His Holiness Pope Francis was saddened to learn of the death of Baroness Margaret Thatcher.  He recalls with appreciation the Christian values which underpinned her commitment to public service and to the promotion of freedom among the family of nations.  Entrusting her soul to the mercy of God, and assuring her family and the British people of a remembrance in his prayers, the Holy Father invokes upon all whose lives she touched God’s abundant blessings.
Cardinal Tarcisio Bertone
Secretary of State

The gracelessness and blind hatred that governs much of the Left was put on full display with the death of Margaret Thatcher, the greatest prime minister Britain has had since World War 2, with organized street demonstrations “celebrating” her passing.

Thatcher, who personified the phrase “true grit”, I think would have welcomed their hate as the finest tribute to her work.  She opposed the Left and its goal of an ever expanding state with all the wit, courage and eloquence she could muster, and she had a considerable store of all three qualities.  This accolade from Milton Friedman in 1979 explains just what an extraordinary politician Thatcher was:

We have become so accustomed to politicians making extravagant campaign promises and then  forgetting about them once elected that the first major act of Margaret Thatcher’s government— the budget unveiled on June 12—was a surprise. It did precisely what she had promised to do.

Margaret Thatcher campaigned on a platform of reversing the trend toward an ever more  intrusive government—a trend that had carried government spending in Great Britain to  somewhere between 50 per cent and 60 per cent of the nation’s income. Ever since the end of  World War II, both Labor and Tory governments have added to government-provided social  services as well as to government-owned and -operated industry. Foreign-exchange transactions  have been rigidly controlled. Taxes have been punitive, yet have not yielded enough to meet  costs. Excessive money created to finance deficits sparked an inflation that hit a rate of over 30  per cent a year in mid-1975. Only recently was inflation brought down to the neighborhood of 10  per cent, and it is once again on the rise.

Most important of all, the persistent move to a centralized and collectivist economy produced  economic stagnation. Before World War II, the British citizen enjoyed a real income that  averaged close to twice that of the Frenchman or German. Today, the ratio is nearly reversed.  The Frenchman or German enjoys a real income close to twice that of the ordinary Briton.

Margaret Thatcher declared in no uncertain terms that the long British experiment was a failure.  She urged greater reliance on private enterprise and on market incentives. She promised to  reduce the fraction of the people’s income that government spends on their behalf, and to cut  sharply government control over the lives of British citizens. Her government’s budget is a major first step. It reduces the top marginal tax rate on so-called  “earned” income from 83 per cent to 60 per cent, on “unearned” income from a confiscatory 98  per cent to 75 per cent. At the same time, it raises the level of income exempt from income tax  and cuts the bottom rate from 33 per cent to 30 per cent. It proposes to cut government spending  significantly, to sell some of the government’s industrial holdings and to promote the sale of  government-owned housing units to their occupants. It loosens foreign-exchange controls  substantially as a first step toward their elimination.

One retrograde step, in my opinion, is an increase in indirect taxes—the British general sales  taxes, or VAT. This increase, which partly offsets the decrease in direct taxes, combined with  lower spending will reduce government borrowing, facilitating a restrained monetary policy and  releasing funds for private investment. The purpose is admirable. However, once taxes are  imposed, it is hard to cut them. From the long-run point of view, it seems to me preferable to  resort to a temporarily higher level of borrowing rather than to a possibly permanently higher level of indirect taxes.

I would also have preferred to see exchange controls eliminated completely rather than by  degrees. The controls serve no constructive purpose. Eliminating them gradually only prolongs  the harm and preserves a mischievous bureaucracy.

But these are quibbles. I salute Margaret Thatcher and her government for their courage and  wisdom in moving firmly and promptly to cut Britain’s bureaucratic straitjacket. Britain has  enormous latent strength—in human capacities, industrial traditions, financial institutions, social  stability. If these can be released from bondage, if incentive can be restored, Britain could once  again become a vibrant, dynamic, increasingly productive economy. Continue reading →