The release of UK cabinet papers from 1984 show that Margaret Thatcher lied about the number of mines she planned to close, and reveal her government's deep belief that a certain level of unemployment was not only necessary but good.
I went to school in England and as a teenager in the 1980s, stood on the picket lines during the miners strike with badges which said ‘Coal not Dole’. Not because we were pro coal mining, but because we were pro jobs. I grew up in a small village based around farming. We were the only New Zealanders who lived there. Some of my friends grew up in villages and towns built around the pits. Closing the mines with no plan of how to save those communities was cruel and totally unnecessary.
Neither did it make the economy better or improve productivity by heralding in new industries to replace coal.
That’s because the Thatcher government didn’t think it was their job to invest in industry. Creating new industries and therefore jobs was the role of the free market, they said.
(It’s ironic that today young left radicals are more likely to stand outside a mine with a ‘Keep the Coal in the Hole’ badge. But that’s another story.)
The 1984 UK Cabinet papers have just been released. They reveal that Margaret Thatcher lied. Apparently there was a secret deal to close about 75 coal pits - not the handful of pits publicly proposed at the time.
That would have seen the lose of 64,000 jobs. But the papers show that Thatcher and her cabinet were perfectly comfortable with this massive increase in unemployment. For the first time in western political history, a certain level of unemployment was even deemed a good and necessary thing:
“.... Milton Freedman’s still used and still untested theory of there being a “natural rate of unemployment” was coupled with the belief that government should not intervene in industrial policy. The free market would create the new industries and jobs for workers who, being unfettered by powerful unions, would move, retrain and ultimately be redeployed by the constant flux of the perfect market.”
We know it didn’t work out like that.
Unemployment continued to rise under Thatcher, peaking at over 9% before Labour was re-elected.
Those new Milton Freedman jobs never came.
Productivity continued to be about 44% lower after 1979 (when Thatcher came to power) and after the miners stirke, compared with the decades before she was in power.
Compare that with the German government of the 1980s which took the opposite track. They decided it was the job of governments to invest in new industries, because no other private player in the market at the time could match the government for the scale of investment required.
When faced with the reunification of the much poorer East, they made a decision to stem the decline and invest. Today the former Eastern German states are world leaders in solar power technology because of that decision.
German unemployment is about 5%, much less than the UK.
The lesson from this is simple. Government’s that don’t invest aren’t productive.
“Free-market economics failed before through trickle down economics and has failed again in its new clothing of austerity. Like the Marxist who faced with the horror of Soviet Union could not accept the fundamental failings of their ethos, so the free-marketers of today suffer the same blind obedience to their ideology.”