An exchange with Glenn Close, sorry, some bloke

“You never replied to my post, or my tweets…”

One of the things they always say about economics is that it’s about allocating scarce resources. One of those resources is time. I’m currently in the middle of exams for my Masters and three months off my wedding so when it comes to time I’ve got a fair bit of economising to do.

Not everyone is in that situation. Some, quite the opposite to me, have an abundance of time with a relative lack of things to fill it with. One of those people is Joe Sucksmith.

On May 28th The Commentator published an article of mine titled Deficit and debt: Does anyone know the difference? Two days later I had a reply to the posting of the article on this blog (which you can find below the article) from Mr Sucksmith. He wrote “Monetary sovereigns retain control over interest rates, so there is no risk of suffering penal rates due to an increase in the debt. Japan is instructive in this regard” I pointed out that, at that time, Japan was experiencing rather a nasty (an unexpected by the Bank of Japan) spike in bond yields. Mr Sucksmith’s example, in other words, was proving him wrong as he typed.

The exchange continued, as you’ll see, with Mr Sucksmith saying sillier and sillier things, a favourite being that, despite Japan having increased it’s debt to GDP ratio from 50% to 230% its stimulus spending hadn’t been big enough. In the end Mr Sucksmith left a post so full of errors and confusion (the main one being that he assumes money demand to be infinite) that the time it would take to refute it was too much time for me to be prepared to divert from either my revision or wedding preparations. So I left the comment to sit before approval.

Since then, while I have been busy with other things, Mr Sucksmith meanwhile has tweeted me demanding a reply and now devoted a whole blog post (and a further tweet about that blog post) to the exchange. A quick look at Mr Sucksmith’s blog reveals it to be be full of such exchanges (Lord Carlile, Student Rights, and Dominic Casciani of the BBC also being on the receiving end), indeed, we have here nothing less than Disgusted of Gloucestershire.

Me? I have one more exam next week and then a wedding in a different continent to get on sorting so I’m afraid I will continue to economise my time with Mr Sucksmith. Maybe I’ll return to it when I have more time. In the meantime I hope Joe gets out more.

An encounter with a bigot

Yesterday I mentioned a conversation I recently had with a member of the Labour Party about the state of the British government’s finances. When I suggested he might be a bit “iffy” on the subject I got the following reply

“Yeah ..a bit like your relatives who took the soup when the going got tough in Ireland and you having “schizophrenic” tendencies over supporting the Cats in GAA when you’re clearly a Prod. You’re just a plastic Paddy”

Some of this might need a little explanation. My Irish ancestors, so I gather, converted from Catholicism to the protestant Church of Ireland at the time of the Irish Famine (about 1850) as the Church of Ireland had a better famine relief program (they “took the soup”). G.A.A. is the Gaelic Athletic Association which was founded in 1884 as part of a revival of Irish cultural nationalism, and the Cats are my team, Kilkenny.

Now, I could explain that I myself am not religious. I could explain that, while nationalist, the G.A.A. has a long history of protestant involvement (indeed, the All-Ireland Senior Football trophy is named after a Prod; Sam Maguire).

But I’ll simply ask this; why should the religious choices of my distant ancestors dictate which sports I watch today?

Beats me. But then, that’s bigotry for you.

Thoughts in a graveyard

Graveyards are some of my favourite places. There’s nowhere like them for perspective. No matter who you are, no matter “your flashes of merriment, that were wont to set the table on a roar”, we all end up as a “quintessence of dust”.

In the graveyard of St Mary’s Church in Walthamstow this afternoon I saw three graves in a row. Charlotte and William Gillam died within months of each other in 1956 aged 83 and 86 respectively. Long lives together, their gravestone reads ‘RE-UNITED’.

Next to them is the grave of Rifleman A Pledger of the 17th (County of London) Battalion of the 5th Brigade of the London Regiment who died aged 38 in 1917. Rifleman Pledger died in October, so he may have been mortally wounded in the Third Battle of Ypres which ran from July to November 1917, better known as Passchendaele. He died in England.

