Welcome

Welcome to the April 2010 issue of IDEAS, Northwood University’s Enewsletter discussing the principles of our founding philosophy, The Northwood Idea, as they relate to enterprise, ethics, life, and liberty.

We are pleased to present the Values Emphasis speech delivered at both the Michigan and Florida Campuses by Dr. John Blundell.  Dr. Blundell has known former British Prime Minister Margaret Thatcher since 1970 and has written a recent biography, Margaret Thatcher - A Portrait of the Iron Lady. Lady Thatcher has commented that John is "very well placed to explain to Americans the beliefs and principles which underpinned what became known as Thatcherism."

Dr. Blundell’s appearance at Northwood University is part of the Koch Foundation Speaker’s Series. As Northwood University and the Koch Foundation interact with one another, the synergies between our organizations and our missions continue to expand.  The Koch Foundation recently awarded Northwood University a grant to be used to support research and free market guest speakers at Northwood and as a result we were able to bring Dr. Blundell to campus.

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Margaret Thatcher – A Portrait of the Iron Lady

Condensed version of a speech by John Blundell to the students and faculty of Northwood University Michigan Campus Monday, March 22nd and West Palm Beach Campus, Wednesday, March 24th, 2010

I’m delighted to be here with you because I’ve long admired all that Northwood stands for.

I had lunch two weeks ago at the Ritz in London with Lady Thatcher and when I told her I was coming to your campus she said “Oh, do give them my very best”.

I want to do five things tonight.  First, I want to paint a picture of her ascent from modest origins to Prime Minister.  Second, I will describe the state of the UK when she won in 1979, and third, I will list her successes.  Fourth, I will draw ten lessons from her decade, and fifth I will close by listing what a modern day Lady Thatcher would have to do to equal her record.

First, her ascent: she was born in 1926 in the small market town of Grantham, Lincolnshire, on the eastern side of the UK.  Self-employment goes back many generations on both sides of her family tree and she was the second daughter of Alf Roberts who both owned and ran the local grocer’s shop.  Alf was a real pillar of the community and held every conceivable civic post including Mayor.  He had left school aged 12 but was universally known as the most learned man in town.  There was no bath, no running hot water, no radio or TV in the family apartment above the shop but there were dozens of books and adult conversation was the order of the day at all meals.  The local movie house opened her eyes to the outside world, but as USAF bases came to the flat Lincolnshire land on the entry of the USA into WWII, a public policy problem was discussed over dinner.  Some USAF personnel had Sundays off duty; should the parks be opened or the movie house to accommodate them?  Alf decided on the latter because young men in parks would make noise that would disturb the Sabbath.

She walked to school, passing the dole queues of the 1930s and severe bomb damage at the start of WWII as Grantham had a munitions factory.  She skipped a year and aimed for chemistry at Oxford which was a huge reach.  Back then you needed Latin to study chemistry and her girls’ school did not even have a Latin teacher.  Alf dipped into his savings, hired the Latin teacher from the boys’ school, and she completed 7 years of Latin in 6 months, in addition to all her other studies.

However she failed to get in and returned to her high school, but at the very last minute a student ahead of her pulled out and still aged 17 she was at Oxford for four years studying chemistry.

She volunteered two nights a week to bus tables at a nearby USAF base.  The world famous Oxford Union debating society was closed to women, so she poured all of her energy into the Oxford University Conservative Association becoming its second ever female President – the first who beat her by a few terms had had a very high ranking father in the Conservative Party so she was the first woman to win that office purely on personal merit.

On graduating she got a job in industry and was soon adopted for the very safe socialist seat of Dartford in Kent, which she fought in the 1950 and 1951 General Elections.  It was there that she met local businessman, Denis Thatcher, by whom she had twins, Mark and Carol.  During pregnancy she decided to switch from chemistry to the law hoping to practice at the patent Bar but ending up at the tax Bar.  With the young babies she sat out the 1955 General Election but as 1959 approached she determined to try for a safe seat.  However it turned out to be a huge struggle and time and again she came second.  Indeed it was the women on the selection committees who opposed her as they wanted a nice, middle aged man, with a good war record, a pretty wife and 2.5 children.  They were not about to vote for a slightly pushy young woman with a husband always away on international business and two babies, despite the wealth that allowed Margaret and Denis to employ numerous nannies.  However in 1958 she was adopted for Finchley in North London which she represented until 1992 when she was elevated to the House of Lords.  From 1959 onward being female undoubtedly helped rather than hindered her career.

