With the passing of Margaret Thatcher, and the commemoration of Winston Churchill day, world attention this week was rightly focused on the greatest Prime Ministers of the 20th century.
Given that Thatcher, more than Churchill, will be remembered for the near miraculous economic recovery her governance produced in Britain, and given America’s unremittingly woeful economic state, it is useful to recall her economic accomplishments, the means by which she achieved them, and their application to our economic moment.
The British stage onto which Thatcher stepped in 1979 was not unlike the America Reagan inherited, or the America we see in the near future. Pre-Thatcherism, Britain, like America, was mired in malaise: the trade unions were rich and rioting; the healthcare system was in crisis; gas shortages loomed; state owned industries were failing; and the top income tax rate was 98%. Not surprisingly, in October of 1980, more Britons were out of work than at any time since the Great Depression.
The resulting effect of this economic and political crisis was a harsh blow to the very soul of Britain. The false promises of post-war Socialism and cradle-to-grave security yielded staggering debts, dysfunctional government, and a sense that Britain’s best days were behind it.
Thatcher rejected such defeatism, asserting, like Reagan, that better days were ahead for her people. Equally important, she rejected her party’s inclination to find consensus with the statist, status quo Labor Party on the most divisive issues – taxes, deficits, unions, privatization – instead proclaiming, “I am a conviction politician,” a leader “not for turning.” Her convictions and resolve never wavered, even when union rioting in opposition to her policies turned deadly.
As a result of Thatcher’s economic revolution, which focused on cutting tax rates, privatizing industries and property, eliminating deficit spending, and weakening the choke hold of trade unions, the British economy grew to become the world’s fourth largest. The top tax rate was reduced to 40% and 900,000 government jobs were shifted to the private sector as a result of massive privatization.
At this American moment, we are in dire need of Thatcherism. The March jobs report told a harrowing tale: only 88,000 jobs were created, jobless claims rose to 385,000, disability claims outpaced new jobs, and the labor force participation rate was 63.3 percent, the lowest level since 1979, when Thatcher took office.
Public sector unions are out of control in our largest states, demanding ever higher benefits and draining state and local coffers with skyrocketing pension and healthcare costs. (Exhibit A: Stockton, California bankruptcy.) Gas prices continue to rise as domestic energy sources (Keystone XL pipeline) are rejected in favor of bad investments in failed green energy schemes.
Taxes on income and investment have been raised, the annual deficit regularly exceeds $1 trillion, federal debt exceeds $16 trillion, and according to figures released by the Office of Management and Budget and the Census Bureau, government spending per household is outpacing median household income.
And instead of leading an economic turn around, Washington dithers over half-measures: belated budgets that invest in policies that perpetuate decline; symbolic gun control bills that won’t prevent future violence; immigration reform that rewards illegal entrants and leaves the border porous; health care reform that raises premiums, eliminates coverage, and disembowels Medicare; and most laughable, media circuses over a “sequestration” reduction of 2% of total government spending. In a time where great seriousness of purpose is needed, America is led not by Thatchers, but by politicians who appear content with the recession their governance perpetuates.
This is not leadership; these are not solutions. The moment is ripe for a conviction politician who rejects the low hanging fruit of easy Beltway consensus, rejects half-measures as insufficient for a great nation, and who seeks national growth and renewal over personal popularity.
Such a politician will not find the path easy. Thatcher was attacked by those outside and within her party. Yet today, her critics and their critiques are largely forgotten, silenced by history’s verdict in her favor.
As the GOP, the national political party ostensibly most receptive to Thatcher’s ideas, licks its wounds from 2012, ponders its prospects for 2014, and looks for its standard bearer for 2016, the only question to be asked is: will the next Thatcher please stand up?