Thatcher and Reagan Gave Rise to an Era

By the end of the 1970s, the West was on the defensive both morally and economically. The Soviet Union stood at the peak of its power, while the U.K., U.S. and many other countries were facing serious economic problems.

In the U.K., many government-owned industries were faltering and battling waning competitiveness, not least because of large increases in salaries driven by a will to compensate for an increasing inflation rate. The parallels with the situation in Sweden at the same time are obvious. In 1976, the Labor government was forced to apply to the International Monetary Fund for a supportive loan.

In order to reduce inflation, Margaret Thatcher introduced a strict financial regime while raising interest rates at the same time. The inflation rate fell to 4 percent. At the same time, reforms were instituted to boost the economy by making it more profitable to work, run companies and make investments. Government-owned industries were sold off and monopolies broken up, resulting in increased competition and productivity. The economy started to grow. The social effects might have been mitigated, but even Tony Blair has said that Thatcher’s reforms were necessary.

Ronald Reagan’s reform policies were similar to Thatcher’s, but while the daughter of the London grocer did everything to keep deficits in check, budget deficits in the U.S. were increasing. The buildup needed to win the Cold War and spending pressure in Congress, but also partly Reagan’s failure to reform social policies as much as was necessary, were responsible for U.S. deficits. Bill Clinton saw through that reform process. In that respect, Thatcher was more assertive than her American friend.

In Sweden, inflation rates were high all through the 1980s, and competitiveness was flagging. It all ended with the crisis during the 1990s, when the very same mix of strict financial policies and low inflation rates became the way forward, and both conservative and social democratic administrations sold off government-owned corporations.

By now, even the left wing has surrendered to Reagan, admitting that he was one of the greatest presidents of the 20th century. Thatcher, on the other hand, still stirs up strong emotions of both admiration and hatred in the U.K.

Peggy Noonan, speech writer for Reagan, claims that the main reason for this difference is that there is something provocative about a tough woman with a lot of power. To that analysis, I would like to add the personalities. Reagan was a charming person who sometimes avoided personal conflicts. Thatcher, on the other hand, never hesitated to jump into the fray and showed a straightforwardness that did not appeal to everyone.

When Reagan’s advisers gave conflicting advice because of deeply incompatible convictions, he could sometimes say: “Guys, you’ll work that out. Come back to me when you’re done.”

Thatcher never would have done that. She would have jumped into the debate, not avoiding asking hard questions and then she would have made a decision.

When it came to foreign policy, however, Reagan did not back down from a fight. When others wanted to appease the Soviet Union with concessions and shilly-shallied about calling Soviet communism by its proper name, Thatcher and Reagan stood up together for freedom and democracy. Their firm actions, backed by military force, finally broke the empire of evil. There was one difference between them: If Reagan was the sunny idealist, Thatcher was the hard-boiled realist. While he believed in a world free of nuclear weapons, she just observed drily, “You cannot dis-invent nuclear weapons.”

Thatcher and Reagan’s firmness of principle was sorely needed. In a time when the Western world did not dare go toe to toe with the communists in Moscow, and when economic policy centered on heavy government control, there was a great need for a clear counterbalance. All told, it was firmness with a humanitarian foundation. She was prepared to negotiate with Gorbachev and, in her eulogy at Reagan’s funeral, she said, “Yes, he never shrank from speaking out about Moscow’s evil empire, but he still realized that a man of good will could rise from its dark corridors.”

Both Thatcher and Reagan are gone now but, thanks to them, the 1980s became a decisive era that will influence us all for a long time to come. Eastern Europe is free, communism is dead, and in the economic debate, everyone agrees on the need for low inflation rates, a balanced budget and a good enterprising climate. The Iron Lady made her own fiery rhetoric redundant. That is an unquestionable victory.

*Editor’s Note: While correctly translated, the quotes in this article could not be verified.