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Society buckled and is damaged but has never disappeared

Remember that her own party got rid of her in the end because she even became a liability to them. She was always a liability to the prosperity of the British people and despite her obsession with incentives and individual action, she undermined both by wrecking the macroeconomy in Britain. The news today is all about the death of the former British PM. There will be a lot of revisionism going on. I don’t plan on a chapter and verse discussion of the legacy of the shopkeeper’s daughter. Apart from the cruelty that was imposed on individuals, particularly the poor, her policies hollowed out the British economy and opened up the door for the parasitic financial sector to take centre stage, with the disastrous consequences that are now for all to see. I could talk about all of that. But to me the biggest impact of her period in office was that it marked the beginning of the end of the social democratic parties. Labour and the Tories became neo-liberal lookalikes. Sure enough, the Tories spoke better and had better table manners. But when the economic policy positions were distilled to their essence, the Labour Party, like so-called progressive parties everywhere, started to sound more right-winged than the Tories themselves. That is what I think is her grim legacy for the weak and the poor of the world.

I lived in England for part of her period in office and was there during the coal miners’ strike, at the height of the union bashing and the attacks on workers. I lived just around the corner from Eddie Shah’s Stockport Messenger factory, which Thatcher used as the stalking horse to destroy the print unions.

Thatcher’s new anti-union laws were first unveiled at this little local paper in the North of England (Warrington). The National Graphical Association (the union) were fined £50,000 for defending their workers.

There were mass pickets of the Warrington plant and the police were brutal in the way they dealt with the workers.

The laws allowed for the full sequestration of its assets. By the end of the dispute the NGA had been fined around £650,000 (which was the largest fine in British legal history to that date) and the publishers had claims for millions of pounds of writs outstanding against them.

The print unions sought support from the peak body, the TUC which by then was dominated by right-wing leaders from the Iron and Steel Trades Confederation (Bill Sirs) and the AUEW (Terry Duffy). The TUC was compliant with the pernicious new laws and kept a distance. Eddie Shah had a phalanx of conservative and monied interests behind him and the police muscle to physically intimidate the workers.

The union lost. Thatcher had the first victory in her campaign to divide and conquer the representatives of labour and to drive down working conditions. The NGA struggle was the first of many in that sector, which eventually led to Murdoch’s News Limited’s decampment from Fleet Street to Wapping, with all the ramifications that followed for workers and their job security.

I lived there in England when unemployment soared and public infrastructure was run down. I lived there when privatised bus services cut “unprofitable” routes into the Pennines and an old lady died because she could not get to her clinic anymore. It was an awful time in Britain.

I lived there when she attacked a small island off Argentina at a time she was about to lose office. The little two-up-two-down working class terraces in the grimy streets that I lived in up in Manchester were adorned with British flags and the working class tories impoverished by Thatcher’s Monetarist assault on them multiplied and she won the next election. An amazing sense of denial of reality was in the streets – similar I think to the tea party morons who will suffer the most materially from the policies they are supporting.

Mass delusion is very hard to explain when drugs are not present. At least in the late 1990s etc, the neo liberals were able to run amok and cut this and that and transfer massive amounts of real income to the top-end-of-town because they opened up the credit tap and we all happily sedated ourselves bingeing on consumption goods bought on the never never.

However, despite all that personal hurt and loss of public dignity, one of the most significant consequences of this era was that it was marked the beginning of the end for the social democratic parties – such as British Labour, Australian Labor Party, etc.

It was during this period – under the onslaught of Monetarism – that these parties all abandoned the ideals of social democracy and public purpose that had shaped their policy platforms since their inception.

Instead, they adopted neo-liberal narratives about individual incentives and private endeavour and today represent a pathetic version of the great ideals they used to profess.

While the politicians railed against Madam Thatcher’s claims about there being no such thing as society, they embraced her message wholeheartedly and stopped understanding or refused to listen to those who did understand that systemic constraints overwhelm individual choice in a macroeconomy.

The lessons of the Great Depression were forgotten. The 1930s were redefined by compliant conservative historians. Even today that is going on. I was talking with someone last night and we laughed in that tragic sort of way when we reflected on the claims by conservatives that the CCC and WPA programs in the US during the Great Depression did nothing to reduce unemployment. Sure enough that is true if you count the millions of workers who toiled for pay under those programs as being still unemployed!

These social democratic parties fell prey to the basic fallacy of composition that Keynes and others had pointed out during the Great Depression – that what might work at the individual level may well have the opposite (negative) impact if the same strategy is employed at the aggregate level.

They thought it was smart politics to adopt the economic policies of the right – mostly without really understanding that the basic propositions of neo-liberal macroeconomics are myths. They also didn’t realise that by adopting these policy positions they would change the public debate so much that the substantive policy issues that defined their existence – recognition and care for the collective – would become unpalatable to an increasingly indoctrinated public.

