Mrs Thatcher came to power in 1979. Britain was then seen as “the sick man of Europe”, its economic future written off. Strikes rent the country and the economy was held back by big and expensive government. Public spending had crept up in the ‘60s and ‘70s to 47 per cent of GDP; the top rate tax was 83 per cent (90 per cent for unearned income); and trade union power brought production to a halt when a union so ruled.
Mrs Thatcher swept to power with a belief that freedom under the law should guide change. She aimed to set the economy free, promote the rule of law and encourage the spirit of entrepreneurship. This meant challenging the power of the state and collective central state planning or ownership. Bit by bit, in the decades after World War Two, state powers had grown. And as Sir Keith Joseph, Mrs Thatcher’s mentor, used to say ‘”statism” is socialism’s twin’.
The reform programme on which she worked would restore accountability to power – both state power and trade-union power; it would provide the freedom under the rule of law, which was needed if the economic life of the nation was to flourish. For the state, that would mean cutting the high income tax rates, and privatising public monopolies while encouraging competition.
Lower tax rates brought growth – and with increase in VAT, a tax on consumption not effort, government revenue went up threefold, to £187 billion in 1990 from £57 billion in 1979. Spending as a percentage of GDP in Britain shrank during Thatcher’s administration, to around 40 per cent from 47 per cent.
Some things might have been done differently; Mrs Thatcher was often the first to recognise when government, her government, had got it wrong; where it undermined the freedoms which people needed to aspire high.
Margaret Thatcher believed that Britain’s relationship with the US could be a force for good in the free world and for extending freedom. It’s no accident that the collapse of the Soviet Union was helped along by both leaders, or that she could do business, as she put it, with the Soviet President Gorbachev. Nor is it any accident that her downfall was inspired by holding out for greater freedom against the central planning of Brussels.
Today many people the world over are the beneficiaries of Mrs Thatcher’s vision: open markets, free trade and smaller governments bring greater freedom to people themselves and a better life. Like Sir Winston Churchill, she was both economically literate and politically savvy. But whereas he gave in to those who wanted the Conservative machine to accept the direction of collective power in post-war Britain – seen as a necessary compromise to regain power in 1951 – she was not for compromise when it came to corporate Europe. As Sir Bernard Ingham, the Downing Street Press Officer, put it when she left office in 1990: she had the heart of a lion and we will not see her like again.
*Dr Sheila Lawlor is the Director of Politeia
On Monday 8th April 2013, following the death of Margaret Thatcher, Dr Sheila Lawlor appeared on Canada’s CTV News to give her thoughts on the late Prime Minister’s legacy. Click here to watch to the programme now.