A quarterly magazine of urban affairs, published by the Manhattan Institute, edited by Brian C. Anderson.
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Thatchers Lesson for Today « Back to Story
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BonafideView nailed it. Bravo!
"Without financial deregulation, London would have lost out to New York and other global competitors."
Really ????????? Do explain how that would have worked, particularly how enforcing financial compliance laws would have driven off investors.
Cato the Commenter, here, needs a long read through Richard Koo's startling economics work. Koo made the first full-scale econometric database using company financi8al statements for all the main players.
What Koo found out was when to rely on the monetarists (Fresh Water) and when on the Keynesians (Salt Water) for economic policies.
He put meat on the synthesis that Friedman suggested 40 years ago.
The problem of the West is we don't have that many jobs that are in the primary and secondary sector, it is simply the nature of a developed economy. What is left? The service sector. Really buying and selling houses, shopping and such like become the bulk of the economic activity for a large proportion of the population. The higher the hosue prices, the higher the taxes on selling the houses and the higher the various land and property taxes. The higher the house prices the more confidence to borrow and spend, the lower the house prices the more savings, to try to regain the wealth that is lost.
The problem is government needs high and rising houses proces to stop a shift to savings and reduced borrowing. Not because they like debt, but because savings and reduced borrowings, cut consumption, which is where the bulk of the economy is now employed.
To "ween" the economy off this cycle would require a re-start. Let house prices and wages fall, until the West was cheap enough to create a balance of exports of goods and services. This would require house prices to fall further even in the US, let alone the UK.
Let banks fail or temporarily nationalise and then rationise them with Thatcherite zeal. Once rationalised, sell then back onto the free market. Shift the economy away from buying clothes and goods we don't even need, to one that saved around 10% of earnings and "made do and mended" would be a hard task for any elected politician.
In simple terms we have used borrowing to over pay ourselves and proced ourselves out of the market. To basically come out and say we are roughly 10-15% over paid for our valued added would take someone of only Thatchers courage in a political context.
Could you see it, "vote for the truth, cut wages by 10-15%, hold your head up high internationally repay the debts YOU borrowed", against the opposition "The bankers made you borrow and waste, we'll inflate our way out and borrow $85 billion a month, or even a week if needed". Possible unemployment, harder work and less rewards short term, against more public and subsidised private jobs, inflated wages, more goods and services.
Thatcher is still hated for shutting down mines that lost money and factories that needed subsidises to survive.
Re the coal mines. Until North Sea gas was found and put into the pipelines, London was still miasmatic with the famous "pea soup" fog that had prevailed for centuries, first from woodburning hearths, then coal, for centuries. After 193 or so, London got to be white and all painted and washing new, even the old brick row houses, which were black as ...coal.
Unfortunately, it seems the United State's "leaders" are presently in a full gear mode of going 'big'. Everything is too big to fail because it becomes more difficult to be small. One size fits all rules, which are often of a ridiculous nature, encourage 'big' who can pay for the rule implementation (often with special tax breaks) while the small entrepreneur's profits disappear to regulation. When the small-time operator can no longer make money, another economic loss occurs for our "big" country. It all adds up to a country with stagnation of growth and with a deadening of individual spirit; a vision completely opposite of what the image of an American has been and should be.
What weight of disaster is needed to force major change on democracies? UK 1979 and New Zealand (under a Labour government which followed the disastrous statist conservative Muldoon government)about the same time give us a benchmark perhaps.
But, as the West gets older and somewhat more materially comfortable, kicking the whatever down the road like the Eurozone (at least till after the German election) seems likely to be the norm. Is it only because of Japan's great homogeneity and memories of just how bad things could be - e.g. in the 1940s, that it has tolerated the slump since 1990? Partly no doubt it is because no one has put forward a plausible answer even if Bernanke et al. now think they can learn much from Japan's recent history.
We can only await the unlikely resurrection of St. Margaret. It is highly
unlikely that the second coming could so soon succeed the first.
She was sui generis and unlikely to be replicated in our lifetimes.