Thatcher's Politicial Legacy.

[fhdz]

God. Work, for its own sake, is SO NOT a virtue. That's one of the most disgusting leftovers of Protestantism.

I disagree, I think work's a virtue. I think it's better for people and communities than either permanent welfare or Downtown Abbey.

I agree.  In my experience there is nothing more soul (psychological not theological) destroying then not being able to work.

One summer I was a dishwasher and on housekeeping staff at a convalescent home. I guarantee you that was more soul-destroying than unemployment.

Anyway, the point is that work in the service of something greater might be a virtue, but drudgery? It may be useful and have a modicum of value, but there's nothing particularly virtuous about it.

[mongers]

Again, I am not sure what you are advocating for.   The coal mines and associated industries that were profitable remained open.  Earlier you said that her "stare down" with the union was necessary but now you seem to be suggesting that it was not and that she should not have tried to close down the money losing pits.

Sorry if I was unclear.  I do think the overall policy on the coal mines was sound as I understand it: gradually reduce employment levels, focus investments in the more profitable mines, and phase out the others.  I also think she had not other good options in the mid-80s strike. My gripe is with the destablizing macro policies of the earlier period 79-81, which impacted all industry.

Thanks JR for you thoughtful contributions to this thread.

Yes, that period of idealogical motivated government policy tends to get glossed over for some reason. 

I can remember living through it and with the consequences, one of which was Thatcher was set to loose the 83/84 election, if she wasn't toppled by a palace coup before than, but the war saved her bacon.

[crazy canuck]

God. Work, for its own sake, is SO NOT a virtue. That's one of the most disgusting leftovers of Protestantism.

I disagree, I think work's a virtue. I think it's better for people and communities than either permanent welfare or Downtown Abbey.

I agree.  In my experience there is nothing more soul (psychological not theological) destroying then not being able to work.

One summer I was a dishwasher and on housekeeping staff at a convalescent home. I guarantee you that was more soul-destroying than unemployment.

You may be an outlier then.  I have had many a shit job in my time.  But I have always felt worse when I did not have a job.  Growing up I also witnessed first hand what unemployment did to friends, my parents, parents of friends and the community in which we lived.

Yeah, shit jobs are, by definition, shitty.  But the alternative is worse.

[garbon]

You may be an outlier then.  I have had many a shit job in my time.  But I have always felt worse when I did not have a job.  Growing up I also witnessed first hand what unemployment did to friends, my parents, parents of friends and the community in which we lived.

Yeah, shit jobs are, by definition, shitty.  But the alternative is worse.

I'm going to agree with fhdz. While on the whole 2010 was a downpatch for me given the whole depression (and my large lack of desire to do anything during the day), I think I had more fun partying every night then I had working at that first job I had out of college - even once my disability payments dried up.  Though, of course, that first job was soul destroying and had been a primary trigger for my depression.

[fhdz]

You may be an outlier then.

Judging by the number of people who have written throughout the centuries about the mind-and-soul-deadening of drudgery, I am not sure you are using the word outlier correctly. Seems like your definition is more along the lines of "disagrees with me".

I have had many a shit job in my time.  But I have always felt worse when I did not have a job.  Growing up I also witnessed first hand what unemployment did to friends, my parents, parents of friends and the community in which we lived.

Yeah, shit jobs are, by definition, shitty.  But the alternative is worse.

A job is a means to an end. For me, the end is "that I have enough money to support myself and my kids so I can actually enjoy the time I am *not* at work, and do the things I love to do". It'd be wonderful if my job and those things I love to do were actually one and the same, but that doesn't happen for very many people.

[Warspite]

Again, I am not sure what you are advocating for.   The coal mines and associated industries that were profitable remained open.  Earlier you said that her "stare down" with the union was necessary but now you seem to be suggesting that it was not and that she should not have tried to close down the money losing pits.

Sorry if I was unclear.  I do think the overall policy on the coal mines was sound as I understand it: gradually reduce employment levels, focus investments in the more profitable mines, and phase out the others.  I also think she had not other good options in the mid-80s strike.  My gripe is with the destablizing macro policies of the earlier period 79-81, which impacted all industry.

This is the sort of evidenced critique of Thatcherite economic policy that's sorely lacking in our own press.

[Admiral Yi]

Hey Yi, what about tax cuts directed at a certain business?  Is that a handout?  Oh, or if the government renders a service to business such as preventing employees from striking?  Is that a handout?

If the tax break is an inducement for an activity the business would not otherwise be doing, then I would not call it a handout. 

Not sure what you mean by preventing employees from striking.  You mean like prodding them back to the assembly line at bayonet point?

What Joan is talking about, if I'm not mistaken, is the tightening of money supply pursued by the BoE concurrently with the Volker-led Fed in order to kill inflation.

[Jacob]

If the tax break is an inducement for an activity the business would not otherwise be doing, then I would not call it a handout.

I must be missing a nuance in your argument, because that would seem to be to include "keeping otherwise unprofitable industries/ worksites going".

[Warspite]

I would say there's a useful difference between giving industries a shot in the arm and putting them on life support.

[derspiess]

This is the sort of evidenced critique of Thatcherite economic policy that's sorely lacking in our own press.

