Margaret Thatcher and Me
Writing about web page http://www.voxeu.org/article/economic-legacy-mrs-thatcher
Like a million other bloggers and tweeters, I woke this morning thinking about Margaret Thatcher, who has just died.
The front page of this morning's Coventry Telegraph calls her "The woman who divided a nation." In the Financial Times, Janan Ganesh notes that those who call her policies "divisive" often wish to avoid a simple fact: "It is almost impossible to do anything significant without enraging some people"; at best, they indulge "the fantasy that her reforms could have been undertaken consensually."
In my heart, at the time, I was enraged by what Margaret Thatcher did. But now she belongs to history. In my head, looking back as an economic historian, I have to acknowledge the necessity of it. When she came to power, our country was a pretty miserable place: stagnant, strife-torn, and full of bullies. Money was more equally distributed than it is now, but money was worth less than power, and power was highly concentrated in the hands of state monopolies, private monopolies, and organized labour. If you are among the many that think heavier taxation and more market restrictions can make a more consensual, peaceful society, you need to take a closer look at this period of our history. In short, Margaret Thatcher did not invent social division and conflict, which were already present, but she redrew the lines in favour of market access and free enterprise.
When the economic historian looks back, what else is there to see? No one has looked back more clearly than my colleague Nick Crafts on yesterday's Voxeu, so I'll leave the last word on that to him.
I'll finish on a personal note. Nothing annoyed me more at the time than what Margaret Thatcher famously had to say about "society," for I am a social scientist and what she appeared to say was that society does not exist:
I think we have gone through a period when too many children and people have been given to understand “I have a problem, it is the Government's job to cope with it!” or “I have a problem, I will go and get a grant to cope with it!” “I am homeless, the Government must house me!” and so they are casting their problems on society and who is society? There is no such thing! There are individual men and women and there are families and no government can do anything except through people.
Yet a close reading shows that Thatcher had in mind something very close to the kind of model that all economists must use to understand the distribution of income in society, based on the idea that income must be produced by some before it can be redistributed to others:
When people come and say: “But what is the point of working? I can get as much on the dole!” You say: “Look” It is not from the dole. It is your neighbour who is supplying it and if you can earn your own living then really you have a duty to do it and you will feel very much better!”
It's a message for today. I didn't want to hear it at the time. Thatcher didn't seem too bothered by that, and that annoyed me even more. It's still hard for me to say it, but it was a good thing she didn't care.
Mark Harrison
09 Apr 2013 10:03
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Tags: Economics Politics Thatcher
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[Skip to the latest comment]Very much enjoyed this analysis, Mark – a clear-eyed view in the midst of a great deal of nastiness and hysteria.
09 Apr 2013, 11:03
Wyn Grant
Excellent as always, I always thought that the piece by Nick Crafts was first rate, as one would expect.
09 Apr 2013, 11:32
Justin Greaves
Excellent Mark. I really enjoyed reading this. I’ll look at wat Nick Crafts had to say too.
I agree Britain was in a terrible state in the 1970’s and needed urgent reform. In many ways, Margaret Thatcher carried through the necessary reform (trade unions, privatisation, the market economy etc). I just feel there was a way it could have been done – more sensitively – without the social breakdown and high unemployment that came about.
And, of course, there were big economic mistakes too. Inflation was practically the same when she left office than in 1979. And if you come into power with the reduction of inflation as a key priority, why double VAT? No one, however, can deny her contribution and her achievements. Most importantly, she did restore our standing in the world and make Brtain more competitive. And to be Britain’s first woman Prime Minister was a phenomenal achievement.
09 Apr 2013, 12:07
Justin Greaves
*sorry about the typos!
09 Apr 2013, 12:08
Fenella Prewitt
When people in Durham and Yorkshire were berating her on TV last night I said “That’s a bit harsh, talking like that about someone who’s just died.” My husband said “You might feel differently if a member of your family had been a miner.” I though about this for less than a second and said “Yes, damn right I would!” And all those ex-miners are part of my family in a societal sense and, yes, she was wrong because there is such a thing as society.
09 Apr 2013, 12:33
Thomas Docherty
‘Necessary’? Well, yes – on condition that what was done at that time laid the grounds for the situation in which we find ourselves today, I suppose: a society where increasing inequalities are taken as somehow acceptable. However, for some – I mean those outside of an Economics establishment that still seems to take GDP as the primary and sole indicator of economic health and social well-being – we might want to contest such ‘necessities’.