The so-called progressive politicians started mindlessly mouthing off about the need for budget surpluses as if they are an end in themselves. They started to quote public debt ratios as if they had some independent relevance to anything. They started to tell us that the markets had to be calmed and obeyed without realising that the bond markets are just another public welfare recipient and will go cap in hand to government on whatever terms the latter offers should it have the economic gumption to realise who is in charge.

I suspect hardly any of the Labour-type politicians had a clue about anything they were talking about. But the damage they caused to society has been immense.

In the 1980s, we began to live in economies rather than societies or communities. It was also the period that unemployment persisted at high levels in most OECD countries. The two points are not unrelated. Unemployment arises because there is a lack of collective will. We have been indoctrinated to believe that government is somehow an impost on us rather than being the essential facilitator for economic well-being.

We support governments, which deliberately constrain aggregate demand below the level necessary to maintain jobs for all. Then we turn our scorn on the victims of that shortfall as if they are all to blame. We have been schooled to think individual and ignore the collective.

We have been dumbed down to ignore systemic constraints. The lack of collective will in the public setting has been the principal casualty of the influence of neo-liberalism.

The solidaristic or collective approach to problems is sometimes called the All Saints approach. Collective will is important when a nation goes into recession because it provides the political justification for sharing the costs and benefits of economic activity more generally.

More generally, collective will is a state where the citizens empower the sovereign government to use net spending (deficits) to ensure there are enough jobs available for all those who want to work. We used to think that governments had an obligation to create work if the private market fails to create enough. That was one of the lynchpins of a progressive social democratic agenda.

It reflected a sophisticated understanding that when system constraints are imposed individuals become powerless. If there are not enough jobs then 5 or 10 into 1 wont go (in integer units).

That sophisticated understanding led us to demand that the Government use its fiscal capacity to generate enough jobs!

The neo-liberals hate collective will. Remember Margaret Thatcher’s famous epithet while being interviewed by Women’s Own Magazine (published October 31, 1987) was:

I think we have gone through a period when too many children and people have been given to understand “I have a problem, it is the Government’s job to cope with it!” or “I have a problem, I will go and get a grant to cope with it!” “I am homeless, the Government must house me!” and so they are casting their problems on society and who is society? There is no such thing! There are individual men and women and … there are families and no government can do anything except through people and people look to themselves first. It is our duty to look after ourselves and then also to help look after our neighbour and life is a reciprocal business and people have got the entitlements too much in mind without the obligations, because there is no such thing as an entitlement unless someone has first met an obligation and it is, I think, one of the tragedies in which many of the benefits we give, which were meant to reassure people that if they were sick or ill there was a safety net and there was help, that many of the benefits which were meant to help people who were unfortunate-“It is all right. We joined together and we have these insurance schemes to look after it”. That was the objective, but somehow there are some people who have been manipulating the system and so some of those help and benefits that were meant to say to people: “All right, if you cannot get a job, you shall have a basic standard of living!” but when people come and say: “But what is the point of working? I can get as much on the dole!” You say: “Look” It is not from the dole. It is your neighbour who is supplying it and if you can earn your own living then really you have a duty to do it and you will feel very much better!”

There is also something else I should say to them: “If that does not give you a basic standard, you know, there are ways in which we top up the standard. You can get your housing benefit.”

But it went too far. If children have a problem, it is society that is at fault. There is no such thing as society … There is living tapestry of men and women and people and the beauty of that tapestry and the quality of our lives will depend upon how much each of us is prepared to take responsibility for ourselves and each of us prepared to turn round and help by our own efforts those who are unfortunate.

You can read more about this interview and its context at – Interview for Woman’s Own.

I think that mentality infested the progressive parties who were starting to struggle because they failed to make the transition from the fixed exchange rate, gold standard system to the fiat currency system. The ridiculous requests from the Callaghan government in the 1970s to the IMF for funds, which paved the way for Thatcher, exemplified this confusion.

Things went downhill after that.

The recent evidence of my thesis is found in the article published in the UK Guardian at the weekend (April 6, 2013) – Labour plans radical shift over welfare state payouts – which reports that the British Labour Party is considering a “radical shakeup of the welfare state, under which benefit payments to those out of work or on low incomes will vary according to their past contributions to the state”.

There was a rather tawdry surge in welfare bashing last week in Britain with the Philpott case being used by the Chancellor in an opportunistic and disgusting manner to further his own mindless ideological attack on the weak and the poor.

I am not being politically partisan here. Remember when Tony Blair was shadow homesecretary and he thought he could score a point or two against the Conservatives (in the period just after Thatcher’s demise as leader) – by claiming that the slaughter of little James Bulger was somehow due to the conservative economic policy.

In both cases, it was innocent children that had died. But that seemed to escape these politicians.

The trend over this period is for the right to come out with some outrageous proposition that they backup with a massive media campaign courtesy of their stooges in the media. In response, the Labour Party (or equivalent in whatever country you like) comes out with something to counter the attacks.

