The Margaret Thatcher Era Isn’t Over Yet
Declarations to that effect are an insult to her legacy.
The cover of Newsweek recently announced that it’s the end of the era of Thatcher. The Washington Post followed suit. These headlines suggest a very significant confusion about what, precisely, Margaret Thatcher stood for. They are an injustice to her legacy.
It is true that Thatcher promoted deregulation. But the deregulation she favored had nothing to do with the meltdown on Wall Street. She was certainly not an advocate of regulation-free capitalism, as these headlines imply: No free-market economist in his right mind asserts that there should be no regulations or laws whatsoever. In fact, contract law and certain kinds of regulation — remember that “regulation” is just another word for “law” — are fully understood by free-market enthusiasts to be essential to the functioning of a free-market economy.
No one connected to Thatcher would have dreamt of disputing this.
Thatcher’s point was that the laws and regulations on the books must be good ones. Thus did she favor removing regulations that massively burdened the British economy. But at the same time, she was a passionate proponent of the kind of regulation that makes free markets function properly. Those who say Thatcherite deregulation has been discredited never say which regulations and laws shouldn’t have been passed during her time in power, or which ones should have been, and when. They don’t say so because the laws and regulations she did promote were good ones and remain good.
The exotic financial instruments now widely regarded as the cause of the subprime mortgage crisis hadn’t been invented when she and her team took power. It makes no more sense to blame Thatcher for having failed to regulate them than it does to blame Lincoln for the rise of al-Qaeda.
So what kind of deregulation did Thatcher actually promote, and what does this suggest about her beliefs?
In 1983, Thatcher’s government eliminated the foreign exchange controls that had been in place since the Second World War.
In 1986, in an event known as the Big Bang, her government opened the stock market to foreign and domestic traders. British investors became free to seek the best rates of return abroad, and foreign investors were in turn free to invest in Britain. Her government simultaneously eliminated the separation of brokers and jobbers on the London Stock Exchange, abolished the fixed minimum commissions for buying and selling securities, and eliminated restrictions on ownership and membership of the Stock Exchange by outside corporations. That’s what “Thatcherite deregulation” comes down to.
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Claire Berlinski lives in Istanbul. She is the author of two spy novels, Loose Lips and Lion Eyes, and the non-fiction Menace in Europe and There is No Alternative: Why Margaret Thatcher Matters.
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20 Comments
1. dan:Interesting – I don’t know much about Thatcher. Thanks for the article.
It is interesting that anyone can possibly believe lack of regulation is what led to this stupidity. If anything, it was a simple failure to enforce. In fact that was a great YouTube video showing a 2004 C-SPAN broadcast of a congressional meeting in which almost exclusively Democratic congressmen were absolutely grilling these poor housing regulators who were warning that Fannie and Freddie were WAY undercapitalized & etc. They basically accused these guys of (1) trying to foment a crisis of confidence as a pretext to scrapping GSEs altogether, just like “you’ve always wanted to do,” and (2) being motivated by racism.
“You’re racist fanatical ideologues.” God, come up with something new, just to change it up a little guys.
Well, i guess we know who was right now. But anyway no one looking at even one volume of SEC and other financial industry regulations could *possibly* conclude that the industry is under-regulated. That’s just political babytalk for the usual idiots to suck on.
Oct 23, 2008 - 11:16 am 2. The Margaret Thatcher Era Isn’t Over Yet | PoliticsMuch.com:[...] orginally posted at PajamasMedia.com. We claim no responsibility for this content. Please click on the link above to read and comment on [...]
Oct 23, 2008 - 11:24 am 3. Ditto:Dan wrote: Well, i guess we know who was right now…
That’s just the trouble – everybody keeps looking backward to see who was right. It’s all well and good to learn from our mistakes, but fer crying out loud, doesn’t the typical American see the pattern? McCain was for the surge when it was unpopular to be for it. Two years later, we look back and see he was right. As far back as 2005, I think, McCain was warning about Fannie and Freddie and joined the move to reign it in. We look back and sure enough, good ol’ Mac was right again.
