Driven by data; ridden with liberty.
Former Prime Minister Margaret Thatcher passed away, igniting the tinderbox over her government’s record and its legacy. The monumental stature of her government’s achievements should be seen through the prism of the preceding years.
(Video: Alexander Wickham)
In the 1960s and 70s, successive governments were shattered by powerful unions. The decades contained three day weeks, incomes policy, double-digit inflation, foreign exchange controls, uncollected rubbish, unburied bodies, continual strikes and an IMF bailout. State intervention was no longer restraining unemployment. The sclerotic British economy trailed behind its European allies, eschewing entrepreneurship and innovation in favour of low productivity, nationalisation and subsidies. The Wall Street Journal was direct: “Goodbye, Great Britain”.
Reality fractured the post-war consensus. The only comfort was the status quo’s false blanket, cradled in national ruin. Thatcher was elected, victorious against a dispirited Labour party, unshackling Britain from its stagnant wisdom. Determined to revert national decline, her government embarked on a series of radical economic reforms. Regulations were relaxed; income taxes were cut whilst VAT was raised sharply, home-ownership expanded and inflation locked down. State corporations such as BT were denuded of their monopolistic privileges, whilst companies like Jaguar were denationalised. Unemployment peaked at 3.2 million in 1984, especially in the overstaffed and unproductive manufacturing sector; exchanged for suppressing inflation and allowing those companies to compete globally. This unemployment level fell by over a million people five years later. Strikes calmed as closed shops were abolished, unions were democratised and their inflation fears pacified, whilst economic growth surged, with the UK ranking first in the OECD-16 in 1987. Though income inequality grew, prosperity lifted all income levels in the UK, with mean income growth of 2.8%.
In the Falklands, Margaret Thatcher demonstrated that Britain would not retreat, a miscalculation by the Argentine junta. Her partnership with US President Ronald Reagan and USSR President Mikhail Gorbachev helped secure the Soviet Union’s dissolution and the Iron Curtain’s folding, freeing hundreds of millions. Thatcher best expressed the vision of a Europe of Nations in her Bruges speech, and was instrumental in establishing the EU’s Single Market. Britain’s rebate was won by Thatcher, with her opponents again miscalculating.
Margaret Thatcher’s premiership is often enveloped in myths. Manufacturing output increased by 7.5% over her time in office, but the economy propagated faster in other sectors, reducing manufacturing’s GDP contribution. Unviable coal was only sustained by subventions. Labour PM Harold Wilson closed 290 pits, whilst Thatcher closed 160. Similar ‘de-industrialisation’ was seen in other advanced economies. State spending increased by an annual average of 1.1%, and was cut in real terms in just two years. The economy simply outgrew the state.
Margaret Thatcher was neither a libertarian nor invincible. The proposed ‘poll tax’ and subsequent council tax scheme centralised government whilst burdening low earners. Section 28 was grotesque. Thatcher lucidly espoused principles that underlie libertarian and conservative political thought today: sound money, individual responsibility, economic liberty, and respect for the money of taxpayers. An icon of freedom, she sculpted the political landscape, rather than merely resting upon it.
Note: I would like to apologise for my blog’s temporary absence, as it was wrongly flagged by WordPress.com’s automatic anti-spam detectors.