Speeches, etc.

Margaret Thatcher

Speech to Citibank in Bangkok

Document type: Speeches, interviews, etc.
Venue: Bangkok
Source: Thatcher Archive
Editorial comments:
Importance ranking: Major
Word count: 5008
Themes: Executive, Monarchy, Conservatism, Economic policy - theory and process, Elections & electoral system, Privatized & state industries, Trade, European Union (general), Foreign policy (Asia), Foreign policy (Central & Eastern Europe), Foreign policy (International organizations), Foreign policy (USA), Foreign policy (USSR & successor states), Law & order

Introduction

It is a great pleasure to be visiting Thailand once again. When I first came in 1988 it was a time of great trouble and uncertainty for your region here the Cold War was not so cold. The fighting in neighbouring Cambodia was still raging as fiercely as ever and there seemed no end to the stream of refugees who were pouring across your borders. I remember on that occasion travelling to the United Nations Refugee Camp on the border to see with Prince Sihanouk the provision made for those who had fled their homes to seek safety in Thailand and to hear of their experiences and their hopes. The camp was the best organised I have ever seen and the devotion of the people to their Prince and his family was very touching. The world has come to be grateful to Thailand for the protection your Government and people offered to those who fled for their lives. That same generosity and warmth are evident to all who visit Thailand, particularly those whose first experience of your country is the thriving, bustling city of Bangkok.

Bangkok was founded some two hundred years ago but inherited the traditions of your ancient city of Ayutthaya. As I discovered on my last visit your capital with its palaces and temples is a cultural treasure of great beauty and significance — one which the world should know and see. I was therefore not surprised to see that tourism is becoming a large part of your economy. People travel the world not only to enjoy themselves but to learn about other civilisations and the lessons they can teach us. And those lessons have never been so important as now — as we approach the new century.

Our forefathers began this century full of hope and yet it has seen the two worst wars and the two worst tyrannies in our history. If our childrens' century is to be a better one than our own then we must work toward the goals of free people, free enterprise and free trade in a free world. If we meet these goals then we will leave a good inheritance for future generations, if we fail then our legacy to our children will be a bitter one indeed.

Monarchy — A Valued Institution

Britain and Thailand are fortunate to have Monarchs whose dedication and sense of duty are an example and reflect all that is best in our countries.

In a democracy where political leaders come and go and with them the philosophies that they promote, the Monarch is a rock of stability. He symbolises the country, its spirit and its traditions and his wise counsel draws on a long experience of national and international affairs which few politicians can match.

It should come as no surprise that it is the Monarch who is often the staunchest defender of democracy. Your own King, like the King of Spain, in recent years, had to take firm and courageous action to protect democracy. Thailand is indeed strengthened by its monarchy.

Another similarity between our two countries is that we both have bi-cameral Parliaments with an elected lower chamber and an appointed upper chamber.

Having served in both chambers I can attest to the wisdom of that approach. However, I have to confess that I would find it difficult to chair the proceedings of a forty nine member Cabinet — personally I found that twenty two were quite enough!

Perhaps I was doubly fortunate that when I was in Government my party never had an overall majority of less than 45 and for most of the time of over one hundred, which allowed me to substitute an enterprise economy for the failed promises of socialism.

I cannot presume to advise you on the management of a coalition government — I never had to deal with one!

Characteristics of Democracy

Every country has to adapt its institutions to suit its tradition and culture. But whatever the country, or the continent, democratic freedom in its fullness has to satisfy three broad conditions.

First, government will be through the consent of the majority expressed in free elections which must take place within a specified period. And for a true democracy there must always be a party or a combination of parties in opposition which, if the electorate so decides, can replace the government of the day.

Second, freedom requires a fair and just law which applies to everybody — rich and poor, citizens, politicians and government alike. It must uphold fundamental human rights. It must set a framework within which enterprise can operate. And it must be enforceable by an impartial and independent judiciary.