Beside him are Edith and Edward Banks. Edith died in 1954 aged just 34. Edward, her husband, lived for another 52 years, dying in 2006. The inscription reads ‘MUM AND DAD TOGETHER AT LAST IN PEACE’.

Five different lives, five different journeys, all ending side by side in a graveyard in east London.

Making the charts in 2012

You may or may not be pleased to know that my article for The Commentator on the economics of Hayek and Keynes was one of that sites 10 most read articles in 2012. Which was nice.

The blog itself was viewed in 104 countries around the world in 2012…

Happy new year, thanks for reading in 2012, and see you in 2013. Which is tomorrow.

What Star Trek means to me

Still boldly going…

Today I attended my first Star Trek convention at the age of 32 as an early Christmas pre a little delirious.

Wandering round the hall most of the other attendees lived up to the stereotype. There were ill fitting Starfleet costumes, Mudd’s Women outfits, and homemade bat’leth’s galore. I had plenty of time queuing to see Shatner to ponder a little on what it is about Star Trek that has inspired this level of devotion for nearly 50 years.

Star Trek first appeared about two thirds of the way through the most murderous century in human history. On ‘the right’ you had the Nazis who’s vision of a future populated by blonde, blue eyed Aryans led to the deaths of millions in World War Two. The communists murdered millions more based on class, education, and, in Zaire, on whether they wore ties. And, though it is largely forgotten now, the genetic engineering and selective breeding of eugenics was a key part of ‘Progressive’ thought. The 20th century totalitarians saw no room in the future for anyone who differed from the Plan.

Star Trek went against all that. It offered a future which didn’t exclude. If there was room in the 23rd century for blue faced Andorrans, lumpy headed Klingons, pointy eared Vulcans, and, strangest of all, humans, there was room enough for you too.

That is the central, simple message of Star Trek and it is as relevant and necessary today as it was in 1964. That’s the reason there was a green woman getting off a bus in east London at 9am this morning.

Black Wednesday

Lamont and advisor run up the white flag

I’ve mentioned before that I’ve been jotting down some notes about the 1990s. As today is the twentieth anniversary of Black Wednesday, I thought I’d share what I’ve written about that…

In 1990 the British economy entered a recession caused by the raising of interest rates from 7.38% in May 1988 to 14.88% in October 1989. Thatcher’s government did this in an attempt to dampen the inflation they had unleashed with a pre election spending boom between 1985 and 1988 though they claimed it was that it was to prepare Britain for entry into the Exchange Rate Mechanism.

I remember all this quite well. The area I lived in was full of people with mortgages, people who had embraced the Conservative ethos of the property owning democracy in the 1980s. And now, in the name of European integration, they were being crucified on a cross of ERM by the same Conservative Party. ‘Repossession’ became a dreaded spectre, figures reported on the evening news. In 1989 there 15,800 repossessions, in 1991 there were 75,500 and I remember kids I was at school with losing their homes. As a Northerner down south my dad became something of a local oracle in how to deal with tough times and I remember a couple my mum knew through her babysitting group coming round for tea, digestives, and advice in how to deal with a mortgage they could no longer afford.

…

John Major possessed impressive reserves of self belief so he might not have been as stunned as everyone else by (his election victory in April 1992). Even so, these reserves were quickly depleted. Within six months of the election the Conservative Party had thrown away its trump card of sound economic management (the playing of which always involved a fair bit of bluff) and handed Labour a poll lead which it wouldn’t lose except briefly for another fifteen years.

The Exchange Rate Mechanism had been forced upon an unwilling but weakened Thatcher a month before she left office by Major, as Chancellor, the rest of the cabinet, and the civil service. It committed Britain to keeping the value of sterling pegged to the value of the deutschemark. When German spending on reunification threatened to stoke inflation the Bundesbank raised interest rates and, thus, the value of the DM. Britain had no choice but to follow.

Two approaches were pursued, both of them disastrous. First, more than £3 billion of Britain’s foreign currency reserves were spent on buying sterling in an effort to push its value up. All that did was make George Soros even richer. This just left interest rates.

