Margaret Thatcher: How I Privatised Britain and Rebooted the "Enterprise Society"

The Iron Lady explains it all in her own words.

Editor's Note: In 2006, former British Prime Minister Margaret Thatcher (1925-2013) contributed the following article to Reason Foundation's Annual Privatization Report. Read the original here.

All too often the state is tempted into activities to which it is either ill-suited or which are beyond its capabilities.

Perhaps the greatest of these temptations is government's desire to concentrate economic power in its own hands. It begins to believe that it knows how to manage business. But let me tell you, it doesn't as we discovered in Britain in the 1970s when nationalisation and prices and incomes policy together deprived management of the ability to manage. And when we came to privatise and deregulate in the 1980s it took some time before these skills returned.

A system of state control can't be made good merely because it is run by "clever" people who make the arrogant assertion that they "know best" and that they are serving the "public interest" interest which of course is determined by them. State control is fundamentally bad because it denies people the power to choose and the opportunity to bear responsibility for their own actions.

Conversely, privatisation shrinks the power of the state and free enterprise enlarges the power of the people.

The policies we introduced in the 1980s were fiercely opposed. Too many people and industries preferred to rely on easy subsidies rather than apply the financial discipline necessary to cut their costs and become competitive. Others preferred the captive customers that a monopoly can command or the secure job in an overmanned industry, rather than the strenuous life of liberty and enterprise.

But we understood that a system of free enterprise has a universal truth at its heart: to create a genuine market in a state you have to take the state out of the market.

For Britain, the 1970s was a decade of decline: even worse than that, our people seemed to accept it. Our nationalised industries were inefficient, overmanned, and weakened by restrictive practices. Government had no business being in business.

We tackled privatisation in the way which best suited us.

First, we had to put the balances of the industries we wanted to sell in good order. Where redundancies had to be made because of overmanning we were determined to ensure that those who lost their jobs would receive a capital sum related to the length of their service. For the first time in their lives this put capital into their hands and each industry helped them to find other jobs or to set up businesses of their own. Thus we made clear our concern to look after those who were losing their livelihoods as well as those who were staying on.

Second, I saw it as part of my purpose to have a policy which extended ownership of capital more widely. It is most people's ambition to have something to pass on to their children. In doing so, we link the generations and create a deep and abiding interest in the future. I have already outlined how we achieved this goal for those leaving an industry, but we also wanted those remaining in the newly privatised industries to have a greater stake. So we reserved a block of shares for employees which they could purchase at a discount.

Third, those companies which could not be floated on the stock market were sold to companies who were willing to buy them at the best possible price.

Fourth, some industries were so thoroughly outdated that they would have cost too much money to modernize. Others such as shipbuilding had lost their markets as business had moved to the Asia Pacific. The subsidies required by our shipyards each year were equal to their entire wage bill, and we were told that we could not stop them because people would lose their jobs. Clearly we could not go on that way. Some shipyards had to be closed, others were offered for "sale."

It was an unusual type of sale, buyers were not asked to pay anything for the land or for the plant. They were even offered substantial capital sums to cover the necessary redundancies and to help build a modern effective industry in the private sector. This recipe, also applied to other industries, offered a way forward in the worst cases.

We faced vociferous opposition, particularly when we came to privatise the public utilities, but the facts show that they too are much more efficient in private hands and that they have become some of our most successful businesses.

Baroness Margaret Thatcher, LG, OM, PC, FRS was Prime Minister of the United Kingdom from 1979 to 1990. She is widely credited with reviving the British economy, reforming outdated government institutions, and reinvigorating the nation�s foreign policy during her term of office. By successfully shifting British economic and foreign policy in a free-market direction, her governments helped to encourage wider international trends which broadened and deepened during the 1980s and 1990s, as the end of the Cold War, the spread of democracy, and the growth of free markets strengthened political and economic freedom in every continent.

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  • Zeb||

    OK, now there are four. But I'm sure Reason still somehow cares more about Roger Ebert, or something.

  • Killazontherun||

    Hey, you beat me to it!

  • BakedPenguin||

    Maybe we could square the circle by discussing The Iron Lady.

