Mrs. Thatcher wins

FOR the first time since World War II the coal miners of Britain have lost a strike. This can mean as much for the economic future of Britain as the breaking of the air-traffic controllers strike has meant for the economy of the United States. True, the coal strike is not officially over. There are still more miners out on strike than are working in the pits. But those who are working, and the number goes up daily, are digging all the coal that Britain needs. The plain fact is that the miners' union has failed to force the government into surrender.

Someday there will be a formal settlement of the coal strike and it will be one which will permit management, in this case the National Coal Board, to close down uneconomic mines just as freely as American management can now close down obsolete steel mills, or ancient automobile factories, or worn-out textile mills, or inefficient airlines.

Scarcely a day goes by now in the US without news of some antique plant being closed or a union accepting a cut in wages in preference to the closing down of the operation.

The unions themselves have not been broken, except in the case of the air-traffic controllers. But the habit has been broken of organized labor in the US demanding, and getting, an annual round of wage increases above and beyond the rise in productivity. There are still some wage increases in the US today, but they are usually modest and inside the boundaries of increased productivity. And such increases as there are are balanced off by the many cases where labor has accepted reduced wages.

All the world has watched with surprise, admiration, and puzzlement as the American economy has turned upward. What is admired most is the fact of rising American employment. How has employment risen in the US while still declining throughout Western Europe?

The London Economist recently noted that between 1973 and 1982 the real wages of British workers went up by 10 percent and British employment went down by 7 percent.

During those same years, said The Economist, ``American industrial workers' real hourly earnings went 11 percent down, and total American employment went 16 percent up.''

In other words, during the 10-year period between 1973 and 1982 the US invested in new plant and hence in new jobs the kind of money that in Britain was spent on increasing the living standards of the declining number of those fortunate enough to have jobs.

The greater flexibility in wages in the American economy explains the difference. Most American industry is still in the private sector of the economy. Hence management can close down an obsolete factory. The issue in the coal strike in Britain is over the right of management to close down coal pits which are uneconomic and which are producing unneeded coal.

From the point of view of the general economic health of Britain that same money could have been better used modernizing fewer coal pits and thereby releasing workers for other and needed work.

Americans and Europeans have both been long conditioned to think of rising wages as being in and of themselves a ``good thing.'' They are of course a good thing when they are earned; i.e., when rising productivity justifies the higher wage. But if productivity lags behind wages, then the extra wage rise is a drain on the economy. It has not been truly earned.

Mrs. Thatcher is trying to apply this fact to Britain's economy. The coal strike was her crucial challenge. The miners, in effect, wanted the government to support them in jobs that are no longer needed in order that they might continue to live in their native villages. No matter how socially desirable, it would be uneconomic. The union made it a test of its power just as the air-traffic controllers union called a strike to test its power.

By accepting the challenge, Mrs. Thatcher has staked her career on winning back for the British economy some of the flexibility which lies behind the American economic recovery.

You've read  of  free articles. Subscribe to continue.
QR Code to Mrs. Thatcher wins
Read this article in
QR Code to Subscription page
Start your subscription today