Thatcher Is Dead. Long Live Thatcherism.

Bernard Shaw's play "Caesar and Cleopatra" has a preface titled "Better than Shakespeare". It was Shaw's contention that Shakespeare, a genius in portraying tragedy, failed to understand the heroism of a character like Julius Caesar and therefore his eponymous play on Caesar was flawed. Upon Margaret Thatcher's death many editorials and the redoubtable Paul Krugman have weighed in on her legacy. Almost all liberal magazines and op-ed writers, except the lunatic far left fringe, couched their appreciation of Thatcher in carefully worded statements that were a shame to linguistic clarity. Reagan and Thatcher will remain beloved in the minds of many of their citizens and in the minds of many across the globe. Yet they will remain the least understand by the academia and the ivory tower of preening intellectuals who wallow in the wooly term 'progressives'. They, like Shakespeare, cannot understand or explain the strength of a Reagan or a Thatcher or a J.P. Morgan or a Leland Stanford.

In an interesting parallel Thatcher and Reagan ascended to power in the gap of a year. Both were instrumental in reversing four decades of run away 'progressive' liberalism that yielded economic misery and devastated both countries. Richard Nixon, Republican, gleefully implemented wage controls, sought and recieved the support of the large unions, campaigned for universal healthcare (when Unions did not want it). Nixon is to the left of Obama. Both US and UK were wracked by runaway inflation or the more dangerous stagflation. The arrival of Thatcher and Reagan did not happen in a vacuum. 

A deep bench of conservative intellectuals, especially in the US, mounted the offensive on liberalism. Ayn Rand battled FDR along with H.L. Mencken and others, then followed Barry Goldwater, William F. Buckley and finally Milton Friedman. Buckley and Friedman provided the intellectual ballast for conservative revival. Friedman's lectures on public TV, assailing statist Keynesian economics while raising the edifice of free market, provided the intellectual platform for Ronald Reagan. Thatcher schooled herself in Karl Popper and Friedrich Hayek. Hayek's 'Road to Serfdom' was a modern classic in economics and a rage in the 50's. Hayek detailed how nations yield to statist fantasies and find themselves in a thralldom.

The day after the first post-war election Churchill, in his own words, 'woke up with a feeling of a sharp stab'. Churchill, who had rescued England and the world from the twin monstrosities of Nazism and fascism was roundly defeated by an England that was tired of being an empire. Churchill, justifiably, was seen as incapable of peacetime rebuilding. Clement Attlee, a liberal, took the helms, liberated India and set England on a course of liberalism for the next 40 years. Along the way the Anglo-French-Israeli misadventure in the Suez canal put paid to any pretension of colonial glory for England. England became a second fiddle to its bigger sibling across the Atlantic.

Until Thatcher became PM there was little difference in economic philosophy between Tory and Labor. The unions had a stranglehold on the economy and practically held the country to ransom as Edward Heath learned at the hands of the miners. 

What was life in UK before Thatcher? A liberal writer writing in the staunchly liberal 'The Guardian' gives a glimpse: "But if today's Guardian readers time-travelled to the late 70s they might be irritated to discover that tomorrow's TV listings were a state secret not shared with daily newspapers. A special licence was granted exclusively to the Radio Times. (No wonder it sold 7m copies a week). It was illegal to put an extension lead on your phone. You would need to wait six weeks for an engineer. There was only one state-approved answering machine available. Your local electricity "board" could be a very unfriendly place. Thatcher swept away those state monopolies in the new coinage of "privatisation" and transformed daily life in a way we now take for granted."

In another curious parallel both Reagan and Thatcher faced down crippling strikes and broke down the unions. Thatcher had her miners strike in her second term and Reagan had the PATCO strike in his first term. Both strikes were led by greedy unions willing to prove they were militant unions. Reagan fired the entire PATCO union. The miners lost broad public sympathy with their arsonous streak. Organized labor never recovered from those death blows. Both countries, thanks to that, have since prospered.

Between Thatcher and Reagan it was Thatcher who found the words to taunt socialists: "you want to make the poor poorer as long as the rich are less rich". Asked if she would do a u-turn on her policies a stout Thatcher retorted "u turn if you want to. The lady's not for turning". "There is no such thing as public money" said she. Yes, its not a revelation or a discovery. But such truths had been forgotten for decades under the assault of liberal Keynesian policies. Truths needed to be re-told and thats what Thatcher did and for that the world owes her gratitude.

It is not for nothing that 'The Economist' called her a 'Freedom Fighter'. Hugo Chavez was mourned by millions across the globe with little regard to how he mismanaged his country and plundered his country's economy, particularly its oil wealth and fashioned himself a ruler for life. Thatcher, as 'Economist' mourned, was the true 'freedom fighter'. She made England anew and left it a better place than when she ascended. Her biography, from a grocer's daughter to the most powerful and longest reigning PM in modern history in UK, is a story of inspiration and awe.

