Milton Friedman on How Francois Mitterrand (and Failed Lefty Economics) Helped Re-elect Margaret Thatcher
Yesterday I wrote a column about how Margaret Thatcher liberated Western Europe from the ills of Francois Mitterrand-style nationalization of industry, in part by "creating a world in which the French Socialist's objections [to privatization] could be overcome."
Proving that people born on July 31 think alike, the Hoover Institution has reprinted a July 1983 Newsweek column from Milton Friedman making largely the same point, one that also has resonance to the American experience with Ronald Reagan. Excerpt:
France was suffering from the same ills when Mitterrand was elected president as Britain when Mrs. Thatcher became prime minister and the United States when Ronald Reagan became president—high and rising inflation, high unemployment and slow economic growth. Mitterrand's attack on those ills was precisely the reverse of Mrs. Thatcher's. On coming into office, Thatcher reduced taxes; Mitterrand increased them. Thatcher reduced controls over prices and wages; Mitterrand expanded them. Thatcher eliminated foreign-exchange controls; Mitterrand made them tighter. Thatcher moved to denationalize enterprises and reduce regulation, Mitterrand nationalized private banks and other enterprises and increased government intervention into the remaining private enterprise. Thatcher tried to hold down government spending, albeit with little success; Mitterrand went on a spending binge.
Had the Mitterrand policies succeeded, even if for only a year or so, Thatcher's opposition in Britain would have been enormously strengthened. The Labor Party would have had a real alternative to offer—one that was consistent with its ideological propensities and that had worked on the other side of the Channel. The cry that Thatcher's "monetarism" was a tragic failure could not have been dismissed as mere campaign rhetoric.
Instead, the Mitterrand policy was a clear failure. Inflation remained high. Unemployment went up. The government's budget deficit soared. So did the deficit in the balance of payments. The franc had to be devalued three times in the past two years, despite massive government borrowing in a vain attempt to prop the franc up. Worst of all for Thatcher's opposition, Mitterrand was forced to reverse course. The U-turn occurred across the Channel as the French government was driven to adopt the much-derided Thatcher policies.
Thatcher's opposition was left intellectually bankrupt. It had no credible alternative policy to offer. The claim that she was an irresponsible demagogue imposing unnecessary costs on the British people rang hollow. Her persistence in the main lines of her policy was perceived by the voters as a realistic recognition that there was no easy cure for ills that had accumulated during decades.