Thatcherism

What were the cultural roots of Thatcherism?

-> Austrian economist Frierich Hayek (critique to the welfare system).
+ Ronald Reagan, the Chicago School, Samuel Brittan.

How was viewed inflation?

Immoral & economically dangerous (penalized saving, which was a virtue).

What was the primary goal of Thatcherism?

Defeating inflation. It became more important than full employment.

What was Thatcher's social ideology?

A high security society -> eliminating poverty basically.

What was the financial strategy that was used by Thatcherism?

Monetary targets -> to limit the amount of money in circulation = refusing to print more money + raising interest rates.

What economic policy did Thatcherism dropped as soon as possible?

Income policy -> They saw no reason why private employers that could pay high wages couldn’t do so if they had the possibility.

Which position had Thatcher on Trade Unions?

To restrict TUs' rights.
3 acts made it possible:
- Employments Acts in 1980 and in 1982
- Industrial Relations Act in 1984

How did Thatcher restricted Trade Union power?

> made TU responsible for illegal acts committed on strikes
> ballot of TU members before a strike
> simpathy strikes illegal
> regular vote on financial support to the Labour party or not

What was the practical application of Thatcher's beliefs around taxation and incentive?

- a reduction in the standard rate of income tax from 33% in 1979 and to **25% by 1988. This concerned the top rate of income tax.
- but an increase in VAT (= Valute Added Tax) from 8% to 15% in 1979. Taxation shifted away from incomes towards consumption

What was the paradox around centralisation?

Thatcher was pro-centralisation but in the end the measures put in place were in favour of decentralisation. For example: the government abolished the Labour-controlled Greater London Council and the Metropolitan Authorities
+ put in place the poll tax = Community Charge.

For Thatcher, what engendered the "dependency culture"?

Welfare because it prevented people to take on personal responsability (target on special social groups like underage mothers). Supposedly to be replaced with the "entreprise culture".

How did they reform welfare?

They created a two-level system in the National Health Service: one public and the other private (John Major).

When did the Falklands War happen?

In 1982: Britain vs Argentina. Total cost: 3 billion pounds.
Victory led the Conservative party to be reelected (landslide victory).

"They believed that the private sector could handle everything better than the public sector." What were the consequences of this belief?

Mass privatization of nationalized industries (water companies, railways, airports...)
+ import of private methods in the public sector
+ market test of government departments (efficiency)

What was the "gang of four"?

It was a breakaway group of four Labour politicians who founded the Social Democratic Party in 1981. Shortly after its formation, the SDP formed a political and electoral alliance with the Liberal Party, the SDP–Liberal Alliance , which lasted through the 1983 and 1987 general elections.

What was the balance sheet of Thatcherism in 1990? (Unemployment, trade, deficit, education, public services, poverty, industry)

- unemployment above 3M (1982) -> 2M in 1990 because of changes in the methods of calculation
- trade was in the red
- deficit in manifactured goods
- worst educated country in Europe
- public services were demobilized
- growth of poverty
- British industry had stagnated and wasn't bigger than in 1979 + foreign-owned

What were the 3 causes for Thatcher's departure?

1. Her policy no-euro that caused the resignation of 2 of her key ministers in Cabinet (Europe)
2. Recession (1980-1982)
3. The poll tax

Did Margaret Thatcher resign?

Yes. She was challenged by Heseltine inside of her party. Her supporters then rallied around John Major who was to be Thatcher 2.0.