The damage of the Thatcher sea-change

When socio-economic historians reflect back in the decades to come, they will see the insanity that ruled the economic policy choices that have been taken in the last three or so decades more clearly than we seem to be able to discern as we live through the nightmare. They will conclude that arrangements such as the Eurozone was the work of lunatics who systematically undermined the prosperity of millions of people and polarised their societies as a consequence. There is no possible way that the Eurozone can be constructed as a successful monetary arrangement. The deeply flawed design of the common currency in Europe, was, in part, the product of the shift towards Monetarism and its microeconomic analogue (deregulation, privatisation, outsourcing etc) that surged back into dominance in the 1970s, after its main ideas had been thoroughly discredited and dismissed during the Great Depression. While Margaret Thatcher was not the first Monetarist government (that title goes to the government of President Giscard d’Estaing who appointed Raymond Barre as the Prime minister and Minister of Economy and Finance in 1976), her regime certainly influenced the spread of neo-liberal thinking among policy circles, particularly in the Anglo world. What is still not acknowledged is the damage done by that swing to so-called free-market policies, which would be better called pro-business capture given there was no real market forces unleashed, just an industry of parasitic, rent-seeking profiteers closely followed by the massive growth in the unproductive, wealth-shuffling financial sector. A recently released report (June 10, 2015) – The Macroeconomic Impact of Liberal Economic Policies – from researchers at the University of Cambridge lets us know more closely how damaging this period was and challenges the view that the best way forward is even more austerity and deregulation.

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