In 2004, a market research agency conducted an opinion poll among selected British academicians on who they thought was Britain's greatest prime minister of the 20th century. The verdict was Clement Attlee, post-war prime minister from 1945 to 1951 - and the man who is stuck with the unfortunate description of having been "a modest little man with much to be modest about". Modest or not, Attlee created the National Health Service which dramatically improved British health standards; he set up the welfare state (including unemployment insurance and old-age pensions); and launched a massive house construction programme (building the council houses that Margaret Thatcher would later privatise). All this while also paying down Britain's wartime debt. Although Attlee nationalised major industries, which later would come to be seen as a mistake, there can be little doubt that he left Britain a better society (as different from being a greater country) than the war-shattered, debt-ridden mess that it was when he assumed office.
Compare that with Thatcher, whom many commentators in recent days have characterised as Britain's greatest peacetime prime minister of the 20th century, with nary a bow in the direction of Attlee. Thatcher had her major accomplishments, of course, and they have been written about at length since she died - the courageous showdown with violent trade unions, the insistence on a proper work culture, the Big Bang financial reform that made London the world's leading international financial centre, and much else. But in assessing her economic record, which was patchy, few have mentioned that she was the beneficiary of enormous oil wealth from the North Sea, the revenues from which at their peak amounted to a staggering 16 per cent of British GDP.
Imagine what any government in India would do with such a bonanza, equal to all central and state tax revenues combined. It is safe to say that a substantial sum would be invested in infrastructure, in building capacities of every kind. Instead, Thatcher spent it all, effected no net investment if you excluded defence, thereby delivered the beginnings of the decline of the country's physical infrastructure, and saw the British economy account for a smaller share of world GDP in 1990 than in 1979. She also left the country deeply divided, far more unequal, and its economy slipping into a recession as deep as the one that marked the start of her premiership - because she locked the pound into an unsustainable exchange rate that made British industry uncompetitive.
India gained its independence when Attlee was prime minister, whereas Thatcher won back the Falklands. That war's best defence was that the disputed islands' tiny population wanted to be British, not Argentinian. But no such opinion poll was conducted in the 1970s when the indigenous residents of Diego Garcia, even now a British colony in the Indian Ocean, were unceremoniously dumped on strange shores and their island home leased to the US navy. On South Africa, Thatcher was resolutely opposed to economic sanctions as a way of pressuring Pretoria (she was isolated 48 to 1 in three Commonwealth summits), but she subsequently voted for sanctions against Iraq.
The "aha" moment came when Tony Blair asked Chancellor Angela Merkel for the secret of Germany's economic success. She said it was because "we still make things". It is a point that Thatcher apparently did not understand - that all the "great" powers of the world have been manufacturing powers: China and Germany today, Japan and South Korea, the United States, and Britain itself in its heyday. Relying instead on financial services as a source of competitive advantage has only bought trouble for virtually every large economy that has tried it.
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
