Some Thoughts on Margaret Thatcher

So Margaret Thatcher recently died. I think Jonathan Bernstein summed up her impact best over at his blog:

What matters about Thatcher, or at any rate about Thatcherism, is that there really was a significant change among elites about the power and efficacy of markets. My general sense -- and to be sure, this is an impression, nothing hard and rigidly empirical about it -- is that in the 1960s and through the mid-1970s, there really was a sense among many that markets were old-fashioned hokum, and that bureaucracies and other centralized planners could do many things far more efficiently. Oh, not Soviet-style central planners; by 1970, certainly, no one looked to the USSR (or China) as an economic model.

 I'd put it this way: I suspect...that if you looked around in 1965 the only people who would be referencing Adam Smith, at least in the US, would be a very small group of committed Goldwater conservatives. If you looked around in 1995, Adam Smith gets used by everyone across the ideological spectrum -- and perhaps more by liberals than by conservatives, who seem more interested in Ayn Rand once liberals dip into Smith and discover that they like him.

Of course, what liberals learned from Smith isn't to have "faith" in markets; it's to respect and use the power of markets.

I think that sums it up quite well. But then again, this isn't just because of Thatcher or "Thatcher," there were lots of other forces and people involved in this change as well, and not just among conservatives. Garry Hart spent much of his political career in the 80's pointing out the need for global competition and economic growth as opposed to a liberal economic policy solely defined by certain groups' interests or the need to redress historical wrongs.

While most people like to focus on unnecessary South American wars or her "personality," I'd say she was defined by her economic policies. Thatcher and her Young Turks believed that they could unleash a new golden age in Britain by rolling back the state, restricting the power of the professional classes that had long dominated British society and above all deregulating everything. The affects of these polices were quite widespread. Initially, they caused a massive recession where British manufacturing declined by 1/6, and at a rate faster than in the depths of the Great Depression while unemployment soared. To make matters worse these economic policies coincided with huge riots all over country. Indeed there is some evidence that Thatcher's policies were reigned in at this point by her cabinet as some of her Ministers grew concerned that they might lose control over sections of the country or have to impose martial law.

Later in the 80's the economy and stock market would boom but not because of Thatcher's great oratory skills, rather because of changes in the financial markets. Thatcher's government drastically altered the way fiance worked in Britain. Since time immemorial Britain had very strict capital controls about money going in and out of the country, Thatcher did away with all that and then completely deregulated the City of London (British Wall Street) in such a radical way that the reforms were referred to simply as "The Big Bang." Adam Curtis has a good montage capturing the mood of the time. The piece also hints at some of the losers of the time, something that most people ignore these days, and there were a lot of losers in Mrs. Thatcher's Britain.

In 1994 the European Union released a report that pointed out that one of the poorest small communities in Western Europe was not in socialist France, impoverished Sicily or the isolated mountains of Spain or Portugal. It was Grimethrope, located in South Yorkshire, once the heart of Britain's industrial north. Thatcher's policies were directly responsible for this. In short she continued the policy of de-industrialization that had been going on since the end of World War II, but at an even faster pace. In addition, her Government helped orchestrate the end of Britain's most powerful union during a huge coal miners strike in 1984-85. It's a long and epic saga, that involves secret hoarding of coal, cutting deals with branches of the union to break away and undermine the strike and the deaths of 10 people. In the end the Government won, and the coal industry was effectively shut down over the next decade along with most of the British manufacturing sector. You can argue that this was necessary or even good in the long run (few people do, instead they just ignore this whole story) but if you were the one on the wrong side of "progress" you might feel differently.

Unfortunately we aren't getting this story in our popular remembrance of her over the past few years. Instead we are getting a simplistic story about her told largely through the lens of "woman triumphs over sexism"-how awful those striking workers are kicking the side of her limo! how little they understand the need for gender equality!-and a simple version of the Cold War told as a moral fable. I guess that is just how our elites like to remember history, but if you are interested, there's a lot more to it.