The Anglo-Saxon Social Model
- Thread starter Rattigan
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That's a very insulting term for Inspired State-led Entrepreneurship
Pakistan's economy being so developed now seems to have it rolling down the happy side of the hill, where it is easier to further democratise than it is to restrict it. Corruption is almost a certainty about power, but it's less prevalent in democratic states, the absolute amount of wealth embezzled only being somewhat comparable to autocratic states only because democratic states are so much richer.
That's a very insulting term for Inspired State-led Entrepreneurship
Pakistan's economy being so developed now seems to have it rolling down the happy side of the hill, where it is easier to further democratise than it is to restrict it. Corruption is almost a certainty about power, but it's less prevalent in democratic states, the absolute amount of wealth embezzled only being somewhat comparable to autocratic states only because democratic states are so much richer.
The inspiration for TTL's Pakistan was a mix of OTL UK and OTL South Korea so you're kind of both right...
I think that because I'm writing this TL in character as a slightly sardonic, critical in-universe historian I tend to overstate some of the negative side effects of the world. But make no mistake, TTL Pakistan is objectively a much better place to live than OTL Pakistan.
Thatcher Ministry (1976-1981)
When the Lights Went Out: Britain and the Commonwealth under Margaret Thatcher
![winter1[1].jpg](https://www.alternatehistory.com/forum/attachments/winter1-1-jpg.476348/ "winter1[1].jpg")
The Last Lights of Empire: striking workers in Dublin during the Winter of Discontent, 1980-81 (top); Margaret Thatcher and her entourage arrive at the second emergency bailout summit, August 1977 (bottom)
With their majority of only 25 and a record of being out of government for more than thirty years, many expected Thatcher to govern in a conciliatory and consensual manner. However, such assumptions demonstrated a severe underestimation of Thatcher’s personal radicalism as well as the extent to which her belief was that the economic problems of the 1970s were not a bug but a feature of a failing system. The first hint that she would be attempting to break with the British governing tradition of the previous century was when she appointed Keith Joseph as her Chancellor, cementing the Gladstonian wing of the party’s control over the government.
Joseph’s first budgetary event came with an autumn statement in October 1976 and it was dramatic. It included large cuts to both direct and indirect taxation, introducing cash limits on public spending on certain services such as housing while also introducing large direct cuts to social services and education. Joseph also announced that the aim of the Bank of England would be shifted such that its primary aim would be the controlling of inflation. This marked a big change for two important reasons. Firstly, the previous government-provided aim of the Bank had been the maintenance of overall macroeconomic stability rather than any one indicator of financial health. Secondly, while the Bank had remained technically the UK’s central bank, since the foundation of the MPC, it had gradually assumed more and more macroeconomic responsibility for the Commonwealth as a whole. The unilateral change of its objectives was a remarkable assertion of British power at the heart of the Commonwealth and a big potential challenge to the previous way of doing things.
Fortunately for Thatcher, general elections in member states over the course of 1975/76 had left a Commonwealth political scene more propitious for her than it would have been only two or three years later. Of the other Big Four, Pierre Trudeau had managed to cling on in the 1975 Canadian election but it came at the price of the loss of his majority. However, with Malcolm Fraser and Muhammad Khan Junejo of their respective Liberal Parties in power in Pakistan and Australia, Thatcher now had a coterie of leaders around her who saw the problems of the Commonwealth in terms of pure power politics. In an interview with the ‘Financial Times’ ahead of a Prime Ministers’ conference in October 1976, Joseph rejected calls for Puerto Rico and Newfoundland to be given more time to reign in their national debts and instead called for them to agree immediate austerity programmes to, in his words, 'get their over-spent, over-taxed houses in order.'
At the conference, the cracks in Commonwealth relations began to appear, between the Big Four (with Canada a qualified but generally willing ally) all arguing that debt-afflicted countries should swallow austerity programs to get their finances in order. On the other side was the newly-elected government of Puerto Rico: following the failures of the dominant Democratic and Conservative parties, the electors had turned to the more radical New Progressive Party lead by Ruben Barrios. The first bailout package reflected this division: agreeing to a 50% write off of Puerto Rican and Newfoundland debt held by banks and a £5,000,000,000 Commonwealth bailout fund; in return, new capital requirements were introduced for Commonwealth banks and commitments extracted from Puerto Rico and Newfoundland regarding further austerity to cut their debts.
