The death of Margarete Thatcher has given rise to a debate about her achievements. Ostensibly this is about the past, but inevitably it's also about the present. Members of the current British government apparently referred to themselves as 'sons of Thatcher' in the past and the similarities between current economic policies and Thatcher's are too similar to allow for a purely historical debate. And quite rightly so. If Thatcher's policies got the UK out of the last economic crisis, why not try them again? Here are some thought's on Thatcher's legacy:
(1) There can be no question that Thatcher's budget cuts and tight monetary policy led to a worsening of the economic crisis in the late 70s and early 80s, it remains much more doubtful how much credit she can take for the strong economic growth in the 90s and 00s. First of all there is the problem of the delay: Paul Krugman points to the fact that the economic renaissance of the UK happened only in the mid-90s. That's almost a decade and a half after Thatcher's reforms. 15 years is a long time in economics and one might wonder how much credit she and her policies can take for the recovery.
(2) Even if we accept that Thatcher should share some of the credit for the recovery are not a decade and a half simply too long a period for any economic cure to produce results if we are to take it seriously. As Keynes famously remarked, the long run is a bad guide to current affairs. By the time that recovery set in the lives of many individuals and whole regions of the UK had been ruined. If we agree with Thatcher that there was no alternative to her policies then this was an inevitable sacrifice. But one might wonder wether there were no faster and less punishing ways out of the crisis.
(3) How good was that recovery anyway? Many developments that occurred as a result of Thatcher's policies are today blamed for the present crisis: growing inequality, increasing private debt, housing bubble and financial deregulation. It seems that her interventions may have contributed to end a medium sized crisis only to lay the foundations for a gigantic one. Or in the words of Martin Wolf in today's FT: 'Today, alas, the post-Thatcher renaissance looks as much illusion as reality.'