Third, there has to be a free economy based on free enterprise and private property, in which state ownership, intervention and controls are minimised.

Democracy and Capitalism

But some may ask is it right to describe free enterprise as essential to democracy? Yes it is. And consideration of what free enterprise capitalism truly is and of the political changes it brings with it will prove the point.

Free enterprise works because, like democracy, it gives real power to the people.

In even the most active form of political democracy, individuals are only asked to cast their votes on the performance of politicians after a period of years nationally, or once or twice a year locally. Yet in the market place men and women are making their economic choices every minute of every day through the goods they buy.

Free enterprise capitalism is economic democracy. It limits the power of government by maximising the power of the people. It removes industry and management from the hands of the state by selling off companies and businesses to those who will buy them, mostly through the stock market. Free enterprise capitalism is a necessary — though not a sufficient — condition for political democracy itself.

Once you permit personal choice to rule through the market, it will in time extend to the ballot box too.

That has been the pattern from Latin America to South Korea. In Russia, political democracy came first, economic democracy is now following.

Free enterprise and democracy go together. You cannot long enjoy the benefits of one without tasting the fruits of the other and you cannot attack the one without endangering the other.

Democracy and Capitalism Work

All this may seem very obvious to us today but the history of our world ought to remove any trace of complacency. Only in quite recent times have we come to expect that our living conditions will steadily improve. For many centuries in the west and for far longer in the east even the idea, let alone the reality, of progress was simply not contemplated.

Of course, over the centuries the civilisations of the world have generated great art, music and literature. But for centuries its scientific knowledge and scholarship was not fully applied. For example China discovered the compass, gunpowder and the turbine. They knew how to use matches, and how to drill for natural gas. But all of these inventions had no widespread effects in China itself and with time some of them were lost.

It was not until about 250 years ago that modern civilisation (born in Europe and of which your country and mine are part) really harnessed science, technology and free enterprise to work for the benefit of ordinary people and created unprecedented economic growth.

The secret of our success can be summed up in just one word — enterprise.

The states and empires of bygone eras did not lack natural resources or knowledge.

They lacked the capacity to put them to good use.

The successful economies of the world today are not only those distinguished by possession of great mineral wealth — if that were so nations like Russia and Brazil would be rich and others like Japan, Singapore and Switzerland would be poor. Natural resources lie un-used unless and until the inspiration of human beings can see their value and work out how to bring them into profitable use.

Here in the Asia Pacific region states, some with few resources, are achieving rates of growth which no-one else can match.

This creative capacity which man has should be respected, encouraged and used.

“In short, besides the earth, man's principal resource is man himself. His intelligence enables him to discover the earth's productive potential and the many different ways in which human needs can be satisfied.”

Those are not my words but the words of Pope John Paul IIHis Holiness the Pope in his encyclical, Centesimus Annus.

But what really makes a civilised society are the values by which we live: for values not only inspire policies, they inspire people.

Most people have a desire to attach themselves to good causes and to feel that life is a little better because of their own efforts. Our feelings do not stop there, they reach across the oceans and the continents to those in other lands.

We share the essential unity of human nature itself and its inherent disposition to make and act upon moral judgements.

It is only possible to govern on the basis that almost all the people will be law-abiding and will use their talents wisely. As we look ahead some acute difficulties face us, within our societies as well as between them.

So many of today's problems are behavioural.

The lack of respect for the rights and dignities of others manifests itself in rising crime and violence. These evils are made even worse by drugs and I want to pay particular tribute to Thailand for its tough and determined stand against drug production and trafficking. These are the great destroyers of human dignity and even of the human personality itself. They should be dealt with severely and decisively.

Privatisation — Transforming Britain

Perhaps we have been too slow to point out that capitalism is therefore not only about material things, it is about the human spirit and its creativity. In seeking to liberate people from poverty it is the business ethic in action which is the cutting edge of progress. Indeed the first social responsibility of a Government is to frame its laws in a way which maintains the wealth-creating capacity and reduces intervention.

