April 27th 2013

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Articles from this issue:

COVER STORY: Australia's motor industry on the edge of the abyss

NATIONAL AFFAIRS: Queensland ports targeted in anti-coal export campaign

CANBERRA OBSERVED: How prepared is the Coalition for government?

EDITORIAL: Julia Gillard kowtows to Beijing

UNITED STATES: Media ignore trial of abortionist who beheaded newborn infants

UNITED KINGDOM: Margaret Thatcher and the politics of conviction

NORTHEAST ASIA: North Korea, China's junkyard dog

MIDDLE EAST: Egypt becomes a nightmare for Muslim Brotherhood

EUROPEAN UNION: Cyprus the symptom of deeper eurozone crisis

SCHOOLING: Parental choice is key, not Canberra control

AUSTRALIAN HISTORY: Archbishop Daniel Mannix's public roles

LIFE ISSUES: Lighting a candle amidst the darkness

CINEMA: How can man die better than facing fearful odds?

BOOK REVIEW: A book they won't allow in our schools

BOOK REVIEW Australia's answer to Morpurgo's War Horse

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Margaret Thatcher and the politics of conviction

by John Ballantyne

News Weekly, April 27, 2013

Margaret Hilda Thatcher, the Rt Hon. Baroness Thatcher, LG OM PC FRS (née Roberts):
Born: October 13, 1925. Died: April 8, 2013.
Prime Minister of Britain: 1979–1990.

Margaret Thatcher was without doubt one of the most remarkable individuals of the 20th century. She made history by becoming Britain’s first woman prime minister and winning three consecutive general elections, making her the longest-serving British PM in the 20th century. At the same time she was one of the most controversial and polarising public figures.

Margaret Thatcher (1925-2013).

To assess Mrs Thatcher’s significance, it is important to look back to the state Britain was in just before the Conservative Party she led was elected to government in May 1979.

Britain was then viewed as the sick man of Europe, just as Greece is today. Inflation was high and rising, powerful and militant trade unions constantly went on strike, the economy was stagnant and industry was uncompetitive. The Bank of England warned in a report in 1978: “Now condemned to very slow growth, we might later have to accept, if present trends continue, declines in real living standards.”

This was the country Mrs Thatcher’s government took charge of in 1979 and attempted to turn around. How we judge her subsequent career should be seen in the light of the economic chaos she inherited.

Margaret Thatcher (née Roberts) was born in 1925 in Grantham, a market town in England’s east Midlands. Her father, Alfred Roberts, who was a major influence in her life, was a shopkeeper, a Methodist lay-preacher and one-time mayor of the town.

The young Margaret worked hard, both in her father’s grocery store and at school. She excelled academically, winning a scholarship to Oxford where she graduated as a research chemist. Later she gained qualifications as a lawyer, married Denis Thatcher and had twins, Mark and Carol.

She was first elected to the House of Commons in 1959. She served as Secretary for Education in Edward Heath’s Conservative government (1970-1974), which was ingloriously brought down by a coal-miners’ strike. The industrial action saw severe cuts to electrical power generation and firms only able to operate a three-day week. In 1975 Mrs Thatcher replaced Heath as party leader and as leader of the Opposition.

Soviet communist threat

Mrs Thatcher demonstrated early on her uncompromising style of leadership by attacking the Soviet Union’s imperialistic ambitions at a time when Western statesmen were anxious to placate Moscow by pursuing détente and peaceful co-existence. In her speeches she often quoted the exiled Russian author Alexander Solzhenitsyn who lambasted Western statesmen for their spineless appeasement of Moscow. This deeply shocked the pinstripe diplomats of Britain’s Foreign Office who regarded this sort of plain-speaking as very bad form.

In a famous speech in January 1976, which attracted international attention, Mrs Thatcher declared: “A huge, largely land-locked country like Russia does not need to build the most powerful navy in the world just to guard its own frontiers. No. The Russians are bent on world dominance, and they are rapidly acquiring the means to become the most powerful imperial nation the world has seen. The men in the Soviet politburo don’t have to worry about the ebb and flow of public opinion. They put guns before butter, while we put just about everything before guns.”

In response to this speech, the Soviet Army newspaper Red Star labelled the British Conservative leader “the Iron Lady”, a nickname that would thenceforth forever be associated with her but which did her reputation no harm.

New economic direction

Meanwhile, Britain from 1974 to 1979, under the Labour governments of Harold Wilson and James Callaghan, staggered from crisis to crisis. In 1976 the pound sterling weakened alarmingly and Britain became the first industrialised nation ever to apply to the International Monetary Fund for a large money loan to remain solvent. That year, Prime Minister Callaghan told a Labour Party conference that Keynesian economics was dead, that the government could not stimulate output and employment by printing more money, and that the only thing that higher spending was likely to increase was the inflation rate.

At the end of 1978, Britain’s trade union movement refused to agree to the Labour government’s plea for pay restraint as a means to reduce inflation without increasing unemployment. Instead unions struck for higher pay. Their campaign of industrial action paralysed public transport, road haulage, hospitals and rubbish-collection. The winter of 1978-79 became known as Britain’s Winter of Discontent.

In the general election of May 3, 1979, Labour was dumped by the voters and Mrs Thatcher’s Conservatives came to power.

Mrs Thatcher overturned the postwar British political consensus of the mixed economy and the welfare state and started enacting some of the tough-minded and controversial free-market policies advocated by two Nobel prize-winning economists, Austrian-born Professor Friedrich A. Hayek, author of The Road to Serfdom (1944) and The Constitution of Liberty (1960), and the Chicago School of Economics’ Professor Milton Friedman, author of Capitalism and Freedom (1962) and Free to Choose: A Personal Statement (1980).

