Margaret Thatcher Was a Privatization Pioneer, and This Is the Story of How Her Agenda Did Nothing But Make Life Worse for Millions of People
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What the Thatcherites feared was not so much government as such, but the degree to which the trade union bureaucracy controlled the Labour Party. Like America, Britain was ruled by what was essentially a two party system. And when one party remained in office so long that its vested interests overplayed their hand, the other party was voted in, and typically tried to reverse what its predecessor had done. Labour was bound to come to power every five to eight years or so. Under Britain’s “pendulum politics,” the prospect was for it to act as the arm of the trade unions that made up the bulk of its constituency, and to re-nationalize companies that the Conservatives had denationalized.
At the Centre for Policy Studies, Keith Joseph stressed in a 1976 pamphlet, Monetarism is not Enough, that monetary deflation by itself could not solve Britain’s problems. Workers had to be laid off. But Labour’s featherbedding practices blocked the needed downsizing. Indeed, union power was strongest in government departments and public enterprises. To be run efficiently, these had to be shifted to non-union labor. This perception helped promote the privatization of key public industries and government operations.
Mrs. Thatcher’s Anti-Union Strategy
After reducing taxes on wealth and fighting inflation by cutting back government, the monetarist objective was nothing less than to destroy British trade union power. Mrs. Thatcher nurtured a popular reaction against the unions, choosing her battles carefully. Biding her time so as not to alienate public opinion, she waited for the unions to misplay – and then acted with tactics planned in advance both from a legal and public relations vantage point.
By the time her tenure as prime minister ended, Mrs. Thatcher had carried through her program, hinted at already in the late 1970s (see Thatcher 1995:424f.). The 1988 Employment Act gave union members the right not to join in strikes their unions called without holding a ballot. The 1990 act, she wrote, “concluded the long process of whittling away at the closed shop,” by forbidding unions from excluding non-union workers from being hired.
Already in the aftermath of the 1974 coal strike, Edward Heath’s government had scaled back union immunities from law suits making it a legal tort – that is, an actionable offense, punishable by fine – for unions to picket or boycott suppliers (or customers) of companies being struck. Monetary judgments henceforth could be levied against the unions.
Mrs. Thatcher also hit upon the strategy of insisting on union democracy as a ploy to counter hard-line union leaders. The traditional British procedure was for workers to vote for shop stewards (typically the most militant union members) to represent them in casting their votes for the union heads who in turn did the voting for strikes and also wielded power at the Labour Party’s annual convention. Mrs. Thatcher knew that it was much more difficult to frighten these activist shop stewards into submission than to intimidate the rank and file. Her idea accordingly was to insist that all major decisions, above all whether to strike, should to put to a full union vote in open secret-ballot elections. Without this reform, she wrote, “the rest of our programme for national recovery would be blocked. . . . Winning the next  election, even by a large majority, would not be enough if the only basis for it was dissatisfaction with Labour’s performance in office since 1974. Therefore, far from avoiding the union issue – as so many of my colleagues wanted – we should seek to open up debate. Moreover, this debate was not something to fear: the unions were an increasing liability to Labour and correspondingly a political asset to us. With intelligence and courage we could turn on its head the inhibiting and often defeatist talk about ‘confrontation.’”