The Great Debate UK

from Anatole Kaletsky:

If Europe wants Thatcherism, it must abandon austerity

Among all the obituaries and encomiums about Margaret Thatcher, very few have drawn the lesson from her legacy that is most relevant for the world today. Lady Thatcher is remembered as the quintessential conviction politician. But judged by her actions rather than her rhetoric, she was actually much more compromising and pragmatic than the politicians who now dominate Europe. And it was Thatcher’s tactical flexibility, as much as her deep convictions, that accounted for her successes in the economic field.

Governments in Europe and Britain today are obsessed with hitting preordained and unconditional targets: Inflation must be kept below 2 percent; deficits must be reduced to 3 percent of gross domestic product; government debt must be set on a declining path; banks must be recapitalized to arbitrary ratios laid down by some committee in Basel. In sacrificing their citizens’ well-being and their own political careers to these numerical totems, modern leaders often claim inspiration from Thatcher. And when voters turn against them, Europe’s leaders keep repeating Thatcher’s most famous slogans, “There is no alternative” and “No U-turn”.  But are these the right lessons to draw from Thatcher’s political life? A closer look at her economic achievements suggests otherwise.

In the 20 years she spent in parliament before becoming prime minister, Thatcher first saw Harold Wilson’s Labour government wrecked by currency crises and trade union militancy; then Ted Heath ousted by a miners’ strike; and finally James Callaghan humiliated by the 1976 sterling crisis and driven out of office by the wave of public-sector strikes that came to be called the “winter of discontent.” After these searing experiences, her immediate priority on becoming prime minister was to turn British monetary management and labor relations upside down. Yet her actions were much more cautious and pragmatic than her rhetoric.

In fact, the Thatcher revolution started with a huge tactical surrender: Within two months of taking office, she gave the public-sector unions that had brought the country to a standstill pay raises averaging 21 percent. This huge award resulted in the biggest increase in inflation in British history – from 10 percent when Thatcher took over to 22 percent a year later (as measured by the retail price index). Controlling this inflationary upsurge required stratospheric interest rates and an overvalued currency. These, in turn, led to a trebling of unemployment and the collapse of many British manufacturing businesses. In response to this economic disaster, Thatcher quickly abandoned the monetary targets she had initially claimed as the lodestar of her economic policies. While Thatcher’s recession seemed to go on forever to Britons who lived through it in the early 1980s, her U-turn against austerity came dizzyingly fast by the standards of today’s obstinate politicians, especially those in Europe.

How to ‘lean in’, Margaret Thatcher style

By Kathleen Brooks. The opinions expressed are her own.

Former UK prime minister Margaret Thatcher’s death at the start of this week has temporarily interrupted the coverage of Facebook chief operating officer Sheryl Sandberg’s new book: ‘Lean In – Women, Work and the Will to Lead.’  However, Margaret Thatcher could be seen as one of the pioneers of ‘leaning in’, doing so some 60 years before Sandberg’s book was published.

Margaret Thatcher (love or loathe her) was not just a formidable political force, but she also managed to ascend to the highest echelons of the political establishment with two children in tow and nurture a marriage, all in an era when it was completely normal for women to give up any career that they had at the first flash of an engagement ring.

We are all Thatcherite now

By Laurence Copeland. The opinions expressed are his own.

As we remember the second greatest prime minister of the Twentieth Century, we quite rightly think first of her achievements. There is no need for me to recap those when they are being well covered in the Conservative press. They are best summarised by acknowledging, as some of the left wing press does, that we’re all Thatcherite now, and however much some folk might have their fun dancing on her grave, it’s a bit late now – she won, and their celebrations are in the end a tribute to the strength of the forces she overcame almost single-handed.

On the negative side, it has to be admitted that we are still haunted by her two big failures.

from The Great Debate:

Margaret Thatcher, an enlarger of British freedom

My immediate and lasting  memory of Mrs. Thatcher -- Maggie as we called her -- is sitting next to her in the late sixties at a dinner table as she scorched a bunch of City of London financial types. I was astonished. She wasn't yet the Iron Lady. She wasn't  in government. Labour was in power. She was  an obscure back bench Conservative MP, elected only in 1959, noticed in those sexist days (has much changed?) as much for her hats and aggressive hair style as for  her passionate defence of grammar schools under threat of closure from Labour.

What she did with the City of London men  was later characterised as a  "hand-bagging." A black Asprey bag she always carried was metaphorically wielded against people she saw as standing in the way of the greatness of Britain as Boudica, the leader of a British tribe, wielded a lance against the Roman occupiers. I suppose that as a new national editor (of The Sunday Times), and with normal male presumption , I had expected to lead the questioning of the ten or so big names and the table. I didn't stand a chance. Maggie pounded and pummeled them all by herself for an hour. I can't pretend this is verbatim but it went something like this: "All you people are interested in is moving paper around, making money not things. What are you doing for British industry? When are you going to help business stand up to  the unions?"  They murmured, they shuffled, they were outclassed. British elections -- six weeks to  a vote and no paid television ads -- have never been as corrupted by money as much as American, so she was not turning off a potential source of funding as an American candidate would fear to do. Still these were  men -- all men of course  -- who were influential and articulate and used to reverence not rebuke.

from The Great Debate:

In Venezuela, an election about the future is haunted by the past

Presidential elections will be held in Venezuela on April 14, pitting Hugo Chavez’s vice president and chosen successor, Nicolas Maduro, against Henrique Capriles, the opposition candidate who lost to Chavez in 2012. At stake: whether Chavez’s legacy will continue after his death.

