Clement Attlee, Prime Minister

Margaret Thatcher said of Attlee that he was all substance and no show, and certainly his calm and detached personality, together with his firm determination, marks him out as a man very suited to be Prime Minister. And he had a talented cabinet.  It is a pity that one has to add that the policies of his government, from 1945 to 1951, were disastrous, establishing the post war consensus that dramatically accelerated the country's decline and led to something close to bankruptcy in the 1970s.

This is not usually a recognised conclusion, as a result, I suppose, of the general tendency to see aims as important rather that the consequences of  government policies. Attlee and his colleagues set out to look after the classes that had been so poor and so unpowerful, but the result of their actions was to hit those sections of society as much as others.

Most frequently the National Health Service is mentioned, but this argument is upset by the fact that a  "Comprehensive National Health Service" was in the Conservative Manifesto in 1945 so would have happened anyway. It was an idea whose time had come. Let us rather look at the main elements of Labour's economic policies in those years, rigorously enforced and disastrous in their consequences

Labour nationalised a whole raft of industries, creating national monopolies which had all the faults of any monopolies.But that was not the worst consequence. These were old industries,  - coal, steel,.  etc - due for decline or needing rationalisation.  Nationalisation kept them going for years when they should have faded or changed -   indeed one could with little exaggeration say that the true beneficiaries of the nationalisation of say coal were the coal owners, who would otherwise have had to bear the burden of the decline.....and anyway the decline would then have taken place over years, with far less pain than their eventual sharp demise,  And in those years they sucked in subsidy after subsidy, using funds better spent elsewhere and employing people better employed elsewhere. The whole system made worse by the pressure from the trade unions to resist change.

Indeed the power of the trade unions was a bane of many governments for many years after the war  ("Get your tanks off my lawn" said Harold Wilson), not only for the influences just mentioned but also in that there was a significant Marxist element in their thinking, leading to a distrust of the market economy which was soon to flourish in Germany. These people illogically  wanted growth and economic success but didn't like profits.

In addition, taxes were sharply raised. It was perhaps not surprising that in an attempt to raise the standard of living of the working class the socialists of that time ( and regrettably of today) saw that raising money from the rich  to pay for better conditions for the poor was justified. But these things are not a zero sum game - by encouraging initiative and investment one raises more wealth for social spending. Tax at 83% on earned income and 98% on "unearned " income led to a denial of  entrepreneurial investment and a clamp on growth.  One feels also that social justice, as perceived by  socialists, was the central aim.......even though the people they were trying to help would have been better off with taxes at half those levels.


And what about Beveridge? He wrote "The State in organising security should not stifle incentive, opportunity, responsibility........The insured persons should not feel that income for idleness, however caused, can come from a bottomless purse"  And much more of the same. No doubt these limitations on welfare were rather unrealistic, but they were anyway ignored by the Labour government which vastly increased spending in these social directions without taking care not to overspend,  whilst at the same time curbing the growth of the economy.

All in all a disaster.  It took Margaret Thatcher to rectify the situation and so engrained were the faults that her policies had to be tough, so that she became vastly unpopular as a result. Tony Blair got the message ( she regarded his conversion as her greatest achievement), and it is a second reason for regretting the Iraq war that his reputation also in economics was clouded, with the result that socialist ideas have revived today in the stupidities of Jeremy Corbyn's Labour Party