What criticisms can be made of Margaret Thatcher's policies as Prime Minister - Essay Example

?What criticisms can be made of Margaret Thatcher’s policies as Prime Minister? Introduction According to Young (1993), Margaret Thatcher was the first female to become a prime minister in the UK. She was the leader of the Conservative Party and was in office for three consecutive terms. She is known to be the longest serving prime minister as she governed office from 1979 up to 1990. In most cases, she is referred to as the most divisive prime minister of the century. She was greatly reverence but also hated by the divided members of the public particularly because of her reaction towards the trade unions. Margaret Thatcher rule has been criticized as lacking proper and unified policies. Together with her government, she has been associated with several practices and ideals referred to as Thatcherism (Evans, 2004). Critics have argued that Thatcherism is well known for its rhetoric and not what it achieved. It is viewed as being contradictory and that Thatcher’s rule was differentiated by its strategic purpose. In considering its challenges to the states existing features, Thatcherism is considered as a radical force. The presumptions and priorities which had been established in the prior years were criticized and then discarded. In 1979 when Margaret Thatcher came to power as the first prime minister in the UK, severe structural problems were being encountered in the country’s economy. This included, high inflation, powerful trade unions which increased the wage inflation and more time spend on strikes, increased unemployment and high percentage of government debt, which necessitated money to be borrowed from the IMF (Johnson, 1991). Thatcher’s policies included the reduction of taxes, reduction of inflation through the manipulation of money supply, privatization of public industries, suppressing trade union powers through introduction of laws, reduction of the role played by the government in the economy, and motivating people to work as well as saving and acquisition of property. Her rule in most cases was compared with aspects of her personal style which portrayed strong individualism, violent and antagonistic approach. Thatcher began to act immediately when she gained power. Her main target was to find solutions to the structural problems, which the country faced (Wittlinger 2002). She established several policies which included; reduction of inflation through the manipulation of money supply. She focused on the idea of monetarism and the free market economics. The conservative administration’s first policies were to handle the inflation and the budget deficit. The monetarism belief indicated that money supply had to be controlled in order to successfully control the inflation. The entire government deficit had to be reduced in order to be able to control money supply. This led to the implementation of deflationary policies. There was increase in tax rates and reduction on government spending. The policies which were intended to reduce inflation in return led to increase in the interest rates. It was possible to reduce inflation through the deflationary policies of both monetary and fiscal nature. This could be attained at the cost of reduced aggregate demand and reduced economic growth. The government continued to pursue deflationary policies regardless of the economy going down to full scale recession, and unemployment being on the rise. It led to several criticisms and a number of economists in the country signed a letter addressing the government to bring the recession to an end and to change the economic policy. Thatcher was greatly criticized by different individuals including those from her own party. According to critics, the reduction of inflation could have been performed with minimal impact. It caused unexpected level of unemployment, while seeking to attain bogus money supply. The unemployment affected individuals in different ways in that it resulted in personal and several social problems. The different riots that came up in Britain in 1981 were attributed to the high rate of unemployment. The second policy was privatization; Thatcher supported the idea of free enterprise, competition, and the market economy. According to her, most public industries were inefficient since they had been protected from the competition of the marketplace. In her first term between 1979 and 1983, her main objective was to control inflation. She is criticized as having used privatization to gain political advantage. She managed to undermine the strong support base of the labor party. Majority of the union members especially those employed in the national industries were constituents who were key in the labor party. Through privatization the union’s power was reduced, it was difficult for them to push for their demands in the private sector especially that of political reasons. Privatization of water in England and Wales was disputable. The public services international Research Unit; an affiliate of the trade unions criticized this move. It stated that it led to; increased tariffs, doubling of profits, reduction on investment, and that it threatened the public health sector through cut-offs for non-payment. According to several critics, privatization did not increase the ownership shares as earlier planned. Moreover, the critics argued that there was no clarity that privatization policy would enhance efficiency of both the privatized companies and those that remained in the public sector. It is perceived the public industries were just replaced by monopolies which were known to be effective. With regard to the housing policy, Thatcher’s government is criticized for not expanding the private rental sector. This policy is