From the FT:
Sir, It has been mentioned in a number of articles that Margaret Thatcher's greatest legacy (1) was in controlling inflation.
In 1980 inflation in the UK was 18 per cent and by 1986 it stood at 2 per cent. In France, under a socialist administration throughout the 1980s, the inflation rate in 1980 was 14 per cent and by 1986 it stood at 2 per cent.(2) Did Thatcher also help the French to reduce their inflation? (3)
David Peett, East Dean, West Sussex.
1) Yes, some people mention this, but the list of things which Thatcher allegedly achieved is very long indeed. So he's off to a poor start there.
2) This probably is true.
3) Clearly not. The Thatcherites would no doubt answer this with "yes", for them, her powers were virtually unbounded. Truth of the matter is that the fall in inflation was largely due to the end of currency controls in 1979 (and yes, we have Thatcher and whoever was her first Chancellor to thank for that). Of course, when the Thatcher government tried reintroducing currency controls (the ERM debacle) we had another short period of relatively high inflation.
UPDATE: Graeme in the comments reckons that the French simply adopted similar economic policies to those adopted in the UK. The Thatcherites will say "ah yes, that shows how influential she was" and the realists would say "well sod that, everybody was doing the same thing anyway".
A simple solution
1 hour ago
13 comments:
Thatcher was anti-ERM...
And you could argue that the inflation highs in the early 80's were a legacy of the previous administrations, Tory and Labour.
In any event, I am not at all sure I trust either the UK's or France's 'inflation' figures, calculated as they were by state bureaucratic satraps..
"Did Thatcher also help the French to reduce their inflation?"
Of course, just like man-made global warming on Earth has caused the ice-caps to recede on Mars.
of course, it would be helpful if Mr Peett outlined the policy meqsures tken by the French government. I wonder how different they would have been from those enacted by Howe.
I found this on Wiki:
"After two years in office, Mitterrand made a substantial u-turn in economic policies, with the March 1983 adoption of the so-called "tournant de la rigueur" (austerity turn). Priority was given to the struggle against inflation in order to remain competitive in the European Monetary System. Although there were two periods of mild economic reflation (first from 1984–86 and again from 1988–90), monetary and fiscal restraint was the essential policy orientation of Mitterrand's presidency from 1983 onwards.[42] Nevertheless, compared to the OECD average, fiscal policy in France remained relatively expansionary during the course of the two Mitterrand presidencies.[43]"
So he did pretty much the same as Howe....no cigar for Mr Peett!
L, no, broadly speaking, the inflation figures give a reasonable indication of the change. If the later figures were fudged downwards then so were the earlier ones.
B, the purist Thatcherite view!
G, well maybe it was that, but by and large I reckon that high general price inflation is caused by currency or exchange controls, nothing else really matters.
I believe that the French devalued the Franc 2 or 3 times in that period as well...at least Howe just abolished the exchange controls and let the pound float.
G, the free marketeer has a floating exchange rate and no currency controls; the statist has a fixed exchange rate with occasional devaluations or revaluations when the official and real rates get too far out of line and there has to be a reality check.
Ultimately it is the same thing, but better to have lots of little adjustments than a few major shocks.
all of whicj makes you wonder why the FT published Mr Peertt's letter
Mw. Yes, relative to each other. But, I do not trust the 'official' measures of inflation.
1) How do you know that they didn't get better at fiddling inflation?
2) I am not sure comparing with just one country is fair to Thatcher. However I am not sure which countries I would compare the UK's inflation to.
3) We could take the view that she was successful at controlling inflation because she like the French followed economic policy x but I am too busy to care that much
It is to me scary that so many people in the UK attribute superhuman powers for good or ill to Thatcher. I.e. she saved the country or that everything going wrong since 1990 is her fault. Both sound crazy to me.
G, agreed. As an anti-Thatcherite letter it pretty much fails on all counts.
L, in absolute terms no, in relative terms yes. It's the same as the unemployment figures.
LF,
1) If the UK did then everybody did.
2) All of them.
3) Agreed.
LF, second comment, yes, if she really had such super-human powers, then actually that proves how strong and powerful central government is. So she was not small government, she was BIG GOVERNMENT, bold capitals underlined.
She was sadly very much big government.
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