No way.  We're a bunch of know-it-all Yanks who "weren't there"

[MadImmortalMan]

It seems to me that the gradual approach would have worked. I mean, from some graphs posted in paradox, it looks like the manufacturing % of the UK economy shrank much more under Blair than it did in the 1972-1990 period, and that wasn't a time of shock and unemployment.

[Jacob]

No way.  We're a bunch of know-it-all Yanks who "weren't there"

Minsky sets a great example

[The Minsky Moment]

Ok, I understand you point now.  But could you provide a brief description of those macro policies and the alternative policies that would have been better to implement?

Brief is hard; I'll try.
The Monetarists believed that inflation was entirely a monetary phenonemon; but while rejecting various variants of Keynsian stabilization policies, they accepted the potential need for economic stabilization.  Their view was (and still is) that monetary policy alone would be sufficient.
The question was how to achieve stabilization through monetary means.  Milton Friedman theorized that an economy could be kept on a relatively stable low inflation equilibrium if the money supply could be targeted to grow at a steady rate sufficient enough to accomodate real economic growth plus a low inflation rate (a kernel of this idea lives on today with the "market monetarists" who advocate NGDP targeting).  Friedman advocated that this could best be achieved through the adoption by the central bank of a fixed "rule" whereby the bank targeted a set rate of growth for a broad monetary aggregate (e.g. M3). 

The problem with the theory is that in practice it is impossible for a capitalist market economy -- even a mixed one like 1970s Britain -- to directly control either the rate of growth of broad money creation by the private financial system or its velocity of circulation.  The Monetarists theorized that it might be possible to control these things indirectly by using policy tools like controlling base money or by manipulating the fiscal deficit (note the tension between the last and the anti-keynsian position however).  This assumption was heavily criticized and it turns out that it was wrong.  Exhibit A is the Thatcher policy.  Thathcer set a formal target for M3 growth.  But her government failed to hit the target every year; in fact they were way off.  In the desperate effort to hit the target however, Thatcher simultaneously cut spending, raised VAT, and clamped down on base money creation.  Keynsian theory would suggest that doing so in the weakened condition of the British economy in 1979 would tip the economy into depression.  In fact, that is exactly what happened; unemployment leaped.  Moreoever, the demand effects fell particular hard on the industrial sector, because one consequence of the Thatcher policy was to push up the value of sterling in 79-81, at the very moment in time when the British economy was beginning to be subject to Dutch Disease effects from North Sea Oil.  So British industry was suddenly faced with the double whammy of collapsing domestic demand, and a weakened external competitiveness. 

This is a long about way of saying that ripping the band-aid off may not be such a good idea if the wound is still free flowing and surrounded by a vat of dangerous bacteria.

[Jacob]

I would say there's a useful difference between giving industries a shot in the arm and putting them on life support.

Agreed, but that may require some nuance in the arguments and definitions.

[crazy canuck]

Ok, I understand you point now.  But could you provide a brief description of those macro policies and the alternative policies that would have been better to implement?

Brief is hard; I'll try.
The Monetarists believed that inflation was entirely a monetary phenonemon; but while rejecting various variants of Keynsian stabilization policies, they accepted the potential need for economic stabilization.  Their view was (and still is) that monetary policy alone would be sufficient.
The question was how to achieve stabilization through monetary means.  Milton Friedman theorized that an economy could be kept on a relatively stable low inflation equilibrium if the money supply could be targeted to grow at a steady rate sufficient enough to accomodate real economic growth plus a low inflation rate (a kernel of this idea lives on today with the "market monetarists" who advocate NGDP targeting).  Friedman advocated that this could best be achieved through the adoption by the central bank of a fixed "rule" whereby the bank targeted a set rate of growth for a broad monetary aggregate (e.g. M3). 

The problem with the theory is that in practice it is impossible for a capitalist market economy -- even a mixed one like 1970s Britain -- to directly control either the rate of growth of broad money creation by the private financial system or its velocity of circulation.  The Monetarists theorized that it might be possible to control these things indirectly by using policy tools like controlling base money or by manipulating the fiscal deficit (note the tension between the last and the anti-keynsian position however).  This assumption was heavily criticized and it turns out that it was wrong.  Exhibit A is the Thatcher policy.  Thathcer set a formal target for M3 growth.  But her government failed to hit the target every year; in fact they were way off.  In the desperate effort to hit the target however, Thatcher simultaneously cut spending, raised VAT, and clamped down on base money creation.  Keynsian theory would suggest that doing so in the weakened condition of the British economy in 1979 would tip the economy into depression.  In fact, that is exactly what happened; unemployment leaped.  Moreoever, the demand effects fell particular hard on the industrial sector, because one consequence of the Thatcher policy was to push up the value of sterling in 79-81, at the very moment in time when the British economy was beginning to be subject to Dutch Disease effects from North Sea Oil.  So British industry was suddenly faced with the double whammy of collapsing domestic demand, and a weakened external competitiveness. 

This is a long about way of saying that ripping the band-aid off may not be such a good idea if the wound is still free flowing and surrounded by a vat of dangerous bacteria.

Thank you JR.  Very much appreciated.