Margaret Thatcher's Grim Legacy: A Lesson for the U.S.

As the Bush Administration goes about trying to privatize everything for the sole benefit of his political cronies vs. the American public--an essentially un-American notion when you look at our democratic history--people should be wary. Margaret Thatcher was, like Bush, an ideological capitalist who believed (yes, it's like religion) that unfettered private enterprise would cure all of England's ills. So what did she do but privatize England's social security system, with disastrous consequences.

This Washington Post article is instructive:

A conservative political leader, basking in a second-term electoral victory, announces a plan to rescue the state-funded retirement system from a looming deficit crisis. One of the leader's keystone proposals: allow participants in the system to divert a sizeable chunk of their contributions to private savings accounts where they can get a better return than in the government system.

Sound familiar? What President Bush is proposing for the United States closely echoes the privatization plan that then-prime minister Margaret Thatcher -- an apostle of rolling back the modern welfare state -- implemented in Britain in the late 1980s. Millions of Britons flocked to Thatcher's plan, egged on by government subsidies, by hard-selling private investment funds and by state-sponsored advertisements showing a pair of hands breaking free from the chains of government regulation.

But for many investors Thatcher's plan has fallen flat. Many investment funds charged huge commissions and fees, leaving contributors worse off than they would have been in the state system. The stock market collapse . . . compounded their losses. Meanwhile, many private pension plans have gone bust, after companies drained those plans to pay off rising debts.

. . .

The Labor government in recent years has sought to help out the poorest retirees by offering means-tested benefits to bring them above the poverty line. But critics complain such programs penalize those with personal savings and add another level of complexity to an already confusing system.

Experts say the British experience should serve as a cautionary tale for Americans. . . .