Was Margaret Thatcher as a Prime Minister “needed”? Had the situation with regards to unions etc. become so grave that the country needed someone like her to step in and take over?
Well, I think she saved your economy…much like I think Regan saved ours…from a Keynesian death spiral (which culminated in the 70’s IMO). Of course, neither of these ‘saves’ happened on either of their watches (i.e. they happened later on), but I think they were able to get things moving into a direction that set up the economic recovery in both nations later on. I’m sure this will be highly disputed on this board, but thats my read of history. 
So, to answer your question…yes, I think someone like Thatcher was needed to take some fairly draconian measures in the UK…and that the results are what you have today, a stronger economy.
-XT
I’m asking this because I really don’t know (macro-economics not being one of my strong points…)… what would have happened if Thatcher hadn’t existed? And have other countries gone through similar periods and not then taken Thatcherite routes, and if so what happened to them?
I’m old enough to remember a little of the pre-Thatcher uk. The economy sucked terribly in those days. My view is the first 4 years Thatcher was a distinct benifit to the country, but after that whe became more and more of a burdon to the country.
What’s this about a “Keynesian death spiral”? If Keynesian economics have been discredited as thoroughly as that, it’s news to me. Cite?
It’s actually a bluff, used to steal a Romulan cloaking device.
Thatcher also broke the back of the coal union - a very important step. Union power was starting to run rampant, culminating in the coal miner’s demands that they be guaranteed employment in the coal mines even though coal was no longer cost-effective - in essence turning the union into a gigantic welfare scheme. Thatcher refused despite enormous political pressure, and after that union power began to wane and the economy to improve. Reagan did the same thing with the air traffic controllers in the U.S., although union power in the U.S. was never as strong as it was in Britain.
But Thatcher was paying a big price for her ‘iron lady’ stance. Thatcher had burned up all her political capital and was becoming somewhat of a lame-duck leader when the Falklands war happened, and the decisive action she took (and the decisive British victory) skyrocketed her in the polls and saved her political life.
And of course, she was part of the small group of leaders who ended the cold war, along with Reagan, Pope John Paul II, Gorbachev, and Lech Walesa. That group of people changed the world.
As for the ‘Keynesian Death Spiral’, it was more than just Keynesianism that was dragging western economies down. It was union pressure, state control over markets (wage and price controls and high tariffs), high marginal tax rates, and government meddling in the economy through state ownership of infrastructure and heavy-handed state regulation. Thatcher began the process of privatization of state-owned businesses, and deregulation of industry. Canada and the U.S. followed suit - to the horrific cries of the left who said that deregulated airlines would fall out of the sky, privately owned industry would gouge the public, ad nauseum.
In fact, the combination of lower taxes, lower regulation, privatization, and a curtailing of union power led to a global economic boom. The triumph of monetarism over Keynesianism led to stable currencies, a key condition for growth. Finally, the last gasp of this conservative revolution was the tearing down of trade barriers and the implementation of free trade (carried on by Clinton, who governed largely as a fiscal conservative).
And here we are today. The pre-Thatcher/Reagan era was marked by closed borders, state control, wildly fluctuating inflation and interest rates, and a stifling economy. The post-Thatcher/Reagan era is marked by worldwide free(er) trade, lower taxes, stable currencies, and free markets in all the major economies in the world.
Sam, your chronology is a little out. The Falklands War was in 1982 (in the first of Maggie’s three terms and just three years after she came to power). She was re-elected in 1983. The miners’ strike straddled 1984-85, and her handling of this might be construed as helping her get re-elected in 1987, when she was arguably more vulnerable than in 1983.
Your statement “the coal miner’s demands that they be guaranteed employment in the coal mines even though coal was no longer cost-effective” is putting it rather strongly, I think, as by no means all mines were not cost-effective.
The animus towards Mrs Thatcher held by many British people sometimes tells us more about them than about her. It is of the order of the irrational hatred that some football club supporters can feel for another team. It doesn’t reflect very well on the country.
You’re right - the strike came later. But she was quite unpopular and was being marginalized at the time of the Falklands war, and her popularity surged after that and stayed strong right until the poll tax debacle essentially caused her downfall. I forgot that strike happened after the war - I suppose that’s how she managed to win that confrontation.
Not strictly true: many of the plants had to be closed on this basis, yes, but profitable collieries were also being run down as a political rather than strictly economic move.
Ultimately, yes, I believe a modernising government was necessary in the late seventies. But she swung so far the other way for the rest of the eighties (Thatcher presided over some of the most “wildly fluctuating inflation and interest rates” in UK history) that we are still struggling to recover from the vast underfunding in public services compared to other social democracies.
I and many fellow countrymen applaud the chap who did this.