Social cost

Mrs Thatcher’s priorities were to curb union power, slash public spending and taxation, cut government subsidies to inefficient enterprises and reduce inflation. She succeeded in doing so eventually, but at a terrible social cost. The credit squeeze that her government engineered (in order to limit the amount of money circulating in the economy) plunged Britain into a severe slump which saw mass factory closures and lay-offs.

A number of Conservative Cabinet ministers and backbenchers were nervous about the direction of her uncompromising economic policies. In October 1980, however, she defied them at a Conservative Party conference by declaring: “To those waiting with bated breath for that favourite media catchphrase, the U-turn, I have only one thing to say: You turn if you want to [laughter]. The lady’s not for turning.” (This was a pun on the title of a 1948 play by Christopher Fry, The Lady’s Not for Burning, about a witchcraft trial). Her oft-used phrase, “There is no alternative”, earned her the nickname TINA.

Unemployment climbed relentlessly. In January 1982, it passed the three million mark, the highest number of British jobless since the 1930s Depression. Scotland, Wales, Northern Ireland and northern England were particularly severely hit.

The great recession of the early 1980s cannot be entirely blamed on Mrs Thatcher’s free-market economic policies. The decrepitude of the British economy had been several decades in the making. Pre-Thatcher governments, in order to maintain employment levels, had resorted to the lazy and ultimately self-defeating policy of subsidising declining and inefficient firms with huge blood transfusions of money from growing and productive firms (“the survival of the unfittest”). By contrast, Japan achieved astonishing economic growth by doing precisely the opposite.

As a result, British labour productivity was abnormally low because of over-manning of enterprises. Employing two workers to perform a task that could be readily done by one did not generate two full-time incomes; instead it effectively divided one full-time income between two workers.

Furthermore, union-inspired restrictive labour practices made the British economy inflexible and its firms unable to adjust swiftly to changing patterns of consumer tastes. By contrast, the Federal Republic of Germany had a sensible policy of Mitbestimmung, or co-determination, under which employees in medium to large enterprises would elect representatives to sit on the firms’ management boards. This created a climate of cooperation rather than confrontation between capital and labour, and certainly did not hinder Germany from becoming the economic powerhouse that it is today.

Many British firms, because of their inefficiency and uncompetitiveness, had fallen so far behind that, once they were exposed to market forces, they either had to lay off workers just to stay solvent or went bankrupt. Free-market economics, however, was no more responsible for this outcome than it was for the high unemployment experienced by the former communist East Germany after its unification in 1990 with capitalist West Germany. The marketplace only brought its inefficiencies to light; it did not cause them.

Back in business

Nevertheless, even during the lean early Thatcher years, Britain’s labour productivity soared and its surviving firms became more competitive. In 1982, the economy finally resumed growing and unemployment started to fall.

Mrs Thatcher’s Conservatives were greatly aided politically by a split in the opposition Labour Party. Under the leadership of Michael Foot, Labour lurched to the radical left, causing four former senior Labour Cabinet ministers to leave the party in 1981 and form the more centrist Social Democratic Party.

Britain’s victory over the Argentine military junta in the 1982 Falklands War greatly enhanced Mrs Thatcher’s public standing. In the 1983 general election, her Conservatives easily defeated the divided Opposition parties.

The British economy’s growth picked up speed. The long postwar era of uncompetitiveness and stagnation was over. Britain was back in business, although the benefits of the recovery were distributed very unevenly. Wales, Scotland, Northern Ireland and the north of England continued to suffer abnormally high unemployment rates for years to come.

Mrs Thatcher still had unfinished business with the trade unions. She braced herself for an inevitable industrial showdown with the militant National Union of Miners under its firebrand Marxist leader Arthur Scargill. Over four years, her government granted moderate pay rises to the miners while stockpiling coal in secret locations around the United Kingdom. In 1984 she announced the closure of loss-making coal-mines. The NUM promptly went on strike.

During the winter of 1984-85, the government was able to supply adequate fuel to Britain’s coal-fired power stations so that they could continue operating.

The coalminers’ strike collapsed (instead of Britain’s elected government collapsing in the face of industrial action, as had occurred in 1974 and 1979).


Mrs Thatcher became increasingly uneasy about Britain’s increasing enmeshment with the European Union. In a speech she delivered in Bruges in September 1988, she said: “We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level with a European super-state exercising a new dominance from Brussels.”

Only in the last two years have British people woken up to the wisdom of Mrs Thatcher in refusing to abolish the pound sterling and join the euro.

1989 witnessed the collapse of communism across eastern Europe and the dramatic fall of the Berlin Wall. However, Mrs Thatcher did not support West German Chancellor Helmut Kohl’s understandable desire to unify West and East Germany. She feared that a unified Germany, with a population of 80 million, would dominate Europe.

Toward the end of her prime ministership, Mrs Thatcher lost her sure political touch. She became increasingly autocratic with her colleagues. She refused to compromise on the replacement of council rates with the unpopular Community Charge (which her opponents dubbed the Poll Tax). By now Conservative ministers and backbenchers had grown tired of Mrs Thatcher’s conviction politics and stridency and wanted a quieter life. On November 22, 1990, they replaced her as leader with the less exciting John Major.

Mrs Thatcher during her time as prime minister profoundly changed British society, but also had a major political impact worldwide. The U.S. President Ronald Reagan was her ideological soul-mate and valued her counsel. She was admired by dissidents behind the Iron Curtain, and became a firm friend of the last leader of the Soviet Union, Mikhail Gorbachev.

John Ballantyne is editor of News Weekly.

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