Thatcher and Reagan indeed inspire

When Josh Frydenberg said he takes inspiration from conservative icons, such as Margaret Thatcher  and Ronald Reagan (as well as John Howard and Peter Costello), the Twitter mob shrieked.

Leading Labor figures – from the parliamentary caucus to the trade unions – charged that a Thatcher-style reform agenda would inflict devastation on Australia.

The strange thing is that the remarks that induced this hostile response were very measured. All Frydenberg told the ABC’s David Speers was that, just as Thatcher and Reagan stimulated the declining British and US economies in the 1980s, the Coalition wants to embrace a supply-side growth agenda to rescue Australia from the COVID crisis.

The Treasurer is right: from the Keynesian mindset that led to stagflation and turmoil in the 1970s, Britain and the US moved to an era of sounder policy and more durable prosperity.

True, Reagan and Thatcher failed to rein in spending. Recessions marked their early years, too, though they resulted from tighter monetary policy to break the back of inflation.

If Reagan and Thatcher were such disasters, as Australia’s critics contend, why then did Bill Clinton and Tony Blair embrace the new economic consensus of enterprise, low taxes and market economics? The New Democrats and New Labour were the political offspring of Reagan and Thatcher.

Bob Hawke, Labor’s most successful leader who did more to deregulate the Australian economy than any other prime minister, once said he “admired” the leadership of Thatcher and Reagan.
The hostility of Frydenberg’s critics leaves one wondering whether his Insiders remarks have touched the exposed nerve of a new economic nationalism and even socialism in Australia. If so, it is a disturbing state of affairs.

There is no economy in history that has benefited from socialism. All economies that have enjoyed sustained economic growth and improved living standards have done so through free trade and market reforms, not higher regulation and taxation.

Of course, the COVID crisis is not akin to the dire circumstances of the late 1970s and early 1980s. Economic reform is a tough sell during a time of rising unemployment. However, the Treasurer is right to support supply-side incentives to increase the economy’s productive capacity once the pandemic passes. Thatcher and Reagan would say Amen to that.

This is an edited extract of an opinion piece published in the Sydney Morning Herald as Is Josh Frydenberg so wrong to invoke Thatcher and Reagan?