Monday, 15 April 2013

Thatcher: Hero or zero?

Amazing really, she became PM more than thirty years ago and left office more than twenty years ago and yet still she arouses strong emotions. Contrast with the more recent John Major who is largely forgotten. It is said she polarized everyone - you either loved her or hated her. As a politician this is fine provided slightly more people love you than hate you.

In the film, portrayed by Meryl Streep, she was shown ending her days friendless in a dingy flat. Turns out she was living in a suite at the Ritz, receiving homage from the great and the good, like a potentate until the last, even if she was ga-ga; a suite she didn't have to pay for thanks to the enduring generosity of the owners of that hotel.

Some want to dance on her grave. This is not totally unreasonable. She harmed a lot of people beyond forgiveness. She is viewed as having shut down the coal mining industry, the steel industry, the ship-building industry and great swathes of manufacturing. There were vast job-losses and many of the blue-collar communities built around the pits or the mills or the docks never recovered. There were suicides and aging workers were on the scrapheap for life. They cannot be expected to forgive or forget.

However, back then, there was this thing called the British Disease. It was militant trade-unionism. The State owned the commanding heights of the economy: power-generation, car-making, ship-making, telecommunications, aircraft-making and the largest airline itself. This gave workers a direct tap into the tax-payers' wallet. These firms did not have to make a profit; all losses were simply picked up by the government. In that kind of zero-risk environment naturally the workers held the government to ransom - more money, better terms, or we turn off the lights, freeze transport, and stop the dead from being buried. Mrs Thatcher moved these businesses into the private sector and put then into an environment where they could go bust. It was sink or swim. And plenty of them sank. Coal-mining, ship-building, steel-production all went to the wall - effectively, although they still exist in a vestigial form even today. Others though, took off and have never looked back. (Well, BP looked back a bit, but they're over that now.)

Mrs Thatcher was the cure to the British Disease. Blaming her for the downside is a bit like blaming your oncologist for your hair falling out. Yes, she did it, but did she have much choice? Of course she could have let the country sink below the waves. We were on the path to national bankruptcy. The previous government had gone cap-in-hand to the IMF (ie, the Americans) to borrow money to support the value of the pound. (Hadn't they heard of quantitative easing?!) So the future was clear when she came to office: kill the trade unions or they would kill the country.

On the other side of the score card, Mrs Thatcher is generally credited with creating a more equal society. Before her, owning shares was a thing only toffs did. She made it so Joe Public could and would buy into the stock market. She also expanded property ownership by giving public sector tenants the right to buy the houses in which they lived. This though was a transparent attempt to create more Tory voters, effectively by bribery. The discounts offered were so generous that there was no way of using the money to build an equal number of houses to replace the public stock (which suited her of course because home-owners were seen as Tory voters and social tenants Labour-voters.)

Her deregulation of the financial markets both enabled London to become one of two world finance capitals (the other being New York) and laid the foundations for the enormous debt bubble we are currently in, and every miss-selling scandal since.

Looking back, it would probably have been better if we had kept the manufacturing industries and not had the banks. We would have done better to be more like Germany: accommodate the unions by bringing them onto the boards of the big companies and privatise by giving the shares to the workers in the firms, not selling them to all and sundry. Keep the financial sector small because it is essentially parasitic - it produces little and merely redistributes.

She was keen on treating the national budget like a household budget and ensuring that no more was spent than could be afforded. She was much reviled for this at the time, by people who claimed she did not understand macroeconomics. But it is clear in retrospect that she was right. Unfortunately she did not, or could not, lock in a balanced budget for the future. If she had we would not be in the parlous state we are currently in.

So to answer the question posed in the title of this post: hero or zero - both really, perhaps a bit more hero than zero, but only just.

1 comment:

Anonymous said...

oh let's give her a bit more credit than that...

a) Inspired the Brits to victory in a somewhat 'unwinnable' war in the Falklands.

b) Did much to get Gorbachev and Reagan together to end Soviet dominance of Eastern Europe.

c) More debatable - the tough stance on the IRA certainly started to lead to the end of bombings in the UK and some kind of peace in Ireland.

To my mind definitely more hero than zero... Especially compared with the dross we have had since.