Counterparties: Thatcher’s economic legacy

By Ben Walsh
April 8, 2013

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

Margaret Thatcher, Britain’s longest serving Prime Minister, died today at the age of 87.

Thatcher famously said “there’s no such thing as society. There are individual men and women and there are families”. The BBC’s Stephanie Flanders sums up Thatcher’s economic legacy by saying that before her, there was “no such thing as the consumer. When she left, politicians spoke of little else… she helped force the rise of the individual at the expense of the collective”.

Dylan Matthews says that Thatcher’s economic policies were “heavy on union-busting, spending cuts, privatization and deregulation, undoing as much as she could of the social welfare state”.

Matt Phillips reviews Thatcher’s legacy as an inflation-fighter. When Thatcher left office inflation was running at 8%, down from more than 20%. That was due, in part, to reduced government spending — but it’s also worth remembering that Thatcher’s government predated the era of central-bank independence, so she (and her Chancellors) controlled monetary policy as well as fiscal policy. Her record on employment was more mixed. The UK’s jobless rate was over 10% for the majority of Thatcher’s leadership. It took nine years after she left office in 1990 for the rate to fall below 6%.

Thatcher’s government also fought, at times literally, with labor unions, most notably with coal miners in 1984-1985. The strikes were wrenching, widespread, and deeply political in a way Americans have not seen for more than a generation. The miners had terrible, dangerous jobs, and fought unsuccessfully to keep them. Megan McArdle concludes that the Prime Minister “destroyed an industrial system which had yes, provided workers with a secure livelihood, but yes, also done so at an unacceptable cost”.

An inextricable part of that legacy, McArdle argues, was a transformation: “post-1970s Britain has been a very good place for educated elites, and not very good for the post-industrial working class”. Former Labour Prime Minister Gordon Brown, on the other hand, thinks Thatcher’s policies helped usher in current levels of poverty and inequality.

Thatcher was an early euro-sceptic, and, as Joe Weisenthal says, rather presciently saw how richer European nations like Germany would balk at bailing out poorer nations. During a 1990 Prime Minister’s Questions, she warned that the single currency would result in “taking many democratic powers away from democratically-elected bodies to non-elected ones”. — Ben Walsh

On to today’s links:

Remuneration
CEO pay rose just 2.8% last year — but perks rose nearly 19% – NYT

Longreads
The slow, thorough destruction of the news business – Frank Rich

Hope/Change/Etc.
After a terrible jobs report, Obama’s budget is expected to drop stimulus for benefit cuts – Bloomberg

Remuneration
Google’s free meals may no longer be free lunches (from a tax perspective) – WSJ

Wonks
Why Japan is the most interesting story in economics right now – Neil Irwin
How to cope with Japan’s monetary boom (if you must) – WSJ

Revolving Door
Where regulators go to get rich – William Cohan
At least 28 of Max Baucus’s former aides are now tax lobbyists – Ezra Klein

New Normal
The vanishing American worker – WaPo
“The problem of people dropping out of the labor force is likely much worse than is generally recognized” – Dean Baker

Yikes
“I continue to expect the U.S. economy to join a global recession that is already in progress” – John Hussman

Hilarious
Roger Ebert did not savagely review ‘Deuce Bigalow: Male Gigolo’ – NYT

Comparisons
Thatcher’s fiscal policy — less austere than Cameron or early Blair – Chris Dillow

Housing
Suburbs “sustain and reinforce inequality” – NYT

Alpha
An infamous rogue trader will now advise Irish struggling borrowers – Bloomberg

Charts
The recovery isn’t dying — it’s just not really helping – James Hamilton

And, of course, there are many more links at Counterparties.

2 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

I am disappointed in the selective, distorted representation of what Meghan McArdle said. Obviously reflects his biases. I now don’t trust Felix’s summations.

Posted by blades2000 | Report as abusive

Most of the Thatcher “revolution” is in the imagination. She didn’t change the UK nearly as much as people tend to think. Read Bruce Bartlett on her yesterday and Paul Krugman today. Her bark was far worse than her bite. And when she began to do what she barked, as with the poll tax, her support collapsed.

Posted by Chris08 | Report as abusive