Wednesday, 2 October 2013

On The Myth That Thatcher Ruined British Industry

In a free market economy there is little place for national affiliation. If an employer has found 100 non-British workers who are willing to work for £3 per hour less than his 100 British workers, the nation is better off (as is the global economy), because before the non-British workers began to do the jobs, there were 100 potential workers each being overpaid by £3 per hour.  In a 40 hour week that amounts to a net overpayment of £12,000. In market economics, Adam Smith's 'invisible hand' states that competition brings about self-interest for the good of everyone, where prices near-perfectly match supply and demand.  Free market economy at a global level works well because hard workers, innovators, entrepreneurs and finance experts amount to different people, with a free market that enables them to coordinate their skills. It's no use being emotionally affiliated to an industrial factory that's costing us money just because it happens to be one’s own place of work, or because it happens to be based in one's own country. Thatcher's critics have got it backwards – she didn’t ruin the British economy - it is the efficiency of the relationship between prices, supply and demand that she used to help save the British economy. The northerners who are bemoaning post-Thatcherism fall largely into two camps; they are either people who really want to seize opportunities and as a result decided that after their industry has been outsourced they'll change vocations; or they are people who have decided that a life of paid leisure (albeit low income) is preferable to changing vocation or learning new skills.

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