‘Necessary’: to initiate and legitimise a state of affairs in which commonly shared wealth is systematically transferred into the hands of a small number of individuals? How many who listened to Sid now retain and control those shares they bought?
‘Necessary’: to support Pinochet, and Apartheid South Africa where her family had large business interests?
‘Necessary’: on taxation – well, only if one rehearses the cliche that her opponents believed in ‘heavier’ taxation; but some believe in progressive taxation, not the further taxes on the poor that are currently being paid in the form of corporate welfare.
Above all, I think that ‘necessity’ in economic terms belongs where it starts, with the ancient tragedians who subscribed to the quietistic fatalism of Ananke – but many believe that there is an alternative to tragedy, and that it has its place in a society (and yes, it exists) wherein people work together or collaborate to make tomorrow better than today rather than ‘compete’ for private economic gain, as if there were no other reality.
09 Apr 2013, 13:41
Matt
You say that “When she came to power, our country was a pretty miserable place: stagnant, strife-torn, and full of bullies.”
But actually, Britain was a marginally happier place in the 1970s compared to the 1990s, according to the Eurobarometer Survey. See Blanchflower & Oswald’s analysis: http://tinyurl.com/592v9
09 Apr 2013, 15:05
Mark Harrison
Matt: I am familiar with the data on subjective well being, and the data are both intriguing and informative in many ways. But can they bear the meaning you are looking for? First, the measures are bounded at top and bottom; if you reported “5” in the 1970s, you can’t report more than 5 in the 1990s (or less than 1, if you reported “1” before). Second, we now have rich data on the subjective well being of Americans through the financial crisis (from Angus Deaton on “The Financial Crisis and the Well-Being of Americans” at http://www.nber.org/papers/w17128.pdf). I’ll paste in part of the abstract; “SWB” stands for subjective well being:
“In the fall of 2008, around the time of the collapse of Lehman Brothers, and lasting into the spring of 2009, at the bottom of the stock market, Americans reported sharp declines in their life evaluation, sharp increases in worry and stress, and declines in positive affect. By the end of 2010, in spite of continuing high unemployment, these measures had largely recovered, though worry remained higher and life evaluation lower than in January 2008. The SWB measures do a much better job of monitoring short-run levels of anxiety as the crisis unfolded than they do of reflecting the evolution of the economy over a year or two. Even large macroeconomic shocks to income and unemployment can be expected to produce only small and hard to detect effects on SWB measures. SWB, particularly evaluation of life as a whole, is sensitive to question order effects. Asking political questions before the life evaluation question reduces reported life evaluation by an amount that dwarfs the effects of even the worst of the crisis; these order effects persist deep into the interview, and condition the reporting of hedonic experience and of satisfaction with standard of living.”
The most recent Gallup data at http://www.gallup.com/poll/154607/Americans-Emotional-Health-Reaches-Four-Year-High.aspx suggest that Americans are now, on average, just happier than before the financial crisis. What does that mean? I’m not sure I know.
09 Apr 2013, 15:50
David
Mark, a question which you might have an interesting answer for: what would have happened if Thatcher had lost in 1979? What about 1983?
13 Apr 2013, 15:05
Mark Harrison
David: You ask “what would have happened if Margaret Thatcher had not won power?” I do not know, but I am often intrigued to recall the prediction of Milton Friedman, writing in 1976 in “The fragility of freedom” at http://0055d26.netsolhost.com/friedman/pdfs/other_commentary/SundayTimes.1976.4.pdf and “Professor Milton Friedman Prescribes a Medicine for Britain” at http://0055d26.netsolhost.com/friedman/pdfs/other_commentary/Immediate.11.18.1976.pdf.
Friedman considered that Britain under Callaghan was on the same road as Chile had been under Allende, and the outcome would most likely be a similar disaster. He wrote:
“I do not know where Britain is going to end up. She is now in a severe economic crisis and it may be that the outcome will be similar to that suffered by Chile: the destruction of freedom, of a democratic government, the resort to some type of a dictatorship. Of course it will be a peculiarly British type of dictatorship: they will be polite but in any dictatorship or any control by armed might, the iron fist will be inside the velvet glove. I hope I am wrong.”
14 Apr 2013, 15:51
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