Thatcherism and Economic Policies Quiz

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Questions and Answers

What event in 1986 is known as the 'Big Bang' in the financial sector?

  • Deregulation of the banking system (correct)
  • Formation of the European Union
  • Introduction of new taxation policies
  • Creation of a new stock exchange

What is one stated aim of privatization within the economic policies discussed?

  • Generate revenue for the government through the sale of shares (correct)
  • Encourage public sector expansion
  • Increase government control over industries
  • Maintain national ownership of profitable industries

Which of the following industries was privatized in the 1980s?

  • National Health Service
  • Public Transportation
  • State-owned banks
  • British Telecom (correct)

What was a notable consequence of privatization in the UK?

<p>Increase in government revenues from shares by £34 billion (D)</p> Signup and view all the answers

What was one of the secondary aims of the privatization process?

<p>To weaken the power of trade unions (B)</p> Signup and view all the answers

What was a significant economic policy shift associated with Thatcherism?

<p>Monetarism focusing on money supply (B)</p> Signup and view all the answers

Which event significantly contributed to the rise in Thatcher's popularity?

<p>Falklands War (D)</p> Signup and view all the answers

What was Thatcher's view on the role of society?

<p>There is no such thing as society (D)</p> Signup and view all the answers

What was one consequence of Thatcher's economic policies during the early 1980s?

<p>Increase in unemployment (A)</p> Signup and view all the answers

What catalyzed the Miners' Strike from 1984 to 1985?

<p>Closure of unprofitable nationalized coal mines (A)</p> Signup and view all the answers

Which idea was a principle underlying Margaret Thatcher's economic approach?

<p>Deregulation and privatization (C)</p> Signup and view all the answers

How did monetarism aim to control inflation according to Thatcher's policies?

<p>By restricting the money supply (B)</p> Signup and view all the answers

Which significant socio-economic issue was prevalent in the UK during the 1970s leading to Thatcher's rise?

<p>Failures of previous governments to resolve economic issues (D)</p> Signup and view all the answers

What major issue did Thatcher face during her premiership that contributed to her loss in the Conservative Party leadership contest in 1990?

<p>Poll tax (A)</p> Signup and view all the answers

What was one of the significant impacts of Thatcher's domestic policies on the power of unions?

<p>Legal restrictions through Employment Acts (C)</p> Signup and view all the answers

How did public spending change as a percentage of GDP from 1979 to 1990 during Thatcher's government?

<p>Decreased from 44.6% to 39.1% (D)</p> Signup and view all the answers

What was a consequence of the 'Right-to-buy' policy implemented during Thatcher's era?

<p>Increase in housing prices (A)</p> Signup and view all the answers

What effect did Thatcher's economic policies have on unemployment levels?

<p>Unemployment increased due to privatization and cuts (B)</p> Signup and view all the answers

What change occurred in the availability of social housing during Thatcher's premiership?

<p>Decrease in availability (C)</p> Signup and view all the answers

How did Thatcher's policies contribute to inequality in society?

<p>By reducing unemployment benefits and social housing (A)</p> Signup and view all the answers

What was a key aspect of the new political discourse initiated during Thatcher's premiership?

<p>Emphasis on individualism (B)</p> Signup and view all the answers

What impact did privatization have on the steel industry by the 1990s?

<p>It regained profitability. (C)</p> Signup and view all the answers

What was a significant change in the number of shareholders from 1980 to 1991?

<p>It increased from 3 million to 11 million. (D)</p> Signup and view all the answers

What role did central government have in education reforms?

<p>The option to receive funding from central government. (B)</p> Signup and view all the answers

What was a notable change in the welfare state during the reforms?

<p>Reduction of unemployment benefits. (A)</p> Signup and view all the answers

What was the main characteristic of the Poll Tax implemented in 1989/90?

<p>It replaced property value-based tax with a flat tax. (D)</p> Signup and view all the answers

How did Thatcher’s approach to Europe differ from a federalist perspective?

<p>She favored independent sovereign states over supranationalism. (B)</p> Signup and view all the answers

What was a significant outcome of Thatcher's reluctance to join the ERM?

<p>UK’s withdrawal from the ERM in 1992 due to currency crisis. (B)</p> Signup and view all the answers

What was the nature of Thatcher's 'No, no, no' speech in 1990?

<p>Opposition to federalism in Europe. (D)</p> Signup and view all the answers

Which statement correctly describes Thatcher's stance on the Schengen Agreement?