We can’t look 2 years back and see Sen. Obama being right about anything because he only votes “present”. His biggest stance has been against babies born alive, apparently so as not to “punish” young women with babies. Doesn’t he realize how many people are on waiting lists hoping for a baby to love and raise? And here I always thought abortion was about terminating a pregnancy and not about ending a life.
*sigh*
Oct 23, 2008 - 11:54 am 4. Mike T:Ditto,
Where McCain falls short is that the man didn’t have the good sense to be right on the bailout. It was plain to everyone with eyes that the plan was doomed from the start, and had he taken the principled, Thatcherite/Reaganite position on the issue, he would probably be 10-15 points ahead of Obama right now; he could have ridden that wave of populist outrage at redistribution of wealth to the wealthy all the way to the White House.
Oct 23, 2008 - 12:10 pm 5. R a Z o R:Margaret Thatcher and Governor Sarah Palin are
similar in character .
http://www.youtube.com/watch?v=96YQdiMV-Jc
Oct 23, 2008 - 12:15 pm 6. David Thomson:Our economic troubles in the United States have virtually nothing to do with the free market. On the contrary, Democratic Party politicians literally forced lending institutions to provide mortgages to minorities possessing mediocre credit histories. Moreover, large corporate interests have often fully cooperated with leftist politicians. They do so to rid themselves of competitors and also guarantee their profits. State interference in the market place normally causes more harm than good. Margaret Thatcher understood this clearly. Left-wing politicians don’t have a clue.
Oct 23, 2008 - 1:03 pm 7. dan:yeah but regarding the bailout – it doesn’t really seem like anyone really knows what to do, don’t you think? i don’t see how you can really hold it against mccain that he thought a confidence-building measure proportionate to the problem was a good idea. considering that financial armageddon seemed (seems?) to be looming. i dunno. the only one i blame is Obama and the cynical argument that if the economy imploded and bush was in the white house, that means I, Obama, am right about how to fix the economy.
What?
And he’s supposed to be the economic white knight. I don’t get it, if this is how politics is going to work for the forseeable future, we are in deep, and deepening, trouble.
Oct 23, 2008 - 1:04 pm 8. Tony:What memories this article conjures up…
At a low point in the popularity her first administration (ultimately she was an undefeated three time election winner) she was under enormous pressure to reverse her economic policy from within her own party. Her policies must be reversed was the cry – the famous “U turn” was eveywhere advocated.
At the party conference she stood up, the joy of battle in her eyes, and issued this ringing defiance:
“You turn if you want to – the Lady’s not for turning”
Shabash Memsahib!
Oct 23, 2008 - 2:07 pm 9. Joseph Marshall:It is unquestionable that the British economy as it stands is largely the product of the Thatcher years and that New Labor is a tacit admission of their basic soundness.
You have, however, understated [or, rather, not stated at all] three important structural advantages to the British economy during these years. First, and most important, Britain became a net exporter of oil an natural gas during a period when the flow of profit to exporters from importers has increased immensely.
Second, the steady integration of Britain into the EEC has given it access to a broader economic base on very friendly terms.
Third, the political climate of Britain became much more accepting of the “collateral damage” of Thatcherism in the form of the return of a stratum of genuine poverty and homelessness in UK society.
We here also have the third advantage. For the basic American assumption is that all poverty is a moral failure on the part of the impoverished and not a structural consequence of a relatively deregulated market.
But we have not had the advantage of being an energy exporter during this same period. Nor have our “diminished trade barriers” been negotiated on terms very favorable to us.
Consequently, there are definite limits to what the Thatcher example can be for us.
Oct 23, 2008 - 3:50 pm 10. Andrew:http://www.youtube.com/watch?v=bBX2ec7c81E
Watch this
Oct 23, 2008 - 5:28 pm 11. Is The Margaret Thatcher Era Over?:[...] October 24th, 2008 By JOE GANDELMAN, Editor-In-Chief Here’s the case that it isn’t… [...]