Paul Krugman in his oped 'Did Thatcher turn around Britain' had two graphs. One, showed that UK's GDP relative to France was in decline, year over year, from 1945-79 and then with Thatcher becoming PM, as if on cue, the graph starts rising. It continues till today. Another graph showed the wild gyration of the employment market which starts to decline, decisively, only from 1993 until the financial crisis of 2008. In fact Thatcher's economy saw an upswing of unemployment. Krugman archly asked 'if it took 20 years for her policies to reap benefit, were they creditable'. I wish he said the same of Obama. Thatcher was reversing the economic decline of nearly 40 years and re-shaping entire segments of the economy. It is bound to disruptive.

Thatcher's reluctance to be drawn into the Euro fantasy cost her the PM chair. Yet as the Euro zone  faces its worst existential crises Thatcher stands vindicated. The Brits owe her a measure of thanks.

Not even Reagan saw the turning of history with Gorbachev as Thatcher did. While Thatcher was not an imperialist in the mould of Churchill her conduct of the Falkland war and joining hands with Reagan to battle Soviet menace brought back England's lost glory. When Saddam Hussein invaded Kuwait Thatcher famously told George H.W. Bush "George, now is not the time to go wobbly".

No obituary of Thatcher was complete without the word 'divisive'. Reagan, on the other hand, was not seen 'divisive' on a similar scale. During the heated 2008 primaries Obama would chide the Clinton era for being 'divisive'. Clinton retorted 'yes. Thats because we fought the fights that had to be fought'. UK was in a deeper mire of liberal nonsense and the entire country was being threatened by unions. Thatcher yanked back the country to life. It is difficult to say if she could have done so with lesser divisiveness. Countering decades of entrenched thinking her laser like opposition to those ideas with very firm articulation of free market could not come across as soothing.

Thatcher and Reagan were the products of an era without whom who knows what course history might have taken in two important countries. Before them nobody thought liberalism could be challenged. After them it was difficult to doubt the blessing of free markets. Both Clinton and Blair were intellectual heirs to Reagan and Thatcher. Clinton, the new-democrat, declared 'the era of big government is over'. Blair re-invented the Labor party and veered away from kowtowing to militant trade unionism. Conservatism was here to stay. When ideological opponents speak your language you have won.

"She and comparisons are odious". Thatcher is dead. Long Live Thatcherism.

AIG and GM: A tale of bonuses and greed.

On Sep 17th 2008, two days after allowing Lehman Brothers to spiral into a bankruptcy, USA nationalized insurance giant AIG. An AIG bankruptcy would have sent the worldwide financial industry into a precipitous tailspin and caused financial armageddon, coming just two days after the largest bankruptcy filing in US history. A year later in March 2009, with Obama just inaugurated, AIG announced bonuses of unto $218 Million involving specifically employees in its financial division, the main culprits behind its ignominious fall. AIG pleaded that those were 'retention bonuses' to retain talented people who were needed to set the house in order. Barack Obama, now President, exploded in anger "I've asked Treasury Secretary Timothy Geithner to use that leverage (US bailout) and pursue every legal avenue to block these bonuses and make the American taxpayers whole". Justifiable anger. Accurately expressed emotions of an outraged nation. Charles Krauthammer, being a columnist, went further and called for bringing out the "guillotine and Madame Defarge". It is a rare cosmic event for Obama and Krauthammer to speak in unison and especially when Obama appears restrained in comparison.

Obama administration caused a flutter when it shredded 200 years of bankruptcy law to give UAW ownership of GM and Chrysler. If Obama had followed that bankruptcy model for AIG, AIG employees would not need that bonus but instead would be laughing their way to the bank. According to bankruptcy law bondholders are the primary recipient of money in a bankruptcy. Obama gifted GM to UAW and stiffed the bondholders. Same thing at Chrysler. Bond holders, banks like JP Morgan, recipients of TARP, were coerced into signing off.

In February 2012 GM (General Motors) reported record profits and declared bonuses $4000-$7000 to its 68,000 US employees. The President was grinning and proudly claimed credit for having saved "American car Industry", liberals danced in the streets (ok, not literally) about how workers and working families were saved by US government. The wrinkle in that story is GM still owes US taxpayers $25 billion. What is worse US taxpayer owns a third of GM shares. The GM shares bought by US treasury is languishing at $30, the shares need to touch $50 for break even. Not feasible any time soon.

AIG and Wall Street were bailed out of a rapidly spiraling, little foreseen, calamitous event. The much maligned $700 billion TARP (Troubled Asset Relief Program), contrary to popular idea, includes bailout of Detroit. Everyone decried how Goldman Sachs and JP Morgan were given $25 billion from TARP. Both companies were actually 'forced' and 'coerced' to take the money lest they make the non-borrowers look bad causing a different crises. Both have returned the money, with punitive interest, promptly. That GM and Chrysler were sliding towards bankruptcy was a writing on the wall for nearly 4 years. Unlike Wall Street that suffered (and inflicted) a domino effect Detroit was declining in front of the public in well foreseen course of events. Wall Street has repaid every penny and interest for TARP. FDIC and US treasury made record profits on Wall Street bailouts. Detroit bailout is yet to make money for the taxpayer.

