The Iron Lady Cast in Bronze?

In this blog a few weeks ago, I welcomed the report that a statute to Millicent Fawcett was to be erected in Parliament Square; the first woman so to be honoured. She was not a parliamentarian: her husband was, as a Liberal he was the Postmaster-General who made many innovations. The range and depth of Millicent's contributions to economic and social improvement, particularly during her long widowhood, more than justifies her place beside the Mother of Parliaments and Westminster Abbey.

It is now reported that the management of the Royal Parks, who manage the square, is minded not to allow the erection there of a larger-than-life bronze statue of Margaret Thatcher; on the grounds that Mrs Thatcher's family has not supported the project.

It is also  matter of open discussion as to whether the statue would become a favourite target for vandalism. Margaret Thatcher remains a highly contentious figure almost three decades after she tearfully quit the office of Prime Minister, after holding it for a decade during which her government had radically redirected politics and restructured the economy.

It will be obvious to anyone who has looked at this blog in the past [or who does a word-search on it at any time in the future] that I am of the view that Mrs Thatcher had no serious grasp of economic theory or reality, beyond the corner shop mentality of keeping the books balanced that she imbibed from her parents.

What was blindingly obvious when she became leader of the Conservative Party at the height of the inflationary crisis of the mid-nineteen-seventies was that the status quo was unsustainable. A Labour government that was dependent on votes in the Commons from minor parties went cap in hand to borrow a large sum of money from the International Monetary Fund in order to have a hope of stabilising the external payments position: and the conditions that were set on that loan would radically change the direction on national policy from that which had - generally - been followed by both Labour and Conservative governments for a quarter of a century.

Through the 'fifties and 'sixties a generation of Economists who could broadly be classified as neo-Keynesian had promised to be able to deliver policies that would give the country pretty-well continuous economic growth. When the politicians applied the policy, after twenty years it became a recipe for inflation of prices that stimulated increasingly vociferous demands for matching pay increases.

The International Monetary Fund's conditions on the loan required the British government [of whichever party was in power] to introduce Monetarist policies. In the 1979 general election the Labour Party was riven between those who felt obliged to impose the policies required by the IMF and the mass of trade unionists who hated that policy. The Conservatives accepted the policy, and some of them embraced it. The consequences of the Thatcher 'revolution; in the economy were immense. Unprecedented wealth came to those who operated in the financial services, especially in the south-east; while whole swathes of the country faced mass unemployment and dereliction as long-established industries and their underpinning assets of coalmines, steelworks, shipyards and railways were shut down. Many areas still have not recovered from the devastation that the Thatcher pack caused, and the whole economy has been set back by the crisis measures that were taken in 2007-9 to save the overblown financial institutions that emerged from the 'big bang' of 1986.

Even in 2020 there is a strong likelihood that a larger-than-life-sized bronze image of Mrs Thatcher could indeed be the much-painted target of expressions of hostility to the entire policy direction that 'Mrs T' embodied. The family and the Royal Parks are right to have reservations. The first woman prime minister should be honoured, as should Mrs Fawcett; but felings are such that the statue could well have a very mixed reception.

The Inevitable Collapse of the Thatcher Legacy

Margaret Thatcher was a forceful woman; but I have heard or read no suggestion that she was an especially intelligent person. She gained an Oxford degree, in Chemistry, when most men in her age-group were on active service; so there were plenty of places for girls from provincial grammar schools to read for degrees. Margaret Roberts - as she then was - was guided to her modest achievement in the examinations by a postgraduate tutor whose war-work was the important search for inert gasses that could be used to fill fuel tanks on aircraft after the fuel was used, thus reducing the very high risk of the tanks catching fire and taking the 'plane down. Forty years on, Margaret Thatcher rewarded him with a peerage. He was a man of the highest non-religious integrity, and I was privileged to know him modestly well.

I begin with that reminiscence because I think it important to recognise that the concepts that Thatcher espoused in her mature political career were not hers. The came from others who were prepared to share her political agenda: and, indeed, to push it further than she would naturally have been inclined to take it. Prominent among these were the several economic advisers who progressively led her into the set of ideas that are still characterised as 'Thatcherism'. The core of all the thinking that she accepted was the idea that markets are 'rational': the notion that the economy is a natural system that operates according to its own natural laws [just like the material universe is subject to Newton's laws - except where it is not]. Those who advocated this principle, of whom the first in Mrs Thatcher's environment was Keith Joseph, argued that the manifest weaknesses that had engulfed the British economy in the nineteen seventies were the inevitable outcome of decades of the 'mixed economy' in which both Labour and Conservative governments had been prepared to over-rule market forces in order to achieve social and political priority objectives. Thus when Mrs T became the Prime Minister the economy was completely disoriented from what would be achieved if it was working 'properly'.

It was inconceivable that half a century of state direction could all be removed at once, so a progressive pattern of removal of the state from the economy was initiated. A major component of this project was privatisation of the major utilities. Water, gas, electricity, airlines, railways, telecommunications, radio and TV and a huge range of other supplies and services were predominantly controlled [and owned] by the state. The clever new idea was that they should be sold to the people, who would become active shareholders who would hold the boards of the privatised companies to account, thus ensuring that they competed openly and fairly in an efficient market. That didn't happen; large swathes of the shares were bought by financial institutions when they were first offered for sale; and the hundreds of thousands of citizens who did buy such shares happily sold them on to institutions at prices higher than they had paid for them: so in a short time institutions owned virtually all the shares. In many cases the utilities were then sold on to foreign investors.

Later, particularly under the Cameron governments, it became clear that the supposed 'markets' were not functioning at all well. Customers of the gas and electricity retailers did not spend many hours every year deciding which company to use for the coming period, as the Economists' market model demanded. Very recently, the May government has indicated that it will 'cap' prices - because competition has failed to keep retail prices 'competitive' or affordable.

Behind this retail market failure is an even more fundamental failure of the market in supplying 'wholesale' electricity. In total defiance of market Economics, successive governments have opted to subsidise 'green' energy, notably windmills, in order to meet arbitrarily assessed targets for the reduction of emissions of the gasses that are said to cause global warming. In principle, that can only be a 'good thing'; but when the cost of it is laden on the customers' bills, the pretence of creating a 'market' in energy is exposed as mere rhetoric. When customers are additionally laden with the forward costs of the 'most expensive structure in the world' - the Hinckley Point nuclear power station [that may never work] - the whole myth of rational markets is destroyed.

Point-by-point, the Thatcher legacy has unwound; and as relief  from the current election rhetoric, I will extend the point of today's message over other sectors of the economy.