EKIP– Expert Club for Economics and Politics A Different Opinion
Left-wing commentators have been using argumentum ad nauseam against Margaret Thatcher’s government – the accusations are the same no matter how much evidence they are refuted or how many times they are proven wrong. Some of their claims have been debunked by Alistair Heath on City AM, but that hasn’t stopped the anti-Thatcher squad from repeating them. Here are ten examples:
1. Thatcher destroyed UK manufacturing
No. During her administration, manufacturing grew by 7.5%. Its relative share in the economy declined, due to the faster growth of services and finance. This is also observed in other developed economies and is part of the general trend. It is true that three of the leading industries – shipbuilding, steel processing and coal mining – suffered a decline because they were uncompetitive with countries with more developed manufacturing.
2. It destroyed the ability of unions to protect workers
Her reforms gave more power to union members, at the expense of their leaders. Previous Labour and Conservative governments had failed to gain a foothold in the unions. Strikes during her term, the worst in Europe, did little to help workers. Thatcher's reforms allowed union members to vote for their leaders and to vote before a strike. The result was more moderate union action and a dramatic reduction in tensions.
3. Thatcher cut income tax so the rich paid less
It did change the income tax, but not only did the rich pay more, they paid a larger share. The government gradually reduced the marginal rate from 83% (98% on investment income) to 40% and cut the basic rate to 25%. The tax cuts increased revenue for the treasury as businesses grew and the tax base widened. The top 10%, who had paid 35% of income taxes before the changes, now paid 48% (an increase from about 1/3 to 1/2).
4. Turned vital state sectors into private monopolies
Wrong. Privatization turned entrenched state monopolies into competitive companies. The government's privatization programs were all about encouraging competition. BT faced a new competitor, Mercury, and periodic changes allowed new competitors to enter. Most utilities began to compete both on the global market and at home. An important change was the separation of infrastructure from the manufacturer, which allowed many companies to use ducts or cables to distribute their products. Where this was not practical, competitors bid to franchise the infrastructure for a certain period. Loss-making state monopolies were replaced by competing companies.
5. Thatcher destroyed the British coal industry
Coal mining had been in decline for decades. Many more mines were closed under Labour's Harold Wilson than under Conservative Thatcher. One reason was the use of oil, and later gas, as cleaner energy alternatives to coal. Another was the decline of some heavy industries that used coal. Households began to heat with North Sea gas rather than coal. In addition, domestic production was more expensive than foreign production. All this doomed the subsidized mines to operate at a loss and helped to spread alternative energy sources.
6. She didn't cut taxes
Critics say Thatcher's tax cuts were illusory, due to the increased revenue the Treasury received during her 11-year term. Initially, there was a rise in VAT, but corporation and income taxes were cut, leading to significant economic growth. After having to sort out the financial mess and inflation it found itself in, the government began collecting a smaller share of GDP. Tax Independence Day (the date by which taxpayers work to pay their taxes) was either brought forward or remained unchanged for the next 10 years.
7. She loosened the regulation that led to the current crisis
As Philip Booth points out at the IEA:
“… the eighties were not a period of tax deregulation. Insider trading was banned in 1980. Life insurance, which had been free for more than a century before, came under state regulation from 1980 to 1982. Bank deposit insurance was introduced in 1979. The sale of investment products and insurance was also regulated in 1986. In addition, the first ever regulation of bank capital was introduced under Basel I, signed during Thatcher’s government.”
The “Big Bang” allowed more firms to trade financial instruments, but, more importantly, it replaced private regulation with public responsibility.
8. Thatcher committed a war crime by sinking the Belgrano
The United Kingdom was at war with Argentina over the latter's illegal seizure of the Falkland Islands. The South Atlantic was a theatre of war. The 200-mile exclusion zone did not prohibit fighting within the zone itself. Ships flying the flags of neutral countries were warned to avoid it. The Argentine cruiser Belgrano was not neutral and, sailing in a zig-zag pattern, posed a danger to British forces, who sank it as an act of war deemed legitimate by the Argentine command.
9. Her government was unpopular and divisive.
Thatcher led the Conservatives to three consecutive election victories, winning a large majority. She failed to win more than 50% of the vote, a feat not achieved since World War II, but in the 1979 election she won more votes than Tony Blair did in 1997. Her next two victories were also stronger than his. Her government broke away from the post-war consensus that had led the country into hopeless economic decline. Thatcher's rule also dashed the hopes of socialists coming to power in England and helped to end it worldwide. The left cannot forget that she robbed them of future power.
10. Thatcher's budget cuts crippled public services
In fact, government spending increased by 17.6% under Thatcher. Some spending was cut, but the main spending increased. As the economy recovered under her rule, the redistributive power of the state fell from 45.1% when she took office to 39.4%. She increased spending on health, education and social benefits, but by less than the growth in the private sector.
*The article is a translation from the Adam Smith Institute blog: http://www.adamsmith.org/blog/politics-government/ten-myths-about-margaret-thatcher-0
**Special thanks to Daniel Vassilev: http://totrants.wordpress.com/
very selective criticisms, ones that (I rightly admit) can be proven, but there are other fundamental things that are why those affected by that time are now in the streets chanting and rejoicing at the death of the dictator Thatcher
What kind, for example?
Being angry with Margaret Thatcher for closing down certain industries is like being angry with an undertaker for someone dying - someone has to close the case. Otherwise, Thatcher has a lot to criticize, especially on human rights. Overall, she is a much more positive character than she is portrayed in England.