The end of the Thatcher era (Financial Times)

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author : Gideon Rachman

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The end of the Thatcher era

By Gideon Rachman

Published: April 27 2009 19:28 | Last updated: April 27 2009 19:28

“The British people had given up on socialism. The 30-year experiment had plainly failed – and they were ready to

try something else.”

So mused Margaret Thatcher on the eve of her first general election victory on May 3 1979. But as we approach

the 30th anniversary this weekend of the Iron Lady’s arrival in Downing Street, many British people have

concluded that once again “a 30-year experiment” has “plainly failed”. This time, however, it is the experiment with

Thatcherism.

The closing of the Thatcher era is an event of global significance. Many of the policies pioneered by her

government in Britain were copied in the rest of the world: privatisation, deregulation, tax cutting, the abolition of

exchange controls, an assault on the power of the trade unions, the celebration of wealth creation rather than

wealth redistribution.

Mrs Thatcher came to power 18 months before Ronald Reagan and the two swiftly developed an ideological love

affair. But the real triumph came when Thatcherite ideas started to catch on in improbable and inhospitable

environments – such as the Soviet Union and France.

In the early 1980s, while Mrs Thatcher pioneered privatisation, France under President François Mitterrand

pushed through wholesale nationalisations of banks and industrial conglomerates. But while she sailed

determinedly on with her free-market policies, famously proclaiming “the lady’s not for turning” Mitterrand was

forced into a U-turn in 1982. At the end of his period in office, he too was a privatiser.

By the end of the Thatcher era, free-market reforms were being pursued in China, eastern Europe, India and the

Soviet Union. On her last visit as prime minister to Mikhail Gorbachev’s Russia, Mrs Thatcher noted wryly that the

new mayor of Moscow seemed to be a disciple of her own economic guru, Milton Friedman. Two of her closest

advisers published a book with the exuberant title of

Privatising the World

. She herself exulted: “People are no

longer worried about catching the British disease. They are queuing up to obtain the new British cure.”

But, almost 20 years after she left Downing Street, the British economy is once again in deep trouble. Almost

everything that Mrs Thatcher opposed – nationalisation, raising taxes, Keynesian economics – is back in fashion.

One by one, the signature policies and achievements of the Thatcher years are being dismantled in Britain.

Her celebrated decision to cut the top tax rate to 40 per cent has been reversed. There will now be a

top rate

of

50 per cent, announced last week – and

opinion

polls suggest that the change is very popular. Britain has also

now effectively nationalised its large banks, just as the French once did under Mitterrand.

No reform captured the spirit of the Thatcher era more completely than the “Big Bang” of financial deregulation in

1986, which set the stage for the inexorable rise of the City of London. But the City is now in the doghouse and

there is a rush to re-regulate the financial services industry. Mrs Thatcher once proclaimed that “printing money is

no more”. But the printing presses are rolling again – except that these days it is called “quantitative easing”.

Forbidden from public speaking by her doctors, Lady Thatcher is in no position to defend her legacy or instruct her

remaining disciples.

Thatcherism is also out of fashion internationally. When Nicolas Sarkozy was elected president of France in 2007,

he quietly encouraged the idea that he was the French version of Mrs Thatcher. But these days he likes to be

photographed clutching a copy of

Das Kapital

. Mrs Thatcher venerated the free enterprise of the US. But the new

GIDEON RACHMAN

COLUMNISTS