Answer to Question #276213 in Management for Ayla

Question

list the actual changes that the two leaders, Ronald Reagan and Margaret Thatcher implemented before discussing their similarities, differences, advantages and disadvantages to the employees and trade union as a main actor of employment relations 

600 words

Answer 1

Discussion

Margaret Thatcher and Ronald Reagan were the politicians who defined a decade. The two fought to reaffirm the merits of neoliberal economics in Britain and America respectively. They were polarizing, making the case for low taxes, balanced budgets, self-reliance, deregulation, trade unions, reduced public spending and a crackdown on inflation. The two struck up a political partnership that, while it may have often been more symbolic than substantive, was powerful. While both employed strikingly similar rhetoric, their monetary policies were often quite different. Reagan was relatively draconian in his attitude to the airline controllers' strike, but on the whole had far less interest in trade union issues than Thatcher. Though, clear policy transfer took place, with Reagan administration studying how Thatcher implemented her privatization agenda and seeking to replicate it in the United States. The political contexts of Britain and the United States are so different that reaching meaningful conclusions about how similar Thatcher and Reagan really were is difficult. A British prime minister usually has greater domestic freedom than an American president. For instance, Thatcher pursued both reduced spending and taxes, whereas Reagan cut taxes and allowed a huge deficit to grow. On the other hand, this was a political tactic, Reagan hoped that the deficit would compel Congress to cut spending.

The two brought about a revolution in thinking and policy in both economics and foreign affairs. The economies of the United States and Britain are today fundamentally different because of what they did. When Reagan assumed office in 1981, Inflation came down rapidly, from more than 10 percent in 1981 to less than 4 percent in 1983, because Reagan backed the tough monetary policies of US Federal Reserve Chairman Paul Volcker. Reagan's tax policies reduced the top income-tax rate from 70 percent in 1980 to 28 percent in 1986. Although Reagan could not bring down spending on entitlement programs for retirees, America's non-defense discretionary spending was reduced from 4.7 percent of GDP in the 1980 to 3.1 percent in 1988. Also, regulations were reduced in a wide range of industries, including air transport and the financial sector.

When Thatcher became prime minister of Britain in 1979, she faced an economy with much more fundamental problems than those in the US. She privatized the major government-owned industries and sold government-owned housing to tenants. Trade union power was permanently broken after long and painful national strikes. The top tax rate on wage income was cut in half during her tenure as prime minister, falling from over 80 percent when she took office to 40 percent at the end of her tenure. Faced with high inflation, Thatcher backed a monetarist approach that supported high interest rates and succeeded in sharply reducing inflation. Thatcher supported Britain's entry into the European Union in order to benefit from free trade, but she forcefully opposed joining the single currency.

Thatcher did an astonishing amount to boost the ideal of home ownership far more than any government since. Many of the new Thatcher-era first-time buyers gained their ownership through the right to buy scheme, giving council tenants the right, for the first time, to buy their homes at a hefty discount about which Thatcher had initial reservations, due to her instinctive thrift. Such changes clearly came with a cost, and one of the most direct costs was the gradual decrease in the amount of social housing and the resultant long waits on housing lists today from a country with a growing population and atomizing households. In addition, many of the first people to buy their council homes through right to buy almost immediately started to struggle with their mortgages.