Part of the purpose of privatisation is to shrink the power of the state and to enlarge free enterprise. Nationalised industries concentrate even greater economic power in the hands of the state. They restrict the opportunities for freedom and leave a legacy of costly inefficiency.

Free enterprise has a universal truth at its heart : To create a genuine market in the state you have to take the state out of the market.

For Britain, the 1970's was a decade of decline. We were the “sick man of Europe” and we seemed to accept it. Our nationalised industries were inefficient, overmanned and weakened by restrictive practices. Government had no business being in business.

We tackled privatisation in the way which best suited us.

First, we had to put the balance sheet in the industries we wanted to sell in good order. Where redundancies had to be made because of overmanning we were determined to ensure that those who lost their jobs would receive a capital sum related to the length of their service. For the first time in their lives this put capital into their hands and each industry helped them to find other jobs or to set up businesses of their own. This made clear our concern to look after those who were leaving the industry as well as those who were staying on.

Second, we wanted those remaining in the newly privatised industries to have a greater stake in their companies.

We reserved a block of shares for employees which they could purchase at a discount.

Third, those companies which could not be floated on the stock market we sold to companies who were willing to buy them.

Fourth, some industries were so thoroughly out-dated that they would have cost too much money to modernise. Others such as shipbuilding had lost their markets as business had moved to the Asia Pacific.

The subsidies required by our shipyards each year were equal to their entire wage bill. Clearly we could not go on that way. Some shipyards had to be closed, others were offered for “sale” . It was an unusual type of sale, people were not asked to pay anything for the land or for the facilities. They were even offered substantial capital sums — to cover redundancies and to help build a modern effective industry in the private sector. This recipe worked. Shipbuilding was not the only industry helped in this way.

In Britain we faced many opponents, particularly when we came to privatise the public utilities, but the facts show that they too are much more efficient and modern in private hands.

Our first privatisation was British Telecommunications, an excellent decision. From that time onwards the investment to build the most modern global networks necessary for today's industries was forthcoming from the private sector. To ensure effective competition to BT we gave the then new Mercury network 7 years in which to build up its own alternative services. It was only then that we sanctioned further licensing.

We were successful in re-building an enterprise society and we showed that privatisation worked. It is better for the consumer, better for the taxpayer and better for the health of an industrial and commercial country. Many others have followed our example.

Indeed as The Economist put it recently:

“Nationalisation, once all the rage, is out; privatisation is in. And the followers of the new fashion are of the left, the right and all hues in between.”

Other countries particularly the ex-Communist ones have used different methods. They had to move to privatisation much more quickly to make clear that a free society meant a genuine transfer of ownership to the people.

I admire Vaclav Klaus, Prime Minister of the Czech Republic who secured mass privatisation by issuing vouchers for people to buy share certificates in companies of their choice as they were privatised. President Yeltsin is following a similar pattern in Russia although he met with opposition from Parliament. He also gave some preferential rights to managers and employees working in the businesses.

Privatisation and the Global Perspective

The sheer scale of global privatisation is still not widely appreciated. The countries of Latin America were the first to follow — Chile, Mexico, Argentina and now Brazil. In Europe, France and Italy are making the biggest privatisations in the next 2 years. In Asia, Japan and Malaysia have already raised considerable sums through privatisation.

Some $400 billion of major sales have taken place or are in progress and the total number of employees transfered from the state to the private sector is probably equal to the population of a medium-sized country such as Thailand.

A classic example of the scale of privatisation is telecommunications. About 25 telecommunications companies are currently being privatised or considered for privatisation around the world. In Mexico, Venezuela, Argentina — and now Hungary —telecommunication privatisations have been, or are being, conducted at about three times the speed of BT, despite far more difficult circumstances;

The most important, lasting lessons that have emerged are not about privatisation itself, but about the relation between privatisation and the creation of orderly, competitive markets.