Matters came to a head on September 16th 1992. That morning, with the cash for further currency manipulation gone, the government announced a rise in interest rates from 10% to 12%. Still the value of sterling fell. In the afternoon the government was forced to announce a further rise in interest rates to 15%. Even this failed to stop sterling’s slide. In the evening an exhausted looking Chancellor, Norman Lamont, emerged from Number 11 Downing Street with a young policy advisor named David Cameron at his side to announce defeat. Britain would leave the ERM and devalue.

Britain’s failed attempt to stay in had been nothing more than an expensive way to cause more pain for already suffering British businesses and mortgage holders. It became known as Black Wednesday, unless you were a Eurosceptic, in which case it was White Wednesday.

The Major government never recovered. The day after Black Wednesday Major phoned The Sun’s editor Kelvin MacKenzie and begged him to go easy on the government. “John”, MacKenzie is said to have replied, “I’ve got a large bucket of shit lying on my desk and tomorrow morning I’m going to pour it all over your head”

But after Black Wednesday something remarkable happened. With the government’s credibility on monetary policy utterly ruined the Bank of England was put in charge with the goal of using interest rates to control inflation. Worrying about the value of sterling vis a vis other currencies was in the past. And it seemed to work. The economy recovered and embarked on its longest ever boom. Unemployment fell from nearly 3 million in early 1993 to 1.7 million in early 1997. The economy, it seemed, ran better without politicians ‘managing’ it.

The polarization of politics: Let’s mingle more

My captain, my captain

As a Trekkie I was keen to watch Patrick Stewart, late of the Starship Enterprise, boldly going on the BBC’s Hardtalk. Stewart is a man I greatly admire not only for pulling off the impossible and filling Captain Kirk’s seat, but for an acting career that spans Sejanus in I, Claudius and a hypersexed version of himself in Extras.

So it was disappointing to actually see Stewart in action. I knew he was a Labour supporter; he’s a Yorkshireman and luvvie after all. But he went further. He said he actually feels “uncomfortable” around Conservatives. This was yet another manifestation of a depressing trend. People are increasingly unable to tolerate anyone whose politics aren’t just like theirs.

The trend is further developed in the United States than in Britain. In the US the tone of political debate is frequently poisonous. From the right you have ‘conservatives’ accusing ‘liberals’ of wanting to destroy America. From the left you get ‘liberals’ accusing ‘conservatives’ of wanting to grind everyone else into poverty. To each their opponents are not merely wrong, not simply possessed of a different philosophy, but are actually evil. Neither side recognises any common ground at all with the other.

We have not been free of this in Britain. In 1945 Winston Churchill warned that if Labour won the election Clement Atlee would usher in a British “Gestapo” and opposition to Margaret Thatcher frequently scaled quite epic heights of demented lunacy. It still does.

But this was the exception in Britain, perhaps because figures like Harold Wilson, Edward Heath, John Major, or Tony Blair drew most of their flack from their supposed supporters. Enoch Powell could disagree utterly with both Tony Benn and Michael Foot yet maintain warmer personal relations with either than Foot and Benn could manage with each other.

This has been changing. As the coalition undertakes to slow the growth in government debt so that it only doubles in five years, some on the Left have reacted as though civilization is about to end. Worse, they attribute it, as in America, not merely to error or possession of a different philosophy, but to evil itself.

Polly Toynbee, a trail blazer for the New Nastiness in British political discourse, described the popular proposal to cap Housing Benefit to a still pretty generous £400 a week for a four-bedroom property and £250 a week for a two-bedroom home as the Tories’ “final solution for the poor”, seeing in the cuddly Grant Shapps the echo of Heydrich and Himmler.

I am quite sure that someone of a left wing persuasion reading this will respond that the Right does plenty of it too. No doubt the Daily Mail and Peter Hitchens will be mentioned. And they may well be right. I concede the distinct possibility that both sides are as bad as each other but I shan’t find any comfort in it.

The rhetoric of someone like Toynbee and her counterparts on the Right is harmful. If, for example, you are a Guardian reader who accepts Toynbee’s view of the world then, by extension, you must consider people like me, as an occasional supporter of the Conservative Party, a crypto-Nazi.

