STAFF NEWS & ANALYSIS
Thatcher's Big Mistake
By Staff News & Analysis - April 12, 2013

Margaret Thatcher made Britain a less, not more, desirable place to do business The ex-PM's greatest mistake was her failure to recognise that social cohesion is crucial to long-term economic growth … 'Margaret Thatcher's most important long-term legacy is likely to be the huge rise in inequality which she caused. – Guardian

Dominant Social Theme: Margaret Thatcher's free-market policies were fairly demonic.

Free-Market Analysis: The Guardian is probably correct in its analysis that Margaret Thatcher's free-market policies made Britain a less fair and socially equitable place to live. But that is only because Thatcher's policies neglected to reform the most heinous part of Britain's economy, which is its central bank.

Had Thatcher – in some alternative and miraculous universe – been able to moderate or remove the pernicious effect of the Bank of England's money printing then Britain and even the entire UK would have benefited tremendously from her deregulatory instincts.

But when the fundamental control of Money Power is exercised by the state, then significant deregulation over the long term can actually increase state power and exacerbate social inequality

Of course, deregulation is a good of itself if applied properly, but here too there are difficulties. Often a government monopoly is merely privatized and no more real competition is injected.

When it comes to state control of money itself, the ability of central banks either directly controlled by the state or affiliated with the state to influence the economy is unparalleled. Deregulation, if not performed properly only gives those with access to the monetary spigot even more freedom to take advantage of social inequalities.

He who has the money makes the rules – and if other rules are weakened or removed then those with the money gain even more power.

This is really what the Guardian's article is about but since those writing and editing the article refuse to grapple with Britain's main engine of inequality – the Bank of England – the article breaks down into just another leftist screed. Here's more:

Margaret Thatcher's most important long-term legacy is likely to be the huge rise in inequality that she caused. The widening of income differences between rich and poor that took place during the 80s (particularly from 1985) is the most rapid ever recorded. The most widely used measure of income differences shows inequality increasing by more than a third during her period in office.

The proportion of children living in relative poverty more than doubled during the 80s, and the damage has never been undone. Many of the effects of inequality have long lag periods. As Danny Dorling says in his 2004 study of the rise in violence: "Those who perpetrated the social violence that was done to the lives of young men starting some 20 years ago [the mid-80s] are the prime suspects for most of the murders in Britain." The young men were those whose childhood was blighted by the effects of relative poverty and inequality on family life.

Thatcher is often credited with showing that you could get to the top whatever your background. But as weand others (including Alan Krueger, chair of Obama's council of economic advisers) have shown, wider income differences reduce social mobility and make it harder for people with poorer backgrounds to do so. Now she would more likely have been beaten to the Tory leadership by one of the Etonians in cabinet. Although the "right to buy" and the privatisation of utilities by selling shares to new small investors was often justified as giving rights to "the little people", the reality is that the less well-off fell ever further behind the rich.

Though she recognised the dangers of global warming, Thatcher's industrial and economic policies prioritised economic growth. But growth rates in the decades since her period in office have been lower than during those that preceded her; nor does the balance of research evidence suggest that greater inequality acts as a spur to growth. Understandably, less cohesive societies – with more drugs, more crime and lower mobility – waste talent, and are not good places to do business.

The Guardian concludes by noting that "Labour authorities in eight or so British cities have set up fairness commissions to reduce income differences locally." This is obviously a useless endeavor. The problem is who is controlling the money not what "commission" can attempt fruitlessly to fix prices.

When a small group of people have access to the awesome power of the printing press, inequalities will always arise. Thatcher nibbled around the edges of the sclerotic British economy with her "reforms" but predictably they didn't have the expected result because the people who control money in Britain can continue to print all they want of it and reap its full value before it circulates and creates price inflation.

The reason inequity continues to grow in Britain is because the country's central inequity has never been addressed. Someday perhaps the Guardian will mention this – but then again, given that the mainstream media is owned by the same people who own the central banks, we probably ought not to hold our collective breath.

After Thoughts

In the meantime, it is instructive to note who is telling the truth on this issue and who is covering it up by not addressing it. The outlets dealing with the reality of these issues are mainly on the 'Net. And that is surely no surprise.

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