Most analysts see Maduro as the favorite. Many believe the fear of losing the social and economic gains made during the Chavez years will be the most important motivator for voters if Maduro is elected. Others see Maduro gaining from sympathy votes after Chavez’s death. Still others see the electoral timetable as working against the opposition. A short campaign season — two weeks — could favor the government, which has more resources at its disposal. All these perspectives cite recent polling that puts Maduro at about an 18-point advantage over Capriles (see table below).

from The Great Debate:

China as peacemaker

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Nuclear escalation on the Korean Peninsula demands creative solutions. With a 2,200-year history of non-aggression, China is in the best position to take the lead — and relieve the United States of a burden it has shouldered for too long.

In fact, no other nation  has had as stable a pattern of world citizenship. Over two millennia, China has not attempted to conquer its neighbors or spread its system of government on any scale remotely comparable to the Romans, Mongols, British, Germans, French, Spanish, Russians, Japanese or even Americans. China does brutally resist the secession of Tibet, which it considers part of its ancient patrimony. But it has not grasped for lands beyond its historical borders.

Cyprus deal means the cat is well and truly out of the bag

By Laurence Copeland. The opinions expressed are his own.

The German insistence that depositors in Cyprus must face a haircut marks a new and dangerous stage in the interminable death throes of the euro zone. Up to this point, the one unshakeable principle underlying all the bailouts on both sides of the Atlantic since 2008 had seemed to be that the value of bank deposits was sacrosanct, whether they were explicitly insured or not. Now, the cat is well and truly out of the bag. It will be clear from now on, even to the most naïve investor, that there are no longer any totally safe assets. The principle of caveat emptor applies to bank deposits as much as to second-hand cars or beef-burgers. If even deposit insurance is now conditional, the difference between insured and uninsured deposits is only one of degree of risk. It is amazing how calmly the markets have reacted to the new reality, but it would be foolish in the extreme to rely on their continued insouciance.

There are a number of lessons we can learn from the events of the last fortnight, most of which relate more to Germany than to Cyprus.

The great dividing line in British politics

By Stephen Evans, Director of Employment and Skills at Working Links. The opinions expressed are his own.

Chancellor Osborne’s latest budget may have been good news for beer drinkers, but it highlighted a growing dividing line in British politics that will shape the 2015 general election.

from Anatole Kaletsky:

Even Britain has now abandoned austerity

The Age of Austerity is over. This is not a prediction, but a simple statement of fact. No serious policymaker anywhere in the world is trying to reduce deficits or debt any longer, and all major central banks are happy to finance more government borrowing with printed money. After Japan’s election of Prime Minister Shinzo Abe and the undeclared budgetary ceasefire in Washington that followed President Obama’s victory last year, there were just two significant hold-outs against this trend: Britain and the euro-zone. Now, the fiscal “Austerians” and “sado-monetarists” in both these economies have surrendered, albeit for very different reasons.

Much attention has been focused this week on the chaos in Cyprus. Coming after the Italian election and subsequent easing of Italy’s fiscal conditions, the overriding necessity to keep Cyprus within the euro -- and its military bases and gas supplies outside Russian control -- will almost surely mean another retreat by Germany and the European Central Bank from their excessive austerity demands. But an even more remarkable shift has occurred in Britain. The Cameron government, which embraced fiscal austerity as its main raison d’etre, was suddenly converted to the joys of debt and borrowing in this week’s budget.

from The Great Debate:

‘Post-Communist’ Russia and China remain remarkably the same

For a Russian to live in Beijing is to experience time travel. Things long gone in Russia, or stuffed into kitschy theme bars to draw tourists, still appear in China with no sense of irony. There are endless displays of hammer-and-sickles, Red stars, and exhortations to Obey the Communist Party. There’s the rhetorical deification of the worker and the peasant. “Public-security volunteers,” elderly men and women with red arm-bands and a lot of time on their hands, lounge on little folding stools, sizing up passers-by. There are five-year plans, and front-page headlines screaming “Socialist path reaffirmed”.  I thought I left all of this in the 1980s’ Leningrad. But no, it’s all still here in Beijing, instantly recognizable even behind Chinese characters that give it  a new spin. All of which makes it tempting to think how  Russia and China have changed over the last 20 years.

But in fact the opposite is true: their political systems  remain remarkably similar. Both ditched Communism a while back. The only difference is Russia ditched the trappings while China held onto them. The system that emerged in both places operates with fewer overt ideological constraints but with a singular mission: the self-perpetuation of the ruling elite.

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