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Former British Prime Minister Margaret Thatcher has passed away at age 87. Rest in peace. She is considered Brittain's greatest Prime Minister since WWII.
Thatcher was famously dubbed "The Iron Lady" by the Russians following an anti-Soviet defense speech she gave in 1976, but today I'd like to focus on a different Thatcher speech, one on economic matters. It's referred to as "the lady's not for turning", or "the reason why". In this speech, Thatcher touches on several points that illustrate the problem with left-wing economic policy, and I agree with her on these matters. One of my major areas of disagreement with the left is about economics.
It's interesting how so much of what PM Thatcher said in 1980 is relevant to today's economic problems.
On monetary policy:
"No policy which puts at risk the defeat of inflation—however great its short-term attraction—can be right. Our policy for the defeat of inflation is, in fact, traditional. It existed long before Sterling M3 embellished the Bank of England Quarterly Bulletin, or “monetarism” became a convenient term of political invective.
But some people talk as if control of the money supply was a revolutionary policy. Yet it was an essential condition for the recovery of much of continental Europe."
Those countries knew what was required for economic stability. Previously, they had lived through rampant inflation; they knew that it led to suitcase money, massive unemployment and the breakdown of society itself. They determined never to go that way again."
"...we are not heedless of the hardships and worries that accompany the conquest of inflation. Foremost among these is unemployment. Today our country has more than 2 million unemployed....But when all that has been said the fact remains that the level of unemployment in our country today is a human tragedy...Human dignity and self respect are undermined when men and women are condemned to idleness. The waste of a country's most precious assets—the talent and energy of its people- makes it the bounden duty of Government to seek a real and lasting cure."
On government spending:
"I know that there is another real worry affecting many of our people. Although they accept that our policies are right, they feel deeply that the burden of carrying them out is falling much more heavily on the private than on the public sector [such as the unemployment referenced above]. They say that the public sector is enjoying advantages but the private sector is taking the knocks and at the same time maintaining those in the public sector with better pay and pensions than they enjoy.
I must tell you that I share this concern and understand the resentment. That is why I and my colleagues say that to add to public spending takes away the very money and resources that industry needs to stay in business let alone to expand. Higher public spending, far from curing unemployment, can be the very vehicle that loses jobs and causes bankruptcies in trade and commerce. That is why we warned local authorities that since rates are frequently the biggest tax that industry now faces, increases in them can cripple local businesses. Councils must, therefore, learn to cut costs in the same way that companies have to.
That is why I stress that if those who work in public authorities take for themselves large pay increases they leave less to be spent on equipment and new buildings. That in turn deprives the private sector of the orders it needs, especially some of those industries in the hard pressed regions. Those in the public sector have a duty to those in the private sector not to take out so much in pay that they cause others unemployment. That is why we point out that every time high wage settlements in nationalised monopolies lead to higher charges for telephones, electricity, coal and water, they can drive companies out of business and cost other people their jobs.
If spending money like water was the answer to our country's problems, we would have no problems now. If ever a nation has spent, spent, spent and spent again, ours has. Today that dream is over. All of that money has got us nowhere but it still has to come from somewhere. Those who urge us to relax the squeeze, to spend yet more money indiscriminately in the belief that it will help the unemployed and the small businessman are not being kind or compassionate or caring.
They are not the friends of the unemployed or the small business. They are asking us to do again the very thing that caused the problems in the first place. We have made this point repeatedly."
On the all-powerful state:
"Without a healthy economy we cannot have a healthy society. Without a healthy society the economy will not stay healthy for long. But it is not the State that creates a healthy society. When the State grows too powerful people feel that they count for less and less. The State drains society, not only of its wealth but of initiative, of energy, the will to improve and innovate as well as to preserve what is best. Our aim is to let people feel that they count for more and more...a great nation is the voluntary creation of its people—a people composed of men and women whose pride in themselves is founded on the knowledge of what they can give to a community of which they in turn can be proud. "
Prime Minister Thatcher transformed the British economy for the better after inheriting an economic mess, much like President Reagan did in America during the 80's. Left-wingers have never forgiven either one of them.