, then the party’s rhetoric and framing is wrong. Unfortunately it seems to lack a qualified messenger capable of articulating what can be explained as common sense rather than emotive and revolutionary.
I’ll not rabbit on further because it’s quite a complex issue and ofc I’m not privy to their research. Just to reiterate, though, that a change of leadership (and not just Corbyn) would be the first step towards achieving a popular majority in the country at large. But as things stand right now I fear yet again they’re missing an open goal, which is so frustrating to view from the side-lines.
Hi Richard
I was listening to a podcast by the BBC which I think was discussing the above issue. I would love to read your thoughts on what was discussed in this podcast (when you have time)
Many thanks
https://www.bbc.co.uk/programmes/p06ltl7b – discussion point starts from 6min 30 sec into the podcast
I doubt I will have time to listen
Sorry….
I’ve had a bit of a listen to the link above from David.
The discussion was in the context of a John McDonnell speech to the TUC, where the advance copy of his speech was going to claim that shareholders now take a greater share of national income than workers. Apparently, enraged and puzzled economists took to Twitter. In the actual speech, he dropped that and went with “the amount of national income going to wages has now reached record lows”.
This was discussed in “More or Less”, and they took “evidence” from Chris Giles of the FT.
He said that labour takes a much bigger share than capital, contradicting McDonnell’s original (but unsaid) point. He also said the labour share of national income has been rising in the UK since about 1993. He claims a lot of the gain is due to the increase in employment, and that this increase outweighs wage behaviour, which has either fallen or been flat. Perhaps, over this shorter period, where the trend is more arguable, he is not contradicting your Chart 15 – but neither does his “evidence” contradict John McDonnell’s speech.
Giles said that labour share has fallen broadly overall internationally, including most advanced countries – but claimed the UK is an outlier. He believes the fall elsewhere is because their workers don’t have enough power in the labour markets. He thinks the UK is different, and workers have enough power to push wages up – really, is he kidding?
This also seems to contradict his other statement about wages falling or being flat in the UK.
I didn’t hear any reference mentioned to back up any of his claims, but the “More or Less” interviewer just accepted what Chris Giles said.
I’ve listened to “More or Less” quite a few times. They often claim to do their own research (not in this case), and leave you wishing they would publish it properly with links. Perhaps, in this case, Chris Giles should have been more forthcoming about where he got his data.
Chris Giles is deeply right wing
Thanks for having a listen George and then writing up what you heard.
Also, thanks for the reply Richard.
I have listen to More or Less for a long time now and there has been a few occasions over the last few months that they have been less than impartial and have followed more of the government’s line of thinking. Having said that I thought they did some really good episodes around the time of the Brexit referendum. Influenced my choice to vote remain.
He was very careful not to appear right wing. The uninitiated listener would have been none the wiser.
I’m puzzled why the BBC thinks it’s exempt from the usual claim of “balance” when they give Giles a platform to critique McDonnell based on what were presented as uncontroversial facts. The programme “More or Less” presents itself as a neutral fact checking service, so it should not be doing this! The fact that Giles works for the FT was presumably deemed sufficient to warrant neutrality.
I wonder if there will be an episode examining McDonnell’s proposal for mandatory worker shares. If so, I hope they employ your services (or read your blog)! However, I find it hard to believe they would hide your left-wing credentials.
Thanks David. I recall an episode in 2016 debunking the myth about straight bananas and other brexiteer claims about the EU rulebook. It was based on their reading of EU documents, and was rather good.
It seems to me that the BBC has punctured their impartiality balloon, and not just on this programme. Many commentators seem to agree, especially with regard to brexit.
This just like the state-supporting role they adopted at the time of the Scottish independence referendum. As Andrew (Andy) Crow said on Richard’s blog the other day, Saor Alba!
(Yes, I am biased)
There is no doubt that the ‘mega bucks’ is moved around by the financial ‘industry’ (ahem, ahem).
But it seems that not only has the said sector of the economy managed to reduce the status of real industry (you know – making stuff) in this country but now it has managed to make the REAL economy (everyday transactions, purchases, investments – the full range of purchases between mortal beings) seem less important too.
This is a huge mistake. We know that those mega bucks often run into trouble for some reason or another (reasons like greed, stupidity and deceit for example – but mostly greed) because there is a lot of debt and leverage involved.
To strip real cash out of the REAL economy though – lower wages, fewer projects/less investment , higher consumption taxes, less help between jobs, less savings etc., forces people into debt so that the REAL economy suffers from the debt cycle too (boom and bust) and adds to the country’s woes when the mega bucks cause us problems.
It does not make any sense to me. It’s asking for trouble. We need to reflate earnings asap for these reasons. So we must pump real cash in and keep it out of the big banks.
Are you listening Labour?
Total agreement except with comments from people I would enjoy playing cards for money with.