England’s Tories, following the dubious example set by their US Republican counterparts, seem to have also concluded that standing on principle is politically inexpedient. The Tories recently chose to celebrate the twentieth anniversary of Margaret Thatcher’s first election victory by betraying the very ideas for which she stood. On April 20th, Peter Lilley, the Tories’ deputy leader, set defacto limits on the role of free market in his country. He not only ruled out privatizing health and education, but worse, committed his party to spending even more public money on them! As Prime Minister, Margaret Thatcher was unashamedly pro-capitalist. She took decided measures to diminish the “welfare state” by reducing the size and scope of government and by privatizing numerous state-controlled sectors of the economy. But how easily the course is reversed by same-party politicians willing to sacrifice conviction in exchange for some hope of political advancement.

US Republicans have also shied away from a number of important ideas in their never-ending but flagging quest to boost their ratings in the polls. Real tax cuts and meaningful tax reforms have been almost entirely abandoned; socialized medicine, packaged with reams of red tape, is creeping progressively into our system; and the idea of denationalizing the educational system is rarely and only halfheartedly tossed around anymore. The party’s last two presidential candidates promised little more than “efficient administration” of the ever expanding welfare state, embracing the welfare state in principle.

Pandering to the “center” was supposed to boost their political fortunes, as it had for Bill Clinton. But instead of rising in the polls, the opposite has happened: Republicans have continued to sink further and further in popularity as they have undermined their identity and their ability to lead. Apparently not learning from America’s recent history, England’s Tories have followed this dismal example. In both countries, as the Right drops their ideas while the left tempers theirs, making differences in the two parties increasingly difficult to discern.

In the short run, all of this will probably have little effect on the markets. After all, the US stock market has done just fine under Clinton. But the picture is far more troubling in the long run, given that ideas ultimately shape history. Case in point: In 1979, the US and UK economies were stagnating under the cumulative weight of more than a decade of anti-capitalist policy choices made by the Johnson, Nixon, Ford, and Carter administrations in the US, and by a long string of Socialists in the UK. In 1999, with the US economy sailing, a great deal of the global competitiveness is a lingering result of what were once considered “radical” pro-capitalist policy choices made in the early years of the Reagan administration. (Similarly, England owes much of its economic advantage over continental Europe to Margaret Thatcher’s “radical” pro-market ideas.)

The strongest politicians are involved in government because they want to see their country move in a direction consistent with their ideals. When the polls are against such politicians, they become even more determined to champion their ideas in order to persuade others to rethink their choices. Unfortunately, we seem to be entering a time when no significant politician is willing to stand on principle in favor of free markets and against growing government and socialism. Today’s politicians are chameleons; when they sense the polls are against them, they rush to edit their beliefs.

With world economic issues far from resolved, great courage and political leadership is needed to guide history in the right direction. Thatcher’s achievements in promoting economic freedom will last only as long as there are people who will wage the war of ideas against a resurgent, subtler, yet perhaps more dangerous Left. Unfortunately, the traditional promoters of capitalism seem to have decided to unilaterally disarm. One is left to ponder what type of celebrations will be held twenty years from now.

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Andrew West

Andrew West is a Contributing Economics Editor for Capitalism Magazine. In 1997 he received the Chartered Financial Analyst designation from the Association for Investment Management and Research.

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