Thatcher: What lessons can we draw from Britain’s first female prime minister?

Thatcher: What lessons can we draw from Britain’s first female prime minister? By Charles Moore.

Right after World War II, Labour prime minister Clement Attlee, overly optimistic about the capacity of government to do great things, laid the foundations of the British welfare state. The sentiment was understandable: centralized authority had just proved itself capable of organizing the country’s resources in the war effort. Well-meaning do-gooders now assumed that the state could do the same postwar, defeating the peacetime adversaries of poverty and need. Filmmaker Ken Loach calls this attitude “the spirit of ’45.” The postwar economic consensus was so robust that it became known as Butskellism, since the policies of Rab Butler, the Conservative chancellor of the Exchequer from 1951 to 1955, and his Labour predecessor Hugh Gaitskell were indistinguishable.

The glory days of interventionism didn’t last, however. By 1979, a third of the British workforce was employed by government, directly or indirectly, yet unemployment continued to rise throughout the 1970s. Inflation rose to double digits, exceeding 25 percent, making even middle-class Britons insecure about their savings and purchasing power. Keeping it under control seemed impossible: government-owned businesses, unable to say “no” to the demands of the trade unions, administered a vast portion of the economy.

Thatcher recognized the economic crisis as a failure of politics. She offered a gospel of government retrenchment and individual initiative that sounded outdated. She wanted to make people responsible again for their economic destinies, instead of entrusting their fates to state guidance. This meant denationalizing the British economy. Before Thatcher took office, “privatization” was a word out of science fiction; ten years after she left office, it was a global norm. She changed England and, by changing England, changed the world. …

While Thatcherism is mostly associated with a set of policies (privatization, tax cuts, monetarism), it should be seen as part of a broader cultural picture. …

But her instincts were at least as important as her ideas. Alfred Sherman — indispensable as an early advisor and speechwriter but eventually excluded from her inner circle — once told me that Thatcher never read Friedrich Hayek or Milton Friedman, as she had claimed, but only Frederic Bastiat. Bastiat’s classic essay, “What Is Seen and What Is Not Seen,” with its emphasis on the long-term, unintended consequences that flow from apparently beneficial efforts, so that intended societal gains end up as losses, is perhaps the only economic lesson any prime minister needs to learn.