A nationalized workforce?

The ratio of public to private sector jobs is not much different under New Labour than it was under Thatcher.
That's the surprising message of these figures out today (pdf).
These show that there are now 4.18 private sector workers for every general government employee. That's down from 4.43 when New Labour took office. But it's higher than the 3.89 ratio in 1993.
Direct comparisons with earlier years are impossible because of statistical rejigging and reclassifications. But the older statistical series shows only a small fall in general government employment, and little change in private employment, between 1988 and 1992.
So, it's quite possible that the ratio of general government to private employment is not  much different now from what it was in the heyday of Thatcherism. There are four reasons for this:
1. Private employment has grown under New Labour, by 1.5 million.
2. New Labour has only reversed the fall in government employment that occured under Ken Clarke's chancellorship in 1992-97 (although a lot of this fall was due to reclassifications rather than genuine cuts.)
3. Contrary to public image, Thatcher did not slash government jobs. The old figures (available here) show that general government jobs grew slightly between 1979 and 1988*.
4. Our image of New Labour might be coloured by the salience heuristic. We see lots of pointless public sector jobs advertised in the Groan, and infer that government is packed with parasites. In fact, these are only a small fraction of  total government jobs  (5.5 million), and the piecemeal rise in private employment, which is less salient, gets less attention.
All this is, of course, consistent with one big fact - that the tax burden, at 39.3 per cent, is lower this year than it was when Thatcher left office. (compare table C5 and C24 of this pdf).
I draw the following inferences from this:
1. It's wrong for free-marketeers to idolize Thatcher. She did less to create limited government than you might think. She was a class warrior, not a libertarian.
2. It's not likely that New Labour's plans will collapse under the burden of huge taxation (though it could do so because public aversion to a given level of taxes has risen).
3. The case for shrinking the state is one of political ideals (dependency is a bad thing; it's our money, not the state's) and allocative efficiency. It's not that we "can't afford" the current level of government.
* I'm leaving public corporations out here: employment in these collapsed under the Tories because of privatization, not just job cuts.

Comments

[Paddy Carter]

that's all very interesting.

there's no chance I'm actually going to read the source data for myself (as if!) so can you satisfy my curiosity and tell me whether the figures adjust for public sector outsourcing to private contractors?

how many competing sources are there for the total tax burden? I'm sure I remember repeatedly seeing people wailing about how high the tax burden has risen

[Tim Worstall]

Re not counting public sector corporations and privatisation. You mean that the Thatcher figures you are using only include those parts of the economy that are currently government?

Also, tax burden. Thatcher left in the middle of a horrible recession. You would expect the tax burden to be high as a % of GDP then, as opposed to now after however many years it is of glorious growth. What worries me about the current spending is what happens as and when we do have the next recession.

[chris]

Tim - by general government I mean functions that were part of government at the time; the current data series is no compatible with the old one, so precise comparisons aren't possible.
And the tax % of GDP fell during the 1990-91 recession. At the peak of the boom, 1988-89, it was 40.7%. In 1991-92, it was 38.5% - automatic stabilizers and all that. In every full year of Thatcher's time as PM, the tax % of GDP was higher than it is now.
Paddy - outsourcing would reduce the share of government employment; they count as private employment.

[dsquared]

I suspect that the outsourcing effect could be quite material and that the number of people who are employed by the state in economic substance as opposed to legal form could show a much more dramatic rise.

[Andrew Duffin]

Fascinating. So what the hell do they do with all that tax? Is it just that the same number of drones are now much better remunerated or what?