Lessons from the Thatcher/Reagan years – an Alternative inflation report

The new coalition government have inherited the highest inflation rate in the G7. Higher even than China. And as they consider any sort of increase in VAT to pay off national debt they need to think about how they keep their finger on the national pulse as the country faces these challenges to their living standards.

Immediately on coming to power, Margaret Thatcher’s chancellor raised VAT, much against her initial reluctance. And this was the start of a process that lead to the popular perception that living standards had been badly hit under Margaret Thatcher. And for no lasting gain.

This chart shows the official story of living standards in the UK. We are supposed to be about twice as prosperous as we were in the 1970s.

The hard times under Thatcher and Major are merely slight setbacks that we quickly recovered from. But if people really bought that story, why did the Tories, even with the mess that Gordon Brown made of our economy, face such reluctance to allow them an overall majority in 2010? Birmingham and the West Midlands are a striking example of this reluctance.

Contrast this blight on the Tories to what happened in the US under Ronald Reagan whose heirs have never been blighted by Reaganism. Two George Bushes stand as evidence of this.

This chart shows that Reagan’s legacy was because living standards in the US were hit more under Nixon and Carter, and actually stabilised under Reagan. This chart and this outcome were in large part because they had good quality inflation and prosperity indicators.

When Reagan came to power, the US had long had monthly inflation figures for most big cities and even had regional indices. However, in the first years of Reagan they improved their inflation indices by revising the way housing was measured. This allowed them to apply counter-inflationary policies while having their finger on the pulse of the people’s economic life.

On behalf of LWM I am currently pressing the UK Statistics Authority to look at what can be learned from the system of US inflation indices.

History often seems to repeat itself, first time as tragedy, second time as farce. A government presiding over austerity that looses track of prices as they are felt across the country, would be a farce none of us would want to see. The coalition needs to allow the best inflation indices to be put in place and allow it the priority it deserves.

Andrew Lydon

Regional Prosperity & Inflation Project


Who's afraid of democracy? – from Avaaz

If like me you’re sick of hung parliament scaremongering, you may like the following from Avaaz…


With the election contest hotting up, there is now a real chance that no one party will get an overall majority in Parliament. Polling suggests that given the choices, most of the public would prefer this outcome.

But scaremongering by the tabloid media and the City about a “hung parliament” has whipped up fear and doubt, threatening to tip voters’ minds and drag the country down.

The first step is to get the facts, and to share them with all our friends and family. WE are the media now — if each of us sends this message on to just two people we could reach over a million voters this week (more than most newspapers!)

This email is based on ideas, facts and references contributed by thousands of us across the UK. Let’s all forward this email to ten friends right now so everyone can make up their own minds!

SCARE #1: The markets would crash, wrecking our economy, if no one party won an overall majority in these elections.

THE FACTS: The markets seem to be neutral (maybe even positive!) about the possibility of a balanced election outcome in which parties would work together. A hung parliament “could help rather than hinder the UK” according to Moody’s, the rating agency for government debt. Currency markets “are getting comfortable” with the prospect, say investment banks.1

SCARE #2: A hung parliament means no decision — it will collapse within months, leading to new elections.

THE FACTS: The negative term “hung parliament” was only coined in the 1970s. It gives the false impression that, like a hung jury, no overall majority means failure and having to start all over again. But parliaments are not juries. If voters elect a balanced parliament, that’s our decision: parties can work together sensibly in coalition, and most say they’re ready to.2

SCARE #3: Britain has no tradition of parties working together successfully in coalitions. There will be bickering and chaos unless one party runs the country on its own.

THE FACTS: Parliaments with coalitions or no overall majority were the norm in UK politics before 1945, and recently the trend is away from single-party dominance. Since it was established, the Scottish Parliament has had good experience of stable coalition and minority governments, as have dozens of other mature democracies in Europe and round the world.2

SCARE #4: A hung parliament will mean that nothing changes and we are stuck with the same old politics.

THE FACTS: A balanced parliament could be more likely to deliver serious change and substantial long-term reforms to our political system, instead of just shuffling the deckchairs!3

With many people unexcited by the two main parties, 53% preferred a hung parliament. The options for single-party government each receive the support of much less of the electorate.4

Awareness has grown that a hung parliament could be a great Reform Parliament, taking better decisions on the challenges we face. But the campaign of fear is making many of us waver and question ourselves. Who’s afraid of democracy? It’s time to stop the scaremongering and make up our own minds.

WE decide the outcome of our elections, so let’s share the facts with everyone in the UK — forward this email far and wide right now!

With hope,

Paul, Alice, Iain, Ricken and the whole Avaaz team


1. The markets won’t crash
Financial Times: http://www.ft.com/cms/s/0/93eeac2c-4e16-11df-b437-00144feab49a.html

2. A hung parliament needn’t collapse, and coalitions work fine:

3. A balanced parliament would be more likely to lead to big reforms to shake up the system: http://www.electoral-reform.org.uk/news.php?ex=0&nid=463

4. The public prefer a hung parliament to either of the two main parties gaining an overall majority: http://www.timesonline.co.uk/tol/news/politics/article7100966.ece