Thursday, October 14, 2010

What We Can Learn From Margaret Thatcher

Margaret Thatcher and Ronald Reagan on the White House lawn, 
February 20, 1985

Happy Birthday Maggie!

Baroness Margaret Hilda Thatcher, née Roberts, celebrated her 85th birthday yesterday, October 13. She served as a Britain's Prime Minister (1979 to 1990) and was a leader of the Conservative Party (1975 to 1990). She was the only woman who has ever held these posts in the United Kingdom. Her tough rhetoric earned her the nickname  The Iron Lady. She was a conservative politician who left a remarkable legacy.

Margaret Thatcher has often been described as a political soul-mate of Ronald Reagan with whom she shared conservative political philosophy and a leadership style. Her place in the world and the British history is indisputable and today, once again, conservative politicians are analyzing her policies in search for solutions to our current political and economic crisis. 

In a nation where more and more people expect the government to give more and more handouts and where the Speaker of the House believes that food stamps are good for the economy, a Tea Party Movement is on the rise with a purpose to restore the morale and the dignity of the people. The history repeats itself and those who look at Great Britain of the late 1970s may find some significant parallels. Although we may need a bit different approach today, the core of Thatcherism may prove more than useful to solving the mess created by the ever growing government and its excessive spending. America probably needs another Ronald Reagan. Fast!

By Dominique Allmon

Here are some excerpts from a lecture by Sir Rhodes Boyson and Antonio Martino that was given in October 1999 at the Heritage Foundation.

"What We Can Learn From Margaret Thatcher"

Political lessons

Margaret Thatcher has her place in world as well as British history. Her very name is used to denote a way of thinking: Thatcherism. She herself was not an original thinker, and on her resignation the editor of the Daily Telegraph described Thatcherism as a powerful collection of beliefs about the capacities of human beings in a political society. The ideas were not new but were put into operation by a very remarkable woman. It was the happy coincidence of the right person, in the right place, at the right time. 

When she became leader of the Conservative Party in 1975, Britain was on the brink of disaster, threatened by total collapse. The weak Labour government with a small majority presided over a bankrupt economy in hock to the IMF and threatened from within by a challenge to law and order itself. When she was forced from power in 1990, she left a sound economy and a confident and well-ordered society. The lessons are writ large.

The achievement was remarkable, starting with the fact of being the only woman Prime Minister in British history - something America has yet to emulate. She enjoyed 11 and a half years in office, longer than any other 20th century politician (in fact, the longest since Lord Liverpool in the 19th century). She won three successive general elections, two of them being landslide majorities, and lost none. The secret of her success lies in a combination of qualities, which both saw her into leadership and were the essence of her period in power:
  • Courage to see an opportunity and take it.
  • Decisiveness in times of crisis.
  • Clear beliefs held with an evangelical zeal. During the 1979 election, she ridiculed the Socialist Prime Minister Callaghan saying, "The Old Testament prophets did not say `Brothers, I want a consensus.' They said, `This is my faith; this is what I passionately believe; if you believe it too, then come with me.'" Her crusading qualities were embedded in her Methodist background, which gave a moral purpose to all she did.
  • Physical strength. She needed little sleep and would certainly have been killed by the IRA bomb in Brighton if she had not been working on her conference speech at 2:00 a.m.
  • Intellectual capacity. She entered Oxford at 17 reading chemistry.
She was a slight, pretty, feminine woman in a man's world. She turned what could have been a disadvantage into a useful weapon, and she had luck.

Few politicians in history have the opportunity or ability to shine in domestic and foreign policy. Margaret did both. She was patriotic and had no compunction in unfurling that flag. Her patriotism was instinctive and struck a chord with the British people. They saw her as a powerful leader who stood up for Britain.

She didn't pretend to be a diplomatist, and actually said of herself, "I know nothing about diplomacy, but I just know and believe I want certain things for Britain." These were increased respect for Britain as a leading power, limitations on European pretensions, and a close alliance with the U.S.

This latter was the most important and productive, and was cemented by the mutual attraction and meeting of minds of President Reagan and Margaret Thatcher on most issues. It enabled her to fight a war 8,000 miles away in the Falklands. She had the backing of the British people, but she needed American help. It was given, and she never forgot this. Neither did she forget European procrastination and obstructiveness. Later, she was to use her prestige to nudge President Bush into the Gulf War.

Britain remained America's strongest ally. She stood with America against terrorism in the Libyan crisis. Most important, she stood with President Reagan on the Strategic Defense Initiative but ensured that what was good for America did not undermine NATO, nor undermine the nuclear deterrent necessary for the rest of the West. It proved to be the final piece in the jigsaw that saw the end of the Evil Empire and the collapse of Russian Communism. The Iron Lady had played her part, and the chemistry that had worked with Reagan similarly worked with Gorbachev.

The repercussions of the changes that were pursued by the action of these three people were immense. The world was made a different place. As Margaret Thatcher herself said after leaving office, "The US and Britain have together been the greatest alliance in the defense of liberty and justice that the world has ever known."

