Delivered April 30, 2007
Thank you for doing me the very great honor of inviting me to
deliver this 1,000th Heritage Foundation Lecture, my fourth
out of your first 1,000!
Today I want to talk about Margaret Thatcher and what we can
learn from her about achieving change. After all, we are in the
change business and she was very good at it!
Margaret Thatcher was and still is different. On February 21 of
this year, on a 3' plinth, a 7'4" statue of her was unveiled in the
lobby outside the Commons chamber. Very few Prime Ministers have
ever been so honored, and all previous ones were honored
posthumously. We are catching up on the USA in honoring
Margaret Thatcher. At the unveiling she commented: "I might have
preferred iron but bronze will do. It won't rust and this time I
hope the head will stay on."
At 7'4" the statue is nearly as imposing as she can still
But she did ask me to relay the following words to you:
MESSAGE FOR THE HERITAGE FOUNDATION
With a title such as Achieving Change: What We Can Learn From
Margaret Thatcher I hesitate as to what I might add in way of
For both Britain and the United States, the late 1970s were a
time when change had become a priority. After years of economic and
political stagnation, and with our international reputations
falling ever lower, our two countries faced a stark choice. In
Britain, the slow and seemingly inevitable decline in the three
decades following World War II, and the growth of the socialist
model of state control and regulation, had made us a dependency
nation. While here in America, the withdrawal from Vietnam had
sapped your readiness to take on further international
Yet within a few short years we had both reversed the effects of
decades of decline. We were no longer prepared to accept the
economic and political models which had caused so much damage.
Today, as we face new challenges, we must never be prepared
simply to accept the "received wisdom" of those who claim to be
wiser. Every one of us can make a difference. And by returning to
our basic principles and beliefs, we can find new ways to revivify
our policies and to forge a brighter future for ourselves and for
In this task, I know that the Heritage Foundation and all its
friends will not falter and I wish you well in the challenges
The Rt. Hon. The Baroness Thatcher, L.C., O.M., F.R.S.
House of Lords, London SW1A OPW
Change for the Better
After all the "temporary" controls of World War II, after six
years of Clement Attlee and full-blooded socialism, after 28
years of the muddle of the middle and the so-called era of
Butskellism (named after leftist Tory Rab Butler and rightist
Labourite Hugh Gaitskell), all mixed in with Keynesianism, what did
Margaret Thatcher do? It's worth reminding ourselves:
- She smashed the militant mineworkers;
- She brought unions back under the rule of law and gave them
back to their members by making them accountable;
- She conquered inflation;
- She turned poor-service loss-making nationalized
industries into superior-service profit-making privatized
- She stood up to tin-pot Argentinean dictators 8,000 miles away
in the Falklands because she believed in the international rule of
law, even to the extent of dispatching a task force;
- She said NO to Brussels-but not often enough;
- She told Bush I not to wobble;
- She faced down the IRA despite losing very close friends Airey
Neave and Ian Gow and nearly being killed herself;
- She sold off public housing;
- She took Britain from 19th to second in the OECD; and with
- She helped tear down that wall.
Because of her, the whole attitude of the country to enterprise,
profit, and building wealth changed, and for the better. Through
wider share ownership, the sale of public housing, and the
liberalization of the City (the financial district of London)
people got access to capital for the very first time in their
lives. In doing so, she created New Labour: Whoever is in power now
has to acknowledge we need a healthy private sector, and that was
just not true prior to 1979. Indeed at times (daily almost) one
sees Labour and Liberal Democrat MPs being far more radical than
David Cameron's Conservatives. To some, that is a disappointment;
to others, it is a cause for celebrations and deep reflection.
She was the Iron Lady on so many fronts and issues, and she did
not turn or bend. With President Reagan she brought the light of
freedom to so many parts of the world. She brought the blessings of
freedom to hundreds of millions of people.
She spent 11½ years at 10 Downing Street, but really her
spell lasted up to 1997, as there was no Major era-nothing you
could label Majorism except retreat. So it is fair to compare 1979,
when she came to power, with 1997, when New Labour triumphed. And
what do we see?
- The middle classes grew by 17 percentage points or just over
half (from 33 percent to 50 percent).
- Home ownership grew by 18 percentage points, or just over a
third (from 53 percent to 71 percent).
- Share-owning more than trebled (7 percent to 23 percent).
- Share-owning among trade unionists all but quintupled, to 29
percent (I'll explain how and why later).
