Breaking news: Margaret Thatcher has died

[Agelastus]

http://www.hm-treasury.gov.uk/psf_statistics.htm

I was looking at the public debt figures, trying to square my mother's remembrance of Thatcher "paying off a lot of debt that had been hanging round for decades as a millstone" with the apparently more common feeling that "nothing special happened" (given our current debt crisis, it's interesting that no-one would be mentioning it if my mother's recollection was correct.)

While the issue is that I can't immediately lay my hands on the debt profile of what was paid off (long term debt as my mother's recollection as an accountant would indicate or short term debt) it actually is quite startling from the raw figures how quickly the percentage fell - PSND fell from 45.1% in 1984-5 to 26% in 1990-91. I'd rate that as an achievement she should be remembered for, albeit one unfortunately marred by the fact that it was facilitated partly by an unsustainable boom.

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As for her being pro-Apartheid?

What a crock; using evidence that she opposed sanctions when recent British history had shown how ineffective they were in the case of Rhodesia and that she considered the ANC a terrorist organisation at a time when it's leadership refused to condemn "guerrilla attacks and mob killings of black policemen, local officials and their families" (quoted from Wikipedia for convenience) while the PIRA was conducting a terror campaign with similar targeting criteria across Northern Ireland and mainland Britain is not particularly convincing.

Martinus, do you dispute the facts of the Wikipedia article regarding her attitude to Apartheid? Calling it "unacceptable" in a face-to-face meeting with the South African President hardly seems to me to be the words of a supporter of an institution.

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And now back to one of my favourite "hobby horses"...

It's also interesting how clearly the figures show when Brown, as chancellor, went "off the rails"...the percentages rise due to the early 1990s recession, then the percentage drops again during the late Major years and during Blair's first ministry when a lot of the spending plans of the Major government were adhered to for a while. Then from 2001 the PSND percentage starts to rise 7 years before the recession/depression of 2008 onwards.

Now I was aware of this before today, I'd just relied on secondary sources for the info rather than the Treasury's own data. I can recall Richard Hakluyt pointing out the same thing a couple of years ago, and on more than one occasion - Brown raised the debt at a time when it should have been stable or falling and that's part of why we're in such a mess now as we feel that we are unable to raise government spending to compensate for the reduction in consumer demand (at its' most basic, anyway.)

[Josquius]

And here's one of the places where I don't entirely disagree with Tyr; Major privatised the railways in very messed up fashion, one that Labour, despite being given the opportunity on more than one occasion, failed to fix (there's too many companies for the size of the network, and because they're so small track maintenance got hived off into another company. Four of five franchises that also had the role of maintaining the tracks would have worked much better, especially if given 20-25 year franchises. Should have cost a lot less in subsidy as well, both direct and indirect.)

Where I would disagree with Tyr no doubt would be that after renationalisation I would have re-privatised but in a more sensible fashion as described above.

I wouldn't totally disagree with that sort of system.
I would question though; how would a private company whose sole goal is profits provide better service than a public service? Railways aren't really an area where competition works so well once the market is mature, for true competition you would need multiple lines serving the same places which is largely impractical.

The way Japan privatised its railways has a lot of good sides - permanent regional companies made of the former nationalised network, allowing totally private sector companies to build their own lines, etc...
In the more rural parts of the country the companies are largely just private in name only, remaining super subsidised government controlled entities, in southern honshu though they're becoming very succesful with the high speed lines subsidising the local lines.
The down side comes though in their pursuit of profits at the expense of service. There are a lot of government controls to stop them just closing down rural lines but they do like to try and make service on them as bad as possible in the hope less people will use them and they'll be allowed to close them down the line (no pun intended).

[Admiral Yi]

Railways compete with buses, cars, and planes.  Sometimes with ships.

[Sheilbh]

While the issue is that I can't immediately lay my hands on the debt profile of what was paid off (long term debt as my mother's recollection as an accountant would indicate or short term debt) it actually is quite startling from the raw figures how quickly the percentage fell - PSND fell from 45.1% in 1984-5 to 26% in 1990-91. I'd rate that as an achievement she should be remembered for, albeit one unfortunately marred by the fact that it was facilitated partly by an unsustainable boom.

Interestingly she did this while running a deficit for 8 years and a surplus for 2-3. I'd be interested to read more, for example what was the effect of privatisation which would have moved public company debt off the books.

[Richard Hakluyt]

While the issue is that I can't immediately lay my hands on the debt profile of what was paid off (long term debt as my mother's recollection as an accountant would indicate or short term debt) it actually is quite startling from the raw figures how quickly the percentage fell - PSND fell from 45.1% in 1984-5 to 26% in 1990-91. I'd rate that as an achievement she should be remembered for, albeit one unfortunately marred by the fact that it was facilitated partly by an unsustainable boom.

Interestingly she did this while running a deficit for 8 years and a surplus for 2-3. I'd be interested to read more, for example what was the effect of privatisation which would have moved public company debt off the books.

Inflation and economic growth tend to pay the debt off for you, perhaps one reason why governments are often quite blase about borrowing. For instance, in 1990 (a bad year) we had growth of only 0.5% but inflation 0f 9.5%, so any debt that we had at the start of that year was effectively 10% smaller. Inflation was high towards the end of Thatcher's tenure (perhaps something the arch-monetarist should be criticised for, but generally isn't) and was probably the major factor in reducing the debt, which was hardly addressed at all in nominal terms.

[Agelastus]

Inflation and economic growth tend to pay the debt off for you, perhaps one reason why governments are often quite blase about borrowing. For instance, in 1990 (a bad year) we had growth of only 0.5% but inflation 0f 9.5%, so any debt that we had at the start of that year was effectively 10% smaller. Inflation was high towards the end of Thatcher's tenure (perhaps something the arch-monetarist should be criticised for, but generally isn't) and was probably the major factor in reducing the debt, which was hardly addressed at all in nominal terms.

