Sunday, 23 September 2012

Evaluating Thatcherism

At the start I should say I am sympathetic to Thatcherism. I think the state spends too much, regulates too much, and ought to be smaller and less intrusive. I also agree with her infamous "no such thing as society" quote, which is still taken out of context so often that it deserves reproduction in context here:
... They're casting their problem on society. And, you know, there is no such thing as society.There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It's our duty to look after ourselves and then, also to look after our neighbour. People have got the entitlements too much in mind, without the obligations, because there is no such thing as an entitlement unless someone has first met an obligation.
In the end, however, Thatcherism appears to have been a failure. The central goal was to roll back the state, but this did not happen.
Public spending fell as a percentage of GDP during the Thatcher and Major governments. In real terms, since GDP increased during this time, it increased. (For some purposes the % GDP figures are what matters, and for others -- like measuring the absolute power of the state, for good or ill -- the absolute amount matters.) But the fall was not sustained, and under Labour we returned to almost the heights of the 1970s. You could just blame Labour for this, but that is politically naive. In a democracy, changes that require one party to remain permanently in power cannot be called sustainable!

Taxes also did not sustainably fall under Thatcher. In fact, taxes grew at first, then fell back, and grew again under Major.
Tax receipts % GDP
At least, unlike Reagan, Thatcher did not increase government debt tp pay for tax cuts -- a policy which ought no longer to be respectable in Conservative circles, but sadly remains tempting to US pseudocons.

Perhaps if Thatcher had not been elected, the state would have got even bigger. But Thatcherism did not make it smaller. I also doubt that the state regulated less in 1997 than it did in 1979, although surely that was true in some areas. In that sense the fundamental goal was not achieved.

Some key state companies were privatised. Few sensible people would reverse that decision. However, that agenda has little room to go further. Although choice and competition may be introduced into health and education, they will not be privatised, for probably sound reasons.

All of which means that the Thatcherite agenda must have been mistaken in some way. (Many, many people think it was mistaken in its goals; I mean that it was mistaken in the means it chose.) Conservatives who still support the basic libertarian goals must now find new ways to achieve them.

(By the way, here is Deirdre McCloskey on fine form explaining why you might want to support those basic goals. There is even more of this in her book The Bourgeois Virtues.)