criticized as having contributed to high prices of properties and majority of individuals to be homeless. The fourth policy is the reduction of taxes. According to Thatcher, work incentive could be reduced by direct taxes and in most cases progressive direct taxes which include the income tax. However, she did not apply the same attitude to indirect taxation. She argued that most people do not realize they are paying indirect taxes; hence, remain motivated in the workplace. She insisted that with increase in income the rates of indirect taxes remain constant. According to her, this encouraged individuals to put in more effort in order to be able to earn more money. Thatcher stated that the expenditure of the poor on goods and services is higher than that of the rich people. She explains that most indirect consumption taxes are regressive. This is illustrated by taxes like the Value Added Tax (VAT) and the gasoline tax. Thatcher is not credited as having lowered the taxation burden. Her policy on tax could reduce the direct taxes at the cost of indirect taxes being increased. In addition to the reduction of tax policies, is the trickledown economics. It refers to policies which were focused on the wealth of the high income earners. The word trickle time effect attracted several critics from the economists. They stated that these policies did not benefit the average citizen welfare. The reduction of the income tax is considered as the main aspect of the trickledown effect. Critics argue that everyone will gain from the reduction of income tax of the rich individuals. The argument is that the rich will opt to increase the amount they spend when they realize an increase in disposable income. All workers will benefit from increased job opportunities and increased wages due to the total demand being high. In addition, individuals may opt to reinvest firm’s increased profits into expanding output. As a result everyone will benefit from improved growth, and increased wages and income. The critics of this policy suggest that the marginal tendency for the rich to save will be high. They also added that in any tax reduction, the rich will save high percentage hence; minimal amount of money left to benefit the rest of the economy. Thirdly they suggested that the Capitalist society underlying inequality is not addressed by increased GDP. Even though the tax reductions resulted in improved economic growth, the main inequalities of the Capitalists society is not handled by the higher output. In addition, majority of the firms do not operate to benefit the workforce because the profits are not distributed amongst them. Therefore, in the case of the low skilled and casual employees, their income is not increased by high productivity. This policy is also criticized as having inappropriate target. In order to reduce poverty in the society, the poor should be the major target when reducing the income tax. It is inappropriate to reduce the taxes of the wealthy in society while hoping the disadvantaged will benefit in the long-run. Moreover, incentives for better productivity are not increased through the reduction of taxes. The main objective of income tax reduction was to motivate individuals to spend more hours at work. However, it was not successful. Finally, there was the policy to suppress trade union powers. The laws which were put in place forced unions to conduct secret ballots during strikes, to have elections of leaders on regular basis with the aim of reducing influence and strictly observe industrial action procedures. With the aim of interfering with the existing solidarity in unions Thatcher‘s government introduced more rights for individual unionists against their unions. Therefore, it was impossible to carry out disciplinary actions against members who did not follow the majority’s decisions. According to critics the laws to suppress the trade unions did not solve problems. Instead, unsolved matters of the unions contributed to the pounds fall against the dollar. The government had to close several coal mines, this move affected different communities in the country and several jobs were lost. Conclusion According to Seldon and Collings (2000), Thatcher has been criticized as having obtained success during her rule at the expense of the British population great social costs. Her policies which include the reduction of taxes, reduction of inflation through the manipulation of money supply, privatization of public industries, suppressing trade union powers through introduction of laws, reduction of the role played by the government in the economy, and motivating people to work, as well as saving and property acquisition, affected individuals and the country in different ways. Unemployment was increased due to the decline in industrial production at the period when she governed. In 1990, most people in Britain were considered to be below the poverty line. Even though Thatcher managed to bring revival to the Britain’s economy, she was greatly criticized for doubling the rate of poverty in the country. In 1997, Britain was declared to have the highest rate of childhood poverty in Europe. Bibliography Evans, E 2004, Thatcher and Thatcherism, Routledge, London. Johnson, C 1991, The Economy under Mrs. Thatcher, Penguin Books, London. Wittlinger,R 2002,Thatcherism and literature: representations of the "state of the nation" in Margaret Drabble's novels, Herbert Utz Verlag, Germany. Young, H 1993, One of Us: a biography of Margaret Thatcher, Macmillan, London. Seldon, A 2007, Blair’s Britain 1997-2007, Cambridge university press, London. Young, H 1993, One of Us: a biography of Margaret Thatcher, Manchester University Press, Oxford. Seldon, A & Collings, D 2000, Britain under Thatcher, Cambridge university press, London. Read More