‘She saved the country’. This was just some of the hyperbole evoked by David Cameron following the passing of Margaret Thatcher last month. Well I’m sorry, Mr Cameron, I must have missed that!
Mrs Thatcher is largely remembered in Northern Ireland for her misjudged response to the hunger strike and for the much reviled Anglo Irish Agreement, which some now say paved the way for the eventual success of the Good Friday Agreement. But her economic legacy in Northern Ireland has been largely overlooked. Unfortunately, it was even less successful than her political interventions.
I spent the first half of Mrs T’s tenure as Prime Minister working in Northern Ireland as an economist in the public sector before moving to the private sector in the mid eighties. I watched therefore as unemployment in Northern Ireland rose to a peak of 18.1% in 1986 (compare this to a rate of 8.5% today), with over 120,000 people claiming unemployment benefit. The Thatcher government also preached the message to our businesses that they had to face up to the ‘cold hard winds of competition’, resulting in the collapse of our manufacturing sector where employment fell by around 40,000 in the first half of the eighties to less than 100,000 jobs.
In many ways, the Northern Ireland economy suffered more under Thatcher than in the present recession. While she did push through important structural reforms in the UK, her economic policies were little short of disastrous for Northern Ireland, even given the context of the Troubles which curtailed inward investment. The drive for home ownership was widely welcomed but also laid the seeds of the property boom of the first decade of this century. Ironically, where the Northern Ireland economy did benefit in the 1980’s was the huge growth in public spending which led to our current overdependence on the public sector.
In the so-called ‘Sermon on the Mound’ to the General Assembly of the Church of Scotland in 1988, Mrs Thatcher linked her economic and political policies to her Christian faith. ‘Christianity is about spiritual redemption not social reform’, she pronounced. This led her to conclude that our social and economic arrangements must be founded on the acceptance of individual responsibility which ‘comes with freedom and the supreme sacrifice of Christ’.
While I accept the basis of her belief, the implications for social and economic policy and the role of the state do not follow for me. Unfettered wealth creation was considered to be entirely acceptable as long as it was accompanied by a degree of altruism. The role of the state was not to ‘intervene’ in the market but to promote the market so that individuals could exercise their choice freely.
Michael Sandel has attributed to Thatcher and her American buddy, Ronald Reagan, the responsibility for turning our ‘market economy’ into a ‘market society’, a trend which was picked up enthusiastically by their successors Blair and Clinton, a society in which we have lost our moral values in pursuit of the market. The capitalist market economy is the best system available for allocation of resources but capitalism must be accompanied by compassion and concern for those who lose out. I look to government to support and promote these principles, not to ignore them.
Philip McDonagh is an economist and a member of the Society of Friends.