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Showing posts with label Economics. Social Breakdown. Show all posts
Showing posts with label Economics. Social Breakdown. Show all posts

Tuesday, 9 April 2013

Thatcher: - getting the balance right! Speaking out as a child of the era!

She divided a nation but the post 1990 generation have no idea what Thatcher did for the UK in the 1980s

Your blogger was a child of the Thatcher era. Although born some years prior to her election as Prime Minister in 1979, Thatcher was the first PM your blogger had any memory of. The politics of the age were defined by her policies and, perhaps even more, by her personality. Almost a quarter of a century after she left office, and now even in death, the former Prime Minister arouses passions no other domestic political figure of the last 100 years comes even close to matching. Judicial Cat comments on her key achievements, and mistakes.

A lesson for those born after 28 November 1990

When the death of Margaret Thatcher was announced on 8 April 2013 the negative reaction from many was predictable. She was not universally admired, far from it. What was not so predictable and, in your blogger's view, almost ridiculous was the reaction of many twenty somethings; those who can have no memory of Thatcher's time in office. The generation born just before her resignation, or indeed some years later, can have no possible practical idea of her overall impact. Yet many revelled in the news of her death. 

Judicial Cat invites the post 1990 generation to imagine it is the late 1970s. There are no mobile phones, indeed if you had a landline phone you were considered 'affluent'. In order to actually get the landline phone one had to apply to the Post Office and wait around three months before it was installed. You had a choice of maybe three state approved colours for your telephone. No internet, indeed no personal computers. Three television channels, a national airline run by the government, the government of the UK run by Trade Union leaders  rather than the supposedly constitutionally formed government of the country. Depending on who was striking this week you did, or probably did not, have electricity running all week without interruption. Unless very affluent you did not take foreign holidays and if you did there were exchange controls regulating just how much foreign currency you could take out of the country. During the winter of 1978/1979, the streets remained uncleaned with rubbish piling up in Leicester Square, and the dead went unburied with bodies piling up in the mortuaries of Liverpool. In summary the UK approached the 1980s as the basket case of the west. This is the reality that Thatcher's critics conveniently seek to forget or claim to be an exaggeration; even those born some years after the events. This was the 'inheritance' Thatcher faced as she walked into 10 Downing Street as the nation's first female Prime Minister on 4 May 1979.

Key achievements 

Let us look at some of the positive achievements of her premiership. Judicial Cat would highlight the 'Right to Buy', taming the Trade Unions, and her uncompromising stance when it came to proposals for European Monetary Union (or the Euro in modern parlance). Right to Buy enabled those living in what we call 'Social Housing' to purchase the home they rented at a substantial discount. A whole generation who would never have made it onto the property ladder became home owners. Your blogger's parents were 32 when they proudly completed on the purchase of their social home. Without this help, these were people who could never have hoped to have owned property. Contrast this with today's, almost impossible challenge, for anyone under 35 to get on the housing ladder. Some argue this is the cause of today's housing crisis; however, Judicial Cat would disagree. Today's crisis is caused by the uncontrolled rents of the private sector and the failure of governments (including Thatcher's) to legislate for more secure tenancies within this sector. 

The Trade Unions had to be tamed. In 1974 the National Union of Mineworkers effectively brought down the government of Edward Heath. A decade later they were at it again this time under Arthur Scargill. A year long strike, called with no mandate from the union members whatsoever, was no less than an attempt to overturn the democratic result of a general election held less than a year earlier. The government had to make a stand and Thatcher was correct to do so. It is of some note that the Labour governments of Tony Blair and Gordon Brown made no attempt to reverse legislation outlawing secondary picketing and making strike ballots compulsory.

However, in your Blogger's opinion the most important legacy of Thatcher's time in office was also to lead to her downfall in November 1990. The nation owes her a debt of gratitude for having the foresight to warn of the perils of European Monetary Union. She correctly predicted that the idea would be a disaster. On this central issue she called it right and that has become crystal clear in the modern era as we witness the economic collapse of many countries within the eurozone. Some may argue that it was Gordon Brown who 'saved' us from the euro and he certainly played his practical part. That being said have no doubt about who had the foresight years before the project came to fruition, and that was Margaret Thatcher. On foreign policy she was right on all the major issues of the day especially defence and the retention of the UK's independent nuclear deterrent.

What she got wrong

Presentation and the perceptions she allowed to be formed were her weaknesses. She gave the impression of not caring for anyone outside of London and the South East. This was, of course, completely daft. Let's take Liverpool for example. Your blogger knows a little about this area of the country, having been born and brought up there. Liverpool had been in decline for some years prior to 1979; however, to this day Margaret Thatcher is blamed. In actual fact the start of Liverpool's regeneration was under her government with particular praise to Michael Heseltine. This message never got through and, perhaps, she was not interested; there were not many votes within inner city constituencies of Merseyside. This has allowed a complete myth about her to grow and be passed down the generations. Lots of people in Liverpool and other so called 'deprived' cities did benefit from her policies; however, this was never properly communicated or promoted.

