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And Britain's current prosperity owes a great deal to Thatcher's liberalising policies. She rolled back the state, reduced taxes, smashed the unions, encouraged private enterprise, sold off public housing, privatised vast sections of Britain's economy, ceased protection of "crown jewels" (ie national champions), encouraged competition, cleared the dead wood from British industry (British Leyland etc), deregulated the City leading to London's current pre-eminance as a global financial capital (the "Big Bang").... Her policies were consistently market driven and that, more than anything else, explains why Britain has come from so far behind to now being a margin ahead of the other large European economies in terms of GDP per capita. Thatcher is why Britain is rich and successful today. |
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Ask an economist, and her record is not what you think it is. Don't believe the spin. |
Thatcher was not Keynesian. The credit boom or 'boom and bust' business cycle was supplied by loose monetary policy. Oil revenues are extremely marginal as a proportion of GDP. Thatcher is mainly associated with the structural 'neo-classical' reforms of the goods and labour markets. It took over a decade for these reforms to materialize into lower unemployment and higher GDP growth and eventually higher real income. Most countries have subsequently undertaken similar reforms, especially the Nordic countries.
But when she came into office, Britian was struggling with mass unemployment and falling GDP. Maybe you are too young to remember this. I do although I also admit she made mistakes such loosen monetary policy you were referring to. |
Britain was struggling just like every other developed economy because of the imposition of oil price hikes during the 70s. Which caused the mythical stagflation, low growth, but high inflation.
Thatcher spent her way out of recession. That is classic Keynesian economics |
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Let me once again repeat what I said earlier, nobody is realiably able to identify market failures before all others do. But that is exactly the skill central bankers in the US and the UK assume they have. A case of irrational hybris. |
http://www.ft.com/cms/s/3ef969a2-73c...0779e2340.html
Robust eurozone growth outpaces US again Published: November 14 2006 Eurozone growth slipped in the third quarter but outpaced the US again and still showed a robust underlying performance by the 12-country region. Gross domestic product rose by 0.5 per cent in the three months to September, extending an exceptional growth spurt in the first half of the year, according to Eurostat, the European Union’s statistical office. That was slightly lower than expected, dragged down by a poor performance in France, where the economy stagnated unexpectedly....The latest figures also encourage hopes that European economies will continue to grow even as the US slows. The US economy grew by 0.4 per cent in the third quarter, hit by housing market woes. |
I do not see it as a competition between the EU and the US or any other countries - why should it be? After all, the EU needs strong US growth and vice-versa.
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And Monkey, I too lived through the Thatcher years, and only economists who foolishly believe in the old orthodoxy of classical economics think her record was good. Anyway, everyone is a Keynesian now, if you believe in the concept of market failures then you are a Keynesian. Keynes also revolutionised economics, as before him, there was no concept of Macroeconomics and the idea of managing the economy. |
Britain's current mix of high growth/low unemployment owes a great deal to Thatcher's free-market policies and supply-side reforms. Like it or not.
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Monkey, do you actually know anything about Keynes or classical economics.
In classical economics there is no such thing as a market failure. If you are a classical economist you believe the market is self-correcting and the best course of action during a recession no matter how severe is to do nothing. Whereas Keynes argued "in the long run we are all dead", meaning within the market are unstable forces which need to be managed otherwise the market collapses under its contradictions. Thatcher boosted public spending every eyar she was in office. Everyone isn't laissez faire at all, everyone is still Keynesian. America operates a Keynesian budget, as does the UK. |
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America has been following a Keynesian economic policy for years, expanisionist budgets during economic slowdowns, tax cuts during slowdowns.
The fact is without Keynes the very concept of 'managing' an economy wouldn't have happened. Keynes believed as has been proved right, that capitalism left unchecked will collapse. |
So why did we see the IT bubble burst then in 2001 and are soon to witness the bursting of the housing bubble if Keynesians are so capable to foresee market failures? In reality they are in fact very bad at it and are often creating and fueling those bubbles. We would probably be better off without them doing anything.
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because in the long run we are all dead.
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There is so much crap on this thread. The Eurozone is not booming. Describing growth of 2 to 2.5% as a "boom" is indulging optimism beyond credibility. And Pricemazda's view, that mere possession of a fiscal policy is proof positive of a new Keynesian consensus, demeans the economist himself (what of the rest of his theoretical model?) and is grossly inaccurate as Keynes's interventionist economics are definitely not in vogue in Europe or anywhere else. Indeed if any consensus is emerging it's that market economics and economic liberalism are more successful. Thatcher's experiments with pure monetarism may have been abandoned but her liberalising policies and faith in the market are being copied everywhere in Europe. Privatisation is merely the most obvious example.
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It qualifies as a boom and you know that. |
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