How Thatcher Liberated Western Europe

Even while saying "No. No. No," the famous Euro-skeptic helped the continent say yes to much-needed reforms.

Among the half-dozen or so reasons that liberal journalists these past 24 hours have either tempered their praise for or tramped the dirt down on the late Margaret Thatcher was her skeptical views about Western Europe. "Mrs. Thatcher's relentless negativism on the European Union and her bullying style of leadership pushed her own party to drive her from office in 1990," The New York Times wrote in a mostly positive editorial today. "French president François Mitterand," recalled the CBC's Don Murray, "told an aide that Thatcher had the smile of Marilyn Monroe and the eyes of Stalin."

But far less appreciated than Lady Thatcher's Euro-skepticism is the extent to which the continent's relentless integration project has borne her indelible stamp. Indeed, it's possible that the European Union would have foundered long ago had it not been so Thatcherite, in at least a few key respects.

Even while shouting "No. No. No," Thatcher had a direct hand in helping Western Europe say yes to much-needed reform. In 1986, she played a "decisive role" in shaping the Single European Act, the European Community's biggest legislative leap toward a common market in goods and services. Though she would come to regret how the SEA helped create unaccountable bureaucracy and centralization in Brussels, the act was a massive piece of deregulation, sweeping away (in the words of Civitas.org) "restrictive practices in a range of areas of private enterprise and the public sector" all across the continent.

And as The Wall Street Journal's Simon Nixon pointed out, "She was also one of the earliest advocates of the EU's eastward expansion; even before the fall of the Berlin Wall, she spoke farsightedly of those countries cut off from their European roots by the Iron Curtain."

The expansion of supranational bodies into the post-communist east may look both inevitable and irrelevant in the eyes of 2013 Americans, but it was most certainly neither. The Soviet Union was still using tanks to crush Lithuanian opposition after Thatcher left the world stage, and the last Russian troops didn't leave Berlin or the Baltics until the summer of 1994. It was not particularly clear well into the 1990s just how, if ever, the former East Bloc would be reunified into a peaceful European fabric.

Expanding both the EU and NATO into former soviet satellites has never been particularly popular among libertarians, due to understandable fears about eroded sovereignty, centralization, and U.S. mission creep, but for the vast majority of commie-hating free marketeers on the ground, the choice was simple. Small countries that had never been secure from the predations of Russia or Germany were now guaranteed peace, and small economies that had only dipped their toes in capitalism were now being offered membership into the most powerful capitalist engine—however bureaucratized—on Earth. If the West was a bit too sclerotic and socialistic, these fresh young democrats reckoned, maybe it needed an infusion of new blood from the East.

By the time these countries seized autonomy over their own economies, there was no longer an international debate over whether government should own the means of production. The results of that academic experiment were pervasive, and shocking: Gray supermarkets named "Supermarket" that had nothing worth buying inside. Filthy, soot-stained buildings deteriorating under coal-dust skies. Incomes that averaged around $100 a month if you were lucky. And in order to enforce loyalty to one-party domination of everything, police states that tolerated very few expressions of individuality.

It was no accident that the economists-turned-politicians who oversaw these transitions from communism to free-market democracy generally called themselves "Thatcherites"—it wasn't Francois Mitterand who had built a usable model for selling off government ownership in telecoms, airlines, car companies, and utilities. But what was little appreciated, then or now, was how much Thatcher was convincing Mitterrand as well. Or at least creating a world in which the French Socialist's objections could be overcome.

Mitterrand was the anti-Thatcher: Since achieving power in 1981, the French president went on a nationalization binge, gobbling up formerly private banks, conglomerates, and "sensitive" industrial giants. But when the resulting lousy economy helped deliver Jacques Chirac's Gaullist coalition a parliamentary majority in 1986, Mitterrand could only mount half-hearted opposition to Chirac's ensuing Thatcher-inspired privatization spree.

As CNN Money's Shawn Tully once pointed out, "François Mitterrand didn't switch course because of a sudden change in ideology. He did it chiefly to ensure his political survival." Nationalization, it cannot be said enough, did not work. Selling off state ownership in banks, utilities, and media companies (!), did. "From 1986 to 1990," Tully noted, "the economy grew at an annual rate of 3.3%, its best five-year performance in the past three decades. The most remarkable accomplishment: Government spending as a share of GDP fell from 52% in the mid-80s to 48% by 1990. For the first time in decades, France was expanding the private sector and shrinking government."

This led to the most massive (and massively underreported) privatization spree of all: Western Europe in the 1990s. Through the heavily deregulated European Single Market that Thatcher helped shape, and with the twin examples of Soviet failure and British success staring them in the face, European bureaucrats went on a historic run of selling off trillions of dollars worth of phone companies, airlines, television stations. Coupled with the newly freed market in labor mobility, this privatization led to the EU outperforming economic and employment projections for a decade.

Meanwhile, China and India and much of the developing world embraced "neoliberal" reforms and engineered the single largest mass escape from poverty in human history. And still The New York Times writes with a straight face such "news analysis" as: "However, there were others, particularly on the political left, who spoke with bitterness of the vogue that spread across the globe in the name of Thatcherism and, they said, consigned millions without recourse to the rewards of free enterprise to lives of unrelieved poverty."

Like all the geopolitical giants of the 1980s—Ronald Reagan, Mikhail Gorbachev, Pope John Paul II, Nelson Mandela, Helmut Kohl—Thatcher was a flawed character who made grievous mistakes. (You can read a couple of recent Reason critiques here and here.) But to her lasting credit—and to the lasting fury of her staunchest ideological enemies—Thatcher fatally discredited the notion that governments in the West have any business owning businesses, and she did so with both word and deed at a time when the outcome was anything but certain. May we continue to heed that lesson.