The very sensible compassion of Margaret Thatcher

The recent death of Margaret Thatcher provoked a plethora of analysis and emotion about the late British prime minister. That was predictable given how the much-needed reforms of the British economy upset the turgid status quo; that was bound to produce admirers and critics.

Glenda Jackson, a British actor who later became a Labour Member of Parliament, is perhaps symbolic of the detractors. In her take on Thatcher in a recent parliamentary speech, Jackson asserted that the Iron Lady wreaked “‘heinous social, economic and spiritual damage” on Britain.  She argued that Thatcher’s legacy was to turn vices into virtues, that “Greed, selfishness, [and] no care for the weaker” were now admired because of Thatcher’s time in office.

It is quite a charge, one often leveled at governments that do not reflexively increase spending, taxes and debt. It is thrown at politicians who oppose the notion that every private or pressing social problem is solvable so long as governments gather enough smart people and tax dollars in one room (the assumption being that somehow, that elixir will then magically banish all human ill).

The Jackson accusation has wider relevance than just British politics. It touches on core arguments about how to create better countries—better in every sense.

Consider one example of Thatcher’s supposed meanness: her refusal to have taxpayers subsidize money-losing coal mines any longer. Thatcher’s refusal provoked a bitter strike in 1983 but the government refused to budge. Or ponder her determination to end inflation, which was in the double-digits when she took power. (Rampant inflation always threatens the savings of the poor and middle class the most. The rich will always find ways to get their money to safer jurisdictions.)

Consider what the United Kingdom would look like today absent Thatcher’s reforms. Great Britain would look like Greece, which in fact it did in the 1970s: regular, lengthy strikes, IMF bailouts, crony capitalism and poor public services.  (And it would look like Argentina on inflation, with 26 per cent inflation this year.)

To use just one recent example, look at Greece, where pensioners have faced significant reductions in their pensions. That is directly tied to how the government spent wildly beyond its means for decades, borrowed excessively, never balanced its books, and is now broke.  (And it wasn’t because of “too-low taxes;” Greek tax rates were in line with much of Europe.)

Critics like Jackson equate compassion with government spending. As it happened, British government spending barely dropped, from 43.2 per cent of GDP in 1979 to 41.2 per cent in 1990. That is hardly evidence of a Scrooge-like approach to government if one thinks that metric is the best definition of compassion.

But large government is not a defensible nor sensible definition of compassion. While the delivery of some services via government makes sense, like much else, the devil is in the details. A government that tries to do everything will end up doing nothing particularly well.

The British Labour MP was wrong. It wasn’t and isn’t greedy, selfish or a sign of unconcern for the poor to demand that governments live within their means; to assert that unions indeed have their role but that union leaders not be allowed to choke up an entire country; that wealth creation and aspiration matter.

In fact, one sign of both smarts and compassion is to grasp that ensuring the potential for job creation is one of the most useful things a government can do.

Here, Thatcher succeeded.  Her attack on inflation, her reform of spending and taxes, of labour laws, the exiting of government businesses, and the re-creation of a Britain that worked, worked.

In 1979, 25.2 million people were at work in the United Kingdom according to the OECD. That dropped to a low of 23.8 million in 1983 before rising once again. By 1990, when Thatcher left office, 26.9 million people had jobs, or 1.7 million more than when she first entered 10 Downing Street. Those who demand evidence of Thatcher’s compassion should look for it in such numbers.

In contrast, in France, where policies prescribed by Thatcher’s critics were in play, employment was 22.3 million in 1979 and just 22.9 million in 1990—an increase of just 600,000 employed people over the same eleven years.

A recent British poll about Thatcher revealed that a good chunk of the British public understands all of this. Tellingly, the poll showed that a plurality of blue-collar workers respected Thatcher’s ability to “get things done,” that in an economic crisis, most people would trust Thatcher over any other recent prime minister.

That should be an unsurprising result. Thatcher’s reforms helped millions more Britons, of every class and creed, to prosper. They recognize a compassion that worked.