Remembering 1970s Britain

Remembering 1970s Britain: a personal perspective

With the passing away of one of the best known prime minsters of Britain, Margaret Thatcher, a few days ago, I was struck with confusion, bewilderment, acknowledgment and deep thought after watching a Channel 4 TV documentary: Margaret: Death Of A Revolutionary that showed how the former prime minister had transformed the economic problems of 1970s Britain to the economic miracle recovery of 1980s Britain. The decade 1980 to 1989 reversed all the problems for the decade 1970 to 1979.

I was a young boy at the start of the 1970s, living in London with my parent and sisters. I did not know that things were that bad in the 1970s London, or Britain as a whole, but I do remember my family using many candles at night, as we had too many power cuts in London, I do remember my dad not working a full week, he only seemed to work 3 days each week, I also do remember being told our yummy free milk was being suspended by the education secretary. However I remember fun things and magic moments like trying to make sense of the new decimal pound and pence, the gigantic crowds at Leicester square to watch Star Wars in the cinema; colour BBC TV programmes, the Queen's Silver Jubilee with several street parties all over London; the very colossal cheers and clapping when the opening ski jump stunt in the film “The Spy Who Loved me” 007 film was shown at Odeon; my new red Chopper bike; singing the Coca Cola advert song “I'd Like to Teach the World to Sing” at school too often; arguing with my best mate after getting beaten to many times with Rubik's Cube, watching Concorde land at Heathrow, playful fighting over who had rights to the Space hopper with my sisters; and so on and so forth.

Yes there were some great …. and dire moments in the 1970s to remember.

However what struck me as odd was why the BBC a year ago today (April 16^th 2012) asked why does the 1970s get painted as such a bad decade?

Ok I did mention some dire times above like the 3-day week, but the BBC said, of all the decades in the post-war period, the 1970s was the worst! In others words, the 1970s was the ugly duckling decade of all other decades. The era of militant trade unions and public sector strikes etc.

The Channel 4 programme mentioned a major fact that after war, both Labour and the Conservative party governments set about taking over many industries as a major step towards recovery, known by politicians as the Post-War Consensus. It was influenced by Keynesian policies of the economist John Maynard Keynes. The Post-War Consensus among other things called for a mixed economy, with a large role for state ownership of the utilities (such as gas, electricity, coal, trains, etc) and intervention and planning in the economy. Very soon gas, electricity, mines, airports, airlines, telephone, buses, etc, you name it; all had been nationalized by the start of the 1970s with Ted Heath, who took over from Harold Wilson and the swinging 1960s.

Channel 4 programme goes on to note that during the 1970s, the effects of the Post-War Consensus did not create recovery fast enough and soon Britain fell into to stagnation, leading to 30% inflation and high unemployment by the mid 1970s, Jim Callaghan asking for an IMF loan and the unforgettable Winter of Discontent in 1979. Margaret Thatcher from 1980 reversed all that, nationalization polices were thrown out the window for good. Today British Gas, British Aerospace, British Telecom or BT, British Airways etc, are now all doing well as privatised entities listed on the stock market and the economy is in much better shape compared to the 1970s.

By the end of the 1980s, Wikipedia points out that British net assets abroad rose approximately nine fold from £12 billion at the end of 1979 to nearly £110 billion at the end of 1986, a record post-war level and second only to Japan. Privatisation of nationalized industries increased share ownership in Britain: the proportion of the adult population owning shares went up from 7% in 1979 to 25% in 1989.

I am no economist, just a humble librarian and writer, but yes that is the main point: in a nutshell, nationalized 1970s Britain was a mistake and privatisation and deregulation clean sweep of the 1980s was the way forward. Keynesian economic policies abandoned for good. Incoming were the policies of other economists like Friedrich Hayek and Milton Friedman among others, advocating monetarism, privatization and deregulation, known also Thatcherism. The policies did lead to bitter pills having to be swallowed, but in the end, the price was worth paying for.

But is that the full picture? The Channel 4 programme simply forgot to mention another far more important point, which came to my mind.

The other main point that I think contributed to the dire 1970s apart from nationalization was not entirely Britain’s fault: It was a problem that began thousands of miles away in the Middle East.

Today, the price of oil is an acceptable $103 per barrel (Brent Crude version). There are no nightmare scenarios: no one is panicking; the United Nations has not called an emergency session to talk about the price of oil. OPEC is not under severe pressure. No one is hoarding drum-loads of petrol in secret storages, and at the petrol stations there are no big queues for petrol or diesel.

Now just imagine for once, if the price of oil today went from $103 per barrel to over $400 per barrel or more than quadrupled in price . All possible worst nightmare scenarios will begin faster than you can blink.

In 1973-1974, the above worst nightmare scenarios did happen. The price of oil did quadruple. And everyone worldwide DID panic, big time really. The massive oil price hike was ordered by OPEC Arab members as retribution. They were angry at certain world powers taking sides during the Yom Kippur War.

With Britain joining the Europe Union or the EEC as it was known back then in 1973, and the EU one of a number of trade blocs, the world economy by the 1970s was very global. So fiscal decisions made in the Middle East could affect countries in another continent very fast, and the 1973/74 oil crisis were very damaging to the world economy on a worldwide scale. It led to a worldwide recession. More than anything else, it was a major external contributing factor to the 1970s being a dire decade, we now hope is a painful distant memory.

The world has moved on since the 1970s, it is highly unlikely BUT not impossible, that a very huge oil price hike will one day happen again. But the massive 2008 economic crises, this time not caused by oil or OPEC, but rather by greedy bankers, showed that certain groups of people in the world or numbskulls in the “powers that be” category, are not done yet causing mayhem, mischief and other problems for everyone else but themselves, but lessons have been learnt. One economic decision the 2008 crises created universally, was the decison of several of the big G8 / OECD countries like the U.S., Germany, the U.K., the Netherlands and Japan. to carry out needy fiscal stimulus, i.e. stimulus package anouncements, and then print more money / inject more money into the economy a.k.a quantitative easing. All clearly economic policies previously advocated by John Maynard Keynes.

In other words, in 2008 there was worldwide interest in the return of some key elements of Keynesian economics. It was not a full return to Keynesian economics however, just an admission that even free Capitalism or liberal economics policies can sometimes get out of control, as illustrated by the abusive use of short selling of shares in which traders practically ruined share values of several companies by betting heavily against its shares. This prompted the U.S. Securities and Exchange Commission or SEC to step in and protect the shares of companies that were deemed just too big to fail, by issuing bans on short sales of 799 selected financial shares in September 2008. Indeed when free Capitalism does get out of control and cowboy rules and reckless colossal betting infiltrate financial markets leading to rogue traders running amok as happened in 2008/2009, then speedy government intervention is required to keep checks and balances.
New York Times, September 2008.

Hopefully the world can, as Jimmy Nash once said, see clearly now, all the obstacles in the way and work towards more prosperity, happiness and progress for everyone.

Hopefully!

Godfrey Oswald

April 16^th 2013

London.

Something to read during your tea break:

Britain and the 1970s through the eyes of the Auntie BBC

http://www.bbc.co.uk/programmes/b01glsyl

http://news.bbc.co.uk/1/hi/magazine/decades/1970s/default.stm

http://www.bbc.co.uk/cult/ilove/years/70sindex.shtml

e-mail: infolibrary@yahoo.co.uk