- Strikes virtually disappeared, and the one place they still
take place is the postal service which Margaret Thatcher reportedly
refused to privatize because Her Majesty The Queen, Queen
Elizabeth II would have been upset at not having her likeness
on every stamp.
- The percent of workers who are self-employed doubled, to 14
- And the percent of workers who are in a trade union collapsed
from over 50 percent to under 20 percent.
That's change! That is big, positive change. However a word of
caution before we move on.
When I started in the war of ideas in the UK the three big issues
Inflation: We won
Nationalized Industries: We won
Trade Unions: We won
But as rapidly as we win battles, so new fronts spring up. As
Arthur Seldon used to say, "government is of the busy, by the
bossy, for the bully."
Where we once had runaway inflation, now we have runaway
regulation-over 5,000 sets of new ones every year (one every 90
minutes) and most from the EU. We know in the UK now that 60
percent of regulation comes from the EU; in Germany they think
it is 85 percent.
Where National Industries gobbled up billions as standards
plummeted, so today our so-called public services gobble up more
billions in education, welfare, health, and criminal justice
while all indicators of success collapse.
Where we had unions taking power from Parliament, now we
have the EU in Brussels. "Who rules," we used to ask: "The
Government or the unions?" Now it is "Who rules: The Government or
some corrupt, unelected, unaccountable foreigners meeting in
secret overseas?" The answer currently is the latter.
Those are today's issues. What can Margaret Thatcher teach us
that might allow us to tackle them in the future? And they can be
The Rt. Hon. William Hague MP tells of appearing on TV in
2004 with Arthur Scargill, the man who the country feared when he
led the 1984-1985 miners strike against Margaret Thatcher.
In 2004, Scargill called for re-nationalization. Hague comments:
"What was striking was the reaction of the audience: while a
pre-Margaret Thatcher audience would have trembled before him, a
post-Margaret Thatcher audience simply laughs-treating his
comments as a trip down memory lane, an entertaining show put on by
an affable and now harmless museum piece."
But while Scargill and all he stands for is increasingly a
matter for archaeologists, contemporary British historians still
have a pretty open field when it comes to "how" the Thatcher
revolution came about and "what" in retrospect it meant.
There have been some attempts but that field of study has yet to
be fully tilled.
Ten Key Strategic Lessons
Today I want to have a good look at that 1979- 1997 period. What
can we learn that might help us today-exactly a decade as of
tomorrow since John Major's original 1992 majority of 21 became
Tony Blair's majority of 179?
Let me try to summarize the ten key strategic lessons I have
identified from Margaret Thatcher.
Above all Margaret Thatcher had a very strong
personal political and moral compass. She could turn to a room full
of powerful men and in effect simply say, "I know this is right;
you know this is right; the only question is how we do it."
It wasn't the bossiness of the cartoons so much as total
conviction. And it built teamwork. If the chief has a set of clear,
well-articulated, consistent principles, then all the little
Indians know exactly what to do-if they want to stay in the wigwam.
And as she once said, "Disciplining yourself to do what you
know is right and important, although difficult, is the
highroad to pride, self-esteem, and personal
She was able to cut through the guff, the nonsense,
the fancy embellishments and get right to the heart of the matter,
simplify it, and communicate it. As books about her are
coming out, one thing is common to all of them: namely this
ability of hers to simplify and communicate clearly and with
conviction. I always think of her and Newt Gingrich together in one
sense. They neither of them were "at this moment in time" types but
rather "now" types. Good, short Anglo-Saxon words-or as
Margaret Thatcher once said to my friend Simon Jenkins,
"Laissez-faire? Laissez-faire? Don't go French on me!"
She is a very clever person. She studied chemistry and was a
chemist in industry before studying law and practicing at the
tax and patent bars. But as well as being clever, she had a knack
of simplifying and communicating, of getting to the heart of the
matter and expressing it in simple words that made sense and
People are being cruel when they say she never had a single
original idea herself. They undervalue her ability to
- She did lead, and she expected and got a lot out of
those around her, yet she also listened. Soon after the
1987 general election a newly elected Tory MP was walking through
the members' lobby in the House of Commons when he suddenly
observed an old friend. The old friend had been elected in 1983 and
was now a junior minister. He was running, literally running. His
hair was disheveled and he was carrying not only his briefcase and
a box but also a full tray of papers.
