Does anyone remember the 1980s? Think back, I know it was a long time ago – I was 5 when they ended so my memories mostly involve a puppet with a slightly better command of the English language than Jordan who spat at the TV screen – but as a society we seem to have some sort of collective amnesia that starts around about 1979 and went on right up to about 1997. The result of this is that we have lost the ability to see cause and effect.
So first point, to preempt any comments about my age – yes I was young in the 1980s but I am capable of reading so saying I don’t know what I am talking about because I wasn’t able to tie my own shoelaces at the time (not till I was 7) is inept, inapt and insipid (and a few other words beginning with ‘in-‘. Grow up. And it is my generation that is having to deal with the consequences of that most short-sighted decade.
The Conservative economic policy in the 1980s could be summed up in three main points: public spending cuts, privatisation and the creation of the laissez-faire banking sector.
The Conservatives embraced Friedman(-ist/-ite?) economic policy and in 1979 began bringing in a vast number of cuts to public services and increased privatisation. Welfare and education bore a great extent of the cuts. The current government are proposing huge cuts to welfare, particularly tax credits and the Sure Start programme, and are hinting at cuts in education – or at least an increase in the cost of education.
Ok so every government makes changes to welfare and education this is nothing new. Well, lets delve a little deeper. Another area Thatcher became notorious for was privatisation. BT, BP, BA, BAA, British Gas (soon to be BG?), British Rail (in 1997) and the National Grid are just a few of the services that were privatised. Are there any similarities with the plans of the current coalition Conservative government? Well a lot has already been said about the privatisation of education – even though it will be government funded private education! Charter schools are a BAD idea and lead to increased social division. There are also plans to privatise 49% of the Royal Mail, with the remainder split between the government and staff. The Conservative reasoning behind this is that government regulation and intervention is bad for the economy. I think I saw this point best illustrated by David Horsey’s cartoon on the right. But the point is this is the same policy they had in the ’80s.
So what else did they do? Well they encouraged growth in the financial sector at the expense of manufacturing industry. Again, this is another policy the current government are pursuing. With the rise of the ‘casual gamer’, video gaming is set to be one of the biggest industries in the world. The UK has a growing industry in video games, particularly in Scotland where Rockstar North (formerly DMA Design, creators of Grand Theft Auto) are based. The Conservative government has scrapped the intended tax breaks for the video games industry that would have provided a huge incentive for more games developers to set up shop in the UK, providing thousands of jobs in a growing market. At the same time their banking reform policy is not exactly coming down hard on the financial services sector, Deutsche Bank analysts said “Taking 2% off the 2012 tax rate for the five banks listed in the UK would increase profit by £1.16bn, that it is should almost offset all of the banks tax. Overall a good outcome for the banks”.
Yet again it is the same old Tory policies. Worse still their lax attitude towards the financial sector is what allowed the current recession. Yes the Labour government should have done something about it but it was the Conservative policies that created the system in the first place!
And one final similarity; at the time Thatcher was warned by leading economists their economic policies would deepen the recession at the time. And it did. The current Tories have also been warned by leading economists that their economic policies will lead to a ‘double-dip’ recession. Maybe they should listen this time.