New York Times (not Wall Street Journal) in its editorial scolding Romney for discrediting Detroit bailout, conceded that Detroit's troubles were caused by outrageous labor contracts. UAW negotiated its most recent contract stipulating that GM should not be opening plants in low-cost Mexico. The American GM worker enjoying his bonus owes it to China and India for those profits. I guess selling to China is good but opening a factory in Mexico is not good.

UAW, with some justification, always deflected criticism of their generous benefits by saying "labor cost is a red herring, Japanese cars which cost more are selling more. So cost is not the factor. It's just that American cars are not liked by people due to reliability problems". UAW is also indignant that management continued to misjudge consumer requirements and produced gas guzzlers as gas prices climbed up. True.

UAW contracts, before the bankruptcy,  are fortified and in the name of protecting the worker make it impossible for factories to retool or close down. When a factory or an assembly line closes down UAW worker enjoys 100% pay and full benefits for more than a year, the benefits include $0 in pension contribution and a very generous healthcare plan. Under bankruptcy protection UAW negotiated and got 'sign on bonus' and contracted bonuses. I don't know if sign on bonuses exist in private sector anymore for any worker lesser than the top most spot.

UAW, because GM is under Chapter 11, conceded something unheard of in Labor movement in USA. UAW conceded that new workers would be paid a different, lower, salary. A two tiered structure. When Metropolitan Transit worker in NYC struck work in the busiest shopping season of the year in 2005, a week before Christmas, their leader Roger Toussaint declared haughtily, "we will not sell the unborn" and caused millions of dollars in losses to NYC businesses. UAW was forced to concede all this ONLY because under chapter 11 they cannot strike. UAW threatened Ford with a strike because Ford, which did not need a bailout, did not have Chapter 11 protection.

A justifiable question on AIG bonuses was "if these guys are so intelligent that we need to pay retention bonuses to keep them how come they caused this mayhem?" Sure.As much as AIG employees were deemed incompetent to receive bonuses I've not seen GM employees being asked that question. Do GM employees deserve their bonus any more AIG employees deserved theirs? Were is the President asking for his Secretary to block the bonuses and pursue every legal avenue to make the tax payer whole.

Time magazine ran a cover story on the turnaround of Chrysler. The hero of the story was the CEO, not UAW. The whole story, by left leaning Time, was effusive about Sergio Marchionne of Fiat. Fiat CEO refused to put a penny of his own and forced Obama to pay everything. Marchionne lent only his legendary name and skill. This a wonderful moment lost by UAW to make good on their boast that they are the pillars behind the companies. I'd have loved to watch UAW run Chrysler without these high priced and hated CEO's. After all does not UAW shout from rooftops about how CEO's are greedy and how its the worker who is the productive unit. Time covers story is a lesson in how individuals and CEO's matter. UAW is just muscle.

Yes GM made profits but at what cost. Aside from direct bailout the Obama administration's clumsy and useless "cash for clunkers" cost is not counted. Edmunds.com CEO (popular website for car prices) lambasted the administration for throwing money. Again, it was done with the 'noble' intention of helping workers. Never mind that that money is taxpayer money, also paid by many hardworking workers. A friend dumped an old Nissan van and bought a Lexus with that taxpayer money. No sensible consumer was going to sign on a loan for a car worth $25,000 just because he/she gets $2000 for a banged up car. Obama administration scolded Edmunds.com CEO for telling the truth.

Everyday the President decries the billions of dollars in subsidy to the gas industry. Little does he talk of how his stooge the EPA tweaks mileage rules to favor the Detroit three. The President continues to plough money into hybrid vehicles. Does a buyer of a $25,000 vehicle need tax payer money? GM's volt is yet to sell like the hot cakes it is made out to be. Also too much is made of GM's profits. GM earned its profits from sales mostly in Asia. Also the tsunami in Japan completely threw out Toyota and Honda's supply lines causing severe shortage. Any CEO worth his salt would put the cash that is raining now for a rainy day and not disburse them as 'bonuses'.

To top off the chutzpah GM recently paid millions to release an ad during Super Bowl half time starring Clint Eastwood lauding the bailout. The thinly veiled campaign ad for Obama drew a lot of scorn from republicans. Ford, trying to sell cars, recently aired a series of ads featuring real customers boasting that Ford did not take tax payer money and is turning out good cars. Obama administration shut that ad down.

Greed, it is liked to be believed, comes wearing a pin stripe suit sipping expensive wines. No, greed is as much blue collar as it is white collar. Greed can come in overalls too. Man is greedy. Greed fuels and destroys man. The art is knowing when the fueling power slides into becoming destructive. Wall Street greed has been decried and punished by lawsuits and regulations. Union greed is commended and celebrated.