British Lessons of the 1970s

I enjoyed reading this (humorous) reference to Britain in the 1970s entitled, “Plan to cap energy prices smacks of 1970s madness” by Iain Martin in the Times today — and how Margaret Thatcher reversed the economic policies that led to Britain being labelled the “sick man of Europe.” I will ignore the larger discussion of whether the current Conservative government is ignoring the “lessons of the 1970s” to court Labour voters. I do believe, however, that any attempt by British governments to intercede in markets to stabilise prices should be subjected to a “lessons of the 1970s” test. It is also worth remembering how politicians can make themselves an object of humour when their actions to manipulate markets are reported by the media — another history lesson from the 1970s.

Some time in the late 1970s, the press spokesman to the then minister of consumer protection, Roy Hattersley, made a series of phone calls to members of the press. One of those on the receiving end recalls to this day the excitement. I have good news for your readers, he was told: Roy has managed to hold down the prices of shirts and underwear.

This was Britain before the dawn of Margaret Thatcher, when governments attempted to run a protectionist policy controlling prices and incomes, and ministers sat in judgment on the minutiae. A daft economic experiment distorted incentives and gummed up the workings of the UK economy to a calamitous extent….

Difficult and painful work was undertaken in the 1980s to wean the British off the notion that the government should control the economy.