By Andrew Humphries

Many look upon Margaret Thatcher as a villain for shutting down or privatizing state-subsidized industries. By ending subsidies to uneconomical industries like coal mining and ship building in England, she caused many to lose their jobs and find new employment. This was not only a process of extreme discomfort for these poor souls, it destroyed communities that had existed for many decades.

It’s important to understand the genuine hardships people face and figure out how we can reduce them. On the other hand, it is also important to look at the unseen harms government favours can cause and figure out how to reduce them, too.

The end of the 1970s was an awful time for Britain.

Towards the end of 1970s, stagflation was high, unions were striking across the board leading to garbage piling in some cases up to three stories high, dead bodies not being buried and ambulances refusing to run, despite people dying who needed help. More than this, many union members engaged in violence against “scabs”, i.e., those that were willing to do the work the union workers were not. These were not an accident or caused by a force of nature, they were the consequences of economic policies being followed up to that point.

The more extensive the restrictions and forced transfers to unproductive activities, the more harmful and the more unsustainable the system of mutual exploitation becomes.

Classical Liberal theory explains that the middle class people often engage in “mutual exploitation”, benefiting from taxes and restrictions they place on others while suffering from taxes and restrictions placed on them by others. The more extensive the restrictions and forced transfers to unproductive activities, the more harmful and the more unsustainable the system of mutual exploitation becomes. (To be clear, the exploiting classes don’t always think of what they’re doing as “exploitation”. However, on the other end of every “free gift” given by government is someone enchained.)

England was experiencing the consequences of this process in 1978. Everyone being called upon to support each other’s unproductive activities was taking its toll.  More and more people were producing less while expecting the same or more in return.

The loss-making industries (the coal mines, for example) may have had wonderful aspects, but what right did people working in them have, to continue their way of life at the expense of those who would not voluntarily subsidize it? Everyone has the right to “pursue happiness”. The coal minors have a right to pursue a way of life even if others disapprove.  What they don’t have a right to do is to compel other people to support their way of life (either through direct threats, or indirectly through government restrictions and taxes).

Margaret Thatcher

Margaret visited the mine before miners’ strike in 1984. | Photo Courtesy: Times of Malta

I’m sympathetic that Margaret Thatcher may have done many things wrong. One of the things people say is that she failed to distinguish between peaceful union activities and protests from violent ones (of which there were many at the time). If true, this resonates with me. Another is that, as the head of the state, Margaret Thatcher undoubtedly engaged in politics, shifting the relative benefits of exploitation to favoured groups who would elect her at the costs on those who would not.

Margaret Thatcher, however, is sometimes accused of intentionally wanting to destroy mining communities to break union power. This opinion is based on a failure to understand her or grant her the grace of assuming decent intentions.

Whether or not she was antagonistic in character and had a vendetta mentality (which she may have and it may have influenced the way she dealt with people), she did close the mines because they were making losses and dragging the economy down. The politics of union-busting may have been part of her motivations, but the primary reason was that England was on was a path of unsustainable mutual exploitation which had the potential to lead (if un-reversed) to Third World poverty.

Listening to some of Margaret Thatcher’s speeches, it is clear that she understood more about the trade-offs at stake than the common people. They thought these industries could have continued as they had forever. They saw government subsidies as a free gift from an unlimited source, not something limited that had to be produced day by day by profit-making enterprises. They did not see that if people were drawing out more than they were contributing, they would create poverty rather than prosperity. As they could not see this macroscopic, systemic perspective, they assumed that Thatcher could only have withheld subsides and demanded reforming enterprises because of an evil intention to destroy their way of life.

I’m not an expert of many on the facts of the case and may be convinced of her mistakes and that the way Thatcher pursued her policies in this field was not ideal. However, if Thatcher’s understanding of the situation was plausible, her critics should have the humility to try to be more understanding and forgiving towards her in this respect. Furthermore, if her understanding was correct, they should not only accept the prudence of the direction of her policies, but consider being grateful for the reforms she made.

Andrew is a former faculty at Michael Polanyi College, a three year liberal arts program at University Francisco Marroquin, Guatemala.

This article was originally published on Spontaneous Order.

Featured Image Credits: Pixabay

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Posted by The Indian Economist