"Slow down," called the new MP. "Rome wasn't built in a day," he
"Yes," cried the young minister over his shoulder. "But Margaret
wasn't the foreman on that job."
That is a true story. The next is 100 percent apocryphal but
instructive. It tells us how she was perceived.
The story goes that in 1989 her Cabinet and senior staff held a
private dinner on the 10th anniversary of her becoming prime
minister. At Café Royal Margaret Thatcher sat at the head of
the table with, say, 20 men in suits down each side. A waiter
enters and heads to Margaret Thatcher.
Waiter: Prime Minister, would you like an appetizer?
Mrs. T: Prawn cocktail, please.
Waiter: Prime Minister, for your main course?
Mrs. T: A steak, please.
Waiter: Prime Minister, what kind of steak?
Mrs. T: Sirloin, please.
Waiter: Prime Minister, how do you like your steak?
Mrs. T: Rare, please.
Waiter: Prime Minister, some potatoes?
Mrs. T: Roast, please.
Waiter: Prime Minister, what about the vegetables?
Mrs. T: Oh, they'll all have steak too!
Like I said, that was the perception. The reality was that she was
a better listener than usually given credit for. She did listen
mostly to Cabinet Ministers, and not all the best ideas came
from her "right" wing colleagues-as in the sale of public housing,
which came very much from those to her left such as Peter Walker
and Michael Heseltine. And she was not always the hard-driving
free-market radical portrayed so often today. She worried about
abolishing exchange controls. She was not sure about public
housing sales at deep discounts, feeling those already on the
housing ladder might rebel. And some privatizations unnerved her a
While still on leadership, enjoy this quote:
I kept tight personal control over decisions relating
to the strategic defence initiative and our reaction to it.
… I was also passionately interested in the technical
developments and strategic implications. This was one of those
areas in which only a firm grasp of the scientific concepts
involved allows the right policy decisions to be made. Laid back
generalists from the Foreign Office-let alone the ministerial
muddlers in charge of them-could not be relied upon. By contrast, I
was in my element.
She championed policies that went with, rather than
against, the grain of human nature. She once said,
"popular capitalism is nothing less than a crusade to enfranchise
the many in the economic life of the nation. We conservatives
are returning power to the people."
Take public housing. In the late '70s I told her to give it all
away to the sitting tenants. Just mail them the deeds, I said.
"No," she replied, "people will not value it unless they pay
something for it." A couple of years later she launched the right
to buy. This gave all sitting tenants a 33 percent discount plus an
extra 1 percent discount for every year of paying rent up to a
maximum of 50 percent off fair market value. Home ownership soared
as nearly 3 million units changed hands under this scheme. Likewise
with privatization, where the shares were very widely spread and
As noted earlier, general public ownership of shares went from 7
percent to 23 percent while ownership by trade union members went
from 6 percent to 29 percent.
All of the great privatizations included special staff deals-hence
the disproportionate boost among union members. Each one was
different, but to stymie opposition and generate positive feelings
overall they included:
Employee response ranged from 19 percent to 99 percent and is
highly correlated to the generosity of the proposed deal, as one
- Offers of free shares;
- Matching programs-buy one get one free;
- Programs that reserved a certain percent of the float for staff
- Incentives to keep shares long term; and
- No limits on the number of preferential shares that could be
bought-once only in that case.
She did a lot of strategic thinking well ahead of
time. Ted Heath in his winter confrontation with the
miners in 1973-1974 had been forced into a corner by lack of coal
reserves. There was only enough coal for industry to operate a
three-day week. Strangely, overall production did not fall, showing
how much fat there was in industry. Thatcher built up coal
reserves to very high levels before she took on the miners.
Or take the suspension of exchange controls. Geoffrey Howe, the
Chancellor, spotted that he did not need Parliament's approval. So
he just did it, but after the markets closed on a Friday evening so
we had the whole weekend to digest the news and government
spokesmen had 60-plus hours to sell the idea on TV and radio.
She had a lot of very smart, dedicated, committed
people to draw on. When I studied politics as part of
my economics degree at the London School of Economics in 1971-1972,
Lord Donoghue taught me that the Tory party is "the stupid party."
There was some truth to this. But the Tories were becoming infected
with ideas and intellectuals, ideas from the Institute of Economic
Affairs, such as:
And intellectuals from industry (such as John Hoskyns), academia
(such as Alan Walters), and from the universities (young men such
as Peter Lilley, John Redwood, Michael Forsyth, David Davis, and
Michael Portillo) were changing the Conservative Party.
