Margaret Thatcher’s signal contribution to Britain’s well being during her 11 years as Prime Minister was to implement institutional changes favorable to capitalism and unfavorable to socialism. This contribution is ignored, for the most part, by Phyllida Lloyd in The Iron Lady. The oversight cannot be an accident. It reflects unbecoming prejudice from the movie Director and her accomplices. The actors and actresses, of course, cannot be held responsible for this misdirection of the movie.
The principal symptom of the British Disease inherited by Margaret Thatcher in 1979 when she entered high office was stagflation: a condition characterized by an abysmally low rate of economic growth, high and rising unemployment and a high and rising rate of price inflation.
The twin political causes of stagflation were the co-existence of an excessively large public sector and of an excessively powerful trade union movement. Both conditions were grounded on a 76-year immunity for the British trade union movement from any application of the rule of law.
Legislation enacted in 1871 and in 1875 had responded to the emergence of trade unions in Britain by reining them in under the rule of law. The legislation rendered union activities unequivocally vulnerable to the criminal law, to contract law, and to tort law. Participants in a strike would be held liable under contract law for inducing contract breaches and under tort for conspiracy. In 1901, in Taff Vale Railway Company versus The Amalgamated Society of Railway Servants, the House of Lords confirmed that trade unions themselves would not be immune from civil or criminal suits for damages.
The trade unions responded to this judicial decision by rallying their members to join the newly-formed Labour Party. In 1906, a panicking Liberal Party government enacted the Trade Disputes Act which provided unions with complete immunity from tort liability, from contract breach liability, and from antitrust liability ‘so long as the alleged acts are taken in contemplation or furtherance of a trade dispute.’ No other organisation in Britain was accorded such immunities.
The unions were not immunized, of course, from market forces. If they disrupted trade and/or forced excessively high wages, their employers would lose market ground and, ultimately, might be pressured into liquidation. Some union leaders, undeterred by such market realities, traded loss of membership against the higher wages of those who remained. Since only the workers who remained would vote, the leaders thereby enhanced their own grip over the union organizations, essentially inverting the principal-agent relationship so that they, the leaders, became principals and the workers became their not-always willing agents.
Following World War II, with the massive expansion of the public sector, the market constraint on union activities was significantly lifted. Public sector unions, most especially, pressured vote-conscious governments, via the threat or exercise of union disruption, to channel ever increasing subsidies from taxpayers to loss-making industries. These industries increasingly were crippled by unproductive work rules and excessive union wages. In 1974, the unions brought down a weak Conservative government, following a sequence of political strikes that degraded Britain to a humiliating and wealth-crippling three-day working week.
In the 1979 winter of discontent, the unions finally and ruthlessly turned on their own political party, humiliating Labour Prime Minister James Callaghan into ‘prostrating’ his government uselessly before them. Margaret Thatcher’s pro-capitalist government would prove to be the effective voter payback for this ultimate manifestation of trade union arrogance and extreme misbehavior, predicated on its immunity from legal redress.
For Margaret Thatcher to return British institutions to the rule of law, and to promote once again individual liberty, private property rights and limited government, against this appalling inheritance inevitably would be a gargantuan task. It would be achievable only under great leadership and firm resolve.
Margaret Thatcher proved well worthy of this task, as tomorrow’s concluding column will clearly show, and as Phyllida Lloyd’s movie equally clearly does not.
Tags: Margaret Thatcher, Edward Heath, winter of discontent, Trade Union Act of 1906, legal immunities for unions, three-day working weak, the battle joined
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