Second, let me describe the state of the UK when she became Prime Minister in the Spring of 1979.  January through March of 1979 was called the ‘Winter of Discontent’ as in the opening line of William Shakespeare’s Richard III, “Now is the winter of our discontent”.  There was:

  • Double digit inflation ranging up to 30%
  • The disruption of gas supplies
  • Pickets all over the industrial scene
  • One million people laid off work because of unrest
  • Ambulances not responding to emergency calls
  • Mountains of trash in every public square because the trash collectors were on strike
  • A strike by grave diggers which meant that full coffins were stockpiled in empty warehouses and the Chief Medical Officer preparing for mass burials at sea
  • Emerging food shortages
  • Hospital trade union leaders deciding who to admit and if folk died “that is the way it must be”
  • Trolleys of hot food being delivered to old people’s homes smashed and
  • The shortest press release in history, British Rail’s ‘There are no trains today’.

She was the fourth ever elected Lady leader following Mrs Bandaranaike in Sri Lanka in 1960, Mrs Indira Ghandi in India in 1964 and Mrs Golda Meir in Israel in 1969.  But she was the first in the West, and she inherited an economy ranked 19th out of the 22 countries in the OECD.  The French ambassador to London said the UK was suffering from degringrolade (which means falling down sickness) and the West German ambassador compared the UK economy to that of East Germany.

So third, what did she do and what were the results?

  • She took on the whole union movement, brought it back under the rule of law and gave it back to its members;
  • She cut top marginal tax rates from the 80 and 90% levels down to the 60%s and then the 40%s; 
  • She transformed the nation’s view of the benefits of a market economy;
  • She privatized the commanding heights of the economy thus transforming their fortunes and starting a worldwide movement;
  • She taught us the need for monetary continence if we wish to enjoy low inflation;
  • She enfranchised millions of former local authority serfs through the right to buy their units of public housing;
  • She made Brits walk tall again with a principled, firm and robust approach to foreign relations;
  • She started the process which has now led to peace in Northern Ireland;
  • She helped Ronald Reagan tear down that wall without a shot and destroy the evil empire;
  • And she ensured that all future British governments have to be much friendlier to laissez-faire capitalism than had been the case prior to 1979.

So what were the results?

Eighteen years later Britain had jumped from 19th to 2nd place on the OECD ladder. It had become a nation of entrepreneurs with self-employment doubling from 7% to 14% of the workforce.

The socio-economic group we call “the middle class” had leapt from 33% to 50% of the population. Home ownership (as opposed to private renting or public housing) had also leapt from 53% to 71%. Ownership of shares by individuals had gone from 7% to 23% and astonishingly among trade union members from 6% to 29% — in other words from below the national average to well above!  Finally the percentage of the work force belonging to a trade union had dropped from just over 50% to 18% and days lost to strikes from 29.5m to 0.5m.

And top tax rates had been brought down from 83% on earned income and 98% on so-called “unearned” to 60% and then 40%, still high but a huge drop.

The transformation was stunning on many fronts. Pre-Thatcher a sclerotic union dominated economy was typified by surly service, poor products and a craven business class. Post-Thatcher even the institutionally left leaning British Broadcasting Corporation (BBC) has had to extend its coverage of the private business sector quite considerably such is the interest in capitalism by employees, entrepreneurs and shareholders. And both service and product quality have been improved many times over. The choice and level of quality and service that had so stunned me on my first visit to the US in 1974 was becoming commonplace in the UK of 1997.

Fourth, then, what are my ten lessons?

ONE

Above all Margaret Thatcher had a very strong personal political and moral compass. She could turn to a room full of powerful men and in effect simply say “I know this is right; you know this is right; the only question is how we do it”.