Took the words right out of my mouth. The pre-Thatcher economy was struggling, but the boom & bust behaviour of her government caused shockwaves that lasted for years. In fact, it could be argued that the stockmarket crash in '87 was the beginning of the end for Thatcher. Business leaders, who couldn’t give a stuff about the massive unemployment caused directly by Thatcherite policies, suddenly lost a hell of a lot of capital. With it went their faith in the government - which is what (New?!) Labour eventually capitalised on in the late '90s.
And yet we still don’t have personal jetpacks. Go figure.
The real reason behind the poor economic performance of the '70s was simple, two massive oil price hikes, which led to inflation, high interest rates and in the round, demands for pay to keep up with it all.
This cannot be held as Keynesian economics at all, it did radicalise unions who suddenly had to exert their muscle in order to maintain living standards.
Once those oils shock effects had been digested, any following government was bound to improve on what went before.
Thatcher actually damaged our manufacturing industry, its fashionable to say that we had to get out of it since its done cheaper elsewhere, but, when you look at much higher cost economies such as Germany during the same period, you see pretty clearly that this was not true at all.
Right now Germany is suffering because it has the burden of an entire rebuild of former East Germany, but even so, manufacturing and industry are still seen there as vital to their well being.
What Thatcher did was to fool us into thinking we could have a service economy, where we merely sell expertise, but such a program is bound to exclude huge numbers of the population who do not have such expertise, or where the demand for it has been filled.
Most Britons consider her necessary, I personally don’t, I wish she had never existed.
Was she necessary? Absolutely vital. Britain made a series of well publicised errors in policy and direction after the war, and it was time for someone to put this right. Both major parties now believe this and the Liberals even partly accept it.
However even her greatest fans (inc me) are prepared to admit that whilst it may have been necessary surgery it was far from pleasant for quite a few people. Yes some of the nationalised industries needed to be shut down, but that decision obviously had a major impact on those whose livelihoods relied on them.
The country is better for her premiership - but the losers did lose big time.
I’m curious as to how Reagan saved the US economy from a KEYNESIAN death spiral. That implied Reagan saved it from a spiral of increased spending.
Am I the only one who remembers that the Reagan did not reduce spending, and in fact vastly increased the debt through massive deficit spending?
I don’t know if the Thatcher government followed the same pattern.
Thatcher had tremendous determination and would never give in.
Unfortunately that applied to every situation, including when she was clearly wrong.
She caused a lot of misery.
Among the reasons to doubt her economic acumen are the **£15,000,000,000 ** her chancellor, John Major, lost in a single day when he took over as Prime Minister.
The privatisation of the railways was a complete shambles. This was idealogical fanaticism, not economic sense. The Government subsidies shot up, as well as fortunes paid to ‘consultants’ and to short-term speculators.
Finally the corruption and sleaze became so bad thast even decades later her party is completely unelectable.
That’s rich. The massive wave of airline bankruptcies, service industry junk fees, and expensive, pointless expansion by banks and finance companies would rather seem to have borne out the “horrific cries of the left.”
Howd he do that?
We tried to tie our currency to a specific value against the Euro, this was at a time when France and Germany had not yet fully changed from their own currencies to the Euro and had also tied their currency to the Euro at a specific value.
Sepculative trading on the pound meant that there was pressure for the pound to fall against the Euro, and this strained the promise to hold it steady against the Euro.
John major was starting to run out of funds to support the pound to hold it steady, so he borrowed very large amounts to keep the pound/Euro value steady and instill some confidence to the markets that the government was fully committed to maintaining this pound/Euro price.
In the end, the pound slid downwards, so all the spending and borrowong was wasted, and our national debt increased somewhat.
The markets were never ever going to be convinced that a Tory government would be totally committed to the Euro, as the Tories have always been pretty anti-European.
The Tories themselves didn’t like the idea of having to maintain fiscal discipline to another party as it meant that they would not be able to have the regular massive pre-election spend to bribe the elcetorate into voting for them.
This created the ‘boom and bust’ cycle whereby the Chancellor would hand out largesse to all and sundry, but then would rake it all back over the next two years causing yet another UK recession - not very good for UK PLC.
Other Tory ministers were openly hostile to the Euro, so all in all, it would have saved the UK plenty of money if they hadn’t tried to buck the market forces pressure, which ,after all, was pretty much Tory philosophy anyway.
Black Wednesday - 16 September 1992 - was regarded as costing the Tories their reputation for economic competence and playing a crucial role in them losing the next general election.
…
“I asked to see the PM at once. There was no reply from his office. The minutes ticked by and I was conscious that we were losing hundreds of millions every few minutes but there was still no sign of any meeting or any indication that there might be one.”