The real legacy of Thatcherism.

by Stuart Lawson

No doubt you have heard about Thatcher’s demise – it has certainly sparked off all those divisive feelings and passions that were evident while she was in her prime.

Have done a bit of research on Cameron’s claim that Maggie was the “saviour of the nation” and have come to the conclusion that this is essentially mythology. Her deciding to offer council tenants the “right to buy” was in itself not a bad idea but even this was tarnished by her government’s refusal to allow Local Councils to use the money gained from the sales to replenish the social housing stock – hence the housing shortage which makes the iniquitous “bedroom tax” all the more callous.

I have also come to the conclusion that the current economic difficulties which leaves the British economy and public finances in a worse state than many countries in the Eurozone have their roots in the policies pursued during the Thatcher period. It is part of the mantra of the right wing media and the Conservative Party to harangue Labour for being the prime cause of the deficit, however, if you look at the statistics, Labour managed to reduce and then maintain the deficit to manageable proportions until the crisis of 2007. What actually caused the deficit to increase to such dizzy heights was the decision to bail out Northern Rock, RBS and HBOS coupled with the rise in benefit payments/fall in tax revenues due to the economic downturn. Where Labour can be said to be culpable was in not taking steps to use surplus revenue to reduce the deficit during Brown’s long boom from 2000-2007 so as to cushion the impact of any subsequent recessionary pressures. However, even this pales into insignificance when compared with the abject failure of the Thatcher government during the 1980’s who managed to squander peak revenues from North Sea Oil on funding tax cuts, selling off nationalised industries at ridiculous discounts, selling off council houses cheaply and deliberately increasing interest rates at the behest of the financial magnates in whose interests it was to imply that the only economic problem worth considering was beating inflation and the only tool to be rigorously applied was monetary policy. It was no accident that the growth spurt of the mid 80’s was quickly followed by deep recession of the late 80’s and early 90’s as the bubble of the “Lawson boom” burst. If the putative “saviour of the nation” had been really clever (like the Kuwaitis, Saudis and Norwegians) she would have used the £450bn oil revenues to build up a Sovereign Wealth Fund as a reserve to ease any contingent pressures once the oil revenues petered out. It might have been also wise to use part of these revenues to ensure, like the Germans did, that rationalisation in manufacturing was more tempered and less draconian rather than passionately opt for wholesale de-industrialisation. What we are left with is the legacy of the failures of policy of those times which means that we are devoid of any significant manufacturing base to generate real wealth, possess an unbalanced economy that is funded by continuous and expanding debt, have a de-regulated financial sector which has irresponsibly created havoc through engaging in casino economics for quick gain, a volatile housing market that up until 2010 was bankrolling credit expenditure but now seems sterile and a government who are taking austerity measures undreamed of during the Thatcher years to try and get the deficit down in conditions of high unemployment and economic uncertainty. (Don’t let the employment figures fool you: many of those who are statistically in work have precarious part time and temporary jobs).

The result of all this is that our economy has become a basket case that can only thrive on a bogus GDP funded by ever increasing public and private indebtedness. The problem is that real wealth is not being generated: de-industrialisation and later globalisation saw to that and Osborne’s dream that a low £ and low interest rates will trigger off a growth spurt from exports is delusionary because exports do not count for much in an economy where 70% of economic activity is within the tertiary sector whose prosperity is financed by more rather than less debt. The inevitable result of this will involve even more drastic cuts in spending and borrowing to get the elusive deficit down which risks generating a further recession with all its adverse consequences and creating a sustained fall in the standard of living for all but the elite few.

There you have it – the real legacy of Thatcherism as I see it from doing a little bit of cursory research.

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