The Iron Lady Passes

When the news flashed across my computer screen that Baroness Thatcher had died, I knew what to expect from the local media.

Her very name seems to evoke a visceral negative response in Ireland. That is largely because of the extremely tough line she took against republican paramilitaries during The Troubles in Northern Ireland. Branding them as terrorists, she refused to regard them as anything other than criminals with no status and not representative of anybody or anything. “Crime is crime is crime; it is not political,” she said. She tends to get blamed for the deaths of Bobby Sands and nine other hunger strikers in prison because she steadfastly refused to give in to any of their demands.

To the extent that there was a balance in the Irish media’s assessment of her legacy, it probably came from the commentator who said that Sinn Féin’s Gerry Adams and Martin McGuinness probably owe their current seats—in the Irish republic’s Dáil Éireann and the Northern Ireland Assembly, respectively—to her. This is because her hard line had the ultimate effect of marginalizing the North’s more moderate Social Democratic and Labour Party and strengthening Sinn Féin (the political arm of the Irish Republican Army) at the ballot box.

Much more interesting to me was to hear the talking heads on BBC radio discuss her legacy at length. Mostly, this consisted of giving time to someone who liked her and then to someone who hated her. It was all very predictable, which is why I waited for the Beeb’s daily business program, where the discussion would be more focused on the effectiveness of her economic policies.

Unfortunately for those wanting to paint her legacy as one of utter failure, the record is pretty clear. When she became prime minister in 1979, Britain was a complete basket case. It is difficult to remember now, but back then the UK was spoken of the same way Greece and Portugal are now. It had only recently gone hat in hand to the IMF for a loan. Thatcher’s remedy was to cut public spending, raise interest rates and start selling off government-run entities like the phone company and British Airways. Many sectors of the economy, especially unionized labor, screamed bloody murder. Unemployment rose. Her first couple of years in office were very rough, and her opponents denounced her as a failure.

And then things began to improve. The country’s high inflation rate came down and the UK became a magnet for foreign investment. Productivity increased and unemployment came back down. After a few years of pain, the economy improved and the downward spiral of the 1970s had been broken. Was it worth it? I suppose that depends on who you were. If you had a good union job in the 1970s or depended on public money for your living, then you were probably worse off under Thatcher. But over time, an awful lot of people were better off. Certainly today Britain is much better off than it was before.

It was sort of a backhanded tribute to Thatcher that her critics on the radio had to rhetorically contort themselves so much in their attempts to darken her economic legacy. Interestingly, they kept pointing out that she had no experience or training as an economist. Many would actually consider that to be a plus, especially when 1970s Britain was essentially following the prescriptions currently promoted by Nobel economics winner Paul Krugman.

These seemed to the main points of criticism:

She decimated Britain’s industrial base. The changing world was already doing away with Britain’s and other countries’ industrial bases. She accelerated the process and moved her country into the globalizing economy. And not without a lot of pain. But it’s silly to argue that all the old jobs that went away would still exist without her.

In her wake there was more inequality. Well, yes, there probably was. I always find it interesting when people argue that policies that make everyone better off in general are bad and should be avoided because a side effect is that the wealthy get even wealthier.

Her policies were ultimately responsible for the 2008 financial meltdown. This one is my favorite. It echoes the notion in the U.S. that Ronald Reagan was somehow responsible for the 2008 financial crisis. In fact, much of the blame properly belongs with deregulation that happened in the 1990s when Reagan and Thatcher were both out of office—notably with the 1999 repeal of the Glass-Steagall Act in the U.S., which had required banks to keep their regular banking and investment arms separate. There was a similar loosening of regulations in the UK under Gordon Brown. Another big contributor to the meltdown was loose monetary policies in the U.S. and Europe—something Thatcher abhorred. Central banks are currently printing money like crazy. Thatcher constricted the UK’s money supply.

For good or ill, I don’t know if we will ever see the like of Baroness Thatcher again. She was an unabashed conservative in the true sense of the word. While the label “conservative” is alive and well in America and Europe, it seems increasingly to be applied to politicians who, in another time, would have been labeled “liberal” in the classic sense of seeing liberty defined as freedom from government control. With her tough lines on Northern Ireland and the Falkland Islands, Thatcher harkened back to a time when the nub of conservatism was defense of an empire.

As for her economic policies, it is hard to imagine such a strict monetarist coming to power again in the western world anytime soon. And it remains to be seen if any other approach can improve the kind of economy we are living through now.