If this sounds as ridiculous as it ought to then stick Toynbee in the bin. If, however, you do accept her world view that the coalition is evil and acting out of spite then you can understand why someone like Patrick Stewart would feel uncomfortable around Conservatives, even ones like me who wear plastic pointed ears from time to time. We’re Nazis, after all.

This matters. Democracies work because every few years, at election time, the losing party hands power to the winning party on the understanding that, at the next election, power will be handed back to them if they are successful. This is only possible because the parties consider themselves part of the same polity. If they don’t, if they see no common ground, then the basis for electoral democracy breaks down. In many places around the world elections are accompanied by fraud or violence precisely because this common polity doesn’t exist.

This also gives some clue as to where this bitterness comes from. Governments are now, increasingly, mechanisms by which wealth is transferred around society. Unlike wealth creation, which can generate wealth which didn’t previously exist and make everyone better off, wealth transfer is always a zero sum game; one party can only benefit to the extent that some else loses. Wealth creation creates winners. Wealth transfer creates losers as well.

And, as governments grow, so does their role as wealth transferors, increasing the number of both winners and losers in the zero sum game of government. Bitterness grows alongside.

I have a great many friends who would describe themselves as being of a left wing persuasion so I can see what people like Stewart are missing out on. Because I know lefties personally and not solely from the pages of the Mail I know that they don’t all want to put me in a Gulag run by Harriet Harman. And I hope that, from knowing me, they realise that not all ‘right wingers’ want to feast on the carcasses of the poor. Each of us thinks the other is wrong; neither thinks the other is evil.

What is under threat in Britain, and almost dead in America, is this sense of commonality, of being part of a shared polity with people we disagree with, but who are, for the most part, just as sincere and well-motivated as we are. And we won’t keep it if, like Patrick Stewart, we seal ourselves off from those we disagree with.

We need to mingle more, not less. Unless you think Picard was a better captain than Kirk, then I really will never talk to you again.

This article originally appeared at The Commentator

London Swings Again! – British music in the 1990s

Lately, inspired by Dominic Sandbrook’s books about the 1960s and 1970s and the onset of nostalgia that accompanies early middle age, I’ve been thinking about Britain in the 1990s with a view, possibly, to something at the end of it. Here’s a sample…

With its leaders incapable of leading anyone anywhere except the bedroom other magnetic poles in British society exerted their pull on national attention. One was popular music and the craze of ‘Britpop’

Britpop was a group of bands who found fame from about 1993, peaked in 1995, and were finished by 1997. Beyond the fact that they played guitars and were British these bands had very little in common. The fey tweeness of Cast or The Bluetones was a million miles from the raucous pub rock purveyed by Reef or Ocean Colour scene; the intelligence of Blur or Radiohead was far removed from the uncompromising stupidity of Oasis or Shed Seven. The same went for the fans. The make up wearing, vaguely goth types who listened to Suede or Pulp were the sort of people lager swilling Oasis fans in Ralph Lauren shirts and ice white Reebok Classics beat up.

A common factor was a cheap sort of pseudo-patriotism which would soon generate the horrible phrase ‘Cool Britannia’. Noel Gallagher of Oasis had a Union Jack patterned guitar and his brother Liam appeared on the cover of Vanity Fair in March 1997 with then wife Patsy Kensit in a bed with Union Jack bedclothes. The headline swooned ‘London Swings Again!’ There was more to this than knowing postmodernism, a popular excuse in the 1990s for serving up old tat in a cloak of irony. Elastica’s Justine Frischmann said “it occurred to us that Nirvana were out there, and people were very interested in American music, and there should be some sort of manifesto for the return of Britishness” In April 1993 the cover of Select featured the usually intelligent Brett Anderson of Suede draped in a Union Jack atop the headline ‘Yanks Go Home’

1995 was the year. It was to Britpop what 1967 was to flower power or 1977 to punks. The success of Blur’s Parklife and Oasis’ debut album Definitely Maybe in 1994 had lit the fuse. In ’95 Britpop exploded into national prominence with the releases of Blur’s The Great Escape and Oasis’ (What’s the Story) Morning Glory? as well as a host of other albums by Britpop’s B list like Cast and Supergrass, both of whose albums produced infectious hit singles titled Alright. Also in the charts were Radiohead and The Verve, who would soon deliver Britpop’s funeral oration, and acts like Pulp and Paul Weller, both of whom had been struggling for attention until they were immolated in the Britpop backdraft. That summer teenage boys gathered round CD players to hear Noel and Liam Gallagher being rude to each other during a radio interview on a disc called Wibbling Rivalry. As bootlegs went it wasn’t exactly Bob Dylan at the Free Trade Hall.

