Guido has been chronicling the decline of The Economist and in particular the once revered Bagehot column for some time. This week’s copy has a letter to the editor from a former editor-in-chief of The Economist, Andrew Knight and Charles Moore, the biographer of Margaret Thatcher. It is a a corker on the subject of a recent Bagehot column on “Thatcher Undecomposed”. They are not impressed…

The full letter is worth reading, it tears apart the contradictions, oversights and mistakes in the column. The conclusion alone is pretty damning:

What one looks for in Bagehot’s newspaper is analysis, rather than generalising replete with attitude. Leaving aside his protracted expression of dismay over Brexit and Euroscepticism (the “flames” of which Thatcher wickedly “fanned” with her Bruges speech), Bagehot’s overall conclusion is an odd (in your pages) mercantilist sally. His Little-Britain lunge is that Thatcher’s free-marketry has left Britain “the Wimbledon of global capitalism, more successful at hosting world-class players than producing them”.

Thatcherites should celebrate that metaphor. Wimbledon: a great global tournament in the heart of British suburbia creating lots of jobs; lots of national prestige; lots of exciting visitors to the grass courts; lots of competition. Lots, in short, of the levelling out, the subsidy-less prosperity, the excitement, enjoyment and fun of the very sort she (and the original Walter Bagehot) would have relished.

That today’s Bagehot can be accused of mercantilism shows how far The Economist has strayed from and is betraying the free trade cause it was founded to further.

Somehow this letter to the editor only appears online and not in the print edition. Fancy that…

The full letter is reproduced below:

Thatcher undecomposed
* Bagehot argues (October 12th) that Margaret Thatcher’s legacy has “decomposed”. But he then writes that the use of market mechanisms in the state “has been adopted by so many different countries and parties that people forget its origins”.

That is hardly “decomposition”, and we wonder whether Bagehot’s whole thesis relies on his simply not mentioning some big main lines of enduring change which Thatcher brought about.

Bagehot ignores a significant list of such Thatcher changes because they have “become so mainstream [as to be] no longer distinctive”. Only by excluding some of these pretty large legacies, can Bagehot question whether the Thatcher “faithsurvives as anything more than empty incantations”.

No mention, for instance, of the cathartic change in trade-union legislation which, after several years of traumatic street battles, brought about an explosion in job creation plus drastically reduced rates of strikes and shop floor discontent: a revolution, many businesses would say, in how uk business is practised to this day. In 1979, when Thatcher arrived in office, 29.5m working days were lost to strikes. In 1990, when she left office, 1.9m.

No mention of the fiscal transformation of the government’s accounts from national debt to surplus—admittedly much frayed in the years since Thatcher’s time when debt has been multiplied anew.

No mention of her so-called (at the time decried) “monetarist” switch to what has become today the conventional wisdom of controlling inflation through money supply and interest rates rather than fiscal policy. Nor of the ending of exchange controls in October 1979, an action which she would never have agreed to if, as Bagehot claims, she was a “nationalist”.

Bagehot rightly brings up the falling rate of home ownership among the young. But not the post-Thatcher causes of it, notably the muddying by later governments of her clear-water Right to Buy policies; and the Blair era and beyond of soaring house prices inflicted by shortage of supply, quantitative easing supercharging of all asset prices, and the unmoderated lure of Britain’s south-east. Even today, when overall home ownership has indeed fallen from its peaks for those same reasons, it is still comfortably higher than when she came into Downing Street.

Bagehot says that financial deregulation cannot be the answer to everything. Thatcher did not think it should be. As The Economist noted at the time, the prime cause of the 2008 meltdown (which Bagehot seems to imply was somehow her doing, 18 years after she left office), lay in deregulated lending in the United States that had been collateralised out of sight, rather than in the deregulated capital markets in London: these—more than the bank or mortgage lending which ultimately lit the fuse—were the prime focus of Thatcher’s Big Bang.

Meanwhile Thatcher’s property-owning society thrives morphed, yes, but very much undecomposed. “The proportion of people who own individual shares has halved since the early 1980s”, says Bagehot. That’s true, but for a very healthy property-owning reason: it is a measure of how sophistication has grown among private individuals since Thatcher introduced them to the notion of stock ownership. They have, very sensibly, learnt to spread their risk: switching from individual shares into pension funds, open-ended investment companies, investor funds of every stripe good and bad, insurance companies and other financial institutions—not to mention, at the higher end, nominee accounts. The numbers for each of these have rocketed.
Next, says Bagehot, Thatcher “poisoned the well of privatisation by selling off nationalised monopolies in ways that favour investors over customers”. Those of us old enough to remember regular hosepipe bans over many summers, expensive landline telephone calls, monopoly bus services, an at times shaming government-owned national airline, and no competitive downward pressure on household electricity and gas prices, will find that sweeping, unanalysed, opinion strange.

What one looks for in Bagehot’s newspaper is analysis, rather than generalising replete with attitude. Leaving aside his protracted expression of dismay over Brexit and Euroscepticism (the “flames” of which Thatcher wickedly “fanned” with her Bruges speech), Bagehot’s overall conclusion is an odd (in your pages) mercantilist sally. His Little-Britain lunge is that Thatcher’s free-marketry has left Britain “the Wimbledon of global capitalism, more successful at hosting world-class players than producing them”.

Thatcherites should celebrate that metaphor. Wimbledon: a great global tournament in the heart of British suburbia creating lots of jobs; lots of national prestige; lots of exciting visitors to the grass courts; lots of competition. Lots, in short, of the levelling out, the subsidy-less prosperity, the excitement, enjoyment and fun of the very sort she (and the original Walter Bagehot) would have relished.

Somehow this letter to the editor only appears online and not in the print edition.