|Tuesday, 9 April 2013||INDEX|
Not waving goodbye but drowning...
|Thatcher, everyone agrees, transformed the British economy. This is true, or has a kernel of truth in it somewhere, but it is also complete rubbish.
The argument that Britain had many rust bucket industries which needed to be shut down and be replaced with a gleaming new service sector (merchant banks, supermarkets that stay open all night etc.) is a remarkably cruel one, especially for groups like the miners and steelworks who lost livelihoods and communities. But if Britain did get rid of the rust buckets in the 1980s the real cause was not privatisation, the sale of council houses or the Falklands War (the things Thatcher really did) but Ted Heath's steering Britain into what was then called the Common Market (now the EU).
By the 1980s Britain's mines were mostly extremely well run, safe and highly efficient. They were not rust buckets. But they had to compete against mines in countries with much more favourable geological conditions (in Britain the easy to extract coal had been taken by a mining industry that dated back to the Roman era more than 1,500 years ago). They also had to compete against miners who were paid a tiny fraction of National Union of Mineworkers (NUM) rates, in an industry that was still highly labour intensive.
But Britain saw itself as an island of coal surrounded by a sea of fish. The fish (or our ability to harvest them) disappeared thanks to Ted Heath and the EU's fishery policy. The coal went (or was sealed untouched in the ground) thanks to Thatcher's wilful vandalism.
That there were rust buckets is undeniable: just think of the car makers. Intense international competition wiped many of them out thanks to the lowering of trade barriers caused primarily by the EU membership Heath had negotiated.
Thatcher's legacy was the destruction of housing. In the 1970s as many public sector houses were built as private sector ones. Thatcher did not change this by allowing councils to sell homes (Jim Callaghan's Labour government had allowed that already). What she did was to prevent councils from building ordinary houses. The idea was that the private sector would take up the slack. Private house building would double.
But it didn't.
Three decades later the private sector is building no more homes than it did when the clampdown on council house building began. In fact it's building rather less.
One reason for this is that Thatcher also encouraged the privatisation of Britain's building societies (at the time the prime institutions financing house purchasing). She wanted organisations like Northern Rock (the first British bank to have a run in 150 years) to privatise. And Northern Rock was not the only former building society to face bankruptcy in the great depression that started in the first decade of the 21st century.
When the banks stopped lending (because they had made gargantuan losses gambling in financial instruments they were too stupid to understand) new mortgages slowed to a trickle. But there never was a private sector house building bonanza, perhaps because the sort of people who got council houses could not afford any type of mortgage. The house building industry (that supported Thatcher to the hilt) lost out because it used to build those council houses, though the real losers were the homeless and those living in over-crowded slum housing.
Thatcher's second legacy was the destruction of the social democratic consensus, or to put it another way the death of Keynesianism. When she came in to office much of British industry (particularly utilities like electricity, gas, telecoms and the post office) was owned by the state. The state, not the people. We didn't feel like we owned it because it was high handed and bureaucratic, often serving its own interests rather than ours.
But it was bloody useful to have it there. During times of relative economic decline, state utilities took no notice and carried on investing. Add to that state benefits (like unemployment pay), that increased during economic down turns and the economy had an automatic stabiliser. In times of down turn, the state took up the slack and prevented mass unemployment.
Mass unemployment returned to Britain in the 1980s, then we had the long boom in the nineties and early naughties. In 2013 the British economy, like much of the rest of the so called developed world, has had five years of depression and no-one knows how to get out of it.
That there has been a massive redistribution of income from the poorest to the wealthiest is undeniable. But the world is more complicated than a simple reading of the employment or census statistics might lead you to believe. When I was a child it was a real event when we got a spin drier and my dad had a good job and earned a fair income. Today I have a fridge, electric kettle, coffee maker, washing machine, numerous computers, a mobile phone and more technological junk than you can shake a stick at. Yet my employment is very insecure and I earn little.
So did Thatcher really change the world or did she just ride the crest of a Kondratiev wave for a while? Whatever the truth, we will never see her like again, if we are lucky.
Posted by Jonathan Brind at 01:46
|Tuesday, 9 April 2013||INDEX|