The Reagan-Thatcher Revolution
May 4, 1998
Government leaders around the world have largely begun to realize the private sector and free economies -- pushed in the 1980s by Ronald Reagan and Margaret Thatcher -- result in reasonable tax revenues compared to state control and ownership of businesses.
- Former Mexican finance minister Jesus Silva Herzog relates that among the 1,100 state-owned firms sold off starting in the 1980s, there was even a nightclub -- "probably the only nightclub in the world losing money," he wryly comments.
- Former Indian government planner G.V. Ramakrishna -- now in charge of privatization -- admits that between the fall of the Berlin Wall and the collapse of Soviet Communism he felt as though he were "awakening from a 35-year dream," and everything he had "believed about economic systems and had tried to implement was wrong."
- While India embarked on a socialist path in the 1960s, countries like South Korea and Taiwan were leaning toward capitalism -- with the result that the latter realized per capita incomes 10 to 15 times that of India by the 1990s.
Experts assert globalization of trade has played a large part in uncovering the inferior performance of statist economies -- with international trade increasing 5.3 percent on average per year between 1989 and 1997. Foreign direct investments have risen even swifter -- at an 11.5 percent rate.
While there were only some half-dozen foreign stock markets deemed suitable for U.S. pension fund investment 30 years ago, today there are nearly 90 credible stock markets worldwide.
Because of these factors, instantaneous global communications and stunning daily advances in high technology, analysts say laggard countries cannot long delay coming into the capitalist fold.
It may have come about eventually, they conjecture, but Ronald Reagan and Margaret Thatcher rushed it along.
Source: Daniel Yergin and Joseph Stanislaw (both of Cambridge Energy Research Associates), "The Real Revolution," Forbes, May 4, 1998.
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