Thatcher and Entrenched Interests

The former prime minister's victories over elites at all levels of society deserve emulation.

It’s probably inevitable that the attention now accorded Margaret Thatcher on the occasion of her death should spawn questions about what lessons from her life and career might be applicable to our own time. And it’s probably inevitable that such questions would spawn plenty of debate, since there are no final victories in politics and her outlook remains controversial in America just as it is in Britain.

Indeed, the United States today is locked in a powerful struggle between ardent advocates of free enterprise and private initiative (the Thatcher contingent) and those who wish to enhance the power, prerogative and reach of the federal government (the anti-Thatcher forces). That debate will dominate American politics well into the future, and the ghost of Margaret Thatcher will hover over it, as will many other ghosts.

But another element of the Thatcher story deserves attention, and that was her almost joyful resolve to smash the power sources of major entrenched elements of society. As David Ignatius notes in his Washington Post column yesterday, it wasn’t just the trade unions that felt the force of her withering assault. She also took down, with an equal fervor, the British class system—"the benign but hapless relics of ‘Downton Abbey,’” as Ignatius puts it.

He suggests it wasn’t easy to determine which side was more hidebound and resistant to change, the unions or the aristocrats. But together they "were unwitting partners in Britain’s paralysis"—a paralysis that stifled the emergence of any significant middle class. Without a vibrant middle class, Britain was gasping for the oxygen of enterprise and economic growth.

The lingering upper crust looked down on the bourgeois values of businessmen and did all it could to stifle entrepreneurial activity. So paltry and unworthy was business considered by young college students of the day that they would rather become government bureaucrats than entrepreneurs. As Ignatius, who attended Cambridge in those days, puts it, "If you couldn’t afford the country manor, better to live like a Bohemian."

In its dismissive view of the middle class, the haughty upper crust had plenty of support from the unions, particularly the powerful mineworkers union, which in 1974 fostered a strike well characterized by Ignatius as "a union-organized exercise in national suicide." Five years later, amid widespread labor unrest and societal dysfunction, Margaret Thatcher came to power.

Her successful attack on the labor unions’ underpinnings of power is well known. But she also demolished the upper-class hold on society by opening up the financial and business sectors to competition. As Ignatius writes, the upper classes became "porous," and new money soon emerged to buoy entrepreneurial upstarts who soon could go toe to toe with the crusty aristocrats of old. As Ignatius says, Thatcher "wielded the wrecking ball that demolished old ideas and barriers, on the right and left."

Few Western leaders of any era have accomplished anything like this. Few have managed to alter the political balance of power by destroying the power base of adversarial forces—all accomplished, of course, through peaceful democratic means. Ronald Reagan, Thatcher’s contemporary and friend whose political career is often linked with the Iron Lady’s, never accomplished any such political feat. True, in the tumble of political competition, he consistently bested his adversaries—the welfare state, the powerful federal government, the liberal isolationists and opponents of a potent military establishment. And he altered the terms of debate on domestic issues for years into the future, breathing new life into such ideas as entrepreneurialism, free enterprise and the imperative of economic growth.

But, when he left office, the power interrelationships in America were roughly what they had been when he became president. And Reagan’s opponents, unlike Thatcher’s, remained in position to chip away at his legacy, as Barack Obama is seeking to do today.

All of this brings us back to the question of whether there are any lessons from the Thatcher legacy that might be pertinent to our own day. And, yes, there is one: the intermittent civic need to smash the underlying power foundations of self-serving elites. In today’s America, there are two such elites—Wall Street and public-employee unions.

Consider the huge transfer of wealth to Wall Street bankers and financiers fostered by the Federal Reserve’s lingering policy of near-zero interest rates. That practically guarantees huge big-bank profits as they borrow from the Fed’s discount window for next to nothing in order to buy much higher-yielding government paper (with no need to add to their reserves, as they would have to do with big private-sector loans). Meanwhile, ordinary Americans see their money-market funds and other fixed-income investments plummet. As financial consultant David Smick has suggested, this may represent "the greatest transfer of middle-class and elderly wealth to elite financial interests in the history of mankind."