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Politics : President Barack Obama
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To: RetiredNow who wrote (132957)4/10/2013 8:48:12 PM
From: Wharf Rat  Read Replies (1) of 149317
 
"How Mrs Thatcher smashed the Keynesian consensus"

She financed her government by taxing oil at 90%. Don't let this get around. It will ruin her reputation. We can do the same thing.

Jonathan Callahan on April 8, 2013 - 5:26pm Permalink
There are a couple of Thatcher timelines out there but here is one for TOD readers:



The numbers on the graph refer to oil-related moments in Thatcher's career as Prime Minister.

  • Thatcher became leader of the opposition two years after the 1973 oil shock at a time when UK imports of increasingly expensive oil were at their height, the balance of payments was terrible and unemployment was high
  • Thatcher became Prime Minister just as the second oil shock was getting underway. This time, however, North Sea output had increased so much that it equalled the shock-reduced demand by 1981.
  • The UK could afford the Falklands war in 1982 because they were starting to earn revenue from oil exports.
  • Quoting wikipedia: "By 1983 overall economic growth was stronger and inflation and mortgage rates were at their lowest levels since 1970, although manufacturing output had dropped by 30 per cent since 1978 and unemployment remained high, peaking at 3.3 million in 1984."
  • The Thatcher administration was able to thwart the UK miners strike of 1984 by having power plants switch to burning oil, causing a blip up in oil consumption and down in exports.
  • The Piper Alpha disaster of 1988 and ensuing investigation shut down a lot of North Sea oil production but not so much as to discontinue exports in Thatcher's final years.
      An easily ignorable sentence from the Wikipedia article sums up the financial situation during her Prime Ministership:

      Throughout the 1980s revenue from the 90 per cent tax on North Sea oil extraction was used as a short-term funding source to balance the economy and pay the costs of reform.

      So Thatcher had the genius to be in the right place at the right time. Her "Iron Lady" temperament was a good match for the UK's renewed economic strength derived from oil and gas despite the hollowing out of the UK's manufacturing sector.

      But, to give credit where credit is due, it was her force of will and strength of character that placed those fossil fuels there in the first place. ;-)
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