The highpoint of the highpoint came on Monday August 14^th 1995 when the Britpop behemoths of Blur and Oasis went head to head with singles released the same day, Country House and Roll With It. It was no surprise to see NME hyping this up as the biggest clash since Hitler took on Stalin but the event even made the 6 O’clock News, interest stoked by rude things Liam and Noel had said about the various members of Blur. In the event Blur took Number 1 and were declared the winners of the Battle of Britpop. By the end of the year that looked mad as (What’s the Story) Morning Glory?, released in October, sold 347,000 copies in its first week (it was still selling 200,000 copies a week in early 1996) while The Great Escape was a bit of a dud. By the end of the decade the judgment of August looked sounder as Blur continued to release interesting music while Oasis didn’t.

There wasn’t very much new in floppy haired teenage boys swaying to guitar music as would have been obvious to anyone familiar with The Beatles. Indeed, the Britpop bands were as generous in acknowledging their influences as The Rolling Stones and Beatles had once been in acknowledging Chuck Berry. The people who teased me for liking The Beatles in my first year at secondary school went out and helped their Live at the BBC album top the charts in 1994 after Oasis said they liked them. Kids, who were supposed to rebel against their parents, were now raiding their record collections for 1960s bands like The Kinks, The Who, and The Small Faces. My Generation had been adopted by a new generation.

One thing Britpop did have was an unrivalled ability to celebrate itself. Events such as the launch party of Pulp’s Different Class held at Britpop HQ The Good Mixer in Camden passed into the memory even of people who weren’t there. You constantly heard that Camden was swarming with music stars but when I started going there in search of these stars in 1995 all I found were other suburban kids like me looking for the same stars. The 1990s was, like my dad said of the 1960s, “like a big party you could hear going on in the next street”

A lack of originality was hard wired into Britpop which was, in retrospect, an entirely reactionary phenomenon. Anyone looking for invention in British music would have gone to the dance scene. One of the richest musical legacies of the 1980s had been the fusion of indie music with elements of dance music imported from New York’s club scene. New Order, who emerged from indie band par excellence Joy Division, were a classic example. Happy Mondays and The Stone Roses carried it to its fullest on tracks like Step On and Fools Gold. Former punks Primal Scream’s dance infused 1991 album Screamadelica was one of the musical highlights of the decade.

The 1990s saw the fracturing of this. Dance music and indie went their separate ways and dance took the inventiveness with it. While Oasis churned out the music of Slade with the lyrics of the Electric Light Orchestra bands like Massive Attack, Portishead, and Faithless, were recording music genuinely unlike anything heard before. Borrowing much from a continental tradition of electronic music these bands made records that were as suitable for the dinner party as the ten hour bender.

Neil Tennant of the Pet Shop Boys observed that music had always evolved with technology; Mozart had written for the new-fangled harpsichord, Elvis for the new-fangled guitar. In drum and bass technology facilitated one of the most bracing musical genres of the decade. The award of the Mercury Music Prize to Roni Size for his album New Forms in 1997 was a belated and, it felt, grudging admission of this.

But when looking back one must always be careful not to mistake what the noisiest commentators say people were doing or thinking for what people were actually doing or thinking. Most people weren’t listening to Bentley Rhythm Ace or Goldie. Manufactured pop bands like Take That and the Spice Girls outsold almost any given Britpop band. In the rivalry between Take That and East 17 the ‘boyband’ genre even had its own version of the Blur vs Oasis schism. In their favour, with records like Back For Good and Stay Another Day, these boybands had at least one good song in them which is more than could be said for later acts like the dreadful Westlife.

