Myths versus facts about Thatcher

The mythology is that Thatcher came, saw, and conquered. Her enemies credit her with destroying the public sector by privatizations. Her friends credit her with the same, but also say she championed frugal spending and was fierce when it came to British independence. She supposedly single-handed turned England around from the brink of disaster and the Winter of Discontent. The reality? Well, the reality is somewhat different….

In the year Margaret Thatcher became PM, government revenue was around 34% of GDP. When the conservatives finally left office at the end of the 1990s, it was a bit higher at 36% and today it is… again, about 36%. Government spending at the peak of the recession of the early 80s was 47% of GDP and  …. so it was again in 2009 at the peak of the current recession.

Real GDP growth per person from the first quarter in 1970 to the first in 1980 was around 25%. From the first quarter in 1980 to 1990 it was around 32% (and the next decade 26%). Not so different from Germany.

In terms of major events that politicians can truly influence that came up in her time, the first one that comes to mind is the housing bubble that the UK government allowed to build up and that burst at the end of the 1980s, leaving households in negative equity and devastating the country as much as any Winter ever did. The second one that comes to mind is the Single European Act of 1986, proposed by Lord Cockfield (British) and helped through parliament by Thatcher’s massive conservative majority, giving European laws reached by qualified majority precedence over those of the UK. This greatly expanded the powers of the EU and diminished those of Britain. It was one of the biggest reductions in UK’s parliamentary powers in its history. No wonder Thatcher tried to disown it later when ex-post rationalizing her reign to fit her image, essentially by pretending to have been too stupid to see what she was pushing through parliament. A weird defense from an ‘Iron Lady’!

And if you believe her favourite minister’s autobiography (John Major, who went on himself to be PM for 7 years), then Thatcher was pushed by her cabinet to declare war on the Argentineans, changed her mind frequently on important issues, and had gone control-freak to the point of paranoia by the time of her demise.

So the overall legacy of Margaret Thatcher has been to make no basic difference to the spending or revenue of the state, to have bankrupted many small house owners by having too low interest rates for too long, and to have signed over a lot of powers to Europe. So she neither destroyed the public sector, nor was she truly frugal, nor was she immovable, nor did she protect British powers.

Summing up her time, she resided over an average economic period, made serious mistakes, and essentially went with the flow of her party and the times. A normal reign. What was truly unusual about her was her style: people were and are passionately for her or against her.

So the reality simply does not measure up to either the picture that her enemies paint nor that of her supporters. The consumers of Thatcherism are the consumers of exaggerations.

But what about her facing down of the unions, I hear you ask? The halving of union membership, the demise of Arthur Scargill and the return to mass private share ownership? Was that not a real change in the destiny of the UK?

I am glad you ask about that one. Yes, the unions lost a lot of influence during Thatcher’s time. But what filled the void of these public sector and manufacturing-based unions? The small entrepreneurs she so admired and that were part of her own family history? Fat chance! In effect, what replaced the manufacturing unions were the financial unions: with the demise of the role and power of industry came the rise of London as a financial capital, fueled by foreign money and foreign workers, making manufacturing uncompetitive and greatly increasing the power and influence of the financial executives.

So yes, sandwiches at number 10 by hairy smelly men with strong regional accents were no more after Thatcher. They have been replaced by well-coifed corporate men smelling of roses, with impeccable French and German English accents, coming for caviar on toast. To paraphrase the Italians: everything had to change so that nothing would change!

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16 Responses to Myths versus facts about Thatcher

  1. Gavin R Putland says:

    “Charles Moore, Thatcher’s official biographer, pointed out on Question Time a few nights ago that 29 million working days were lost to strikes in 1979, and that this was reduced to 2 million by the end of her premiership. Fine. But how many working days were lost to unemployment throughout her leadership? How many in 1981, when unemployment peaked? 3 million unemployed multiplied by 335 working days lost works out at over 1 billion working days lost due to unemployment in 1981 alone.” – Reason in Revolt.

