The Lady’s Ironclad Legacy

Thatcherism: love it or hate it, what remains incontrovertible is the Iron Lady’s clear influence on modern-day politics. In 1979, just twenty years after her first election to the British Parliament, Margaret Thatcher made history, becoming the first female Prime Minister of the United Kingdom and one who propelled her Conservative Party to a forty-four-seat majority in the House of Commons. As Prime Minister, she felicitously became known as the “Iron Lady”, alluding to her ruthless, no-nonsense leadership style. It’s not hard to see why. She relentlessly pursued her political philosophy in the face of widespread domestic opposition. She was nonetheless successful in achieving her economic and foreign goals.

Her recent death has prompted widespread commentary on the effectiveness of her leadership, particularly over the growth of the British economy. She was well known for her conservative supply side economic policy, where tax and spending cuts are more effective economic stimulants than government expenditure. Margaret Thatcher came to office amidst a recession and rapidly rising unemployment. In April 1984, it peaked at 11.9% and by the time she left office in November 1990, unemployment had fallen to 7.5%. While it is true that wealth inequality worsened under Thatcher’s premiership, household income rose for everyone under Thatcher’s tenure. In inflation-adjusted terms, the 10th percentile incomes rose by 4.7 while the income of the 90^th percentile rose by 47%. The prime minister created a net 1.6 million jobs after leaving office, including 3.6 million new jobs in the service sector.

Thatcher cut the top income tax rate from 83% to 60% and lowered the common rate from 33% to 30%. To offset revenue losses, she increased the Value Added Tax from 8% to 15%. Because this tax hits people in lower brackets harder than people in higher brackets, Thatcher also introduced a 90% tax on all oil extraction revenue from the North Sea. Financial deregulation and privatization of most state owned companies accompanied these tax law adjustments. These collective policies have boost GDP growth by 29.4%. It is important to remember that Thatcher’s overall tax policy benefitted the living standards of all her constituents, not just the well off. Her philosophy of economic self-dependency and less reliance on government helped shape her tough reputation.

Margaret Thatcher’s harsh, no-nonsense status were further supported by her response to the 1984-1985 Miners’ Strike and the Argentinian invasion of the Falkland Islands. While the former was domestic policy and the latter was foreign policy, both capture the essence of the Iron Lady’s tough leadership style. Much to the dismay of National Union of Mineworkers’, Thatcher sought to close a number of several unprofitable coalmines to cut wasteful subsidies. To avoid being pressured to bow to union demands, she prepared for the strike by building up coal reserves to prevent electricity shortages. The union gave up on its strike after one year without a deal.

Thatcher subsequently privatized most of Britain’s coalmines. In the Falkland Islands, Thatcher repealed an Argentinian invasion claiming to have property rights over the British territories. Going to war and confronting unionized labor were two instances that showed her resolve and unwillingness to succumb to pressure. It would have been easier to cave to the union’s demands in the coal strike and allow coal subsidies to continue swelling deficits. It would have been less costly to not invade the Falkland Islands. Nonetheless, she made two difficult decisions that worked in favor. Not did they bolster her re-election; but these two decisions helped shape her standing as a tough leader who would never surrender to enemies.

One aspect of her premiership that critics often take for granted is her special relationship with Ronald Reagan. During the 1980s, Cold War tensions reached their highest levels since the 1962 Cuban Missile Crisis. This was in part due to the increased nuclear spending under American, British and Russian governments. Reagan increased military spending to pay for the Strategic Defense Initiative, by which the United States would have the power to offset nuclear ballistic missile attacks. Thatcher tripled Britain’s nuclear capabilities by purchasing the Trident submarine system. In response, the USSR devoted fifteen to seventeen percent of its GDP to defense spending. The British and American economies were beginning to recover from 1980s recession while the Soviet economy was tanking. The Reagan-Thatcher strategy of outspending the Soviet Union worked, because by the time Reagan challenged Gorbachev to tear down the Berlin Wall, the USSR could no longer keep its military spending levels consistent with the UK and US. This strategy brought about the demise of the Soviet Union and ended the Cold War peacefully.

Left-wing critics frequently point to Thatcher’s decision to increase military spending at the expense of social services including education and government retirement programs. The brilliance of the Peace Through Strength” is that by increasing tensions through more military spending, the West was also increasing mutual desire to negotiate and end the conflict peacefully. The additional spending gave the Soviet Union an even stronger incentive, as its economy could sustain military power to match that of Britain and the United States. It is impossible to conclude how the Cold War might have ended had one Thatcher’s Labor Party opponents ousted her from office in the 1980s. Perhaps a different British Prime Minister would not have pursued the Peace Through Strength strategy that spared the world from the fear of nuclear Armageddon. Nonetheless, Thatcher deserves credit for playing a leading role in the process of ending the Cold War without firing a shot.

The Iron Lady and her legacy will always be controversial. While conservatives may hail Thatcher’s premiership as a success story of their ideas, there is a more important message to take away from her time in office: strong-willed leadership. Liberals and conservatives can both derive inspiration from her unrelenting determination to accomplish her political goals. Hopefully when our future leaders invariably struggle and look to history for answers, they will not forget the Iron Lady.