<p>She did not join the Schengen Agreement. (A)</p> Signup and view all the answers

What was a key feature of the Single European Act signed in 1985/6?

<p>Establishment of a single market and European Political Cooperation. (D)</p> Signup and view all the answers

Flashcards

Thatcherism

A set of political, economic, and social policies associated with the British Prime Minister Margaret Thatcher during her time in office.

Privatisation

The practice of selling state-owned businesses and assets to private companies.

Economic Liberalism

The idea that government intervention in the economy should be minimal, and that markets should be allowed to function freely.

Monetarism

An economic theory that emphasizes the role of the money supply in controlling inflation.

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Social Conservatism

A belief in traditional values and social structures, often associated with a conservative political approach.

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Falklands War

The 1982 military conflict between the United Kingdom and Argentina over the Falkland Islands, resulting in a British victory.

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Miners' Strike

A major industrial dispute in the UK in 1984-85 involving miners protesting against pit closures, resulting in a government victory.

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Deregulation

The process of reducing government regulations and controls within economic sectors.

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The Big Bang

A financial event in 1986 which drastically altered the UK's financial landscape, marked by a surge in finance and trading in London.

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Market-based economy

The aim of privatization which encourages competition and efficiency in the market.

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Popular capitalism

A key aim of privatization, where individuals can invest and own shares in previously government-owned companies.

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Increased government revenue

One of the consequences of privatization, where the government received a significant amount of money from selling state-owned companies.

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Poll Tax

A flat tax levied by local councils in the UK, replacing property-based taxation.

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Welfare State

A system of providing financial protection for individuals during unemployment, sickness, or old age.

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Education Reform (Thatcher Era)

A set of policies aimed at reforming education in the UK, giving local authorities more control and promoting competition among schools.

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What was Thatcher's key economic policy?

The policy of reducing the size and scope of the state's involvement in the economy by selling state-owned businesses to private companies.

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What economic philosophy did Thatcher embrace?

The belief that governments should minimize their role in economic affairs and allow free markets to operate without excessive regulation.

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How did Thatcher attempt to control inflation?

The use of monetary policy, particularly controlling the money supply, to manage economic activity, often by increasing interest rates to control inflation.

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How did Thatcher impact the power of unions?

The policy of decreasing the size and power of labor unions by introducing legal restrictions and reducing their influence in negotiating working conditions.

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What was a major consequence of Thatcher's economic policies?

The widening gap between the rich and poor, often attributed to policies favoring market forces over social safety nets.

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How did traditional industries fare under Thatcher?

The decline of traditional industries like coal mining, leading to job losses, particularly concentrated in certain regions.

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How did Thatcher's government approach social welfare?

The government's policy of reducing spending on social programs and public services, often leading to cutbacks in welfare benefits and public housing.

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How did Thatcher encourage home ownership?

The policy of encouraging home ownership by giving existing council tenants the right to purchase their homes at discounted prices.

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Study Notes

Thatcher Revolution

  • Thatcherism and privatization were key terms
  • The period 1979-1990 is considered as a period of radical and successful break from the past
  • Assess the validity of this view of Thatcherism
  • Thatcher became Prime Minister in 1979 following failures of British governments to resolve the UK's economic issues during the 1970s
  • The Winter of Discontent and social divisions, alongside an oil crisis in 1979 (related to the Iranian Revolution), contributed to the context of Thatcher's election

Thatcher's Policies

  • Main ideas include private enterprise, reduced state role, and "there is no such thing as society"
  • Economic liberalism: privatization, deregulation, and reduced state role in the economy
  • Social conservatism: traditional view of society
  • Early policies focused on monetarism, advanced by Milton Friedman
  • This involved a focus on money supply for inflation control, restriction of money supply, cuts in government spending, and a rise in interest rates

Results of Monetarism

  • Inflation fell from 18% in 1980 to 5% in 1983
  • Unemployment increased from 2.2 million in 1980 to 3.2 million in 1983
  • Rioting occurred in inner cities, such as Brixton in London, in 1981

Falklands War, 1982

  • Assertion of sovereignty
  • Increased Thatcher's popularity, contributing to election victory in 1983

Miners' Strike, 1984-85

  • Reaction to the closure of nationalized, unprofitable coal mines
  • Strike failure due to government stockpiling, Employment Acts (no closed shop, union vote required), and uneven participation

