The Economist magazine had a nice profile on the legacy of Margaret Thatcher: No ordinary politician.
Items of interest for this blog are comments about her changing the overall economic and political direction of England away from Socialist back to Capitalist.
A colleague of hers once quoted Abraham Lincoln as encouragement to her before a major speech. She pulled out a copy of the quote from her purse. The comment?
You cannot strengthen the weak by weakening the strong.
You cannot bring about prosperity by discouraging thrift.
You cannot help the wage-earner by pulling down the wage-payer.
Here’s a summary of her perspective:
Mrs Thatcher believed that societies have to encourage and reward the risk-takers, the entrepreneurs, who alone create the wealth without which governments cannot do anything, let alone help the weak. A country can prosper only by encouraging people to save and to spend no more than they earn; profligacy (and, even worse, borrowing) were her road to perdition
A fascinating concept – if you want the government to function, especially if you want the government to help the poor, you have to encourage the private sector so it can thrive, thus in turn pay taxes, thus the government has money to spend.
Here is a one sentence summary of her legacy:
Judged from the grand historical perspective, Mrs Thatcher’s biggest legacy was the spread of freedom—with the defeat of totalitarianism in its most vicious form in the Soviet Union, and with the revival of a liberal economic tradition that had gone into retreat after 1945.
The next four paragraphs, taking up about one-third of a page, expand on those two types of freedom: political and economic.
Another one of her accomplishments was to reverse the trend (which in the United States is still running full steam ahead) that failures in government policies become the arguments for more of the government policies that caused the failures:
She reversed what her mentor, Keith Joseph, called “the ratchet effect”, whereby the state was rewarded for its failures with yet more power. With the exception of the emergency measures taken after the financial crisis of 2007-08, there have been no moves to renationalise industries or to resume a policy of picking winners.
Translation: nationalizing industries = socialism; picking winners = cronyism.
A graph in the article shows a radical drop in both unemployment and the inflation rate during her tenure. Look at the graph from a very long-term perspective. It looks like she kicked off a 20 year economic boom. Now that’s a legacy.
Quite a contrast to the preceding 10 years which saw a dramatic run-up in both inflation and unemployment.
Here’s the question: which approach has a higher level of morality? Running inflation and unemployment up or bringing them down?
Phrased differently, which is moral? Socialism or capitalism?