Thatcher and Reagan: the difference
REAGANISM and Thatcherism have much in common. Both have slowed down welfarism and curbed the power of the trade unions.
Both have stressed enterprise and the marketplace.
Both have turned away from nationalization and have sold off as much nationalized industry as the private sector would accept.
Both have reduced government regulation of private enterprise, stimulated competititon and, by so doing, stimulated productivity.
But the United States, after six years in office of Ronald Reagan, and Great Britain, after seven years of Margaret Thatcher, are in startlingly different condition. The United States has an annual budget deficit running at nearly $200 billion and an adverse trade balance of nearly as much. Mrs. Thatcher's Britain has a balanced budget at home and a balance in its foreign trade account.
Britain today is financially and economically solvent. Is the US? There are anxious doubts as the dollar slides below its intended level of one dollar to 150 Japanese yen and the US securities markets shiver in uncertainty.
The British pound sterling is going up against the dollar. The Gross Domestic Product (GDP) in Britain, long lagging, is now rising faster than that in France, West Germany, or Italy. British productivity, long slowed, is also now rising faster than that in the other countries. Mrs. Thatcher has turned Britain around, from a declining economy to a lively and newly competitive economy.
Britain has paid a hard price. Its unemployment was running at about one million when Mrs. Thatcher took office. It is over 3 million now, although it began to come down in 1986. It is at about 12 percent of the work force now, which is more or less general for most of Western Europe but very high by pre-Thatcher British standards.
The US has come through the six Reagan years with high employment and low unemployment.
When there are so many similarities between the domestic policies of Mr. Reagan and Mrs. Thatcher, why is there such a disparity in the present condition of the two countries?
There have been two important differences of emphasis between Reagan and Thatcher policies. Mr. Reagan raised his defense budget radically and cut income taxes radically. Mrs. Thatcher raised her defense budget modestly, and cut income taxes modestly.
If Mr. Reagan had applied the Thatcher example to defense and taxes, his budget could be nearly in balance today. If Mrs. Thatcher had followed the Reagan example in defense and taxes, she, too, would have a radically unbalanced budget today.
Mrs. Thatcher's main emphasis has been to regain a competitive economy. Mr. Reagan's emphasis has been to cut taxes while raising defense. Their ideas have been similar. Both have believed in reviving a competitive economic condition by curtailing welfare and regulation. But Mrs. Thatcher never attached the importance Mr. Reagan has to high defense and low taxes. To her, they were desirable things to do insofar as her country could afford them, but not ends in themselves.
Mrs. Thatcher has never lost sight for a second of her main goal: the economic revitalization of her country. Mr. Reagan has never retreated from his drive for more defense and lower taxes.
Each has paid a price for achievement.
Mrs. Thatcher's achievement has won her a high position in today's world councils. She was in Moscow last week, being treated with great deference. Mikhail Gorbachev was trying to learn from her about how to gain economic vitality. She will almost certainly soon win reelection as a reward. But during her next term of office she will find Britain's three million umemployed an ever present and daunting challenge.
Mr. Reagan is spared by the 22nd Amendment to the US Constitution a chance to face the consequences of his unbalanced budget. Someone else will inherit the White House and the problem of restoring the American economy to soundness.