While the package agreed in October managed to satisfy the demands of the Big Four leaders at the time, it accidentally deepend the troubles facing the Commonwealth banking industry. The imposition of new capital requirements meant that every bank was forced to raise capital at the same time. With every bank trying to add to its balance sheet, it became very difficult to raise funds and so many banks began to cut down on loans and unload lagging assets as they worked to improve their capital ratios. Furthermore, the austerity policies that Puerto Rico and Newfoundland were required to take choked off demand in their countries and only caused further economic stagnation. Taken together, these two phenomena plunged the Commonwealth economy back into recession in the first two quarters of 1977.
A marathon emergency conference in August 1977 resulted in the Commonwealth agreeing the conditions for a second bailout. Once more, it was agreed that Puerto Rican and Newfoundland debt would take a further, nominal, haircut and a second bailout package, worth £14,000,000,000, was agreed. In theory this would bring Puerto Rico’s and Newfoundland’s debt down to under 100% of GDP by 1985. However, Puerto Rican demands for a more serious writing down of debt were rejected by the Big Four, mainly because they did not want to jeopardise the position of their banks, who held much of the national debt in question.
The new measures had a certain effect, drawing some countries out of recession (notably the Big Four) but leaving others further myred in it (notably Puerto Rico). The most overt expression of this ‘two-track Commonwealth’ was the increasing divergence in bond yield spreads between countries. By the end of 1977, the UK had not only climbed out of recession but was estimated to have made more than £1,000,000,000 out of the crisis as investors flocked to safer British government bonds. By July 1978 Canada, Australia and the Bahamas were also benefiting from zero or even negative interest rates. On short-term bonds (i.e. those with a maturity of less than a year), Pakistan and Ceylon were also amongst the beneficiaries.
The contrast with the two crisis countries was stark. Puerto Rico was particularly badly hit, its debt crisis exacerbated by a state infrastructure (particularly as regards tax-raising) that was weak and had been left to decay by successive governments, along with a spending policy that had relied on borrowed funds to cover up for tax raising failures (in this sense Joseph's comment about the country being over-taxed was not only harsh but flatly incorrect). Barrios’ New Progressive Party had come to power on the promise not only of a fairer management of the crisis but also a radical transformation of the Puerto Rican economy. But it looked as if his government had been, in effect, screwed over by the pure power politics of the Big Four. Over 1977, Puerto Rican GDP decreased by 8%, corporate bankruptcies increased by 27%, Puerto Rican purchasing power fell by 40% and unemployment hit 8% (with youth unemployment standing at 60% in January 1978). Newfoundland suffered, if anything, worse, even as its more compliant government was regarded by the Big Four as a ‘good debtor.’ GDP contracted by 7% in 1977 and unemployment rose to 15%.
With his government increasingly convinced of the impossibility of enacting the austerity agenda imposed by the Big Four, Barrios moved his government to more radical acts. When a June 1978 conference again produced only agreement on a further bailout without a meaningful haircut, Barrios called a national referendum on its terms, with he and the majority of his party campaigning for it to be rejected. When it was put to him in an interview that this would in practice mean that Puerto Rico would have to leave the sterling zone (and, effectively, the Commonwealth too) Barrios commented that this was a risk he was prepared to take in order to save his country. The referendum returned a decisive (61-39) result in favour of rejecting the terms of the bailout. In May 1979, Barrios' government formally delivered notice to the Commonwealth Assembly that he intended for Puerto Rico to leave the organisation in three years, furthering a sense of general decay.