Margaret Thatcher's part in the fall of Russian Communism bridged her American and European policies. She wanted the Eastern European countries free and absorbed into the European Community. This would dilute French and German dominance of Europe and make more likely a community of independent national states. From 1980 to 1988, she visited Eastern Europe as often as she could - Hungary, Czechoslovakia, Russia, and Poland. She was popular and was seen as the champion of the values they wanted - national determination, liberty, and the free market. She raised British prestige and gave the people of Eastern Europe hope.

Economic Lessons 

Margaret Thatcher's and Ronald Reagan's leadership has translated the revolution in economic thinking into actual policy changes. Also, by bringing those ideas out of the ivory tower and into the political arena, they have contributed in shifting the focus of political debate in a direction more favorable to a free society. If today's political discourse is so radically different from what it has been for the greatest part of this century, this is certainly due to the intellectual giants that have prepared the revolution - Friedman, Hayek, Buchanan, Stigler, to name just a few - but also to a great extent to two world leaders - Reagan and Thatcher - who have allowed those ideas to be implemented and, by so doing, to be known to the masses.

It is gratifying to look back at the political climate which has prevailed for most of this (20th) century and compare it to the present one. The century that is coming to its end has been the century of the State, a century of dictators, the century of Hitler and Stalin, as well as the century of arbitrary government and of unprecedented intrusion of politics into our daily lives. It has produced the largest increase in the size of government in the history of mankind.

For the greatest part of the 20th century, the prevailing intellectual climate has been in favor of socialism in one form or another. The future of freedom, of a society based on voluntary cooperation, free markets, and the rule of law, appeared uncertain, to say the least. Many people had become convinced of the "inevitability of Socialism." There is no need to insist on this point. We all remember how gloomy the political scenario was for freedom fighters until recently.

In the course of the 1970s, things started to change. Gradually, pessimism subsided and a new mood started to take hold. More and more people were expressing dissatisfaction with the old socialist prescriptions and indicating a preference for market mechanisms. Socialists of the old school became fewer and fewer. As a result, believers in a free society began to hope for the future of a liberal order.

Wrong economic theories, entrenched interest groups, and a widespread aversion for the free market had resulted in economic sclerosis, inflation, unemployment, and general decline served as a background for Margaret Thatcher's policies. She intended to change all of this, and she did.

Her first battle was in the field of macroeconomic policy, where there was a switch from reliance on fiscal policy as a means of managing aggregate demand to the use of monetary policy. In fiscal policy the aim was that of reducing the deficit (PSBR: Public Sector Borrowing Requirement). In the field of taxation, the goal was that of restoring incentives to work, save, and invest through cuts in all tax rates, especially at the highest levels. The underlying philosophy was that the restoration of incentives was more important than the search for equality.

Thatcher also succeeded in taming the unions. Even her detractors concede that that was one of her great successes. She also succeeded in shrinking government's direct role in the economy through privatization.

Thatcher succeeded in drastically reducing inflation in a country that had become dependent on it; taming the power of what were probably the most powerful labor unions in Europe; privatizing a large portion of a bloated public sector; enacting a tax code more favorable to entrepreneurship and investment; and establishing the conditions for long-term economic growth.

She dared do what no one else had had the courage to do in Britain for decades: challenge the prevailing consensus, the common wisdom, the entrenched interests, and drive a reluctant party and a befuddled country in a radically new direction.

Mrs. Thatcher's success owes much to the intellectual revolution in economic theory. She did not invent anything new; there was nothing novel or original in her economic policies. However, while those ideas had been available for a long time, they had not been translated into policy changes until she came about. It was her leadership, courage, determination, and intellectual integrity that allowed those intellectual insights to inspire actual economic policies and change Britain.

The limiting factor in politics today is not the comprehension of the nature of social problems and of their desirable solution - even though we still have a long way to go to make the case for economic freedom fully grasped by the majority of public opinion and of politicians. The really scarce resource is leadership. A principled and uncompromising leader capable of building a coalition, a majority consensus around his platform is essential if we want to move toward a freer world.

Unfortunately, however, the likes of Thatcher and Reagan are not in large supply, and we can't wait for another one to come about. "So long as the people of any country place their hopes of political salvation in leadership of any description, so long will disappointment attend them." We must continue polishing our case, making it more convincing, exploring new ways to enlarge our freedoms, and above all converting politicians to our cause. 

About the authors: 

Sir Rhodes Boyson was one of the architects of the Thatcherite Revolution and served in several senior posts in the Thatcher government. He delivered the remarks on politics at a meeting of The Heritage Foundation's Windsor Society in Sea Island, Georgia, on October 3-6, 1999.

Antonio Martino is Professor of Economics at LUISS "G. Carli" University in Rome. He is currently on leave as a Member of Parliament. He delivered the remarks about economics at a meeting of The Heritage Foundation's Windsor Society in Sea Island, Georgia, on 
October 3-6, 1999.

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