Munkhammar comments in FT

Comment (30-04-2009)

Sir, Gideon Rachman writes that we are witnessing “the closing of the Thatcher era” (April 28), which is of “global significance”. Mr Rachman claims that most of her policies are now rolled back, partly because people no longer believe in them, partly because the policies have failed.

The global free-market renaissance Margaret Thatcher started has created tremendous results. During the past three decades global trade has increased five times, average global income has increased by more than 50 per cent and hundreds of millions of people have left poverty behind. The policies helped break up the Soviet empire and reverse socialism in the west. Many have been shocked by the magnitude of the financial crisis and this leads to disappointment. But does this mean that her policies were failures, or that the results from it have vanished? The answer is no, on both accounts. The fact that the European left seems unable to benefit from the crisis is just one sign of the victory of free market ideas.

True, many governments have launched emergency policies for more regulation, taxes and government ownership. This confirms that crises tend to benefit government intervention rather than free markets. Several of these policies, notably tax hikes, increased government spending and soaring deficits, are likely to create more problems. But the financial crisis was ignited by government intervention – by regulations, subsidies, government-founded corporations and monetary policy - in the US housing market. Again, this confirms the fundamental analysis of the Thatcher policies to be correct, and it provides an argument for freer markets.

The world will leave the recession behind. The question is whether we will emerge stronger or weaker than before. What we need in order to achieve another quarter-century of spectacular wealth creation is policies that continue to liberate the entrepreneurial spirit: freer global trade, lower taxes, a single European market for all services and deregulations for entrepreneurs.

Mr Rachman agrees with Mrs Thatcher that "there's no alternative" to the policies she inspired, since the left has not articulated a vision and the crisis measures are temporary.

That leaves us with one inevitable conclusion; the intellectual victory of free markets is still in place and policies should follow.

Johnny Munkhammar,
Research Director,
European Enterprise Institute,
Brussels, Belgium