If these acts seemed old fashioned so did Britain’s musical tastes. The bestselling singles of the 1990s look like a list of bestselling singles from an earlier decade. In 1990 and 1995 the biggest selling singles were versions of Unchained Melody (by The Righteous Brothers and stars of popular TV show Soldier, Soldier Robson and Jerome respectively), a song written in the 1950s.  In 1994 it was a cover of Love is All Around a song first released in the 1960s and in 1998 it was a new song by Cher, a singer who had her first hit in the 1960s. In 1992, 1996, and 1997 the biggest selling singles were versions of songs first recorded in the 1970s.

It was the same story with albums. (What’s the Story) Morning Glory? was the decades biggest seller by some distance but the other top selling albums were greatest hits compilations by ABBA and Madonna and pap like Celine Dion, Simply Red, Robson & Jerome, and The Corrs.

Same as it ever was. Just as in the 1960s Sgt Pepper’s was outsold by the soundtrack for The Sound of Music and Mull of Kintyre sold more copies in the 1970s than Anarchy in the UK, the British record buyer remained a conservative creature.

More on Maggie

It was

One of the great pleasures of the internet is to see Baron Tebbit, former Chairman of the Conservative Party, saying something like “I was disappointed to read the view of viewtoday, David Simpson, Jangly Guitar Part and others…” Well, if it’s alright for Norm it’s alright for me so I thought I’d take some time to engage with some of my critics.

The thrust of my article for The Commentator last week was that when someone tells you about the party they have planned for when Margaret Thatcher pops her clogs it is generally a sign that they haven’t thought about the matter very much, at least, not in any serious or original way. There was little in the responses to indicate that this observation is wrong and much to suggest it is entirely correct.

Over on twitter @BirleyLabour saw it as an example of “Tory hate for Sheffield” despite the fact that I am from Sheffield and am not currently a member of the Conservative Party (and when I am I’m not a Tory). Still, it’s nice to see the Sheffield Labour Party’s long tradition of idiocy being upheld.

‏@DaveTomHodges said it was “somewhat odd to write a piece proclaiming the longeivity of Thatcher’s ideas at a time they’re most discredited economically” I asked him which ideas he meant exactly (my answer would have been monetarism, but there you go) and got in reply “why that would be the low global growth over the last 30yrs as a starter. Economic extremists on both sides are v.dangerous!”

For starters, I don’t think low economic growth was one of Thatcher’s ‘ideas’. It might have been a consequence (though I’d argue against that) but it’s not as though she thought sometime before 1979 “Hang on; what we need is lower economic growth” In fact, she is often slated for putting the pursuit of economic growth above any other considerations. The charges against Thatcher are rarely coherent.

Secondly, though, what has economic extremism one way or the other got to do with it? It doesn’t matter whether your ideas are extreme or not, it only matters whether they are right.

After that young Master Hodges drifted into the last refuge of the Thatcher Bashers, some stuff about Chile and Pinochet.

Another vocal critic on twitter was @glynsmith3. His intial response was “Thatchers achievements mmmm. no sorry she’s just an evil cow who destroyed many peoples lives #witch” which rather proved my initial point. He went on to tweet “you are one selfish dickhead. 5 million unemployed, but at least your fucking happy eh.#torywanker” (proving my point again – and it was 3 million) before tweeting “no abuse from me” He eventually asked “pray tell why Thatcher was so good. i did ask 30 messages ago” which suggests he hadn’t actually read the article which had got him so angry in the first place.

I ought to say that not all the response was bonkers. I was pleased to see a few of my fellow Sheffielders agreeing in the comments (Andrew Cadman, Chrisuk1943, and Phil).

And not all the anti responses were barking. My friend Phil, a thoughtful fellow, reflected on Facebook that “the experience of leaving school and trying to find a job in a city affected as Sheffield was circa 1982 gives me the right to dislike someone who caused that affect” This demands more of a reply.

I don’t think anyone would disagree that Sheffield in the early 1980s was a grim place to be. The question was to what extent that was Thatcher caused it. If she didn’t then celebrating her demise is pretty daft.

