Excelente analise do impacto e legado do Governo Thatcher. Os adoradores da Dama de Ferro no grande bananão demonstraram conhecer muito pouco a respeito do Reino Unido. Desconhecimento aceitável no passado, quando era impossível conseguir uma cópia do FT, felizmente este não é mais o caso. Trata-se, me parece, da cegueira ideológica que costuma atacar o marxismo talebã, mas que desta vez atacou a incipiente, vulgar e intelectualmente sofrivel direita brasileira.
Today’s British economy is the legacy of Margaret Thatcher. The governments that succeeded her did not change the broad lines of her policies. John Major privatised the railways. Labour lightly regulated the City of London and made the Bank of England independent. When it did reverse direction – such as with the introduction of the minimum wage – the measures were carefully calibrated. So how should we judge Thatcher’s legacy?
The UK economy has registered at least four clear successes since 1979, notes Professor John Van Reenen of the London School of Economics.
First, roughly a century of underperformance relative to its peers came to an end. In 1979, according to the Conference Board’s database, UK gross domestic product per head (at purchasing power parity) was 76 per cent of US levels, while French GDP per head was 82 per cent. By 2007, UK GDP per head was up to 83 per cent of US levels, while the French level was down to 73 per cent. By 2007, UK GDP per head was third highest in the Group of Seven leading economies, after the US and Canada.
Second, this marked turnround was because of a relative improvement in both employment and productivity. In 1979, output per worker in the UK was 75 per cent of US levels, far behind that in France, at 88 per cent. By 2007, UK output per worker was 85 per cent of US levels, the same as in France.
Third, the improvement in productivity performance was not just the result of a financial bubble: only 10 per cent of the productivity growth between 1979 and 2007 was generated inside finance.
Finally, the collapse in economy-wide productivity performance since 2007 is a mirror image of the greater flexibility of real wages and consequent employment resilience. Moreover, the poor productivity performance since 2007 has not eroded all the prior gains.
The evidence, then, is that the market-oriented and regulatory reforms – labour market liberalisation, withdrawal of subsidies and privatisation – did improve UK performance. But Prof Van Reenen also notes important failures: rising inequality, excessive financial deregulation and inadequate investment in both human and physical capital.
I agree. But I would put these criticisms in a wider context, one that bears on where the post-crisis UK might now go. Thatcher – like many who supported her – had a 19th-century view of the economy, rejecting most of what happened in the 20th century. She was a pragmatic politician: she did not seek to abolish the welfare state. The same was true of US President Ronald Reagan. But her core belief was that all good things would follow from pruning back the state.
The economic history of the UK suggests this view is, at the least, incomplete. The nation did not fall behind the late-19th century US or Germany because its governments did too much. It was far more because it was culturally and institutionally incapable of remaining central during the “second industrial revolution” – an era of rapid innovations and giant corporations. Increasingly, the British became rentiers. That was one reason why the City became the leading global financial centre.
It is not an accident that an effort by a forceful politician to reverse the interventionism of the 20th century has brought the UK so far back to this future. Thus, it has a huge financial centre, weak domestic manufacturing, a deregulated labour market, rising inequality and low private and public investment. It all looks remarkably late-19th century.
As Richard Lambert, former director-general of the CBI, the business organisation, and former FT editor, noted in a recent lecture, the British business sector still shows a “relatively low commitment to long-term investment, [and] to research and innovation”. When the City determines how companies are run, that is sure to happen. A company such as Rolls-Royce could hardly be created today. That is not what the City would dare to support.
So how should the UK build on Thatcher’s legacy? As Andy Haldane, a leading BoE official, notes, radical simplification could still make the economy work far better in some areas – taxes and the reform of financial regulation, for example. In other respects, however, the government has to act much more positively. It needs, for example, to consider its balance sheet, not just its debts. It must see the case for far higher investment when interest rates are so low. It must appreciate more the role it has to play in promoting science-led innovation.
The crisis has shown that the post-Thatcher economy was weaker than many believed. Going back to the 19th century is also not enough. The country needs institutions, public and private, better capable of generating widely shared growth. Is that possible? Perhaps not. But it is today’s challenge.