They have stopped questioning the agenda and, instead, try to trump the conservatives on their own ground. In macroeconomic policy, for example, it becomes a battle of who can promise the biggest budget surplus. Hang the consequences. The surplus becomes the only goal even though neither side of politics seems to understand that the government cannot control the fiscal outcome that emerges anyway because it depends on the state of the cycle and the spending and saving decisions of the non-government sector.

The government can influence the outcome but not control it. In that sense, it is a mindless and counterproductive goal to pursue.

The real agenda is what does a budget deficit or surplus mean in the context of other spending aggregates and the state of capacity utilisation in the economy. That agenda is lost in the “battle for the biggest surplus”.

The British Labour Party are trying to leverage off the latest conservative attacks on welfare recipients at a time when unemployment is obscenely high and the economy is going backwards.

Apparently, they want to address the:

… “something-for-nothing” culture.

So, falling into the trap of the false premise. Those who receive unemployment benefits don’t do “nothing”. They endure – every day – the alienation and dislocation from the distribution system. From work. From their social networks (which increasingly shrink). From their dignity. They endure massive personal costs. That is a big “something”.

In return, they get a pittance and are harassed by bureaucracies which seek to deny their rights as citizens to expect their governments will honour international human rights’ treaties, which say the government will create work for all.

The Guardian article reports that British Labour’s shadow work and pensions secretary, Liam Byrne wrote in the Observer that Labour is committed to a:

… return to the “old principle of contribution” championed by William Beveridge after the second world war. “There are lots of people right now who feel they pay an awful lot more in than they ever get back,” Byrne writes. “That should change.”

Yes it should change. If this character really understood the historical reference he was invoking he would realise that the Beveridge Report, which defined the modern welfare state in Britain (Australia, New Zealand, Canada etc), was cast in a time when the prevailing macroeconomics paradigm was very different to what the British Labour Party is proposing to maintain now.

If British Labour really wants to recast its welfare policy then it has to start by recasting its macroeconomic policy.

Beveridge was writing immediately after the Great Depression which only really ended when government spending associated with the prosecution of the Second World War accelerated.

The Great Depression taught us that, in the absence of government intervention, capitalist economies are prone to lengthy periods of unemployment, the Second World War experience proved that full employment could be maintained with appropriate use of budget deficits.

The employment growth following the Great Depression was in direct response to the spending needs that accompanied the onset of the War rather than the failed Neoclassical remedies that had been tried during the 1930s. The problem that had to be addressed by governments at War’s end was to find a way to translate the fully employed War economy with extensive civil controls and loss of liberty into a fully employed peacetime model.

That was the context that Beveridge was working within.

The Post World War 2 economic and social settlement in most Western countries was based on three main pillars. First, the Economic Pillar was defined by an unambiguous commitment to full employment.

Second, the Redistributive Pillar was designed to ameliorate market outcomes and defined much of the equity intervention by government. It recognised that the free market was amoral and intervention in the form of income support and wage setting norms was a necessary part of a sophisticated society.

Third, the Collective Pillar provided the philosophical underpinning for the Full Employment framework and was based on the intrinsic rights of citizenship. We accept that our depiction is a stylisation and that there were many individual nuances in particular countries over the period considered.

William Beveridge’s work in the 1940 (noted above) was entirely consistent with the emerging Keynesian orthodoxy of the time, which saw unemployment as a systemic failure in demand and moved the focus away from an emphasis on the ascriptive characteristics of the unemployed and the prevailing wage levels.

Beveridge (1944, 123-135) said that:

The ultimate responsibility for seeing that outlay as a whole … is sufficient to set up a demand for all the labour seeking employment, must be taken by the State.

Welfare support for the unemployed was conceived as short-term support rather than a permanent source of income support. It was taken for granted that the state would use its fiscal policy capacity to ensure there were enough jobs available.

Governments used a range of fiscal and monetary measures to stabilise the economy in the face of fluctuations in private sector spending and were typically in deficit.

Please read my blog – Back to William Beveridge requires a commitment to true full employment – for more discussion on previous spurious contributions from Mr Byrne.

The point is that the “Labour Parties” around the world keep harking back to their glorious roots as if they will lull traditional voters into supporting them. However, the modern politicians haven’t a complete grasp on the historical context or the full suite of policies that have to be proposed and implemented to be faithful to the “glorious past”.

If you want to return to an unemployment benefits system, which was always only meant to provide very short-term support to workers who were in between jobs in an otherwise fully employed economy, then you have to restore true full employment.

No-one was meant to live on unemployment benefits for very long. The fact that workers have now eked out (diminished) lifestyles on income support in the face of a massive shortage of work doesn’t signal to me that there is some sort of deep moral decay.

