Thatcher's political and punk rock legacy

It is doubtful that any other political leader of the 20th century had, in her lifetime, as many songs written about her death as Margaret Thatcher.

The disaffected off-casts of her free market reforms found their voice in the British punk movements lyrics.

Shortly after she was elected in 1979, and Britons began to feel the heat of her economic reforms to stomp out inflation, the American New Wave eccentric Klaus Nomi remixed the Wizard of Oz ditty “Ding Dong! The Witch is Dead” in her honour.

Pink Floyd lyricised that she belonged in a home for “incurable tyrants and kings”.

Morrissey was the subject of an official investigation by the British police for a song on his debut album calling for her death: “Margaret on the Guillotine”.

Elvis Costello promised in 1989, shortly before she was ousted by her party as leader the following year, that: “And when they finally lay you in the ground, I’ll stand on your grave and tramp the dirt down.”

Harsh things were said about Britain’s Iron Lady in life. And harsh things will be said about her after her death overnight from a stroke. She was 87.

Perhaps it is a testament to the lady, and the strength of her convictions, that she existed as much in ideas as flesh and blood. And it is in those ideas that she will live on.

Thatcher inherited an inflation-riddled, union dominated, heavily nationalised economy. Her early policy reforms were aimed solely at bringing inflation down from eye wateringly high levels above 25 per cent a year in the 1970s to around 4 to 5 per cent. By the mid 1980s, she had succeeded. Inspired by the ideas of Milton Friedman and Friedrich Hayek, she began slashing government spending in a way that would make the modern European troika proud.

But her austerity regime came at a price. That price was the jobs of three million Britons who suffered the indignity of unemployment during her rein. The British jobless rate stayed above 10 per cent for most of the 1980s, even as prices growth sank to a moderate 4-5 per cent. A world recession in the early 1980s didn’t help the jobless situation. But neither did pro-cyclical big cuts to government spending.

Surely the memory of Thatcherism most deeply ingrained in the public mind was her staunch stance against the miners union in the 1984-1985. Determined not to give any government concessions to the powerful union, she organised the stockpiling of coal supplies for domestic use to reduce the effectiveness of the miners’ industrial action. And it worked. They went back to work after a year with no concessions. And the decline of Britain’s industrial north began.

Mass privatisations are also a legacy of her prime ministership. It is easy to forget that many of the world’s successful companies today, British Petroleum, Rolls Royce, British Airways, British Telecoms, were once government owned.

By sheer force of will and belief, Thatcher reshaped the British economy fundamentally towards a more market-oriented system.

She deregulated financial markets – an event remembered today as “the Big Bang” – leading to an explosion of private equity firms and hedge funds in The City. Indeed, the seeds of the 2008 financial crisis were sown in her decision to abolish regulations on borrowing.

She was staunchly anti-euro, arguing that small inefficient European states would always suffer from having a shared currency with stronger nations like Germany. She was right.

The grocer’s daughter floated her currency, cut industry subsidies, cut government spending, sold council houses to their occupants and reformed unions.

She destroyed the cosy, post-World War Two statist pact of governments to pursue full employment at any cost. Jobs matter. But it matters also that they’re the right jobs.

She ripped away government protections from workers and industry creating immense and very real pain in the short term.

But, as with all painful economic reforms, they unleashed the longer term gain of a more nimble and entrepreneurial economy.

Thatcher’s driving belief in free markets as the best way to allocate society’s scarce resources is her biggest legacy to the British economy.

Just don't expect any pop songs about it.