Reagan's pal, Thatcher. Conservatism's Wreckage

I wrote about Ronald Reagan here and today's Sunday Herald published an essay on Margaret Thatcher, Children of the revolution

Thatcherism wasn't just an economic policy, however. It was a social psychology based on possessive individualism. It was about getting as much as possible for yourself and your family and then letting the rest of the world go hang. "There's no such thing as society," she said in her most magisterial soundbite. And while she insists that she didn't mean it literally, actually, she did. She largely succeeded, too, in destroying collectivism, a form of social solidarity that had endured in large parts of Britain since the second world war.

We may not have had collectivism as in the UK but otherwise that does describe the Republican Party's economic policy since Reagan. But think about gated communities, the splitting down into the smallest demographic groups, and the sheer spitefulness of political discourse during the Bush II Administration. How far is the distance between Michael Millikan and junk bonds and AIG or Bernie Madoff? I think not much.

Thatcher sensed intuitively that the key to breaking communitarian ties was home ownership. Before 1979, the sale of council houses had been regarded as a fantasy of the loony right. But she went ahead and did it, and by ushering in the age of mass home ownership - "the property-owning democracy" - she turned Britain into a nation of property speculators. Homes, once just places to live, became assets to be traded, used as private fortresses of personal wealth ... and ultimately, vehicles of speculation by the banks. In 1979, when Thatcher came to power, fewer people in Scotland owned their own homes than in communist Poland. Now, nearly 70% of us are owner-occupiers. Ask long-serving trades unionists why workers are so reluctant to go on strike these days and they will often say: mortgages.

Now that is chilling to think that our current problems started with the subprime mortgage crisis and derivatives. But then American policy has always favored home ownership. Yeah, think about that for a few minutes.

She also ignited the "big bang" in the City of London - a wave of deregulation which opened the way to the "anything goes" era of financial buccaneering. The great mis-selling scandals - endowment mortgages, personal pensions, "with-profits" insurance bonds - all had their origins in the 1980s. Commission-driven "independent" financial advisers developed ever-more ingenious "financial products". One of Thatcher's earliest acts was to break the link between the state pension and average earnings. In future, they would rise with inflation. This apparently technical move ensured that the value of the state pension would wither to next to nothing, forcing people to seek security in private pension provision.

At least we were not dim enough to tie Social Security to the stock market.

And there is a Wagnerian quality, now, to the collapse of Thatcherism and the fall of its gods. The origins of the greatest economic depression in 100 years lay in May 1979 when she became prime minister. The economic engine she created, based on the unrestrained accumulation of wealth and deregulated financial markets, turned into an uncontrollable global juggernaut which has just careered over a cliff. Almost everything that has gone wrong with the neoliberal model - the housing bubble, the bonus culture, fraudulent derivatives, tax havens, financial speculation, the collapse of manufacturing - had their origins in the Thatcher revolution 30 years ago. When David Cameron's Tories today talk of the "broken society" what they are really talking about is the society of rampant individualism and moral anarchy created by their own former leader.

The problems we are dealing with here began long ago. We have all been complicit. Who did not dream of getting rich on the right stock pick? We helped create a house of cards. Unfortunately, we also stored high explosives in that house. One wrong move and the entire world economy goes down the tubes.