Wednesday, 24 April 2013

Thatcher’s Revolution

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Daniel Yergin, Pulitzer Prize winning American author, energy scholar and economic researcher, wrote recently that the passing of Margaret Thatcher provides “a timely reason to ask: What was the Thatcher Revolution about?”

Yergin explains that he tackled that same question 15 years ago and “decided the best way to answer it was by asking Thatcher herself.”

He quotes Thatcher’s reply: “For me, it was so simple. The state ought not to tell people what to do. My experience reinforced my beliefs. It was becoming obvious to people that the socialist way meant accepting decline. Can you imagine — people accepting decline.”

Thatcher was right about the decline.

“In 1870, Britain was the world’s richest economy, but by the late 1970s it had become the sick man of Europe,” report Guy Faulconbridge and Andrew Osborn at Reuters.

Britain’s accelerating decline and “sick man” status was not a matter of opinion, as evidenced by a confidential dispatch to London entitled “Britain’s decline” from Nicholas Henderson, Britain’s ambassador to Paris, in 1979, the year Margaret Thatcher was elected as the nation’s first female prime minister.

“Today we are not only no longer a world power but we are not in the first rank even as a European one,” wrote Henderson. “Our decline is shown not simply by the statistics but by the look of our towns, airports, hospitals, local amenities.”

In what was called Britain’s “winter of discontent” in 1978-1979, rubbish was piled two stories high on the streets and bodies went unburied due to strikes by refuse collectors and gravediggers.

“The days lost to strikes” in Britain, reported London’s Guardian newspaper, were “an incredible 29 million in 1979.”

A Guardian news report entitled “Fear of fights at cemetery gates” quoted minutes of a “secretive central contingencies unit” of the Liverpool council showing that members considered allowing the public to make “their own arrangements for grave digging” but refused to grant this small bit of freedom due to a fear that it could lead to violence against “a mourning party” and “unseemly scenes at cemetery gates.”

Members of the “secretive central contingencies unit” also expressed the fear that “very few people” in Britain, aside from unionized diggers, would have “the skill or the strength” to dig a grave.

Britain’s Department of Environment said there were “150 unburied bodies stored in a factory in Speke, with 25 more added every day,” reported The Guardian. “The bodies could be kept for up to six weeks in heat-sealed plastic bags but this option was regarded as ‘totally unacceptable for aesthetic reason.’ ”

Britain’s Ministry of Defense considered the use of troops to get the bodies buried but decided to keep the dead piled up in warehouses because “very young troops” might find the job “extremely distasteful.”

Three years earlier, in 1976 during the sterling crisis, a broke Britain with a public debt out of control, hospital workers walking off the job, highly inefficient state-owned industries losing money, and Marxism seen as a way forward by much of the country’s intelligentsia and entrenched political class, a once “Great” nation was forced to plead to the International Monetary Fund for a bailout.

Thatcher’s answer to this economic collapse was more capitalism and less government.

The result, 1979 to 1990, was an economic revival that delivered lower inflation, higher economic growth, and across-the-board income gains in every income quintile — overall, an economic reversal that created a Britain that didn’t become Greece or Spain.

Ralph R. Reiland is an associate professor of economics and the B. Kenneth Simon professor of free enterprise at Robert Morris University in Pittsburgh.

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