It signals what it is – there are not enough jobs because macroeconomic policy is unnecessarily constraining aggregate demand, and unemployed workers and their families are powerless to relieve that systemic constraint.

And … they have to eat and put a roof over their heads. And perhaps even smile once in a while. But then the scarcest sign that they might be enjoying a moment of their life is evidence to these socio-path policy makers and would-be Labour politicians that they are getting “something-for-nothing”.

Margaret Thatcher was an important cog in the mentality changes that have led to these politicians being able to peddle such myths and nonsense but still command the public stage.


Warren Mosler is staying in Darwin with me at present. We are off to the Northern Territory Treasury this afternoon to present a workshop on how federal government policy constrains the choices of state and territory governments and leaves them picking up for the unemployed etc.

While I am in Darwin I have agreed to give a monthly workshop on macroeconomic matters to help build capacity in the Treasury department. It is a very receptive audience and we are going to have a lot of fun over the next year or so.

I would never shed any tears for Margaret Thatcher.

That is enough for today!

(c) Copyright 2013 Bill Mitchell. All Rights Reserved.

This Post Has 44 Comments

  1. I know someone in Darwin who would be interested in what you have to say.
    Please send a contact nunmber to me so that I can forward.
    Many thanks.

  2. “I would never shed any tears for Margaret Thatcher.”

    I can’t think of any parasite – I mean, politician – that I would shed a tear for.

  3. O.K. Bill so just give us the whole account of Warren’s visit: who’s Oskar ? 😉


  4. “I lived there when she attacked a small island off Argentina at a time she was about to lose office.”

    While I agree with everything else you wrote this is simply factually inaccurate. Rightly or wrongly the Falklands were a British territory. Unless somehow you believe that she incited the Argentinians to invade the didn’t ‘attack’ the islands, the Argentinian junta was the aggressor. Yes, the war won her re-election but that isn’t why she did it. Any British government would have done the same thing – i.e. wage a war to reclaim the territory. She just got lucky.

    You mention ‘revisionism’ in your first paragraph but that’s exactly what you’re doing here.

  5. Dr. Mitchell,

    Is young Oscar in Warren’s video a relative of yours?

  6. What a beautifully structured and brilliantly argued piece.

    But this blog does overlook one or two points. To produce full-employment demand on the scale of the 1930s, we’d have to remilitarise as we did then. For that of the 1940s, we’d have to rebuild the nation as if after a war (and introduce slapdash 1950s/60s architecture to keep the ball rolling cheaply. We’d have to reintroduce National-Service conscription. We’d have to roll back on the safety-net giveaways government has introduced for its voters ever since. The NHS would have to shrink as a proportion of GDP, as would the education budget. So too for that matter would the welfare budget.

    We’d have to slash the population by between a quarter and a third. A deer cull maybe? We’d have to return mums to their kitchens and remove them from the nation’s workplaces. We’d have to uninvent mechanisation of factory lines and the computer. We’d have to force other countries to buy our goods (with gunboats maybe) to reestablish defunct trade agreements. And we’d have to suppress wages to a fraction of today’s to compete with those of the overseas economies that have stayed over there and Taken All Our Jobs.

    That, as I see it, is the historical context of Mitchell’s full-employment paradigm and it is lost forever. (At least I hope so; otherwise we’ll have had the deer cull imposed on us with war exceeding the scale even of 1914-18 or 1939-45, reducing the supply side of the economy and recreating the demand side that existed back then.) Or have I, one of Thatcher’s children with natural social-democratic leanings, been indoctrinated with the neo-liberal consensus?

  7. Dear Bill

    Let me make just 3 brief remarks:
    1 – The Thatcher years weren’t bad for everybody. They were good years for the riches 25%, or at least for most of them.

    2 – Thatcher didn’t attack Argentinian islands, but she liberated British islands from a totally illegitimate Argentinian occupation brought about by a vicious military regime. The Falklanders are British and want to remain part of the UK.

    3 – In the end, Thatcher didn’t reduce the British welfare state all that much. This demonstrates that the welfare state is popular enough to survive even a dogmatic neoliberal government.

    Regards. James

  8. “The ridiculous requests from the Callaghan government in the 1970s to the IMF for funds, which paved the way for Thatcher, exemplified this confusion.”


    I think everyone would really appreciate if you wrote something one this topic.


  9. Wow. What a devastating rebuttal analysis. Thank you Sir for giving me (someone who wasn’t there) a glimpse into the mind of a Thatcherite. “To produce full-employment demand on the scale of the 1930s”, first “we’d have to remilitarise as we did then.” And then “We’d have to slash the population by between a quarter and a third”.

  10. Bill, could I second Philip Pilkington’s suggestion that you write something about Denis Healey calling in the IMF. It is certainly one of the sticks that the Tories have always used to demonstrate Labour’s economic incompetence relative to themselves. Ironic when so few politicians appear to do more than spout their received wisdom from the City.

