Abacus: What Trump Can Learn From Thatcherism
Margaret Thatcher was the first female prime minister of the United Kingdom and its longest-running head of government to date, serving three consecutive terms. She persevered in renovating Britain’s economic model notwithstanding the wariness of the public and her own cabinet. Likewise, President Donald Trump is so far implementing his own tendentious approach to economic policy.
Both these leaders began their respective candidacies in a similar fashion: going beyond the norm of their party and projecting their nation’s economy from a new perspective. The phrase “Thatcherism” is so aptly named after the era in which Thatcher’s policies became a prominent force in international politics.
Using Trump’s presidential candidacy and first year in office as a basis for comparison, here’s what Trump could learn from Thatcher’s economics.
At the start of his run for president, Trump promised to improve the economy by targeting the tax law, though he provided little detail on how he would accomplish this; he only mentioned cutting tax breaks for hedge fund managers. Within a few weeks, Trump proposed a plan to reform the tax law through simplification of the tax code, increases in income tax cuts, the introduction of 10 percent tax rate on national corporations’ overseas production and decreases on tax rates paid by businesses.
His plan was not without criticism, though Thatcher herself can agree no economic plan is ever met with full praise. However, the most notable critiques on Trump’s plan were how those closer to the top income bracket would also benefit from the tax cuts and that the plan banked on businesses straying from corporate inversions due to the proposed tax decrease. Thus, Trump revised his economic policies in the months leading up to his election.
What this tells us is that during this time, the then-presidential candidate and his advisors had not yet finalized all the specifics for his economic plan - understandably so. Given Trump’s unfamiliarity with the politics, it is preferable that his team takes the time to perform careful analysis on the effects of the proposed economic changes.
As prime minister, Thatcher took a stance against critics in a manner not unlike Trump and used the phrase “There Is No Alternative” to defend her economic policies. But by having a clear understanding of Britain’s economic state and staying informed about the kind of changes that needed to be made to their economic model, Thatcher adequately pre-planned her economic policies and was prepared to implement them as soon as she took office.
Britain was well into an economic decline, marked by high unemployment, high inflation and monopolistic conglomerates that manipulated Britain’s industries. It was clear that Britain’s economic model of “managing decline” was archaic and needed to be changed. Thatcher was familiar with this model, witnessed from her seat in Parliament, and understood what actions needed to be taken.
Thatcher’s mission was to steer Britain out of its long-standing economic decline by implementing “supply-side” economic policies. With this, the U.K. government saw to the privatization of state industries such as steel, energy, water, telecommunications and transport. Thatcher also matched it with deregulation policies that freed British markets and interested international investment. This meant national monopolies loss their respective market power that formerly went unrestricted. However, the new interest in British markets by foreign investors induced an increase in national production that British businesses were eager to accept. By following her economic plan to implement monetarist policies, Thatcher managed to bring global capitalism to Britain and reverse its economic decline.
Upon reviewing Trump’s first year in office, it’s reasonable to say that he has succeeded in improving his decision-making skills when it comes to what actions he should take on the U.S. economy. President Trump’s improvement in proper assessment can be reflected from his recent passage of the GOP tax plan. Trump’s cabinet communicated with Congress that the tax plan should include key points from the policies Trump has advocated for, but otherwise trusted tax writers to formulate the rest of the bill.
In the president’s handling of foreign economic policy, Trump rescinded his decision to pull the U.S. from the North American Free Trade Agreement only after taking time to meet with both Canada and Mexico’s governments and agreeing to pursue negotiations to update the trade deal. Though Thatcher was also aggressive in her foreign economic relations, specifically with the European Union whom she claimed owed the U.K. for their large contributions for membership, it was through compelling negotiations at European summits that she secured a rebate for the U.K.
Margaret Thatcher had twenty years of experience in Parliament by the time she became prime minister. She had the time to outline a detailed economic plan, knowing exactly what course of action she needed to take to achieve success. But even her implementation of economic policies was met with public disapproval and faced opposition from her own cabinet and Conservative Party.
Trump has shown that he has been gaining a better handle on how to be a persuasive commander-in-chief, however there is still room to grow. Amidst the government shutdown that occurred on the one-year anniversary of Trump’s inauguration, we’re left wondering if his administration will take this time to reflect on their economic policies. The U.S. public awaits what policies Trump will undertake now that the shutdown has ended.