  • ||

    May she rust in peace.

  • Rhywun||

    Well played!

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  • Killazontherun||

    Now let's see if she gets half the attention Roger Ebert is getting from Reason editors.

  • ||

    Man, you fellas are relentless!

    Keep it up.

  • Pro Libertate||

    The UK is a mess today, of course, but I wonder what it would be like if Thatcher had never been PM? Probably a total disaster.

  • Loki||

    The United Kingdom of British Socialist Republics?

  • JWatts||

    Probably a lot like Greece.

  • The Late P Brooks||

    I'm sure there are people out there who believe Missus Thatcher destroyed a thriving British automobile industry with her "privatisation" lunacy.

  • The Late P Brooks||

    I wonder what it would be like if Thatcher had never been PM?

    Milk and honey.

    Rank upon rank of joyous, apple cheeked children, marching as if to the beat of a single nationalized heart.

    Hammers clanging on anvils like a million celebratory church bells.

    Equality. Dignity.

    Paradise.

  • John Galt||

    A system of state control can't be made good merely because it is run by "clever" people who make the arrogant assertion that they "know best" and that they are serving the "public interest" interest which of course is determined by them. State control is fundamentally bad because it denies people the power to choose and the opportunity to bear responsibility for their own actions.

    Conversely, privatisation shrinks the power of the state and free enterprise enlarges the power of the people.

    *loud applause*

    Someone needs to explain all of this to our self appointed king and emperor. Then again, what's the point. They're the very "clever" people the Iron Lady was referring to.

  • Doctor Whom||

    But ... but ... evil corporations! Also, people can't be trusted to choose anything (except abortion).

  • TripleT||

  • Tony||

    As if Thatcher didn't wish to impose a regime under the assumption that she knows best. Laissez-faire doesn't get a head start just because it claims to appeal to good feelings about freedom. Most economic systems do.

  • JWatts||

    As if Thatcher didn't wish to impose a regime under the assumption that she knows best.

    This comment is just idiotic. She was in control of the government. She made the government smaller, thus she was reducing her power. She didn't impose a regime, she reduced the power of the existing regime.

  • ||

    Yeah well it don't look like too many of her policies or ideas are still around in the UK judging from what I read in the news. Terrible economy, large welfare state, a culture (legally and socially) seized by political correctness...

    And no, I wouldn't bang her.

  • JWatts||

    So are you ruling out necrophilia in general or just dead British Prime Ministers?

  • ||

    BAD MEMORY LANE:
    RIP-ing Thatcher: All DINOSAURS; Mikhail Gorbachev, Helmut Kohl and Bill Clinton among friends foes who joined in tributes to Margaret Thatcher, praising fearlessness and fierce determination of an "iconic" leader. English coal-miners used to stay back in the pits to die than face their devastated homeless & starving families. Look at UK today. It is beyond repair. That’s what Thatcherism all about. Glorified Obituary of Margret Thatcher is bad business lest little minds take her memory seriously. Especially when the world weaning away from Seigniorage Banksters Sharia Scam. The best way to respond to Thatcher's death would be to bury her rotten legacy. I thought you should know that her Prodigal Kid Mark Thatcher was knighted by Queen of England for State the Art of Bribery in Saudi Yamama Scandal. Oh Maggie! Since then Britons given-up putting women in Ten-Downing-Street. She exploited Ronald Reagan’s dementia and dyslexia to outsource US Fed to keep printing fiat money on behalf Bank of England to print Sterling Pounds overseas outta thin-air as architecture of Weak Dollar vs. strong Pound. This scam is sold to fools, adored and admired by East European Idiots as we speak as modern globalised economy – monetarism, privatization, deregulation, small government, lower taxes and free trade. Hilary is digging her own grave if she ever followed the Maggie steps. Meryl Streep and Margret Thatcher have one thing in common both have noses as famished vulva.

  • Marcus75||

    upto I saw the check 4 $7309, I didn't believe that my best friend was trully erning money in their spare time at there labtop.. there great aunt haz done this for less than seventeen months and resently cleard the mortgage on their villa and bought a gorgeous Lexus LS400. read more at, http://www.wow92.com

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