Oct 23, 2008 - 10:01 pm 12. Brit:I think it’s too soon to tell. MT helped build a Britain where the services industry was to bring us wealth instead of manufacturing – opinions differ on whether she destroyed manufacturing or just buried the corpse. We need to see how the country deals with the current crisis before judging whether this is a sustainable strategy (the success of the City of London has carried us, along with the oil revenues noted above).
At the time I seem to remember that Reagan and Thatcher’s domestic economic policies in practice were quite different from each other, so maybe the lessons are limited.
On the other hand their social outlook seemed much more similar, not to say fairly repellent to a lot of people in the UK and dare I say the US.
Oct 24, 2008 - 1:47 am 13. Andrew Ian Dodge:They have declared the era of Lady T dead many times. Her ethos and attitude will live on for many a time. I still mention her name and watch the lefties twitch.
Oct 24, 2008 - 2:50 pm 14. Tony:Joseph Marshall,
You are right to point to the “windfall” bonus of oil & gas exports without which the Thatcher revolution arguably would not have succeeded. However in fairness it was Geoffrey Howe who established the tax and royalty structure that was world beating at the time – so some credit reflects on the Thatcher government here too.
The benefits of the EEC/EU that you cite are far more dubious. Britain has a net trade deficit with the continental EU and those areas in which the UK outperforms, especially services, are still not a single market in the EU. Therefore, Whilst the British market is open on favourable terms to EU manufactures and EU agriculture the reciprocal benfits of open EU markets for British services have just not materialised. The outperformance of the British financial sector makes Britains share of the global financil services cake disproportionate to the size of the domestic UK economy but this Thatcher achievement owes nothing whatsoever to the EU.
Real poverty levels in the UK are far lower in post Thatcher Britain than they were prior. However relative poverty levels have certainly increased due to the gearing towards incentives embodied in Thatcherite economic philosophy.
Oct 24, 2008 - 2:56 pm 15. jerry denim:Naomi Klein has an excellent chapter on Thatcher in her book “The Shock Doctrine” While Margret Thatcher may have very well “been appalled by the unregulated explosion of leverage in Western economies” everything she did while she was in office cleared the way for the debt explosion and her policies helped to concentrate the wealth of Great Britain in the hands of a few allowing them the power to corrupt the political system and game the financial system to their benefit and the detriment of all others. The article also fails to mention any of the social costs or causalities of Thatchers policies. It may be a bit early to write the obituary of Thatcherism (Reganomics, Neo-liberalism, Milton Friedman etc.) but it is a philosophy that has been exposed as a fraud. A little peppering of Thatcherism may perhaps be tonic for a overegulated socialist economy but Neo-liberal ideas are a dangerous and fatal cancer if applied in full to an entire economy. Chile, Argentina, Iraq, United States etc.
Oct 24, 2008 - 9:40 pm 16. Mary Jackson:An excellent article. Thatcher, peace be upon her, was the best PM since Churchill.
Oct 25, 2008 - 1:00 pm 17. themike:I don’t know much about Margaret Thatcher but hey, McCain could learn some lessons from her.
OT: Does anyone know a good biographical book about her?
Oct 25, 2008 - 10:53 pm 18. claire Berlinski:Dear Commenter 17–
I just wrote the book you’re looking for. “There is No Alternative: Why Margaret Thatcher Matters,” available on Amazon. I hope you’ll enjoy it.
Best regards,
Claire
Oct 26, 2008 - 10:36 pm 19. themike:thanks Ms. Claire!
Oct 27, 2008 - 10:23 am 20. Dan:Yes, and that says it all.
An unmitigated disaster. A misguided women that crowed, ‘there is no such thing as society’.
My only disappointment is in the fact that she is now so senile that she has no comprehension of her disastrous policies.
Feb 2, 2009 - 12:27 am