Stoll: Thatcher’s Crucial Legacy Transforming British Economy

Monday, 08 Apr 2013 10:52 AM

By Ira Stoll

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Of all the possible ways to remember Prime Minister Margaret Thatcher — victorious cold warrior, pioneering woman politician, resolute American ally — the one that’s probably most relevant today is the way she transformed Britain’s domestic policy and economy.

The numbers tell the story. As The Telegraph reports, when she took office in 1979, the top British tax rate on earned income was 83 percent; on “unearned” income, 98 percent. By the time she left office in 1990, the rate had come down to 40 percent.

It was a classic supply-side success story. The growth encouraged by the lower rates (along with an increase in the value-added tax that shifted the tax burden to consumption rather than income) caused government revenues to more than triple, to 187 billion pounds in 1990 from 57 billion in 1979.

Yet because the private sector grew faster than government spending, even during a Cold War military buildup and a war in the Falkland Islands, government spending as a percentage of GDP in Britain shrank during Thatcher’s administration, to 39 percent from 47 percent. Britain had annual real GDP growth of 4 percent in 1986, 4.6 percent in 1987, and 5 percent in 1988.

As if that weren’t enough, the Telegraph summary continues, she privatized government-owned gas, electric, coal, telephone, and airline companies, and she sold the “council flats” housing projects to the tenants who lived in them.

How did she do it? There are all sorts of possible explanations, including the fact that Britain in the late 1970s, like America, had sunk to such a sorry state that there was a market for solutions that were alternatives to the big-government conventional wisdom. But the point that seems most salient from this distance is Thatcher’s steadfast confidence in the basic principles behind her policies. It was, as she put it in her “Iron Lady” speech, “my defense of values and freedoms fundamental to our way of life.”

She explained those values in her 1988 Bruges Speech, speaking of how “From classical and medieval thought we have borrowed that concept of the rule of law which marks out a civilized society from barbarism. And on that idea of Christendom, to which the Rector referred—Christendom for long synonymous with Europe—with its recognition of the unique and spiritual nature of the individual, on that idea, we still base our belief in personal liberty and other human rights.”

She went on, “The lesson of the economic history of Europe in the ’70s and ’80s is that central planning and detailed control do not work and that personal endeavour and initiative do. That a State-controlled economy is a recipe for low growth and that free enterprise within a framework of law brings better results … and that means action to free markets, action to widen choice, action to reduce government intervention. Our aim should not be more and more detailed regulation from the centre: It should be to deregulate and to remove the constraints on trade.”

Even The New York Times obituary, beneath a home-page headline characterizing the heroine of the Cold War as “divisive,” seemed to grasp what it describes as “the principles known as Thatcherism — the belief that economic freedom and individual liberty are interdependent, that personal responsibility and hard work are the only ways to national prosperity, and that the free-market democracies must stand firm against aggression.”

What to make of Thatcher in America today, when talk of a 4 percent growth rate is dismissed as a “fantasy” by distinguished commentators? Today, the tax debate between the political parties seems to be about how much to raise taxes, not how much to cut them. In today’s America, mere minor reductions in planned growth in government spending trigger paroxysms of political opposition, and the prospect of reducing government’s share of the economy, as Thatcher did, by 8 percentage points seems remote.

But it probably seemed remote in the late 1970s, too, that Britain’s first woman prime minister, who had grown up in an apartment above her father’s grocery store, would reshape a failing post-Colonial power into an exemplar of liberty. And who would have thought then that, 30 years later and an ocean away, she would be inspiring those of us who believe that even after Thatcher’s (and Reagan’s) Cold War victories and tax cuts, there yet remains room for another political leader with the conviction and skill to redefine the possibilities for growth and economic freedom?

Ira Stoll is editor of FutureOfCapitalism.com and of Smartertimes.com.

© 2014 Newsmax. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Pressure Mounts to Expand Airstrikes Against ISIS in Iraq

Thursday, 21 Aug 2014 13:13 PM

Pressure is building on President Barack Obama and within the Pentagon to intensify airstrikes against Islamic extremist . . .

Perry Open to Sending US Troops to Iraq

Thursday, 21 Aug 2014 13:10 PM

Texas Gov. Rick Perry signaled Thursday that he would be open to sending U.S. combat forces to Iraq to fight the deadly  . . .

Michael Reagan: Obama Showing He's 'Disengaged'

Thursday, 21 Aug 2014 12:43 PM

President Barack Obama is showing he's "disengaged" by continuing his vacation and being photographed playing golf after . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved