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Nigel Lawson’s economic ‘success’ was an oil-fuelled illusion [1]
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Date: 2023-04
How we remember the 1980s matters. Along with its twin-decade, the 1970s, it acts as a lesson, in British media-land, for how the economy works.
The conventional story goes like this: in the 1970s, there was too much social democracy. The rich were taxed too much, workers were paid too much, too many industries were nationalised and the unions were too powerful. Inflation got out of control and everyone got poorer.
In the 1980s, supposedly, Margaret Thatcher and her wizard chancellor Nigel Lawson came along. They slashed taxes, smashed the unions, and dashed nationalised industries on the rocks of privatisation. The City of London swelled in what was dubbed ‘The Lawson Boom’ and ‘the Big Bang’. Suddenly, so the story goes, the country got richer.
Tory chancellors have been trying to emulate this ever since. George Osborne cut corporation tax and sold off the Royal Mail. During his brief spell in office last year, Kwasi Kwarteng promised a ‘Big Bang 2.0’. Rishi Sunak has spoken several times – including when Lawson’s death was announced this week – of having a portrait of the now late chancellor placed above his desk when he took on the job. (Lawson repaid the favour by endorsing Sunak in the pages of The Daily Telegraph during last year’s Tory leadership election to replace Boris Johnson.)
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Even the banking collapse of 2007/8 doesn’t seem to have stopped right-wing writers from pressing this nonsense. A spectacular example is in today’s Spectator, of which Lawson was editor from 1966 to 1970. As columnist Ross Clark puts it:
“The statist economy of the 1970s, with its wretched labour disputes and under-performing nationalised industries had still not been fully dismantled. It is a tribute to Lawson that, when he left office in 1989 after six and a half years running the economy, Britain had been reborn as an enterprise economy.
“Growth hadn’t been bought with high levels of public spending, as many economists seem now to think is essential: the government was running a surplus of £4.1bn.”
This narrative has shaped so much of British policy debate over the subsequent decades that it’s hard to measure its impact. We’ve had nearly four decades in which the British economy has fallen further and further behind its peers, to the point that the poorest Britons are around 20% poorer than their French counterparts. Again and again, chancellors have tried to repeat Lawson’s trick, only to find the table won’t levitate.
There is a simple reason for this: the whole thing was always an illusion. The ‘Lawson boom’ – the burst of economic growth in the mid-1980s – wasn’t so much delivered by the policies of the chancellor, as by hard-hatted offshore workers drilling in the North Sea.
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[1] Url:
https://www.opendemocracy.net/en/nigel-lawson-legacy-big-oil-economic-boom-climate-lies/
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