Thatcher was elected to tackle two problems; inflation and excessive trade union power. The tool she used to tackle inflation was the doctrine of monetarism. This diagnosed the cause of inflation as being growth in the money supply and prescribed the cure as being the slowing of this growth. However, a decline in the growth rate of the money supply would lead to higher interest rates and higher unemployment.

That is, in fact, exactly what happened under the first monetarist government Britain had; Labour in 1976. That year Jim Callaghan, Thatcher’s predecessor, was forced to ask the IMF for a bailout. One of the conditions of the IMF’s loan, not unreasonable given the inflation of 25% the previous year, was a slowing in the growth of the money supply. The Chancellor, Denis Healey, obliged (he had no choice) and unemployment quickly shot up to a post war record of 1.5 million in 1977 where it more or less stayed until Thatcher was elected. Inflation, meanwhile, fell to 8% in 1978 before Labour went on a pre election credit binge and it started heading upwards again.

So given the experiences under Callahan/Healy as well as Thatcher/Howe, we can safely say that the defeat of severe inflation means higher unemployment. There is no other way. If you believe that the inflation Britain was plagued by in the 1970s needed to be defeated you cannot hold the subsequent unemployment against Margaret Thatcher.

You might, however, think that the price was too high and that high and increasing inflation was preferable to the unemployment that was an unavoidable part of getting rid of it. Celebrating Margaret Thatcher’s death because of the unemployment she oversaw only makes sense if you believe this.

The trouble is that economic theory had come to predict and the practical experience of the 1970s had borne out that using a bit of inflation to reduce unemployment only worked for a short time (that short time getting shorter with every dose) and that each dose had to be higher than the one before*

Indeed, this insight came to Jim Callaghan before Thatcher was even elected. In 1976 he told the Labour Party conference that

“We used to think that you could spend your way out of a recession, and increase employ­ment by cutting taxes and boosting Government spending. I tell you in all candour that that option no longer exists, and that in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of infla­tion into the economy, followed by a higher level of unemployment as the next step. Higher inflation followed by higher unemployment”

That was Thatcher’s belief put as well as she ever put it herself.

Quite simply the path of ever higher inflation was the path to national ruin. Thatcher saved us from that at a dreadfully high cost. But anyone who tells you it was available cheaper is having you on.

* The reasoning behind this was that if people expected inflation of 5% they would factor it into their calculations and only nominal magnitudes (prices) would change, real ones (output, unemployment) wouldn’t. So, to spur an increase in output or employment the inflation would have to be unexpected so if 5% was the expected rate the actual rate would need to be, say, 8%.

However, once people factored in the 8% rate the next stimulus would have to be up higher, say 10%…

Thatcher’s achievements will long outlive the spite of Sheffield’s sons and daughters

You want a lump of cole rather than a welfare payment? 

“When Thatcher dies they’ll have to build a dance floor over her grave for all the people who want to dance on it.” When I was told this in a pub some years ago it wasn’t the sentiment that struck me but that fact that the unimaginative fellow speaking might have thought it was the first time anyone within earshot had heard that rib tickler.

I was born in Sheffield in 1980 and through family and support of an underachieving football club I retain ties to the place and its people. I have heard Sheffielders, some quite reasonable folk, say that they wish the Brighton bomb attack had succeeded; I have heard them joke frequently about Thatcher’s dementia.

One told me that if there was a God he would believe in him if Margaret Thatcher died. But, if there is a God, shouldn’t he believe in him anyway? And unless he was ascribing to Thatcher powers of immortality, her death is a certainty and, thus, so is his eventual embrace of theism.

You won’t find logic where none exists. The visceral hatred of Margaret Thatcher isn’t based on anything resembling rational thought. As one Sheffielder once put it to me “I dont understand all this stuff about GDPs, Taxes, RPI etc etc. All i know is that growing up in Sheffield in the 80s. Thatcher demolished a once proud city & left alot of its inhabitants pennyless, jobless & without hope. You can argue about stats all day. But that was the reality of it all. People loosing their, jobs, homes & pride.” (sic, sic, sic…)

That’s why people in places like Sheffield will be celebrating Margaret Thatcher’s death. There’s just one problem. It’s wrong.

