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Thatcherism fails for emerging economies (Zhao Chen)

Thatcherism fails for emerging economies (Zhao Chen)

Author:Def author From:en.ce.cn Update:2017-08-21 13:43:57

Whether it is compliment or criticism, Margaret Thatcher, the late former prime minister of the UK, deserved everything said about her. Considering the ongoing overheating debate on her legacy, it is still uncertain whether the British former leader, after her high-profile "quasi-state funeral," will rest in peace.

As the representative of right-wing hard-liners, Thatcher rarely compromised or submitted to pressure or criticism. This kind of unyielding spirit did not only earn her the striking nickname of the "Iron Lady," but made her politics, Thatcherism, become a set of ideas that are still with the UK and the rest of the world.

Privatization, financial deregulation, reduction in welfare payment, small government, free trade and low taxes, all these measures can best interpret the core of Thatcherism. Echoing former US president Ronald Reagan's policies, it symbolizes the rise of neo-liberalism, which not only reversed the decline of the British economy, but also profoundly promoted the capital flow around the world and finally pushed forward the emergence of globalization.

There is no doubt that Thatcherism, with its variants, has been successfully transplanted to more than 50 countries. These kinds of "new Thatcherism" have produced a great amount of wealth, but in the meantime, have caused many social conflicts partly because of the way they copy Thatcher's social welfare policy.

Thatcher's most controversial policy lies in her harshness toward social welfare. Her insistence on substantial welfare cuts contributed a lot to the recovery of the British economy, but it also caused high unemployment and stirred up resent and anger among the populace.

Emerging markets, in order to catch up with the trend of globalization, are sparing no effort to create wealth through liberating market and deregulating financial sector. These means are most likely the transplantation of Thatcherism's economic policy.

However, it should be noted that Thatcherism, especially a basket of measures to reform social welfare, could take effect only because the UK, at that time, was stranded by a common drawback in the Western world, the welfare states. But for most emerging markets whose social welfare expenditure is far behind that of the more developed countries, Thatcherism should not be their first choice.

Efficiency and equity, two sides of a coin, are always the determinants for the development of a country. What matters is how to strike a balance between the two elements and maintain a long-lasting development.

There is no doubt that emerging markets have made great achievements in economic development and have created abundant wealth. But unlike from the UK under the leadership of the Iron Lady, emerging markets should focus on the distribution of the increasing wealth, which will release the economic dividends to the people and hopefully bridge the widening gap between the rich and the poor in time.

The precondition of Thatcher's reforms in the UK was the growing problems of the welfare disease which resulted from the overly strong welfare state and made the UK a slothful society without energy. As for the emerging markets, the progressive societies are not short of economic vigor, but in a desperate need of a fair and safe social system which can cover the well-being of every citizen, rich or poor.

Years of reforms conducted by Western countries, especially after the financial crisis, have demonstrated that the welfare state is not the optimized choice for societies. The over-expansion of welfare is not capable of constructing a dreamland for its citizens. Thus, by cutting welfare expenditure and invigorating the economy, a middle way, which takes into account both economic energy and people's welfare, becomes a universal choice.

Therefore, a blind imitation of Thatcherism will not address but worsen the imminent trouble brought by lack of social security. As for the governments of the emerging markets, what really matters is how to build up a balanced and sustainable system of social welfare. The lessons can be drawn from their Western counterparts taking the other way.

http://www.globaltimes.cn/content/776925.shtml#.UXiF15hHJ2M

(Contant Zhao Chen:zhaochen@cass.org.cn

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