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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As one Conservative remarked, “What other right winger would ever have had the cleverness to trust the common sense of the ordinary union member so sincerely? The union bosses were put in an impossible position. As the self-proclaimed tribunes of the workers they could not refuse democracy. They tried to use the argument of the expense of ballots to avoid them, so Maggie said, ‘That’s alright; the government will pay.’ Love her or hate her, one has to admire the accuracy of her perception.”
The unions overplayed their hand in the Winter of Discontent, 1978/79, but the time was not yet ripe for a showdown. “From 1980 we pursued a ‘step-by-step’ programme of trade union reform,” Mrs. Thatcher later reminisced. The 1982 “Tebbit Acts” removed the traditional union “immunities from common law tort action for damages, except for ‘primary’ strikes sanctioned by a majority in secret ballot,” observes one of her advisors, Patrick Minford. This legal chess game set the stage for her to checkmate Arthur Scargill’s coal miners in 1983 (her counterpart to Ronald Reagan’s 1981 destruction of the Air Controllers’ Union), by making union funds subject to awards for damages.
In 1981, Mrs. Thatcher gave into the union rather than engage in a fight she felt she could not win in the public’s eye. She knew just how far she could go up against them, and her sense of timing enabled her to succeed. Her defeat of the 1984-85 miners’ strike (described in the next chapter) effectively cemented the new order. “In 1990, my last year as Prime Minister, the number of industrial stoppages was the lowest in any year since 1935.”
The decline in union power enabled the privatized companies and others to downsize their labor force. Between 1979 and 1986, union membership fell by three million persons. Two million industrial workers were put out of work, including over a million miners. “The new service industries, such as computer software and biotechnology,” Mrs. Thatcher wrote in 1995, “are in any case not easily unionized, and so not held back in the application of new techniques.”
A Conservative politician summed up matters: “The original purpose of privatization was to break up Trades Union Monopsony rather than manufacturer/utility Monopoly.” The politicians who joined Mrs. Thatcher’s inner circle focused on labor’s cost-push inflation, to the extent that British wage rates (and hence, product prices) were negotiated between strong-willed union leaders and (so Mrs. Thatcher claimed) weak-willed government bureaucrats.
The Conservatives depicted their warfare against the unions as being waged not against labor, but against adventurist opportunists using their constituencies for their own glory. Even communists such as Leon Trotsky had attacked craft unions such as America’s American Federation of Labor as representing particular layers of the labor force acting in their own narrow self-interest. Mrs. Thatcher subtly froze the union leaders out of the policy picture simply by ending the traditional ritual of beer and sandwiches in Downing Street. The trade union bosses found themselves cut off.
Mrs. Thatcher ended by excluding children and young adults under twenty-one from the minimum wage regulations, and finally abolished the laws outright. These transformations of the labor market, she concluded, “allowed management once more to manage and so ensured that investment was once again regarded as the first call on profits rather than the last.” But a double standard seems to have been at work. The first call on profits seemed to be for higher salaries and stock options for senior managers. She denounced high taxes for deterring their efforts and praised high salaries for motivating them, yet what seemed to motivate manual workers was poverty and the loss of job security. Her rather vindictive world view did not recognize falling real wages as deterring productivity gains; only falling profits and dividends for the well-to-do led to inefficiency in the monetarist world view.