A party that in the postwar years had accepted Butskellism and
middle-of-the-road socialism as inevitable had found its
intellectual feet under Thatcher. As Thatcher herself said,
"standing in the middle of the road is very dangerous; you get
knocked down by the traffic from both sides."
- Markets work, governments fail;
- Labor market reform;
- Privatization; and
- The conquering of inflation.
She took advantage of circumstances. The winter
of 1978-1979 had been awful. There was a very strong sense of being
in the Last Chance Saloon. Thatcher herself recognized this, as
"there can have been few in Britain who did not feel, with mounting
alarm, that our society was sick-morally, socially and
economically." Trade Union leader Mr. Bill Dunn seemed to express
the spirit of January 1979 when he said, of the ambulance men's pay
demands, if "lives must be lost, that is the way it must be."
There were strikes galore. There were mountains of trash. The
dead were not being buried! Either we got it done now or we became,
say, an Argentina-as in a formerly prosperous country turned basket
case. And the economics profession was nearly 100 percent
Twenty-six years ago this spring, 364 of them wrote a letter to
The Times denouncing her. In Parliament Michael Foot
confronted her across the dispatch box, asking if she could name
two who agreed with her. "Yes," she fired back: "Alan Walters and
Patrick Minford!" However, in the car back to Downing Street she
said, "Thank goodness he did not ask for three."
I cringe when I envisage what we probably would have become
without her leadership.
We must not forget Ronald Reagan and their
partnership. It was very special indeed, much more so than
Bush and Blair.
Some people still believed the future lay with Communism; some
still believed Soviet statistics. Ronald Reagan and Margaret
Thatcher instinctively knew that was wrong and evil.
As early as 1950 she said, "We believe in the democratic way of
life. If we serve the idea faithfully, with tenacity of purpose, we
have nothing to fear from Russian communism."
Can anybody else on earth claim such foresight?
She took the time to prepare. Politicians in
power are too busy to think, and they are surrounded by
bureaucrats and pestered by vested interests. Margaret Thatcher
used her three to four years of opposition to prepare for
government. (In this regard see John Hoskyns' Just in
Time and see Richard Cockett's Thinking the
Think of the following ideas: labor markets, exchange controls,
inflation, the right to buy public housing, privatization,
contracting out, and Enterprise Zones.
All were well discussed before 1979. And she made it quite clear
to her research and support staff what she believed in-as in the
exasperated moment when she slapped down Hayek's
Constitution of Liberty and said, "This is what we believe
She tackled problems one slice at a time, particularly
on labor market reforms and privatization. Every year, the
unions were slowly but surely brought back under the rule of law.
Every year, advances were made on privatization and a momentum was
established. She did not try to do it all at once.
For example, in the 1980 employment act she:
Then in the 1982 employment act she:
Then in the 1984 employment act she:
Finally, in the 1988 employment act she:
- Abolished statutory recognition procedure,
- Extended the right to refuse to join a union, and
- Limited picketing.
- Prohibited action to force contracts with union employees,
- Weakened the closed shop, and
- Removed some union immunities.
- Weakened union immunities,
- Required pre-strike balloting of union members, and
- Strengthened employers' power to get injunctions.
- Removed further union immunities and
- Extended the right of the individual to work against a
So the lessons are:
- Have a strong compass,
- Simplify and communicate,
- Lead but always listen,
- Develop policies that go with the grain,
- Think strategy ahead of time,
- Build good teams,
- Use circumstances,
- Make good allies,
- Prepare before you are in power, and
- Have patience.
The Thatcher Era is an extraordinary story of change, of a
country saving itself in a turbulent world. And we must not
overlook, as I mentioned earlier, her impact on her
opponents-particularly New Labour, which abandoned Clause 4
(namely, its commitment to public ownership), and today also
the Liberal Democrats, where some young men and women are
making surprisingly good, encouraging noises.
Also internationally we saw: the worldwide spread of
privatization, China going capitalist, and reforms in Central and
Margaret Thatcher's influence is everywhere. My institute is very
proud of the small part we played in her education!
I hope my ten lessons from the book of Margaret have given you all
food for thought.
John Blundell is Director General of the Institute of
Economic Affairs in London. This lecture is part of a
forthcoming book on Lady Thatcher to be published in