One of the worst myths ever created by cynics is that privatisation of utilities merely involves a shift from public monopoly to private monopoly; history now proves this false. In every known case where a utility has been privatised involving an element of monopoly a transparent regulation regime has been established to limit price increases. As a result, the conflict of interest under nationalisation between government as shareholder and government as regulator has been abolished. The regulator now regulates on behalf of the customer — private shareholders put on the pressure for profit — and management have to satisfy both by cutting costs.

The Nature of a Regulated Market

Thatcherism has never been about crude ‘laissez faire’. It has been about creating a framework within which individuals and firms can compete on fair terms, to the benefit of the customer and the nation.

Superficial commentators describe an economy as either “central planning” or “free for all, and all power to the strong” .

They miss the main point — freedom can only work within a framework of law which protects the weak against the strong, so that:

— small businesses get a chance to enter the market if they can offer a better deal to the customer;

— large businesses are not allowed to build monopolies and then exact a monopoly rent;

— the customer and the shareholder get transparent information, so they can make genuine, properly informed choices; and

— the government sets the rules of the market to achieve this basis for fair play, without trying to plan all the outcome: in other words, government intervenes to create a market, not to distort the market.

Looked at in the political context of the history of the last century, and the early days of this century, extending the franchise to every adult was the great step forward in extending personal liberty.

Looked at economically I saw it as part of my purpose in this Century to have a policy which extended ownership of capital more widely. It is most people's ambition to have something to pass on to their children. In doing so, it links the generations and gives us a deep and abiding interest in the future.

South East Asia

I am well aware that when it comes to dynamic economies the peoples of the Asia-Pacific are out-stripping much of the rest of the world.

1. Thailand's growth rate is over 7 per cent, in spite of the world recession and you have the second largest economy in ASEAN.

2. By the end of this decade trade within the Asia/Pacific area is expected to exceed trade within Europe.

3. Across Asia, output per person is doubling every ten years;

4. Savings rates are running out over 30 per cent of GDP.

5. Asian banks hold over one third of the world's foreign currency reserves;

6. Between now and the end of the century the number of people in the crucial 20-39 year old age group will decline in the United States. It will decline in Japan. It will decline in Europe. But in the Pacific Rim countries it will increase by some 80 million, representing a huge advance in buying power and the capacity to produce more goods and services.

Clearly the Asia-Pacific region will be the world's economic centre of gravity.

Trade Policy and GATT

Thailand is a leading proponent of free trade and an important ally in the struggle to conclude the Uraguay Round. Rightly your example challenges the European world to be not only less regulated but less protected in trade. Protected industries soon become inefficient. The presence of Japanese car factories in America and Britain has done wonders to improve our own car and component industries. It is no accident that the new wave of prosperity has come in much more from the South East Asian economies which are opening their doors than from the wealthy Western economies which are tending to close theirs. While sixty developing countries have reduced their trade barriers in recent years, twenty of the twenty four developed nations have increased theirs.

We have been discussing the present Uruguay Trade round for a longer time than it took to reach decisions on the previous Tokyo Trade round. It is time it was completed and agriculture and services included within its jurisdiction. If a small group of European countries continue to be obstructive because of agricultural subsidies they must just be left behind.

It is ironic that the Common Market of Europe was meant to be an example to other nations to get trade barriers down. In fact it is putting quotas and anti-dumping orders on East European countries whose only hope is to earn a better living through trade.

I hope that China and Taiwan will join the GATT during this round. (Hong Kong is already a member.) Taiwan should be admitted by virtue of her outstanding performance and financial significance in the world community, China because of the path of economic reform chosen by Deng Xiaoping allowing markets to work in even more sectors of the Chinese economy.

There is a growing tendency towards the creation of regional trading blocs. There is nothing wrong with countries bilaterally or in groups agreeing to remove obstacles to trade and investment — as long as this is not at the expense of the GATT. What I strongly oppose is the kind of regionalism which leads to regional blocs of countries competing politically and economically, outside the proper global framework of priciples and rules, in a manner which both discriminates against weaker less developed countries and which results in general economic impoverishment.