Nationally, she stayed in office far too long and brought in daft policies like the Community Charge (Poll Tax). Again nothing wrong with this policy in principle, but the implementation was a dog's breakfast due to a failure to address the regressive nature of the duke paying the same as the unemployed citizen. Judicial Cat takes the view that she should have bowed out in 1989.

Some personal thoughts

As a youngster your blogger was politically aware from a very young age. The politics of the 1980s helped form many of the political views held by your blogger today. In particular it was Thatcher's merit based approach to life that was particularly attractive. She was a conservative politician who had made it to the top, not via the 'silver spoon' route but by sheer guts and determination. Thatcher had no time for the 'celeb culture', which has affected almost every aspect of British life since the late 1990s A tough no nonsense approach is what attracted your blogger to her politics. People claim she was divisive, yet with polices such as the assisted places scheme she facilitated those with ability and from modest backgrounds to attend some of the best schools in the land. University education remained free and social mobility improved. Contrast that with the government of David Cameron and his Liberal Democrat 'side kicks'. The modern day government is divisive, detrimental to social mobility, and interested only in the 'elite'. A cabinet of millionaires, mostly with members who have no idea of the 'real world'. That is a truly non progressive government, not the socially inclusive, widely supported governments led by Margaret Thatcher between 1979 and 1990. May she rest in peace!

Tuesday, 15 May 2012

Grexit: - what a Euro mess!

It really is now time for Greece to be "set free" from the Euro

A health warning, Judicial Cat is not an economist. Indeed your blogger's only formal economics "training" took place over 20 years ago as part of a first year undergraduate course. That being said your blogger distinctly recalls some of the more obvious arguments against joining the Euro; when back in 1991 it was still some years away, but even then anyone with "sense" could predict the sort of events we witness today. The sovereign debt crisis may not have been predicted; however, what happens when their is a major disparity between the economies of say a northern European nation such as Germany, and a southern European nation such as Greece certainly where!



Billions just "thrown away"

For the past two years the EU and the IMF have literally thrown billions at attempting to solve the problem in Greece. Yet it remains unresolved. Every few months the political "elite" of Europe announce the latest "idea", which will finally solve the debt crisis. A few weeks later a new crisis then erupts ........ rinse and repeat. Whilst the continent's politicians refuse to face reality the majority of the citizens of Greece live in abject poverty. It can be argued the system in that country has a lot to answer for, and yes it does, but any student of history can see the reality in Greece is now becoming comparable with the days of the Weimar Republic in Germany during the inter war period. The only thing missing in Greece is hyper inflation.

Austerity, the elastic won't stretch anymore

It is ok for Frau Merkel to sit in her Chancellery in Berlin going on and on about austerity like some old "broken record"; however, it is not Germany facing the serious prospect of a breakdown in the social order of it's nation. Already there are reports of soup kitchens in Athens, children being passed to orphanages, as well as suicides. Let's not forget that Greece is a country, which was in the grip of a military dictatorship as recently as 1974. The recent inconclusive elections were conclusive in one respect; namely, the rejection by Greek voters of the mainstream parties of Pasok and New Democracy. So called "fringe" parties where the real "winners" in the election. When Greece returns to the polls (and they will very soon) expect the "fringe" parties to become the mainstream. Those parties, with their mandates, are not going to continue to take lectures from Chancellor Merkel. So either the eurozone and the IMF "back down" and continue to bail out Greece despite that country not following the terms of the bail out, or the money tap is finally turned off and Greece defaults and is forced out of the Euro.

With no mandate from the people to continue the austerity course imposed on Greece then it is obvious that something has to change. The only realistic option is for Greece to leave the Euro.

It might be painful but ultimately it will prove fruitful

Leaving the Euro will be chaotic, it will send "shivers" through every country on the continent. There will be bank runs, exchange controls, border closings and a few unpleasant things besides. That being said Greece will have a new currency and once again be in complete control of their own economy. They will be able to conduct their affairs for the benefit of the Greek people and once again become a fully sovereign state. A new Drachma will float on the markets and Greek exports will become competitive. Indeed the tourism industry will receive a boost from the favourable rate of any new Drachma to say the remaining Euro, the Dollar, or Sterling. A path would have been taken, which will ultimately lead to Greece restoring some national pride and some hope. What happens with the threat of contagion is for the remaining eurozone nations to worry about. The single currency was always a plainly daft idea without full fiscal and political union first. Like artificially created nations, this artificially created currency is facing the same fate; i.e. oblivion.

Remember "Black" Wednesday?

16 September 1992 is described as "Black Wednesday" in the UK. On that date the nation was forced out of the Exchange Rate Mechanism (ERM), the forerunner of the Euro. Despite the gloomy predictions the UK economy recovered and provided years of growth. All this as soon as Sterling was allowed to "float" and not be artificially locked into a "false" exchange rate with the then Deutsch Mark.

Ultimately Greece will leave the Euro so why not get it over with now and stop the further wasting of billions of euros of citizens' money and the breakdown of the social fabric in Greece.