The woman who launched privatization big time

During the 20th century, governments everywhere became more powerful, undermining both liberty and prosperity. Yet because of entrenched interest groups which gained special favors from government, it seemed politically impossible to do anything about this.

Then Margaret Thatcher became Britain's Prime Minister on May 3, 1979. This grocer's daughter broke the monopoly power of labor union bosses and began selling off costly, inefficient government enterprises. She privatized 350,000 residential units in government housing. The first public offering of shares in a government enterprise: British Petroleum (a 5% stake), in November 1979.

The 1984 British Telecom offering put privatization on the map. Daniel Yergin and Joseph Stanislaw, in their book The Commanding Heights (1998), noted that "Relatively few people actually paid attention to the oil and gas privatizations; almost everybody knew that something dramatic was going to happen to the phones. The telephone system, part of the post office until separated...embodied many of the worst traits of state-owned companies. Bureaucratic state control repressed innovation. The customer did not count. It took months to get a new telephone. There were only two choices – the design offered or nothing. The only way to get a phone fixed in any reasonable time was to pay a repairman, who freelanced after hours, under the table."

Thatcher wanted as many people as possible to become shareholders. Shares were offered through post offices. Purchases were tied to phone bills. People could pay on the installment plan. There were applications for four times more stock than was available. More than 2 million people bought stock, half of whom were investors for the first time. The offering raised L3.9 billion, the biggest equity offering of any kind, for 51% of the enterprise. This was seven times more than was raised by the next-biggest privatization. Yet it was later topped by the privatization offers for British Gas (1986) and British Petroleum (1987).

Following Thatcher's lead, more than a hundred countries have sold more than $500 billion of government enterprises. This cut government losses and gave private individuals incentives to improve the enterprises. Most of them expanded, served customers better and created millions of productive jobs. Large numbers of people became shareholders, which would make it politically unpopular for a government to again try nationalizing the enterprises.

The first woman to be Britain’s Prime Minister, she served longer than any other 20th century British Prime Minister, 11 and a half years, and she won three consecutive terms which nobody else had done before.

While Thatcher wasn’t the first to privatize government enterprises, she made privatization a battle cry. She wanted as many people as possible to become stockholders and thereby have a greater stake in defending a free society.

Thatcher explained that her aim was "to change Britain from a dependent to a self-reliant society; from a give-it-to-me to a do-it-yourself nation; a get-up-and-go instead of a sit-back-and-wait Britain…A man’s right to work as he will, to spend what he earns, to own property, to have the state as servant and not as master; these are the British inheritance…What I am desperately trying to do is create one nation with everyone being a man of property or having opportunity to be a man of property…That is what capitalism is: a system that brings wealth to the many, not just to the few."

Thatcher turned privatization into a big, sophisticated program. Her people pioneered a wide range of privatization methods. Thatcher’s experience proved that obstacles could be overcome, and privatization would help millions.

Privatizations have become so widely accepted that it’s hard to imagine now what a radical idea they were. Sell off the state? It seemed like an unthinkable, impractical, preposterous pipedream.

"If any economic policy could lay claim to popularity, it would certainly be privatization," observed Harvey B. Feigenbaum and Jeffrey R. Henig in the Journal of International Affairs.

See:

Peter Jenkins, Mrs. Thatcher's Revolution: The Ending of the Socialist Era (Cambridge: Harvard University Press, 1988).

"Privatization" in Jim Powell, The Triumph of Liberty
(New York: Free Press, 2000).

See:

Eleanor Griffith, In Her Own Right: The Life of Elizabeth Cady Stanton (New York: Oxford University Press, 1984).

"Steadfast Devotion" in Jim Powell, The Triumph of Liberty (New York: Free Press, 2000).

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