According to a Nobel price wining Economist Friedman, M (2006) and an advocate of laissez-faire capitalism argues that "Unionization produces higher wages at the expense of fewer jobs, and that, if some companies are unionized while other are not then the wage will decline in a non-unionized firms". If the price of labour are raised the wage rate, about equilibrium price, unemployment rises. This is because it is no longer worthwhile for businesses to employ those labourers whose work is worth less than the minimum wage rate set by unions and that principles was adopt by the Thatcher government when it become in power.
The strategies were to cut a considerably number of unemployment by taking away the powers of the trade unions and introduced the trade union legislation in order to increase unemployment. Hayek, F. A (2006) the constitution of liberty believes that there can be little doubt that union activities lead to continuous and progressive inflation. However, the Thatcher government thought that the trade union is one vital tool that can tackle inflation by creating unemployment.
She was always prepared for the strike after taking power from the trade union and by accumulating coal at power station the effects of the strikes on the economy was diminished. She also passed some legislation to make striking more difficult with a compulsory secret ballot and less effective with flying pickets being removed and were banned. Redistribution of wealth, The other policy that made Thatcherism a power tool was the re-distribution of wealth and it was dealt with in a way that every individual have to a give level get the same income as others.
When quantifying income or wealth inequality according to Fallbrook, E (2008) adds that economists use a measure of statistical dispersion called the Gini Coefficient. In a simplified sentence, a value between 0 and 1, where 0 corresponds to perfect equality were every one receives the same income while 1 corresponds to perfect inequality, were one gets everything and high income. The Thatcher government wanted to redistribution the wealth from the poorest to the richest. Privatisation of state owned industries,
As Thatcher wanted to distribute wealth to all individuals at all level, she also believed strongly in the freedom of the removal of the state from the market system. As a result, they started a sequence of massive privatisations and the first was British Telecom (BT). Thatcher also saw this as a way of stopping the unavoidable difference of interest between proprietor and employee. Employees in companies were offered cut price to encourage them to own part of the business and this removed the need for trade union.
Thatcher was giving opportunity to all ordinary people not only to own the companies they worked for but even the house they lived in. The majority of council houses were sold to their the people who lived in them and the money generated from the sale of all the council houses, public companies provided to lighten the enormous budget deficit considerably. When the council houses were all sold, the Thatcher government introduced the poll tax to every individual. Taxation (Poll tax).
Poll tax is the tax that is levied on every individual, without reference to income or property. Being simple to administer, it was among the earliest sorts of tax (introduced in England in 1379), but because of its indiscriminate nature (it is a regressive tax, in that it falls proportionately more heavily on poorer people) it has often proved unpopular. The poll tax was attempted to be introduced by the formal Prime Minister Margaret Thatcher and her government to financing local government.
This was aimed to replace the older rates system whereby the amount a household was changed was based upon the value of the property in which they lived. The poll tax, which was officially called as community charge, caused a widespread popular resentment then riots were caused in London where people were protesting against the poll tax. The riots are sometimes known as the Battle of Trafalgar, mainly by those opposed to the poll tax and it took place in Trafalgar Square.
According to Fallbrook, E (2008) it was believed that the demonstration together with the general opposition to the poll tax, which was especially intense in the north of England and Scotland, powerfully contributed to the collapse of Margaret Thatcher, who resigned as the prime minister before the end of the year. Conclusion. All in all, Thatcherism was a better policy that Margaret Thatcher introduced because it helped to build Britain.
The involved strategies were powerful and her secret laid in a combination of qualities, which both saw her into leadership and were the essence of her period in power. She was decisiveness in times of crisis, had courage, intellectual capacity and had the physical strength. Britain was saved by Thatcherism when the country was on the brink of disaster and threatened by total collapse. Although, she changed the country there was nothing that was invented. The ideas of Thatcherism has been available for a long time, they had not been translated into policy changes until she came about.
It was her leadership and intellectual integrity that allowed those intellectual insights to inspire actual economic policies and changed Britain. The real issues here is not the policies, the really scarce resource is leadership. A principled and uncompromising leader capable of building a coalition around his or her platform is essential if it is to adopt these policies. However, Thatcherism can not work out the problems faced in the developing countries because not just the policies required but also leadership.
The two most important sets of conditions for the success of privatization or any other policies are country conditions and market conditions, Kikeri, Sunita, Nellis and Shirley, (1994) suggest that Country conditions that help successful privatization include an open trade regime, a stable and predictable environment for investment and a well developed institutional and regulatory capacity. Market conditions are also an important determinant of successful privatization. Privatizing enterprises that produce tradable or operate in competitive or potentially