It is noticeable that the £ Sterling value of the debt doesn't show a similar trajectory; I hadn't realised the inflation-to-growth ratio was so bad though, especially since the government ran surpluses in the last couple of years of the period suggesting a very positive trend between growth and taxation compared to the earlier years.

And I don't think people blame her for the inflation for three reasons - firstly because although it had gone back up it was still well below what it had been at its height in the previous decade or 80/81. Secondly because the inflation rate was perceived in certain circles as being a consequence of the worldwide reaction of governments to Black Monday - certainly in the papers of the time there were fears that this was a precursor to a depression that the Wall Street Crash had been; it wasn't just Lawson who let the brakes loose (although he'd done it before the Crash in 1986*, probably why we "crunched" so badly later.) And thirdly because other issues dominate the story for those years (The Community Charge and the riots, the consecutive leadership challenges, the resignation of the "Old Guard", the beginning of the Tories feuding over Europe, Thatcher's resignation etc.)



*According to Wikipedia,anyway - but a quick glance at the BBC's brief budget notes shows that the final reduction of the lower rate of income tax to 25% (the long term goal set in 1979) and the reduction of the top rate from 60% to 40% (the first reduction since 1979) both occurred in the 1988 budget and look like obvious attempts to stimulate consumer spending. The 1987 budget's a traditional pre-election "give-away", and the 1986 budget isn't there in enough detail (although what is there looks like tinkering more than anything.)

Two "give away" budgets in a row (1987 and 1988) is, of course, a problem. As we found a couple of years later.

http://www.bbc.co.uk/news/special/politics97/budget97/background/bud1979_92.shtml

[Valmy]

My apologies then, I misunderstood. I thought you were saying Tyr's views were unjustified since they were as reasonable as people who thought Obama was Hitler.

Yeah that was totally not what I was saying.

It was not an appeal to the crowd, it was an appeal to the people who've directly experienced the effects of the policies in question, something which I thought relevant when discussing the effects of the policies in question.

Well I do not think they actually were the effects of the policies.  I think people significantly overstate the ability of governments, particularly a middling one like Britain, to control international economic trends.  The fact of the matter is most first world industry was going to be offshored for awhile.  Thatcher could not wave a magic wand and make Asia and South America and so forth disappear or substantially check their impact on Britain and the rest of the third world.  It was time for an economic equalization and it was going to be difficult for all of us...and it has been.  It is my view that Britains who do not like this process blame it all on ideology and policy as if some sort of policy could have kept Asia, and China in particular, down forever.  Eventually, and it happened sooner rather than later thanks to Deng, their massive labor resources were going to be felt in the world economy.

However I totally get where Tyr and company are coming from.  We are engaged in a painful race to the bottom wagewise with the wealthy profiting from globalization while the working and middle classes suffer from having their labor be worth less.  Even high skilled labor can be done cheaply overseas thanks to the internet and so forth.  I think eventually the race to the bottom will be finished, it has occured far faster than I would have thought so far, and things will even out.  My hope was that government welfare programs could carry us through these painful transitions, and for the most part they have, but right now the sovereign debt issue is making even that a dicey proposition.  But Thatcher actively enjoyed this process it seems to me, as far as personal animosity is concerned, by glorifying in it so much and acting as if she set out to destroy the working classes and that somehow they deserved it.  Perhaps this will end up basically being a good thing, better to focus popular anger on a dead politician than on foreigners taking our jobs or whatever.

Since you ignored the bulk of my post, let me ask you a question instead: what's your opinion of Thatcher, and of the people who loathe her? You said earlier you weren't surprised by the outpouring of spite; what do you think the sources are?

I think I addressed this a bit already but there is one thing I left out because I do not really understand it.  The idea that a lack of regulations brought on the current economic crisis and that she and her ilk are ultimately responsible for that.  That maybe true but exactly what sort of regulations are necessary is too arcane of a topic for me to get my head around.  Supposedly Canada did it right but they might have just gotten lucky.  The frustrating part to me is we see these economic bubbles forming all the time and everybody knows they are bubbles and everybody knows they will pop, and not only is my government completely surprised everytime but they tend to turn out even worse than we had expected...consistently.  This phenomenon is also attributed to Thatcherism and perhaps that is fair and perhaps not.

My overall impression of Thatcher is she mostly did what had to be done, or rather what Britain was forced to do due to forces of history.  Due, mostly to her own doing, she personally has taken on most of the credit and blame for this.

[garbon]

Heh only a few hundred showed up of the promised thousands to celebrate Thatchee's death.

[Razgovory]

What were you doing there?

[Richard Hakluyt]

Heh only a few hundred showed up of the promised thousands to celebrate Thatchee's death.

Probably just the SWP and their hangers-on. Which is good news in my book, I didn't like the idea of mainstream socialists behaving in such a crass way.

[Admiral Yi]

Just read the Economist articles on Maggie.

Inflation was running at 24% in the UK when she hit the monetary brakes.

[Sheilbh]

Yep. At the time of her election it was under 10% but a constant problem, peaked in 80 but due to later policies when she left inflation was around 12% again.

[Brazen]

At least in the days of higher inflation salaries kept up. Now we have inflation of 2.8% and a retail price index of 3.3% and employers have taken the opportunity to stop pay rises altogether because of the "harsh economic climate" (I've been in this job for three years without an additional penny). This is despite the cost of everything, especially food, energy and fuel, rising unremittingly at far above inflation throughout. To date benefits have been index-linked, although the recent budget capped increases other than for pensions to 1%, but that's still 1% more than the employed are getting.