  11. “Or have I, one of Thatcher’s children with natural social-democratic leanings, been indoctrinated with the neo-liberal consensus?”

    You have.

    Try starting with a world where the machines do everything and work backward.

  12. Excellent summation of Thatcher’s legacy. A lengthy detailed article by Michael Hudson is available over at Naked Capitalism – he could not have written that in only 2 days – it is well worth the time.

    Have a successful workshop and maybe you can provide some surf lessons.

  13. Bill, just one thing on fall of the Social Democratic parties. I resist the idea that some have that Thatcher and Reagan were “revolutionaries” who through the power of their amazing charisma and political skills managed to topple an order that could have survived if they had not come along. Thatcher and Reagan were just the main conservative figures who were around to take advantage of broad changes in social and economic attitudes resulting from a long evolutionary transformation of the postwar economy. The left failed to devise a new progressive vision (they are still failing) to replace the war-and-industry model that was forged in WWII and the Cold War. Neoliberalism wasn’t the result of a few prominent “great men”. It was the result of class shifts, economic dislocations and de-unionization that in a way resulted from the left’s own success.

  14. Dear PC and others who have mentioned Falkands

    Your position is solely dependent on your denial of the Argentinean claim to sovereignty. That matter is unresolved. My Argentinean friends certainly deny the British-centro view of the history of the legitimacy of the British occupation. So what we construct as an invasion or not depends on which position you consider has merit. Sure enough the British live there now. But Australians from a European background live in Australia now but are considered to be invaders by the indigenous Australians who have lived on the land mass for more than 30,000 years.

    It all depends. There was no revisionism going on in my blog. More a statement of support for indigenous claims. But I admit the matter is contentious and either position can be argued with merit.

    best wishes

  15. re: IMF loan.

    Synopsis here –

    In 1976 the US (with the IMF) decided that sterling was undervalued, the US part-funded a loan to the Brits of $5.3Bn so that we could buy pounds, the pound continued to fall, however the Yanks insisted on the loan being repaid (at the end of ’76) and we had to “borrow” $3.6Bn from the IMF to do that. In fact it was a loan “facility” which was never used. The £/$ exchange rate quickly ‘improved’ as demand for sterling grew due to oil exports and the loan was easily repaid. The moral of that story (for nations sovereign in their own currency) is never, ever, borrow in a currency you don’t issue.

  16. I really do think that the Steven Patrick Morrissey correctly summarized Madame Thatcher.

    Thatcher Was a Terror Without an Atom of Humanity

    She gave the order to blow up The Belgrano even though it was outside of the Malvinas Exclusion Zone – and was sailing AWAY from the islands! When the young Argentinean boys aboard The Belgrano had suffered a most appalling and unjust death, Thatcher gave the thumbs up sign for the British press.

  17. These social democratic parties fell prey to the basic fallacy of composition that Keynes and others had pointed out during the Great Depression – that what might work at the individual level may well have the opposite (negative) impact if the same strategy is employed at the aggregate level.

    Many people do not understand that Keynesianism is a counter-cyclical economic theory producing a more “steady Freddy” type economy. Keynesianism works because it benefits those of the working class to keep their incomes intact and generating economic activity. Another benefit I have discovered in this current period of economic malaise is that such severe recessions result in low interest rates, which is the optimal time to borrow. On a micro level, such downturns affect large swaths of working people who lose economic power due to getting laid off, which reduces their buying power. On the other hand, such deflationary periods benefit those who have tremendous wealth stored up (i.e. “savers”). The people who benefit the most from the virtuous and vicious cycles — also known as “booms and busts” — are these “savers” (something I refer to as a “bi-polar economy;” so named for bi-polar disorder, a psychiatric condition wherein an individual experiences extremes of mania and depression). Therefore, it is in their personal economic interests to oppose government borrowing, as any reduction in the deflationary cycle (i.e. the vicious cycle) reduces their economic advantage.

    What I find perplexing is that anyone in Great Britain (where John Maynard Keynes is from and where he developed his theories) — or anyone else in the English-speaking world — would adopt an Austrian “hard money” school of thought over a tried-and-true economic model such as Keynesianism. It was just 40 years ago that even the conservatives acknowledged “We are all Keynesians now.” It is amazing how rapid such proven ideas have fallen into disfavor.

    And in response to a commenter above:

    Under the Keynesian model, it does not matter what kind of work people need to do, as long as it gets them working and earning income, which they can use to rebuild their personal balance sheets (even paying down debts has a useful purpose). You merely need to get them to do something. It is a conservative perversion of Keynes’ theories to state that it would have to be militaristic in nature. It is time that people learn that it is possible to be patriotic about something other than war. Furthermore, public works projects — of which there are probably endless possibilities — represent neglected activities that are ignored during economic expansions. Deflationary periods wherein interest rates are the lowest (like now) are the most optimal time to borrow and spend on public works projects.

