Ten Myths about Thatcher
Glen Newey
1. Britain became ‘great again’ by leaping up the international output table. In fact, the IMF table of economies listed by nominal GDP put Britain sixth in 1979, where it still was in 1990 – it had overtaken the Soviet Union but also been leapfrogged by Italy.
2. Thatcher presided over a dramatic contraction of the state. Despite the privatisations, industrial policy led to a countervailing increase in the welfare bill.
3. She cut taxes. In fact, as a proportion of GDP tax receipts went up between 1979 and 1990, from 33.7 to 34.6 per cent. This had to happen to avoid drastic budget deficits caused by unemployment and associated ills. Thatcher did cut taxes for the well-off, but financed them with regressive indirect tax rises, notably the VAT hike of 1979.
4. Her premiership saw a steep decline in UK manufacturing, while the service sector boomed. Manufacturing as a proportion of GDP fell from about 24 to 21 per cent, a trend followed in other major economies like the US, Germany, France and Japan.
5. Thatcher balanced the budget. The government ran a persistent deficit through the 1980s till the ‘Lawson boom’ at the end of the decade. By the time Thatcher resigned the deficit was again soaring. The deficits would have been much bigger without the twin windfalls of discounted public assets sales and North Sea oil revenue.
6. She ‘got Britain working again’. Unemployment rose sharply during the Howe recession, to three million. The later fall in jobless rates partly reflects persistent massaging of the figures, which still showed two million jobless in 1990.
7. She ‘stood up to Europe’. In 1986 she signed the Single European Act, a major derogation from UK sovereignty extending qualified majority voting in the European Council, which her government (unlike Denmark's or Ireland's) accepted without putting it to a referendum.
8. Her government ‘beat inflation’. The rate in May 1979 stood at 10.3 per cent; in November 1990 at 9.7 per cent. In October 1990 she took Britain into the Euro’s precursor, the Exchange Rate Mechanism; the UK’s exit from the ERM on ‘Black Wednesday’ in 1992 was partly due to speculative pressure, but also the gap between UK and German inflation rates.
9. She stood for ‘sound money’ and kept an iron grip on policy. She junked monetarism after the 1980-81 bust, and in the subsequent Lawson boom, high interest rates failed to curb inflation. Meanwhile, in an effort to keep prices down, Lawson was shadowing the Deutschmark (£1 to 3 DM), a policy of which Thatcher was apparently unaware.
10. Without Thatcher, no Blair. Well, even myths can have a grain of truth.
Comments
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17 April 2013
at
4:18pm
klhoughton
says:
"Without Thatcher, no Blair. Well, even myths can have a grain of truth."
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17 April 2013
at
5:52pm
snellios
says:
Interesting points, but comparing figures from the beginning and end of her terms may not tell us much about what happened in between. More useful would be to detail the trends in inflation, jobless, deficit and taxes between 79 and 90; I don't know enough to judge whether the 1990 figures are representative of her time in office.
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17 April 2013
at
8:51pm
streetsj
says:
Straw woman cut down by straw blogger.
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19 April 2013
at
8:20am
Dhubfitz
says:
@
streetsj
Obviously it's a 'straw woman' - that's what myth-busting means. D'oh.
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19 April 2013
at
1:00pm
Mike Hall
says:
The 2008 financial crisis as facilitated by the 'Big Bang' rather undermines any suggestion that she stood for sound money!! Not to mention the fixation on 'free' markets – didn't they work well in the financial system?! Trashing the world economy? Now that's really something.
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23 April 2013
at
11:07am
Andy White
says:
Seems to me that both streetsj and Dhubfitz make valid points. Even if balance is always going to be too tall an order with MT, is that always going to preclude a more objective approach?
Read moreNow, wait a minute. Thatcher and her coattails may be responsible for much evil in the U.K. government, but Blair???
She would never have been called a poodle--nor done so much to earn the term. Those standing ovations British audiences gave Hugh Grant's Prime Minister when he told off the American President in Love Actually? Only possible because the real Tony Blair was replaced by a Dalek. And even Denis's wife couldn't beat the Daleks.
Why is it completely impossible to have a sensible discussion about her impact/legacy? I would like to see one balanced article on Mrs T before I forget she's dead.
'Balance' ... so we're all pale blue/pale yellow now. Let's hear it for a 'balanced' verdict on Thatcher's pals Pinochet and Savile ...
Anyways, the article doesn't bust all the 'myths' to Thatcher's disadvantage. Eg the ones about the shrinking of the state, the anti-Europeanism, tjhe manufacturing decline.
Ian McEwan's "We liked disliking her" comment for example, suggests to me that some kind of displacement was going on: the left opposition filling the gap caused by our lack of internal unity and a coherent alternative set of policies. Disliking her put the smiles back on our faces and still does.
In his Guardian piece McEwan contended that the common currency of the anti-Thatcher opposition of the 1980s was 'human value', 'heart' and 'the impulses that bind individuals into a society'. All real enough, all emotional responses actually felt but a long way from the convincing political programme we needed and still need.