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BLUNDELL: Margaret Thatcher’s revolution
The previous few months had been called the “Winter of Discontent,” as per Shakespeare’s “Richard III” - and it was grim, very grim indeed.
There were pickets at ports, oil refineries and manufacturers of essentials; gas supplies were disrupted and gas stations closed. Ambulance drivers went on strike - not responding to emergency calls in many areas. Hospital support staff (not doctors) decided whom to admit, and if people died, so be it. The trash collectors and gravediggers went on strike, so garbage and coffins piled up.
There were food shortages. British Rail issued the shortest press release ever: “There are no trains today.” Pregnant women were denied medical services. Disabled people’s homes were blockaded. Trolleys carrying meals to old people were smashed.
Britain lay 19th out of 22 on the Organization for Economic Cooperation and Development’s league table. The French ambassador said we were suffering “degringolade” or falling-down sickness; the West German ambassador said we had the economy of East Germany. We had enjoyed double-digit inflation for five of the past six years, with an average of 16 percent and a high of 24 percent.
It lasted from Jan. 3, 1979, to March 28, 1979, when the socialist government fell. The ensuing election on May 3, 1979, propelled Margaret Thatcher into Number 10 Downing Street the following day. She was to live there for 11 1/2 years, followed by six years of John Major. So what happened between 1979 and the advent of Tony Blair in 1997?
Mrs. Thatcher’s earliest bold move was to suspend exchange controls, to free the pound. The British no longer had to go, passport in hand, to beg their bank managers for foreign currency.
She abolished a raft of price and dividend controls, limits on hire purchase, office-development permits, pay controls and industrial-development certificates. Twenty-one bleak, rundown areas - victims of municipal socialization by both parties - were transformed as Enterprise Zones - areas of much lighter regulation and taxation.
Economic policy changed to using interest rates and monetary policy to control inflation and taxing spending rather than income.
Mrs. Thatcher faced down 364 economists who wanted her to reflate and bring back wage-and-price controls. When archsocialist Michael Foot waved the 364 in her face across the despatch box and challenged her to name two who supported her, she snapped: “Patrick Minford and Alan Walters.” In the car heading back to Number 10 Downing Street, she confided: “Thank goodness he did not ask for three!”
She persuaded many cities to contract out to private firms the provision of “public” services. This created a 30-billion-pound sterling (about $45 billion) new industry that saves the taxpayer 20 billion pounds (about $30 billion) every year.
Slice by slice, she reformed the union movement, brought it back under the rule of law and took it back to its members and away from the extremists.
Through plain speaking, she transformed the nation’s view of a market economy. Company by company, she denationalized the commanding heights of the economy, thus transforming their fortunes and starting a worldwide movement.
She taught a nation the need for monetary continence and the importance of living within one’s means.
Three million families moved from serfdom as public-housing tenants to freedom as owners of their own homes under her brilliant right-to-buy scheme. Mrs. Thatcher slashed top tax rates from 83 percent to 60 percent on earned income, and from 98 percent to 75 percent, and later to 40 percent.
The British people began to walk tall again because of her principled, firm and robust approach to foreign relations.
At great personal risk she started the process that has led to peace in Northern Ireland.
She stood shoulder to shoulder with President Reagan, helping him to tear down that wall without a shot fired, thus destroying the Evil Empire.
Overall, she ensured that all future British governments have to be much friendlier to the market than previously was the case. So what were the results?
Tax exiles such as Michael Caine returned. The United Kingdom jumped from 19th to second on the OECD list. Self-employment doubled from 7 percent to 14 percent of workers.
The British venture-capitalist industry, almost nonexistent in 1979, was twice the size of the European Economic Community’s entire industry within six years.
The middle class leapt from 33 percent to 50 percent of the population.
Homeownership leapt from 53 percent to 71 percent.
Ownership of stock went from 7 percent of the population to 23 percent, and among union members from 6 percent to 29 percent.
The percentage of workers in a union dropped from more than 50 percent to less than 20 percent.
And days lost to strikes per annum went from 29.5 million to 500,000.
It was a stunning transformation. Pre-Thatcher, a sclerotic, union-dominated economy was typified by surly service, rotten products and a craven business class. Post-Thatcher, even the institutionally far-left BBC has had to extend its news coverage of private business - such is the interest in capitalism on the part of employees, entrepreneurs and shareholders.
Service and quality have improved beyond one’s wildest dreams.
So today, we salute a great lady who put the “great” back into Great Britain.
John Blundell’s “Margaret Thatcher - A Portrait of the Iron Lady” was published by Algora late last year to explain Thatcherism to Americans. He is director general and Ralph Harris Fellow at London’s Institute of Economic Affairs.
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