  2. Steve 1 says:

    This is a very interesting post. If you compare the Thatcher changes & acievement to those of the Hawke & Keating Government, one would think that the transformations the Hawke/Keating achieved far outweighed those of Thatcher. Hawke & Keating were able to drive through fundamental change to Australia’s social & economic fabric without totally destroying our socital cohesion, and lay the ground work for a economic golden period that has stretched for almost a quarter of a century. Considering Australia has vast multi-cultural and indigenous population to embrace, and we moved from a closed protected economy to an open competitive one, and we didn’t have guarranteed access to a large wealthy market on our doorstep, rather than singing “Ding Dong the Witch is Dead” the Brits should probably thinking she really was the Wizard.

    • john r walker says:

      A UK friend reckons that entrenched privilege ,of all kinds, is so deeply engrained in the UK that Thatcher only ‘slashed the weeds’, they then mostly the regrew over the past 20 years

  3. allan taylor says:

    Conservatives don’t want to take an unpopular action so they manufacture public consent prior to taking action so it will be popular.

  4. murph the surf. says:

    England is a land of two countries- London and everyone/where else.
    Years ago 50% of the economy and population were within an hour of London.
    London loved Thatcher and most others suffered as you say!
    The property crash of 1991 which lasted a few years only has been superseded by a far greater boom courtesy of foreigners seeing the London she created as the world city of choice.
    Thatcher stimulated the growth of Militant and that lead to all manner of trouble for self identified progressive politics as represented by the Labour Party. This is an achievement of sorts as the reform of that party was then in reaction to this leftist extremism.
    I would also concur with John’s comment – Thatcher sometimes represented a challenge, even a threat to certain conservative power groups too. The idea that change could occur might be her legacy for many.

    • john r walker says:

      It was for my wife who was living in the UK at the time , it meant that she and a friend were able to start up a very small biz that eventually became a success. What really strikes us is the people ranting and dancing on Maggie’s grave all look like they were babys or not even born in 1980 and that they have no idea about how bad, falling apart, the UK was in the 70s.

  5. nottrampis says:

    One interesting myth is that the 364 economists were wrong.

    In fact they were entirely correct as I link in my superb Around the traps.

    Simon wren-Lewis has a very good piece on Thatcher as well

  6. john r walker says:

    Sorry to be pedantic :-) Plus ça change, plus c’est la même chose, is french not Italian

    • Paul Frijters says:

      Thanks for taking the bait! I was in fact not thinking of the 19th century French quote, but rather the quote “everything needs to change, so everything can stay the same” in ‘Il Gattopardo, a novel by Giuseppe di Lampedusa. The feel of the proverb is subtly different. The French one makes you think you can’t change things. The Italian one is about appearing to change everything with the unspoken intent of changing nothing.

      • john r walker says:

        :-) I beg do differ about the french quote… place emphasis om “plus”- more things change- and the meaning has a slightly different irony. A lot of activity is after all just noise.

        • john r walker says:

          spill chick :-)
          I beg to differ about the french quote… place emphasis on “plus”- more things change- and the meaning has a slightly different irony. A lot of activity is after all just noise.

      • Paul Frijters says:

        The french one is normally translated as ‘the more things change, the more they stay the same’ which for me has a fatalism to it: a statement of how things turn out. The Italian one is more active as in producing noise to keep what you have. A Leopard changing its spots. You seem to think the French quote should be read the way I read the Italian one (which in Italian is ‘Se vogliamo che tutto rimanga com’è bisogna che tutto cambi.’).

  7. john r walker says:

    “producing noise to keep what you have” as in keep them so busy they can’t notice/think… about how often, your hand is in their pocket….?

    As for the french… my french is crap.

    • Paul Frijters says:

      my best-guess direct translations are:
      “the more it changes, the more it is the same” (French)
      ‘If you want everything to remain as it is, it must that everything changes” (Italian)

  8. john r walker says:

    ‘Il Gattopardo, a novel by Giuseppe di Lampedusa.

    I have a cod ,can’t brain today.
    Why did you not say a film by visconti ;-) And to continue the panning shot , are you sure that the hyenas entering stage left were are bankers they look more like mangers, small, vicious and cruel… than leopards (spotty or spotless)

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