It wasn’t the bossiness of the cartoons so much as total conviction. And it built teamwork. If the chief has a set of clear, well articulated, consistent principles then all the little Indians know exactly what to do…. if they want to stay in the wigwam.

And as she once said “disciplining yourself to do what you know is right and important, although difficult, is the highroad to pride, self-esteem, and personal satisfaction.”. An early example came in April 1980 just a year after she entered Downing Street. A group of six Iranian terrorists stormed the Iranian Embassy in central London and a siege ensued with 26 hostages. The terrorists demanded the release of political prisoners in Iran; Prime Minister Thatcher demanded the defeat of the terrorists and brought in the crack special forces men from the Special Air Service (SAS). The whole affair dragged on for nearly a week when the terrorists suddenly shot a hostage and threw the body out of the front door. “Go in” commanded the Prime Minister and on prime time TV the nation watched live as the men of the SAS abseiled down to the windows on the front of the building, chucking percussion grenades in ahead of them. The result was that five out of six terrorists were killed and 19 out of 20 hostages saved; there were no police or SAS officer casualties.  She visited their regimental HQ that evening and the Commander of the SAS shared with her the view of his troops which was that after decades of weak leaders they had wondered if they would be ordered to attack!

TWO

She was able to cut through the guff, the nonsense, the fancy embellishments and get right to the heart of the matter, simplify it and communicate it. As books about her are coming out one thing is common to all of them namely this ability of hers to simplify and communicate clearly and with conviction. I always think of her and Newt Gingrich together in one sense namely they neither of them were “At this moment in time” types but rather “now” types. Good short Anglo Saxon words or as Margaret Thatcher once said to my friend Simon Jenkins “Laissez Faire? Laissez Faire? Don’t go French on me!”

She is a very clever person — she studied chemistry and was a chemist in industry before studying law and practicing at the tax and patent bars. But as well as being clever she had this knack of simplifying and communicating, of getting to the heart of the matter and expressing it in simple words that made sense and resonated.

People are being cruel when they say she never had a single original idea herself. They undervalue her ability to synthesize.

THREE

She did lead and she expected and got a lot out of those around her, yet she also listened.

Soon after the 1987 general election a newly-elected Tory MP was walking through the members’ lobby in the House of Commons when he suddenly observed an old friend. The old friend had been elected in 1983 and was now a junior minister. He was running, literally running. His hair was disheveled and he was carrying not only his briefcase and a box but also a full tray of papers.

“Slow down,” called the new MP. “Rome wasn’t built in a day,” he added.

“Yes,” cried the young minister over his shoulder. “But Margaret wasn’t the foreman on that job.”

That is a true story. The next is 100% apocryphal but instructive nonetheless.

The story goes that in 1989 her cabinet and senior staff held a private dinner on the 10th anniversary of her becoming prime minister. At Café Royal Margaret Thatcher sat at the head of the table with say 20 men in suits down each side. A waiter enters and heads to Margaret Thatcher.

Waiter:   Prime Minister, would you like an appetizer?
Mrs. T:    Prawn Cocktail, please.
Waiter:   Prime Minister, for your main course?
Mrs. T:    A steak, please.
Waiter:   Prime Minister, what kind of steak?
Mrs. T:    Sirloin, please.
Waiter:   Prime Minister, how do you like your steak?
Mrs. T:    Rare, please.
Waiter:   Prime Minister, some potatoes?
Mrs. T:    Roasted, please.
Waiter:   Prime Minister, what about the vegetables?
Mrs. T:    Oh, they’ll all have steak too!

That was the perception; in reality she was a better listener than usually given credit for. She did listen mostly to Cabinet Ministers and not all the best ideas came from her “right” wing colleagues as in the sale of public housing which came very much from those to her left such as Peter Walker and Michael Heseltine. And she was not always the hard driving free-market radical portrayed so often today. She worried about abolishing exchange controls; she was not sure about public housing sales at deep discounts feeling those already on the housing ladder might rebel; and some privatizations unnerved her a little.

