With the current mania for Government, Inc. to take over the world of finance, industry and health care it might do to recall some events from the early ’70’s in Britain. At that time Britain was certainly not a bastion of conservative politics or economic theory. The Cold War was still in full flower and so was the rise of government intervention into every aspect of the business world. The Arab oil embargo and their own misguided economic policies of statism and welfare benefits gone wid had brought the hills of Avon low. The left was pushing hard for more government intervention into every nook and cranny of the world of industry. The unions were very strong. They had had increasing power and dominance over the affairs of industry since the end of the War. The empire had already been mostly unraveled and the last vestiges were being shed as quickly as Britain could make the arrangements for transfers of power.
Britain and other European countries had just given in to the demands of the Popular Front for the Liberation of Palestine by releasing hijackers of international flights. It was in decline economically and in prestige at home and abroad. First there was a strike by dock workers and imports were critical to the economic health of Britain then as it had ever been so. The Prime Minister, Heath, paid them off. They got their demands which increased the price structure and made Britain just that much weaker in the world trade picture. That dock business was bailed out pure and simple. At the time the Trade Minister said that he would not “bail out companies where I can see no end to the process of propping them up”. Of course they didn’t stop there. Next up was millions to Rolls-Royce to cover its losses and keep the union workers happy. Then the utility workers got a huge increase with only a work slow down and the threat of a strike. After that the Bris nationalized portions of Rolls-Royce operations. There tax rates were off the charts going up to a 75% rate. Because of the decline ever since the war the government had campaigned on a promise of immigration reform, tax cuts and free market reforms to encourage new business development and reining in the power of the unions. The British government caved into the pressures of the moment.
They capped it all off with imposing wage price controls and the creation of a large bureaucracy to oversee the impositions of these controls. The costs of everything was regulated–from plumbers to taxi drivers and rents. The government was in charge of pricing everything. More bailouts of the coal industry were paid out. Interests rates skyrocketed and shortages of gas and many other essential commodities emerged. One speaker in Parliament asked “does not my honourable friend know that it is fatal for any Government or party or person to seek to govern in direct opposition to the principles o which they were entrusted with the right to govern?” Gas rationing was re-imposed and the economy sank further into the abysss.
It was not until the election of Margaret Thatcher at the end of that decade that the economy began to right itself when she fulfilled the reforms that had been promised by the Conservative Party in the late ’60’s but then never delievered. All the bailouts and buy offs to unions and crushing taxes were abated under her. The economy began its climb which lasted for over 25 years under a free market approach to their economic challenges. Those policies of the early ’70’s are the same ones we are invoking now to deal with our economy. They were a disaster for Britain. Even the left leaning Brits of that era ran out of patience with the smart guys telling them what was good for the country. Do we want to emulate that experience now? What is there to justify a belief that bailouts and pay offs to appease unions will have a different outcome now than they did then? Much thanks to Roberts and his History of the English Speaking Peoples for some of the history recounted here.
Popular opinion is the greatest lie in the world. Thomas Carlyle