Remembering the Iron Lady

The grocer's daughter who took the world by storm -- and helped define her era.

Confession time: The grocer's daughter  was the only world leader to whom I ever sent a Valentine’s Day card.

I did so in 1980, just a few months after she began her eleven-year run as the United Kingdom’s only female prime minister (1979-1990). There was nothing romantic about it. It was simply a gesture of friendship across an ocean to someone—a kindred heart and spirit—who so clearly understood the dangers posed at that time by an assertive, expansionist Soviet empire that had just invaded Afghanistan. Mrs. Thatcher was just the kind of friend that the US needed at that time. I was surprised, and humbled, when I received a gracious acknowledgment of my card from one of the PM’s secretaries.

Lady Thatcher, who passed away Monday at age 87, helped to define her era. During her eleven years at 10 Downing Street, she was one of those commanding presences about whom it could be said, “Tell me what you think of Margaret Thatcher, and I’ll tell you who you are.”

Those who believed then or believe now in traditional values—private property, voluntary cooperation, hard work receiving its deserved reward, individual rights, principled opposition to suffocating statism (the welfare state at home, Marxism-Leninism abroad)—admired, even adored, this one-of-a-kind leader. Leftist ideologues, comprehending the existential threat she posed to their beliefs and impotent in the face of her moral and intellectual clarity, futilely denigrated her.

She fully deserved the label coined by a Soviet journalist—“Iron Lady.” Margaret Thatcher had courage, resoluteness, and a strength of character unmatched by any other democratic politician of her generation—Tory or Labour, in the UK and outside of it—combined with the dignity, poise, and refinement of a lady in the highest sense of the word.

For me, the passing of Lady Thatcher has a personal dimension beyond the Valentine card. I did some graduate work at Oxford (Shakespeare, not economics) in the mid-‘70s, and my time living in England was eye-opening. Like many, if not most, American undergraduates during the Vietnam War years, I had been inundated with anti-capitalist, social-engineering do-goodism. Living the dreary day-to-day reality of Britain’s stagnant, heavily socialized economy caused me to finally, emphatically, and completely forsake any belief in the efficacy of government economic control over economic activity. Economic prospects for middle-class or poor Brits appeared abysmal, nearly hopeless.

It also seemed to me that the US was on the same path as the UK, although, thankfully, several decades behind it. I remembering hoping that we would never find ourselves in similar circumstances; I also couldn’t see, at that point, how Britain could climb out of its self-imposed economic morass. What I had not counted on was the emergence of a leader as effective as Margaret Thatcher.

Mrs. Thatcher crafted one of the most successful national economic policy regimes of the 20th century. This was no small feat, considering that her academic training was in chemistry and later in law.

Thatcher had developed an understanding of the values and virtues of free enterprise as a child, when she worked with her father in his grocery store. Heavily influenced by the Austrian economist, Friedrich Hayek, she understood the importance of shrinking the footprint of the state by reducing government spending and stemming the depreciation of the currency. She proceeded to implement the necessary policies, despite the short-term pain the inevitably caused.

The core of her successful economic program was encapsulated in the word “privatization.”

The UK’s budget had been out of control. Major industries were bleeding the Treasury, creating a never-ending need for more revenues. The problem was, the heavier the tax burden on the private sector grew, and consequently, the more sluggish economic growth became. The leviathan state was crushing the life out of the UK’s economy.

Thatcher realized that government efforts to encourage state-subsidized industries to operate more efficiently were futile. She understood economic incentives and human psychology, stating, “Why should they be efficient? They had access to the Treasury purse.”

By privatizing state-owned businesses, Thatcher shrank government budget deficits in three ways: 1) By selling shares to the public, the government treasury received cash infusions. 2) The divested businesses ceased to receive subsidies, thereby reducing government expenditures. 3) Through the invigorating pressures of competition and the newly acquired need to strive for a profit, formerly money-losing enterprises trimmed fat, improved quality, and generated profits, generating additional revenues for the government.

Thatcher’s privatizations (she accomplished the privatization of approximately 2/3 of the UK’s nationalized firms during her tenure as PM) allowed her to reduce marginal tax rates on work and savings. Her tax policy, combined with an end to the inflationary policy of financing the formerly bloated government deficits with loose money policies, turbo-charged the UK’s Thatcher-led economic boom.

It is important to realize how close the UK came to abandoning Thatcher’s program before it had time to go into effect. She faced fervid denunciation from all the special interests whom she sought to remove from slurping at the public trough. Similarly, she had to contend with mutiny of some less-principled Conservatives who were more concerned about being liked than in mending the UK’s broken economy. Fearlessly, Thatcher withstood vilification, back-stabbing, and unpopularity. She was determined to revitalize the UK’s moribund economy. She knew there was no point in returning to the failed status quo ante.

What saved her political career and the eventual economic turnaround for the country was one of those historical “wild card” events—the Falkland Islands War against Argentina in the South Atlantic in 1982.

The unpopular Argentine junta sought to appeal to patriotic sentiment to divert attention from their unpopular domestic policies by sending the Argentine military to reclaim the Falklands from the UK. It would have been easy for a leader already beleaguered by economic stagnation to rationalize that those remote, almost insignificant islands weren’t worth fighting over, but there was a principle involved: The Falklanders (fewer than 2000 in number) considered themselves British citizens, and valued the rights that being a British citizen included.

Thatcher was not about to abandon those loyal patriots. She mobilized the British navy, which proceeded to engage in combat with the Argentine military, driving them out and securing possession of the Falklands. In doing so, Thatcher gained instant “street cred” with the aggressors and potential aggressors of the world, and she also restored British pride and won the reelection that was necessary to give her major economic reforms time enough to work. And work they did, setting the UK economy on an overall upward trajectory for the next quarter-century.

On another policy front, Mrs. Thatcher had reservations about the EU and the euro currency. Many political opportunists, including some in her own party, were seduced by the siren song of the EU and the euro currency, and they criticized Thatcher for being old-fashioned and backward-looking. Today, as we survey the lurching national crises and the ethically questionable machinations of undemocratic and unaccountable eurocrats, Thatcher’s reservations can now be regarded as prescient and prudent. Her compatriots should be grateful for her wisdom in keeping the UK from becoming entangled in that increasingly lawless and illiberal quagmire.

As we remember Margaret Thatcher, we Americans should be grateful for her strong support of President Reagan as he strove to eliminate the Soviet threat. Although there were some disagreements

between these two spirited, strong-minded leaders, their partnership was crucial. One of Lady Thatcher’s finest moments—one that should touch the hearts of all patriotic Americans—was her moving eulogy to Pres. Reagan. Already suffering some physical decline at that time, she recorded her remarks on camera so that her own infirmities would not detract from the proper focus on our own fallen leader. It’s great stuff. Watch it some time when you want to feel good.

One final thought about this great woman: Her climb up from humble origins to become one of the most influential leaders of the 20th century is in many ways a quintessentially American story. It resonates with us. Her ascent was achieved by diligence, persistence, and strength of conviction. I can’t tell you how many bright, promising undergraduate women to whom I have introduced Margaret Thatcher as one of my few heroes. I love the response in their eyes as the fire of hope and inspiration is kindled in them when I tell them the story of the grocer’s daughter who became one of the great Brits of all time and one of the most important national leaders of the 20th century.

Rest in peace, dear lady. You will be missed and remembered.

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