Avoidance of that dismal prospect depends heavily on getting the international political framework right.

If there is widespread cynicism about the effectiveness of international action to uphold order and fair dealing in one area it will spread to another. And the biggest challenge the international community now faces — and will face for many years to come — is the need to reintegrate the former communist countries peacefully and successfully into the system of freedom from which Marxist revolution abruptly shut them off.

China and Russia

Russia

The two main exponents of Communism, the former Soviet Union and China, have chosen different routes out of their Marxist and Maoist period. Former President Gorbachev began by giving personal and political liberty including more freedom to travel and leave the USSR — an enormous change which altered the whole atmosphere from one of fear and furtiveness to a more open society. Discussion flowed freely. Television showed the proceedings of the Supreme Soviet and elections including non-Communist candidates were introduced.

Russia had known only a brief period of private enterprise some sixty or so years before Lenin seized power in 1917, but during that time her industry was growing well and attracting some foreign investment as a commercial law began to develop. Nevertheless unlike the Chinese her people were not natural traders and doubtless President Gorbachev hoped that the economic way forward, or restructuring as he called it, would become more apparent through discussion.

In the meantime Mr Yeltsin, a firm believer in dispersal of power, limited government and a market economy, was elected President of Russia — itself the largest country in the world. But by this time the totally centralised Communist economic system was collapsing and just at the moment when President Gorbachev was about to disperse power to the separate republics, the coup was attempted, failed, and the USSR broke into fifteen component republics all of which joined the United Nations. Contrary to what many even in the West thought at the time, that was a thoroughly welcome development. The smaller, nationally based units which have resulted have a far better chance of pushing through the economic reforms required.

Yet the problems remain huge. The world has never experienced a challenge of this kind or dimension, turning a total tyranny where all land and jobs belonged to the state into a free enterprise economy with a sound currency and a rule of law.

Our freedoms, justice and democracy grew gradually and they benefit from our experience. It is a much more difficult task to construct the necessary institutions and to change the habits and customs of a people who have been denied freedom and justice.

Russia will always matter. The Russian people are good people with very special qualities after all they have endured. What they want is an honest market, a currency and a law they can trust as well as more goods. What they have is corruption, too few goods, an inflationary currency, no independent justice, a 1978 Brezhnev constitution and a Parliament pre-dating the attempted coup. While only they can make the necessary changes, it is in our interest to respond to their needs. Consider the alarm that would go through the world if Russia and the other countries were not to make the transition to a democracy.

China

When Mr Deng was restored to power in China, he introduced some aspects of a market economy but retained centralised political power in the hands of the Communist Party and its leaders. Chinese people are born traders and, unlike Russia, have a large diaspora in the other nations of the Pacific who poured investment and management into the coastal provinces. Of course there are massive problems especially as the banking system is ill-equipped to cope with the enormous growth now occurring and Mr Zhu Rhonji is left grappling with the problems, again on a scale we have never had to deal with.

I do not believe that the clock of economic reform in China can be turned back. Nor do I believe that you can insulate economic reform from political reform. The latter will come. Decisions on an enterprising economy can hardly be made by a political class unskilled in its ways, its habits and its needs.

There has been a tendency to suggest that perhaps democracy is not for some of the countries of the Pacific. But the Chinese, Japanese, Koreans and other Asians who chose to become devoted citizens of the United States found that great country's Constitution, founded on liberty and democracy, not only to their economic benefit but to their taste politically and as a way of life. However different their own history, culture and religion, their experience demonstrated that the characteristics and dispositions which bind us all as human beings are greater than those which divide us.

In Hong Kong it is the people who want more democracy; in South Korea, Singapore, Taiwan, Malaysia, and Thailand they have been successful in securing it. Recently I was asked in Russia whether I thought a form of enlightened absolutism would be better than democracy. I replied that it would rapidly become less enlightened and more absolute!