While still on leadership enjoy this quote:

“I kept tight personal control over decisions relating to the strategic defense initiative and our reaction to it. … I was also passionately interested in the technical developments and strategic implications. This was one of those areas in which only a firm grasp of the scientific concepts involved allows the right policy decisions to be made. Laid back generalists from the foreign office — let alone the ministerial muddlers in charge of them — could not be relied upon. By contrast, I was in my element.”

FOUR

She championed policies that went with rather than against the grain of human nature. She once said “popular capitalism is nothing less than a crusade to enfranchise the many in the economic life of the nation. We conservatives are returning power to the people.”

Take public housing. In the late ‘70s I told her to give it all away to the sitting tenants. Just mail them the deeds, I said. “No,” she replied — “people will not value it unless they pay something for it”. A couple of years later she launched the right to buy. This gave all sitting tenants a 33% discount plus an extra 1% discount for every year of paying rent up to a maximum of 50% off fair market value. Home ownership soared as nearly 3 million units changed hands under this scheme. Likewise with privatization where the shares were very widely spread and quickly appreciated.

As noted earlier general public ownership of shares went from 7% to 23% while ownership by trade union members went from 6% to 29%.

All of the great privatizations included special staff deals — hence the disproportionate boost among union members.

Each one was different but to stymie opposition and generate positive feelings overall they included:

  • Offers of free shares
  • Matching programs — buy one get one free
  • Programs that reserved a certain percent of the float for staff and pensioners
  • Discounts
  • Incentives to keep shares long term and
  • No limits on the number of preferential shares that could be bought — once only in that case.

Employee response ranged from 19% to 99% and is highly correlated to the generosity of the proposed deal as one might expect.

FIVE

There was a lot of strategic thinking well ahead of time.

Ted Heath in his winter confrontation with the miners in 1973–74 had been forced into a corner by lack of coal reserves. There was only enough coal for industry to operate a 3-day week. Strangely, overall production did not fall, showing how much fat there was in industry.

Prime Minister Thatcher built up coal reserves to very high levels before she took on the miners.

Or, take the suspension of exchange controls. Geoffrey Howe the Chancellor spotted that he did not need Parliament’s approval; so he just did it — but after the markets closed on a Friday evening, so the nation had the whole weekend to digest the news and government spokesmen had sixty plus hours to sell the idea on TV and radio.

SIX

She had a lot of very smart, dedicated, committed people to draw on. Lord Donoghue once said that the Tory party is “the stupid party”. There was some truth to this — some. But the Tories were becoming infected with ideas and intellectuals, ideas from the IEA such as:

  • Markets work — governments fail
  • Labour market reform
  • Privatization and
  • The conquering of inflation.

And intellectuals from industry (John Hoskyns) academia (Alan Walters) and from the universities young men such as Peter Lilley, John Redwood, Michael Forsyth, David Davis and Michael Portillo — were changing the Conservative party.

A party that in the post war years had accepted Butskellism and middle of the road socialism as inevitable had found its intellectual feet under Mrs Thatcher. As she herself said “standing in the middle of the road is very dangerous; you get knocked down by the traffic from both sides.”

SEVEN

There was a very strong sense of being in the last chance saloon. The winter of 78/79 had been awful. Mrs Thatcher herself recognized this as “there can have been few in Britain who did not feel, with mounting alarm, that our society was sick — morally, socially and economically. Trade Union leader Mr. Bill Dunn seemed to express the spirit of January 1979 when he said, of the ambulance men's pay demands, if "lives must be lost, that is the way it must be".”

There were strikes galore. There were mountains of trash — the dead were not being buried. Either we got it done now or we became say an Argentina as in a formerly prosperous country turned basket case. And the economics profession was nearly 100% against her.

I cringe when I envisage what we probably would have become without her leadership.

EIGHT

We must not forget Ronald Reagan and their partnership. It was very special indeed, much more so than Bush and Blair.

Some people still believed the future lay with communism; some still believed Soviet statistics. Ronald Reagan and Margaret Thatcher instinctively knew that was wrong and evil.