For starters, feel the parochialism. Thatcher was bad for Sheffield ergo she was bad. Never mind the rest of the country. Never mind the GDP growth of 23 percent or the increase in the median wage of 25 percent during her time in office. For most people the Thatcher years were ones of prosperity. That’s why she regularly tops polls of most popular Prime Ministers.

This is not to say that this person’s view is worthless. But it is to say that an opinion formed simply by looking up and down your street might not be too useful.

Then, just how proud actually were places like Sheffield before Thatcher came along? How proud can any city be when it is, essentially, a vast welfare case getting by on the wealth transferred to it from other parts of the country?

That was the truth of the industrial situation in these areas. Take coal. Just before the First World War the mines employed more than 1 million men in 3,000 pits producing 300 million tonnes of coal annually.

By the time the industry was nationalised in 1947 700,000 men were producing just 200 million tonnes a year. To improve this situation, in 1950, the first Plan for Coal pumped £520 million into the industry to boost production to 240 million tonnes a year.

This target was never met. In 1956, the record year for post war coal production, 228 million tonnes were produced, too little to meet demand, and 17 million tonnes had to be imported. Oil, a cheaper energy source, was growing in importance, British Rail ditching coal powered steam for oil driven electricity, for example.

Jobs were lost in numbers that dwarfed anything under Thatcher. 264 pits closed between 1957 and 1963. 346,000 miners left the industry between 1963 and 1968. In 1967 alone there were 12,900 forced redundancies. Under Harold Wilson one pit closed every week.

1969 was the last year when coal accounted for more than half of Britain’s energy consumption. By 1970, when the Conservatives were elected, there were just 300 pits left – a fall of two thirds in 25 years.

By 1974 coal accounted for less than one third of energy consumption in Britain. Wilson’s incoming Labour government published a new Plan for Coal which predicted an increase in production from 110 million tonnes to 135 million tonnes a year by 1985. This was never achieved.

Margaret Thatcher’s government inherited a coal industry which had seen productivity collapse by 6 percent in five years. Nevertheless, it made attempts to rescue it. In 1981 a subsidy of £50 million was given to industries which switched from cheap oil to expensive British coal. So decrepit had the industry become that taxpayers were paying people to buy British coal.

The Thatcher government injected a further £200 million into the industry. Companies who had gone abroad to buy coal, such as the Central Electricity Generating Board, were banned from bringing it in and 3 million tonnes of coal piled up at Rotterdam at a cost to the British taxpayer of £30 million per year.

By now the industry was losing £1.2 million per day. Its interest payments amounted to £467 million for the year and the National Coal Board needed a grant of £875 million from the taxpayer.

The Monopolies and Mergers Commission found that 75 percent of British pits were losing money. The reason was obvious. By 1984 it cost £44 to mine a metric ton of British coal. America, Australia, and South Africa were selling it on the world market for £32 a metric ton.

Productivity increases had come in at 20 percent below the level set in the 1974 Plan for Coal.

Taxpayers were subsidising the mining industry to the tune of £1.3 billion annually. This figure doesn’t include the vast cost to taxpayer-funded industries such as steel and electricity which were obliged to buy British coal.

But when Arthur Scargill appeared before a Parliamentary committee and was asked at what level of loss it was acceptable to close a pit he answered “As far as I can see, the loss is without limits.”

Source: The BBC

Falling production, falling employment, falling sales, and increasing subsidy; that was the coal industry Margaret Thatcher inherited.

She did not swoop in and kill perfectly good industries out of spite. Industries like coal and steel were already dead by the time she was elected. Thatcher just switched off the increasingly costly life support which had kept these zombie industries going.

When Margaret Thatcher dies the streets of Sheffield will flow with ale. But the next day the revelers will wake up with headaches and Margaret Thatcher will still have crushed Arthur Scargill, will still have helped win the Cold War, and will still have shown the supposed inevitability of socialism to be the dimwitted sham it was. And those achievements will last longer than the hangovers.

This article originally appeared at The Commentator