What if government shutdowns continue over federal spending and America’s creditworthiness deteriorates over the next few years? Or, with federal debt near $17 trillion and rising, the U.S. should default? History teaches us what life would be like.
America would resemble Britain in the 1970s, when unions and other socialist and communist militants resorted to government shutdowns and strikes if they did not receive more taxpayer money every year. British politicians would give in until the money ran out. Shutdowns would often turn violent with the British public denied everything from healthcare to heat and electricity. The government would then borrow or print more money until debt and inflation reached unsustainable levels. In 1976, the country almost went bankrupt and was bailed out by the International Monetary Fund. The situation appeared hopeless, as Britain was labeled the sick man of Europe.
British Conservatives debated and fought over how to respond, like American conservatives are doing today. Fortunately in February 1975 something unexpected and momentous happened. Margaret Thatcher was elected Conservative Party leader. She had defied the odds. Even her own husband told her she could not win the contest. Yet after a period of indecisiveness and humiliation under Prime Minister Edward Heath from 1970 to 1974, Conservatives were ready for a decisive and courageous leader.
Thatcher wrote on the eve of the leadership contest, “My kind of Tory party would make no secret of its belief in individual freedom and individual prosperity, in the maintenance of law and order, in the wide distribution of private property, in rewards for energy, skill and thrift, in diversity of choice, in the preservation of local rights in local communities.” Conservative renewal occurred in the middle of economic and electoral disaster, and the party rediscovered principles that would make Britain great again.
Thatcher won in large measure because other Conservative leaders were out of touch with the British people. So enamored were they of big government that they ignored the aspirations of working people, who were rejecting socialism. As she wrote regarding the 1974 election defeats under Heath “… one of the reasons for our electoral failure is that people believe too many Conservatives have become socialists already.” For many American conservatives, this could also be said of some Republican leaders in Washington, D.C.
Thatcher showed from 1975 to 1990 that if conservatives stick to their principles in good and bad times, they will triumph in the end. She never lost a general election as leader of the Conservative Party. By 1990, the Iron Lady had restored British greatness through conviction and conservative leadership. The bad days of the 1970s were gone forever. The unions were tamed, the economy was growing, and government shutdowns were drastically reduced by taking a big ax to government itself. In the 1970s, politicians and pundits said it could not be done. Thatcher proved them wrong. For an American like me who lived in Britain, the changes were miraculous. If the British people, far more dependent on government in 1979 than Americans will ever be, could send Margaret Thatcher to 10 Downing Street with a conservative agenda, then American conservatives today should not despair.