How Thatcher Set the Template for Reagan

Love her or hate her, one thing is beyond dispute: Margaret Thatcher mattered.

The grocer’s daughter from Grantham, England became the United Kingdom’s first woman prime minister. She also served the longest of any PM in the 20th Century. And she changed the country’s direction more than any prime minister since Labour’s Clement Attlee installed the National Health Service and Britain’s welfare state after World War II.

Among her many accomplishments was her revival of the “special relationship” between the U.S. and the U.K., which reached its zenith during World War II in the complicated alliance between  Winston Churchill and FDR.

Thatcher’s relationship with President Ronald Reagan was also complicated—it was not always a love fest—but the two respected and admired each other greatly. They both embraced free-market capitalism and passionately hated Communism. The economic prosperity their policies helped unleash and their firm stance against the Soviet Union in its dying days were instrumental in winning the Cold War.

More often it was Thatcher who led the way. Taking power in 1979, following Britain’s Winter of Discontent, Thatcher embarked on a series of reforms based on Milton Friedman’s monetarist policies.

She pushed interest rates higher (the Bank of England wasn’t independent until 1997), cut social spending, slashed income taxes while doubling the Value Added Tax, and started privatizing state-owned monopolies in oil (BP), steel (British Steel), telecom (BT), airlines (British Airways), rail, and others.

President Reagan made similar moves when he took office in 1981, although deregulation had started under President Carter and the U.S never had the number of state-owned enterprises Britain did. Their tough medicine pushed the U.S. and U.K. into deep recessions in the early 1980s, but by 1982 both economies were on the upswing again. That prosperity lasted through the decade.

President Ronald Reagan and Prime Minister Margaret Thatcher outside the White House. Official White House photo. Source: Margaret Thatcher Foundation.

President Ronald Reagan and Prime Minister Margaret Thatcher outside the White House. Official White House photo. Source: Margaret Thatcher Foundation.

Thatcher also set the template for President Reagan’s foreign policy. The 1982 Falklands War with Argentina was a silly bit of grandstanding, but it did restore “pride” among certain Britons and warned far more powerful foes that “the lady’s not for turning.”

Similarly, President Reagan’s invasion of helpless Grenada in 1983 was the first blow against the Vietnam Syndrome, which crippled US policymakers during the Carter Administration.

And in 1984 Thatcher met Mikhail Gorbachev before he became Soviet premier and declared in an interview with the BBC: “I like Mr. Gorbachev . We can do business together.” Thatcher’s blessing made it easier  for President Reagan to negotiate with the new Russian leader, while building up U.S. military might and pursuing a missile defense program. Thatcher, however, had to throttle Reagan back when the president pursued full nuclear disarmament.

She also had to buck up his successor, George H.W. Bush, during the confrontation with Saddam Hussein over Kuwait in 1990. “Don’t go wobbly on us, George,” she famously hectored him before the first Gulf War, though she was out of office by the time that conflict began.

President Reagan was ahead of her in one major area—he fired striking air traffic controllers in 1981. That was the shot heard ‘round the world in the labor-management arena, and it changed things forever. Thatcher’s confrontation with the far more powerful miners’ union  took place three years later, and she, too, took a firm stance, defeating the formidable miners’ boss Arthur Scargill, a force in the Labour Party as well.

Margaret Thatcher was a ground-breaking leader, affecting U.S. history almost as much as Britain’s. In many areas she led and America follwed. Here, too, she mattered.




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