Economic Policies: Deregulation

  • Deregulation affected finance, transport, education, hospitals, and housing
  • Deregulation of financial sector in 1986 ("Big Bang") led to a boom in finance and trading in London

Economic Policies: Privatization

  • Timeline of privatization:
    • Cable and Wireless (1981, 1983)(P)
    • British Aerospace (1981, 1985)(P)
    • British Telecom (1984)(P)
    • British Airways (1987)(P)
    • British Steel
    • Water
    • British National Oil Corporation (North Sea oil) (80s)(P) (P denotes profitable industry before privatization)
  • Aims of privatization:
    • Market-based economy (profitability, efficiency, productivity)
    • 'Popular capitalism' (ownership of shares)
    • Revenue generation (sales of shares)
    • Reduction of public sector borrowing
    • Weaken trade unions
  • Consequences of privatization:
    • Increase in government revenue (£34 billion from 1979-1991)
    • Modest impact on efficiency and profitability (steel industry regaining profitability, British Telecom - partly from deregulation, and British Airways - largely from factors before privatization)
    • Increased number of shareholders (3 million in 1980, 11 million in 1991)

Local Government Reform

  • Central government involvement in local spending (Standard Spending Assessments)
  • Competition between service providers (compulsory competitive tendering)

Education Reform

  • More choice for local actors (financial autonomy)
  • Local management of schools (financial autonomy)
  • School choice
  • Greater role for central government (funding options)
  • National Curriculum with core and foundation subjects
  • School selection based on 11-plus exam

Welfare State

  • Welfare state programs (child allowances, social insurance, NHS) largely maintained
  • Reduction of unemployment benefits and end of tax benefits for the unemployed
  • Increased outsourcing and compulsory competitive tendering at NHS hospitals
  • Charges introduced for optical and dental services

Poll Tax

  • Introduced in 1989/90 (Community Charge)
  • Flat tax raised by local councils, replacing property value-based system
  • 1990 London demonstration ended in violence and over 300 arrests

Foreign Affairs

  • Friendly relations with Reagan
  • Anti-communism
  • Critique of European institutions

Thatcher and Reagan

  • Partnership

Thatcher's Anti-Communism

  • Cartoon depicting the negative reaction to Thatcher's policies

Thatcher and Solidarity

  • Connection to Solidarity
  • Support and influence in the period

Critique of European Institutions

  • Sovereignty in federal Europe, budgetary contributions

Thatcher and Europe

  • Supported UK membership in the EEC during the 1970s
  • Believed in an independent sovereign states model in Europe, opposing supranationalism
  • Saw the EC as protectionist, centralized, and bureaucratic
  • UK was a net contributor to the EEC -> wanting money back (1979 comment), 1985 rebate (66%)
  • Did not join the Schengen Agreement in 1985
  • Signed the Single European Act in 1985/6
  • Single market, European political cooperation, and qualified majority voting
  • Vocally opposed German reunification
  • Reluctantly joined the European Exchange Rate Mechanism (ERM) in 1990

End of Thatcher's Premiership

  • Loss of Conservative Party leadership contest in 1990
  • Major issues included poll tax, German unification, and Europe (ERM, Single European Act)

Impacts of Thatcher's Policies

Domestic Policies

  • Resolved major 1970s issues (inflation, union power, low growth)
  • Contributed to inequalities and divisions
  • Changed role of the state and political discourse
  • Impacts on inflation, interest rates, and GDP growth (detailed with charts)
  • Decline in union power and members resulting in legal restrictions
  • Increase in poverty (charts included)
  • Increase in inequality (chart included)
  • Unemployment changes (chart included)
  • Growing north-south divide (cartoon included)
  • Role of the state (public spending as % of GDP: 1979, 1990 values) - decreased
  • Decline in social housing, rise in home ownership (with supporting details and charts)
  • Consequences of right-to-buy scheme: housing price increase, independence for home owners, long waiting times for social housing, challenges for mortgage payers with high interest rates

Foreign Policy

  • Strengthened relations with the U.S.

  • Contribution to the end of the Cold War

  • Renewed Euroskepticism but a unique role for the UK in the EU

  • New political discourse, emphasizing individualism; tax changes (details with a table)

Revolution

  • "Radical and profound change" (Britannica)

Discussion

  • Was there a Thatcher Revolution between 1979-1990?
  • "A radical and successful break with the past"
  • Assessment of the validity of this view

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