Thatcherism, by Kim, Changhyun, Oct 2005


Margaret Thatcher, the Conservative prime minister of the United Kingdom from 1979 to 1990, cut direct taxes, reduced the power of trade unions, deregulated the economy, and privatized nationalized industries.
Her economic doctrines, collectively called Thatcherism, initially caused a severe recession. Production declined, especially in manufacturing. It was only in 1983 that the economy once again entered a period of growth.
She oversaw the passage of legislations designed to weaken the power of unions over their members or against the management. Her policy regarding private sector strikes was to consider them a business between labor and management. Her policy regarding strikes in nationalized industries was to systematically fight the unions' demands. Trade union membership declined.
The income tax was cut and indirect consumption taxes were raised. Her tax policy had the effect of easing the tax burden on the rich and increasing the tax burden on the poor. She believed this would encourage diligence and entrepreneurship.
Many nationalized companies were privatized. Through privatization, Thatcher aimed to improve efficiency, increase the number of stock holders in Britain, raise extra revenue, and undermine the support base of the Labour Party.
Despite a recession in the early 1980s, the British economy grew more during the 1980s than it had done during the 1970s. The average real income rose significantly.
Income distribution grew more unequal while Thatcher was in office. Although Britain as a whole got wealthier, the poor became poorer. The economic gains achieved during the Thatcher years went mostly to the wealthiest fifth of the population.
Thatcherism was a boon for the service sector but a disaster for the manufacturing sector. Most of the unemployment was due to the loss of manufacturing jobs. The provision of financial services led economic growth and job creation.
Industrial areas in the northern United Kingdom were adversely affected, while the southern United Kingdom, especially the greater London area, became home to new service sector jobs. Consequently, a north-south rift emerged. The south boomed while the north struggled with high unemployment.

Kim, Changhyun
October 2005

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