    Additionally, there are other reasons why this is so beneficial. For instance, there is an old proverb that says: “Idle hands are the Devil’s workshop.” Putting people back to work reduces the risk of marginal workers falling into criminal enterprises. This is a positive externality that is often not considered in the equation.

  18. I came to the US in 1971 from the Philippines. There, as in much of Southeast Asia, most consider “welfare” to be beneath the dignity of someone who should find a way to work no matter what it took. Of course, we would have likely made exceptions for the aged and infirm, but for the large part this was the reality of a gritty place like Metro Manila. My friends here in Florida scarcely know of or can relate to such poverty, as the “poor” in the US often have refrigerators, air conditioning, cell phones, at least one car, and multiple televisions. So of course “poverty” is a relative thing.

    Back in the early 1980s I was a fervent supporter of Ronald Reagan and his counterpart Ms. Thatcher. Their rhetoric about self-reliance and thrift resonated with me because it was how I was living my life as an immigrant here. I never even considered applying for public assistance because I was young, able-bodied and of sound mind. (I’ve raised my five children in the same manner) After working at menial jobs for scant wages, I nevertheless was able to save small amounts and launch my own business (I know it may sound stereotypical, but I was an excellent seamstress who realized I could do far better once I started marketing my own designs – eventually I became informally known as the prom-dress queen of Orange County, CA).

    I always reasoned that there was nothing all that special about me, and if I could do it, others could (and were) do it as well. But I also realized there was a culture of “entitlement” in the US, which seemed to basically say “I don’t have to do anything because I am owed a certain level of existence simply because I am an American.” Aside from the matter of how to support this, it seemed awfully arrogant when I thought of how many others around the world would do almost anything to win “the visa lottery” and come here – and not because of the “safety net” but for the chance to make it on their own.

    The philosophy being espoused here (aside from the logic of MMT and the nature of “modern money” – which I believe I basically understand and agree with) seems to devalue the honest effort of people like me who never asked for anything beyond what we believe we have earned. I fully support the MMT concept of a Job Guarantee because anyone receiving some kind of government check (aside from the aged and infirm) ought to do something for it in return. My principal beef with Reagan and Thatcher now is not their supposed “cruelty” but their opposition to using government to achieve and maintain full employment, and the obsession with deficit spending as some kind of “evil” (perhaps the opposition is religious-based as I alluded to yesterday). Due to this understanding, my positions today are rejected by most conservatives who cling to the outdated Austrian school and other gold-standard era constructs. I enjoy taking them on because it’s fun to watch their expressions change from outrage to confusion, and sometimes even acceptance of the arguments.

  19. “The recent evidence of my thesis is found in the article published in the UK Guardian at the weekend (April 6, 2013) – Labour plans radical shift over welfare state payouts – which reports that the British Labour Party is considering a “radical shakeup of the welfare state, under which benefit payments to those out of work or on low incomes will vary according to their past contributions to the state”.

    To be fair to the Labour Party the article in The Guardian also mentions that the party is considering a return to a commitment to full employment as a policy goal, which is surely to be supported.

  20. Dion

    Guaranteeing or forcing someone to stock shelves in Tesco after 2 years unemployment is not a full employment policy or a Job Guarantee scheme. I think the main idea of that policy was to show they could be as tough on benefit scroungers as the Tories.

    Looks like they want to continue Thatcher’s legacy.

  21. Let’s not forget that before Thatcher, there were big problems that were getting steadily worse. Thatcherism was the wrong solution IMO but a solution was needed. Labour Unions had massive power to bring things to a halt. The government stepped in and nationalized industries as the unions rendered them unworkable for the private sector. The Unions then continued strikes and disruption of the nationalized industries. I appreciate that labour unions can be credited with totally transforming pay and safety standards since the 1800s. The whole economy has benefited from that. However the way they went about things was incapable of making any further progress. If everyone is on strike half the time, the economy goes into free fall. Thatcher was a reaction to that.
    I think the labour movement was very stupid to not face up to what was going on and fix it before Thatcher. I think what was needed was for the employees (perhaps through the unions) to have actually owned the companies. The unions were so powerful at that time; wouldn’t that have been an achievable aim? If the employees owned the companies, then all of the “class conflict” nonsense could have been forgotten and workers could have benefited from the work they did. Much of the economy could have become like the John Lewis Partnership. Everyone would have been better off.

  22. James Schipper, the falklands are not part of the UK, and AFAIK they don’t want to become one. They are, and the overwhelming majority of the population wish to remain, part of the British Empire (or whatever its called nowadays).

    Bill, you seem to be under the false impression that the Falklands had an indigenous Argentinian population before the British came.

  23. In response to Thatcher’s trolling i would say that we as a society must come together to solve problems affecting our society. If there is unemployment we should buid a society where there are as many job offerings as there are jobseekers.