New World Disorder

The free political and economic system on which our countries — including your own — have been built was bound to triumph in open competition with Marxism if we allowed it to do so. But our victory over Communism in the Cold War was only achieved because the United States, staunchly supported by its allies including Britain, remained strong and had the will to use its strength.

It was right that there should be a reassessment and some reduction in the West's armed forces once the threat from the Soviet Union receded and then the Soviet Empire itself crumbled. But the need to ensure that military superiority — particularly technological superiority — remains with nations (above all the United States) which can be trusted with it. We must never leave the sanction of force to those who have no scruples about its use. There is now a real danger that in one of those periods of false optimism to which democracies are prone we will cut back our defences too far.

For there is no shortage of threats to peace. We would be quite wrong to believe that the legacy of Communism is behind us and can be quietly forgotten. That is something which you in this region — so closely aware of the unanswered questions about China's future, concerned about the intentions of a dangerous regime in North Korea, and weapons proliferation, and close witnesses to the uncertain fate of Cambodia — understand better than some of us in the West.

But we Europeans have every reason be equally alert to possible dangers.

I have already mentioned the need to bring Russia to prosperity and stability. I have huge admiration for President Yeltsin as well as former President Gorbachev. But there are other powerful forces in that country anxious to exploit the question of Russian minorities living outside Russia in order to recreate, by violence if necessary, a new Soviet style empire in which the nomenklatura and the generals resume their autocratic rule.

Elsewhere in the former Soviet Union, the new democrats are on the defensive against the old communists, who are sometimes dressed up as nationalists and sometimes as practical men of affairs. Border disputes between national and ethnic minorities whose identities were fiercely suppressed under Communism are now flaring up in what seem unquenchable political bushfires. And in these areas — as of course more widely in the Middle East and Africa — the full political consequences of fundamentalist Islam have still to be seen.

And then there is the case of the former Yugoslavia, the tragic consequences of a combination of Western weakness and Serbian aggression have become so terrible that the world's conscience risks becoming numbed. Yet there are vital lessons from this conflict — which apply as much to affairs in your region as in Europe.

The first is so simple that it should barely need making: yet it must. When aggressors see that they can act against their victims with impunity they draw the conclusion that they can get away with anything. In these circumstances the extremists secure and increase their hold. And the search for new victims to satisfy greed and vainglory continues. The process spills over borders. Respect for law, international opinion and the norms of human decency are weakened. New potential tyrants and aggressors take heart and follow the example. That is not a description of the world in the 1930s. It is a description of what is happening in the very heart of Europe today. Belgrade has been allowed to prosper from aggression.

Unless this is reversed it will be a signal to would-be aggressors throughout the world that aggression pays.

The second general lesson from the tragedy of Bosnia is that international organisations cannot be relied upon in the last resort to enforce what is right. The euphoric talk, of which so much was heard just a year or two ago, of the United Nations as an effective arbiter and world policeman has been shown to be just that — and no more. Humanitarian aid cannot stop the massacres or the ethnic cleansing.

Of course, it is true that with the end of the Cold War and with a somewhat more cooperative approach by China the UN Security Council is able to work more effectively. I am also aware that the Cambodian election operation, certified as free and fair, was the largest ever conducted by the UN. But the use of force requires the engagement of strong states in a cause which their people are prepared to defend. In today's world only nations inspire such allegiance. That is why we should be strengthening not undermining nationhood — while at the same time spreading democracy and demanding the respect of human rights. The leading nations of NATO did not lack the means to stop what happened in Croatia and Bosnia, they lacked the will. But if we cut defence too far we will shortly lack the means as well.

There is no better advice than that enunciated at the end of the 18th Century.

“The condition upon which God hath given liberty to man is eternal vigilance; which condition if he break, servitude is at once the consequence of his crime.”