Margaret Thatcher and the Road to Privatization
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Margaret Thatcher and the Road to Privatization

The Road to privatization was a key focus under Margaret Thatcher\\\'s leadership.

A key component of Thatcherism as it has been called, was the move toward privatization. The sale of public utilities rose after Margaret Thatcher's 1983 election. She raised over £29 billion from national industry sales and an additional £18 billion from the sale of council houses (public housing).

It has been said that the move toward privatization improved the British economy and workforce performance and productivity under her leadership though it is not clear just how it did it. Andrew Glyn a Marxist economists believes that privatizing industry did not improve upon what was called the "productivity miracle." Instead it was the smaller workforce within the industries along with increasing unemployment which did it. Less workers will work harder to keep the jobs they have.

Various natural monopolies such as gas, water, and electricity had no competition. The industries that did show market improvement were showing improvement even while they were still owned by the state. For example, British Steel did well while it was owned by the government.

When government ownership was relinquished, regulations in various industries to monitor private interests increased. Some of the regulatory bodies included: Ofgas, which is the government regulatory body for gas and electricity in Great Britain, Oftel, which regulations the telecommunication industry, and the National Rivers Authority. The National Rivers Authority divided into 10 Regional Water Authorities that regulated drinking water, sewerage, sewerage disposal, land drainage, flood risk management, water resource management, fisheries, water pollution, aquatic and some types of recreation. They were the forerunners of the Environment Agency of England and Wales.

There is no solid pattern to show if privatization of these industries helped the British economy. There were however, lower costs passed down to the consumer and an overall increase in efficiency when regulations were established for the newly privatized industries. However, these conclusions are not shared by all economists.

Oddly the one industry that Margaret Thatcher never wanted privatized was British Rail. She stated to her Transport Secretary, Nicholas Ridley that, "Railway privatisation will be the Waterloo of this government. Please never mention the railways to me again." Then just before her resignation she agreed to it. Her successor, John Mayor privatized the railroad in 1994. According to the Economist, privatizing the railroad was a disaster.

All her attempts to privatize added with financial deregulation was to stimulate economy growth, her main focus of her time in office. To allow more capital investment in foreign markets, Geoffrey Howe abolished Britain's exchange controls in 1979, and what was called the Big Bang in 1986, reduced restrictions concerning trading on the British Stock Exchange.

Furthermore, the Thatcher administration favoured growth in the finance and service sectors over the flaying British manufacturing industry. “Political economist Susan Strange called this new financial growth model "casino capitalism", reflecting her view that speculation and financial trading were becoming more important to the economy than industry.”

Source

http://en.wikipedia.org/wiki/Margaret_Thatcher

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Comments (2)

Another great article.

Anything about Margaret Tatcher has always been interesting. thanks

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