  24. PZ,

    “as many job offerings as there are jobseekers”. That’s a popular but near meaningless concept. First, there is no hard and fast way of measuring “job offerings” or “jobseekers”.

    Second, there is no more logic in the above “equality” than in trying to make the number of pistons in your car engine equal to the number of windows the car has.

    I.e. if it’s feasible to get the number of job seekers down to 90%, 80% etc of the number of job offerings, then why not? The official unemployment count in Switzerland in the 1960s twice declined to zero. I don’t have a problem with that. Do you?

  25. “Labour Unions had massive power to bring things to a halt. The government stepped in and nationalized industries as the unions rendered them unworkable for the private sector. The Unions then continued strikes and disruption of the nationalized industries.”

    That’s a rather partial view, IMHO. In reality, management and unions in the UK deserved each other. management was quite happy to play divide-and-rule with the unions, which led to their fragmentation and competing interests. Management in the UK has historically been more concerned to act as rentiers and look for short term profits and short term “solutions”, rather than develop their industries with investment and better work practices. Taking the car industry as an example, it’s no surprise that foreign management have had no problems with British workers by taking a more enlightened view of industrial relations and work practices.

  26. Gastro George, am I right in thinking that the foreign owned car plants have come to the UK only AFTER the unions were crushed? I don’t think it should be a blame game. Everyone failed to sort the issue out. If the workers had taken ownership of the companies then the workers could have their chosen managers just as John Lewis Partnership workers do.

  27. About the Falklands: Argentinians believe a nation is a land. Brits believe a nation is a people. The Falklands are Argentinian land inhabited by British people- so both sides find the other side’s argument unfathonable.

  28. Ralph,

    I throw that out as a general “rule of thumb” for a society where jobs are plentiful. I cannot say “full employment” anymore because mainstream economists have defined that term to mean unemployment rate that is as high as 5-8 percent with this NAIRU concept.

    It’s sad.

  29. @stone: “am I right in thinking that the foreign owned car plants have come to the UK only AFTER the unions were crushed?”

    Yes, of course. But these plants are currently unionised, and those foreign companies also worked with unions in their own countries in the 70s and 80s, so the problem can’t be unions per se. The problem was the specific relationship between UK management and UK unions at that particular time. Like I said, they deserved each other.

  30. @Gastro George, there is a huge difference between current disempowered unions and the unions when Thatcher first came to power

  31. @stone

    But how did we get to the situation when Thatcher came to power? All I’m saying is that the world is somewhat more complex than you suggest. There are reasons for union militancy that are not just down to the attitude of unions.

  32. @stone

    It shouldn’t be forgotten that the German union structure is largely a British construction. After the war, the British went to German y to help rebuild the society, one of the goals being union restructuring. When they returned to the UK in around 1947 to do the same thing here, they discovered it was too late, as the union structure was already too entrenched. There are a number of serious misconception concerning British unions, but the most formidable of which is that is was the size and related issues that were the problem.

    The real problem of the UK union structure, which still persists today to some extent is the number of unions. At the time of Healey, there were around 600 unions scattered about firms throughout the UK. A union with, say, 6 members, could shut down a plant due to them being central to the operation of the plant as a whole; and the other unions at the plant could do nothing about it.

    There is another problem that resides within the union/firm relationship. Union members tend not to be on the boards of companies or effectively integrated into management, and the management of the firm and the workers on the shop floor tend to be recruited from different social classes. If engineers, for example, are accepted into management, they have to effectively give up engineering, which means giving op all their contacts on the shop floor, people who may have been their friends for years, thus leading to social isolation and a sound basis for brainwashing of the former blue collar worker by while collar management. This does not happen in the US or Germany. There, firm management and union leadership are better integrated.

    This is a serious social problem bequeathed to Britain by its history which it has never been able to overcome.

  33. Addendum:

    I should have mentioned that these organizational problems fed into Thatcher’s ideological agenda perfectly and, rather than tackle the problems themselves, she decided to destroy the unions instead or, as she said, bring the unions to their knees.

    Part of her fury directed at the miners’ union may have been fed by being outwitted and thus humiliated by the then head of the miners’ union, Joe Gormley in a stark dispute of the union with government and the Coal Board. Unfortunately, Gormley’s successor, Scargill, never had Gormley’s brains or guile. As a consequence, Thatcher outwitted him, and in the process completely destroying the mineworkers’ union and the mining communities. A number of these communities have never recovered from this lethal and virtually overnight destruction of their livelihood and way of life.

    Living through Thatcher could be hazardous to your physical and mental health. And we are now going through it again. No wonder antidepressant usage is on the rise.

  34. @larry

    “I should have mentioned that these organizational problems fed into Thatcher’s ideological agenda”

    I might rephrase this slightly and say that they corresponded perfectly to Thatcher’s world view – and that of UK management generally – that industrial relations were essentially oppositional.