As early as 1950 she said “we believe in the democratic way of life. If we serve the idea faithfully, with tenacity of purpose, we have nothing to fear from Russian communism.”

Can anybody else on earth claim such foresight?

NINE

Preparation — in power politicians are too busy to think and they are surrounded by bureaucrats and pestered by vested interests. Margaret Thatcher used her 3 to 4 years of opposition to prepare for government.  In this regard, see John Hoskyns Just In Time and see Richard Cockett’s Thinking the Unthinkable.

Ideas regarding labor markets, exchange controls, inflation, the Right To Buy public housing, privatization, contracting out and Enterprise Zones were all well discussed before 1979. And she made it quite clear to her research and support staff what she believed in.

TEN

Bit by bit: she tackled problems one slice at a time particularly on labor market reforms and privatization. Every year the unions were slowly but surely brought back under the rule of law. Every year advances were made on privatization and a momentum was established.

She did not try to do it all at once.

For example in the 1980 Employment Act she:

  • Abolished statutory recognition procedure
  • Extended the right to refuse to join a union
  • And limited picketing.

Then in the 1982 Employment Act she:

  • Prohibited action to force contracts with union employees
  • Weakened the closed shop
  • Removed some union immunities.

In the 1984 Employment Act she:

  • Weakened union immunities
  • Required pre strike balloting of union members
  • Strengthened employers power to get injunctions.

Finally in the 1988 Employment Act she:

  • Removed further union immunities
  • Extended the right of the individual to work against a union.
  •  

So the lessons are:

  • Have a strong compass
  • Simplify and communicate
  • Lead but always listen 
  • Develop policies that go with the grain
  • Think strategy ahead of time
  • Build good teams
  • Use circumstances
  • Make good allies
  • Prepare before you are in power and
  • Have patience

The Thatcher era 1979-97 [she went in 1990 but there was no Major era] is an extraordinary story of change, of a country saving itself in a turbulent world.

And we must not overlook as mentioned earlier her impact on her opponents particularly New Labour which abandoned Clause 4 namely its commitment to public ownership and today also the Liberal Democrats, where some young men and women are making surprisingly Thatcherite political points.

On the international scene there were several positive developments:

The worldwide spread of privatization;

  • China going capitalist;
  • And reforms in central and eastern Europe.

Margaret Thatcher’s influence is everywhere. And my institute, the IEA, is very proud of the small part we played in her education!

So finally what would a new Lady Thatcher have to do to equal her record?  How about this list?

  • Deregulate and stop the tsunami of new legislation;
  • Renegotiate with the EU;
  • Bring crime down;
  • Reform the National Health Service;
  • Increase educational standards;
  • Reduce welfare rolls;
  • Simplify and reduce taxation; and
  • Balance the books.

To conclude, how do we rate her?  The institutionally left-leaning BBC has ranked her as the 16th greatest ever Briton, which is quite remarkable and the distinguished British journalist, Dr Charles Moore, has, with all due respect to Queen Elizabeth II, described her as “the greatest living Englishwoman”.  Finally one of our most distinguished historians, Francis Beckett, has studied all 20 Prime Ministers of the 20th century, but the bottom three are 18th John Major, 19th Sir Anthony Eden and 20th Neville Chamberlain while his top four in ascending order are 4th Sir Winston Churchill, 3rd Edward Heath, 2nd Clement Attlee, and at number 1, the very best Prime Minister of the 20th Century, Lady Margaret Thatcher.

John Blundell  has worked both sides of the Atlantic and is a former President of the Institute for Humane Studies, the Atlas Economic Research Foundation, the Charles G Koch Foundation and for the past 17 years Director General of London's prestigious Institute of Economic Affairs where he is now Senior Distinguished Fellow.  He is currently writing a new book on the 25 women who have, in his view, done the most to advance liberty in U.S. history.

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This concludes our April 2010 issue of IDEAS. If you prefer to receive a printed copy of this newsletter, please call the Advancement Office at 989.837.4356.

As usual, your comments and suggestions are most welcome and appreciated.
Sincerely,

Keith A. Pretty, J.D.
President and CEO