• Sunday, April 14, 2024
businessday logo

BusinessDay

The economic consequences of Thatcherism

businessday-icon

  Baroness Thatcher passed away on Monday, April 8, age eighty-seven. The longest serving British leader of the twentieth century was a conviction politician who left a lasting legacy on her age. Indeed, so strong has been her influence that New Labour under Tony Blair and Gordon Brown found it necessary to preserve many of her key policies. At a public lecture in 2002, Peter Mandelson, one of the moving spirits behind New Labour, declared that “we are all Thatcherites now”.

Margaret Hilda Roberts was born on October 13, 1925 in the provincial town of Grantham, daughter of a fastidious Methodist grocery shop owner Alfred Roberts and his wife Beatrice. A bright and rather determined girl, she won a scholarship to Somerville College Oxford, where she studied Chemistry, completing her undergraduate thesis under the Nobel laureate Dorothy Hodgkin. She was also president of the students’ Conservative Association.

After graduation in 1947 she worked briefly as a research chemist. But it was clear that her true vocation lay elsewhere. At a local meeting of the Conservative Party, she met a young recently divorced businessman by the name of Denis Thatcher. Their friendship soon blossomed into marriage. It was a union made in heaven. Denis had the wherewithal to enable her devote herself full time to the study of law, eventually qualifying as a barrister. He was also more than happy to finance her overweening political ambition. Their twins, Mark and Carol, were born on August 15, 1953.

Margaret Thatcher was elected in 1959 as the conservative MP for Finchley. She held a number of cabinet posts under the Edward Heath administration, eventually defeating him in the party leadership contest of 1975. Her election victory as premier in May 1979 marked a new era in British politics. She came to power at a time when the confidence of the British people was at its lowest ebb, thanks to stagflation, the stranglehold of the unions, a worsening fiscal deficit, the troubles in Northern Ireland and the growing spectre of terrorism.

The great economist John Maynard Keynes once famously declared, “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

Margaret Thatcher was not what you would call an ‘intellectual’. But she understood the force of ideas – in particular, the economic liberalism associated with Friedrick von Hayek and Milton Friedman. She was also deeply influenced by Keith Joseph, a conservative free market liberal politician and former Fellow of All Souls College. These core principles comprised, on the one hand, monetarism as defined by high interest rates, restraint on the money supply, higher taxes and spending cuts; and, on the other, supply-side policies anchored on privatisation of key public sector industries, de-regulation, enhanced market competition and reduction of the power of the unions.

Thatcher believed that the only way to make Britain great again was to roll back the state, allow free rein to market forces, unleash entrepreneurialism, curb the stranglehold of the unions and give back power to the people through home ownership and expanding the possibilities of free choice. At a speech to the General Assembly of the Church of Scotland in May 1988, she observed that if Jesus Christ chose to lay down His own life, it meant that our human adventure is all about moral choice – the ability to choose between Good and Evil. Echoing the Apostle Paul, she declared, “If a man shall not work, he shall not eat.”

Margaret Thatcher saw socialism and communism as the great evils of our time. In waging war against these incubi she dealt a heavy blow to the labour unions, shook up the public sector and took a stand with America’s Ronald Reagan against the Evil Empire. She described reforming Soviet leader Mikhail Gorbachev as a ‘man we could do business with’. Regrettably, she was opposed to sanctions against the Apartheid regime in South Africa. She launched a successful military campaign against Leopoldo Galtieri in Argentina, reaffirming British sovereignty over the Falklands/Malvinas islands. Thatcher also cut down drastically on British official development assistance, propping up, instead, the policy-based structural adjustment lending by the IMF and the World Bank, with their highly deleterious impact on developing countries.

Today, in Poland, Hungary and other parts of Eastern Europe, she is revered as one of the great apostles of the New Liberty. Margaret Thatcher loved her country and sought her good. But she also distrusted the EU, an attitude that has increasingly pushed Britain to the fringes of the New Europe.

Her type of ideological politics had, at best, a mixed impact. The rejuvenation of the British economy owed much to Thatcherism. Britain was no longer ‘the sick man of Europe’ but a prosperous and self-confident democracy. The downside is that there were more than 3 million unemployed. Manufacturing has never quite recovered. Britain has become a nation of money-changers and shopkeepers as Bonaparte once sneered. Inequalities have widened to alarming proportions. The introduction of the highly unpopular poll tax drew the ire of even members of her party.

Thatcherism had a highly divisive impact on the British political economy, pitching class against class, North against South. This is why thousands of young Britons who were mere toddlers when she was in power have been celebrating her demise in such a tasteless manner.

Economic science has since proved that her brand of monetarism and its accompanying shock therapy was based on an intellectual fallacy. Despite her foibles, no one can dispute that she was a strong leader who stood up for what she believed and fought for the good and prosperity of her people.

Goodluck Jonathan, where are you?

 

OBADIAH MAILAFIA

Chef de Cabinet, African, Caribbean and Pacific Group of States.