  35. The need for labor unions came about because of the existence of the government-backed banking union (cartel). Why? Because the existence of the government-backed banking cartel allows businesses to bypass paying honest interest rates for their workers’ savings and/or sharing equity with them. Instead, business has used loans from the cartel to automate and outsource their workers’ jobs away!

  36. Of course it is possible to have labour unions and company share holders who work together constructively to improve the company for all concerned. It is also in theory possible to have a gift economy where people go to work in an efficient way and only take what is appropriate without using any money or coercion whatsoever. I’m just saying that the whole architecture of “unions versus owners” is intrinsically broken by design and only ever works if the people involved actually rise above those flaws and in effect act as though they were in a gift economy. The whole point of economics is so as to NOT have a system that is so broken by design that it relies on people ignoring the system and falling back to our primordial gift economy way of doing things. From what I can see the only way to align interests is if workers actually own much of the company as in the John Lewis Partnership. Unless that is the case, the union will be letting down its workers if it allows the shareholders to have enough to warrant any investment in the future of the company. Remember the logical extension of union power is to have globalized unions across all companies in all countries just as there are multinational companies. We don’t need to re-balance power by being obstructive. We need to re-balance power by being constructive. Unions are a great way to wrest power for workers but a dismal way to try and use that power to constructively build the economy.

  37. @larry, the USA car makers used to be an example of where staff were paid a lot such that the economic earnings of the industry were high despite the profitability for shareholders being modest. However the management of the companies hollowed them out in an effort to juice shareholder returns and the industry has been wrecked.
    Japan perhaps does seem to sort of work but I wonder whether it is a case of people rising above the system and acting as though they were in a gift economy. Companies own shares in connected companies in the supply chain and seem to not care about how those shares perform in a financial sense. There seems to be a general sense of getting the job done rather than attending to the bottom line. I’m happy to be corrected though if I’ve totally got this wrong.

  38. Bill:I was talking with someone last night and we laughed in that tragic sort of way when we reflected on the claims by conservatives that the CCC and WPA programs in the US during the Great Depression did nothing to reduce unemployment. Sure enough that is true if you count the millions of workers who toiled for pay under those programs as being still unemployed!

    No, it is not true even then, even on the basis of official figures which insult ones intelligence. Based on them, conservatives claim that the New Deal did not reduce unemployment below 15 or 10 % or left X millions still unemployed. Sometimes they then illegitimately exaggerate this and say “so it did nothing.”

    But since the multiplier effect of these programs reduced private sector unemployment, the last leap is an additional error. Even crazily counting these government employees as unemployed, the New Deal employment programs clearly did do something against unemployment. The New Deal wins the fight, in a wheelchair and with both hands tied behind its back.


    Matt Scott: To expand on Neil’s comment, as I understand it. These statements are so wrong, so anti-logical that neoliberal, neoclassical Austerian economics is far to the left of them. A striking illustration of how a few decades of nonsensical propaganda can turn “natural social-democratic leanings” into something far “more right-winged than the Tories themselves.”

    None of them makes the slightest sense. Deer cull? Deer cull? None of the measures proposed would be necessary or helpful, and would have the opposite consequence to what is claimed. All the things proposed to be reduced should be expanded if you want to increase demand, growth and employment. Reducing them would reduce demand, not increase it, and modern economies are generally demand, not supply constrained. No conscription, no remilitarization necessary or helpful. Where is the war? Expand the safety net, NHS, education and welfare and see demand, growth and employment rise. Do the opposite – uninvent mechanisation, suppress wages etc and see them fall.

    Full employment is not, has nothing to do with a deer cull, and is very easy to attain. When societies or people become wealthier, as they have, even with the ardent and arduous efforts of elites to make them stagnate for the last 40 years, amputating members of the society or their limbs does not help further growth and wealth accumulation, but hinders it. War and destruction are bads, not goods. Those views could only come from having “your head fuddled with nonsense for years and years”, squared.

  39. I agree with Bill and have lived in the UK most of my life. I’ve been in retreat for a few days to avoid the witches’ funeral. Our unions needed sorting out properly, not a slayer. Thatcher would have gone without the Falklands, even with a Labour Party stocked with dullards. The “smart money” here was always on the idea she was after the oil rights and access to the Antarctic – a reflush of British imperialism. The war was fought against all odds – a total farce when you consider we and the US had been denaturing their arms for years – they had 5 or 6 exocets when Iraq and Iran squandered them in hundreds. Their airforce outnumbered ours 16 : 1 but we had air superiority in days. We had as much right to the islands – but then the Argentinian claim goes back to the time when there was no Argentina. British-Argentinian relations go back a long way and involved our manufactures at high prices for their beef – and the crushing of any working class there. Argentina, on resources and size could have rivaled the USA and between the wars had the 4th highest GDP per capita. The Falklands was a neo-con war.

    Thatcher was a dullard who read well-researched scripts and only answered scripted questions. She took no part in ad hoc debate.

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