The new year is not just a time for making resolutions along the lines of ‘Aargh, I’ll never mix rum and Champagne again!’
It is also a time to look back so we can inform our future through the lessons of the past. As the old year shuffled off, two of the free market’s biggest proponents resurfaced when former British prime minister Margaret Thatcher praised her recently dead chum, Augusto Pinochet, self-appointed president of Chile. These two were the grand panjandrums of privatization: Pinochet famously privatized the Chilean pension system and Thatcher, in the oft-repeated words of the New York Times, ‘privatized the loss-making state industries.’ But Pinochet’s military and police resolutely refused to have their own pension schemes privatized. And some of the state-owned industries Thatcher sold were making huge profits, which is why everyone was so eager to buy them. In those days BP not only made big money for the UK Treasury, but also did so without blowing up Texas or leaking on Alaska.
The afterlives of the biggest projects of Thatcher and Pinochet also returned for a quick haunt at the end of the year.
First, the New York Times ran an editorial warning that Chile’s pension schemes were facing disaster because half or more of them could not promise their prospective pensioners even the minimum living standards.
Across the Atlantic, the UK’s staunchly conservative Daily Telegraph lamented how business investment was at risk because of the poor state of British utilities: electricity, gas, telephone and water connections were inefficient, businessmen complained. The Telegraph did not mention that these were the first industries Thatcher had privatized, nor that they were now celebrating their first quarter-century of profit-taking and lack of infrastructural investment.
But she was never the free market ideologue she was claimed to be. Rather, she was a ruthless and accomplished politician trying to lock in her party’s victory. By selling deeply discounted shares in state industries to consumers, and selling off municipal housing to tenants, she raised a pot of capital that let her hold off on tax increases – and, she hoped, created a whole constituency of anti-socialist working class voters. Selling off the state industries was a move to break the power of the unions not only because they were a source of opposition, but also because they bankrolled the Labour Party, which she wanted to cripple.
Of course, in the US, the private sector’s strongest unions are for autoworkers, and those unions fund the Democrats. One can only speculate, but is it possible that long-term GOP coddling of the big three in Detroit has an agenda inspired by Thatcher’s example?
By giving huge tax breaks to Detroit to build gas-guzzling SUVs, car-makers have been locked into heavy capital investment in truck-beds that have all the commercial future of a dinosaur squinting at a plummeting meteor. Any analyst can see where fuel prices are going, but Congress has held back on any stringent MPG restrictions. Foreign car-makers, whose unions do not have a stranglehold, are coming into the US and making smaller, more efficient and more saleable vehicles. Could the misguided coddling of Detroit be intended to lead the US auto industry to auto-destruct, taking with it the UAW’s funding for the Democrats?
