Goodbye to Blighty?

It’s revolting to watch the outpouring of morbid glee at the death of Baroness Thatcher from the British left–not from Occupy Wall Street fringe elements, but from trade union leaders and senior Labor MPs. London’s Daily Mail today reports:

Paul Kenny, general secretary of the GMB union, said: ‘Mrs Thatcher will be remembered by many for the destructive and divisive policies she reigned over which in the end, even in the Tory Party, proved to be her downfall. Her legacy involves the destruction of communities, the elevation of personal greed over social values and legitimising the exploitation of the weak by the strong.’

Labour shadow pensions minister Gregg McClymont came under fire for ‘condoning’ an inflammatory tweet about the former Conservative prime minister. He was accused of being ‘extremely foolish’ when he described a university student’s political views as ‘spot-on’ following a reference to Lady Thatcher a ‘f***** witch’.

Dancing on the grave of one’s political opponents is unthinkable in American terms. In part this is because any American president bears the dignity of the office of head of state, while a British prime minister is a servant of the sovereign. But that does not explain the eruption of hatred against a dignified, intelligent, and principled woman who led her country longer than any 20th-century prime minister–almost as long as Franklin Roosevelt led the United States. This eruption of hatred is inexcusable. But it is not entirely inexplicable.

The victory of the West in the Cold War would have been impossible without her. The book to read is The President, the Pope and the Prime Minister, by her close adviser and friend John O’Sullivan (I reviewed it when it first appeared in 2007).

Baroness Thatcher was a great woman, one of the few political leaders to change a country’s direction for the better. During the 11 years of her ministry the compound annual growth rate of per capita real national income was 2.5%, compared to just 1.9% during the preceding 11 years of (mainly) Labour governments. She believed in free markets and unleashed a wave of creative destruction that reshaped much of England.

I spent two years in London as a graduate student in the mid-1970s, when the city had a characteristic stink: few had central heating and all the buildings reeked of mildew. Civil servants wore old shirts with frayed collars and smoked their cigarettes down to the stub. Billboards advertised “barley wine” as the drink with the most alcohol for the money. The docklands looked like a post-apocalyptic ruin. When I came back to London as an investment banker in the 1990s, it was a transformed city. The docklands had become prime real estate and the city overflowed with money. Taxi drivers speculated in the real estate market and immigrants from all over Europe flocked to London; there were French bus drivers, Spanish waiters, Portuguese hotel staff, and Polish carpenters. It was a pleasure to hear Jamaican cabdrivers inveigh against the lazy (overwhelmingly white) spongers living on the dole in the Midlands and the north of England, while good jobs went to foreigners.

Last month I stopped briefly in London for business, and found myself hoping that I never would return; it reminds me too much of what might become of us. It is the great capital city of a great nation where the British are entirely marginalized. At the top, Arab and Russian money has turned Knightsbridge and Belgravia and South Kensington into an impossibly priced theme park for absentee owners. At the bottom, what used to be the Cockney London–within earshot of the bells of the Bow Church–has become Little Bengal.

It is wicked for the British Left to celebrate Baroness Thatcher’s death, but even wickedness has its reasons. She removed state subsidies for coal mining and other inefficient state-supported industries and turned the entrepreneurs lose. The entrepreneurs exploited Britain’s comparative advantage as a global metropole for finance and trade.

Proportion of UK GDP by Sector

Industry (including energy) fell from 35% of GDP in 1980 to just 15% today, while finance rose from 17% to 34%–a staggering GDP contribution, according to OECD data. The world’s investment banking talent poured into London, and the trading floors of the global firms became polyglot pirate ships. London became the great center for derivatives and structured products in particular.

In 2004 a Bank of America colleague invited me to hear the triennial piano competition at Leeds, the largest city in Yorkshire. Once a great northern industrial city, the great mills of Leeds were now clubs where the city’s youth drank and vomited out their weekly stipends every Saturday evening. The north of England is for the most part a post-industrial moonscape of poverty and ruin. The great wealth of the financial sector in the southeast never made it to the north–which explains why Thatcher’s Conservatives have become a southeastern party.

England was especially hard hit by the financial crisis of 2008, given the economy’s huge dependency on financial services. Even so (as the diagram below from the UK statistics office shows) the rest of England suffered far more than London and its environs.



This was not Baroness Thatcher’s fault. The jobs were there, but the people of the de-industrialized north left them to immigrants, preferring to remain state dependents. London became a paradise for upwardly-mobile, enterprising young people from all over Europe and beyond, but a monument of envy for the rancorous north. History, to paraphrase Friedrich Schiller, brought forth a great moment, but the moment encountered a mediocre people. A large part of the British population sees no benefit from the growth that Thatcher’s free-market reforms set in motion. Don’t bother to explain to them that without the entrepreneurial boom in banking, Britain would not have had the money to keep them on the dole. Don’t bother to explain to them that the same trends continued under Tony Blair’s Labor government. They will still hate Baroness Thatcher to the point of dancing on her grave.

It is disturbing to think that Margaret Thatcher might have led the last wave of British national feeling. Her body was presented today at the altar of St. Paul’s Cathedral, the national shrine where Britain interred its greatest military heroes, Nelson and Wellington. It is getting harder hard to find Britons who are still patriots, that is, who still believe in their nation’s special virtues.

If we become a nation of takers, as Nicholas Eberstadt titled his 2012 book on the explosion of state dependency, we will emulate our mother country in its decline. I don’t want to go to London any more. It frightens me.