This move immediately plunged the Commonwealth further into crisis, with currency speculators attacking the pound and lending facilities further drying up. This spread the crisis back to the Big Four and the UK returned to recession in the final two quarters of 1978. The size of the bailouts, historically unprecedented and now looking like they had been useless, also contributed to a spike in inflation, which peaked at 22% in 1979. The stage was set for a dramatic showdown between the Big Four, on the one hand, and the Bank of England on the other. In May 1979 a secret agreement between Joseph and John Howard (the Australian finance minister) allowed Britain and Australia to unilaterally seize control of interest rates and begin an aggressive attack on inflation heedless of the consequences for unemployment. As discussed above, the unusual legal structure of the Bank of England and the consensual way in which it had been managed previously meant that it was within the power of the British government to do this but it broke an unwritten rule that had previously given the Bank responsibility in this area.
Inflation fell below 10% by the beginning of 1980 but UK unemployment rose to 9.5% over the same period, a level not seen since the 1930s. Unemployment was particularly bad in Ireland, where nearly 20% of the adult population was out of work. Over the spring and summer of 1980, a wave of rioting broke out across the island, leading to Thatcher taking the extraordinary decision to declare a state of emergency and deploy the army in an attempt to enforce order. Defence Secretary Charles Haughey was fully behind the move and threatened the TUC with an extension of the state of emergency to cover the entirety of the UK if they embarked on widespread sympathy strikes.
Pierre Trudeau’s Liberals lost the 1979 Canadian elections to the Progressive Conservatives of Flora Macdonald. With recession, rioting and governmental changes now rampant across the Commonwealth, the Chinese Premier Deng Xiaoping described it as “the sick man of the Security Council” in 1980. The winter of 1980-81 was a gloomy one in the UK: dominated by industrial unrest and government failures, it soon came to be known as the ‘Winter of Discontent.’
The Last Lights of Empire: striking workers in Dublin during the Winter of Discontent, 1980-81 (top); Margaret Thatcher and her entourage arrive at the second emergency bailout summit, August 1977 (bottom)
With their majority of only 25 and a record of being out of government for more than thirty years, many expected Thatcher to govern in a conciliatory and consensual manner. However, such assumptions demonstrated a severe underestimation of Thatcher’s personal radicalism as well as the extent to which her belief was that the economic problems of the 1970s were not a bug but a feature of a failing system. The first hint that she would be attempting to break with the British governing tradition of the previous century was when she appointed Keith Joseph as her Chancellor, cementing the Gladstonian wing of the party’s control over the government.
Joseph’s first budgetary event came with an autumn statement in October 1976 and it was dramatic. It included large cuts to both direct and indirect taxation, introducing cash limits on public spending on certain services such as housing while also introducing large direct cuts to social services and education. Joseph also announced that the aim of the Bank of England would be shifted such that its primary aim would be the controlling of inflation. This marked a big change for two important reasons. Firstly, the previous government-provided aim of the Bank had been the maintenance of overall macroeconomic stability rather than any one indicator of financial health. Secondly, while the Bank had remained technically the UK’s central bank, since the foundation of the MPC, it had gradually assumed more and more macroeconomic responsibility for the Commonwealth as a whole. The unilateral change of its objectives was a remarkable assertion of British power at the heart of the Commonwealth and a big potential challenge to the previous way of doing things.
Fortunately for Thatcher, general elections in member states over the course of 1975/76 had left a Commonwealth political scene more propitious for her than it would have been only two or three years later. Of the other Big Four, Pierre Trudeau had managed to cling on in the 1975 Canadian election but it came at the price of the loss of his majority. However, with Malcolm Fraser and Muhammad Khan Junejo of their respective Liberal Parties in power in Pakistan and Australia, Thatcher now had a coterie of leaders around her who saw the problems of the Commonwealth in terms of pure power politics. In an interview with the ‘Financial Times’ ahead of a Prime Ministers’ conference in October 1976, Joseph rejected calls for Puerto Rico and Newfoundland to be given more time to reign in their national debts and instead called for them to agree immediate austerity programmes to, in his words, 'get their over-spent, over-taxed houses in order.'
At the conference, the cracks in Commonwealth relations began to appear, between the Big Four (with Canada a qualified but generally willing ally) all arguing that debt-afflicted countries should swallow austerity programs to get their finances in order. On the other side was the newly-elected government of Puerto Rico: following the failures of the dominant Democratic and Conservative parties, the electors had turned to the more radical New Progressive Party lead by Ruben Barrios. The first bailout package reflected this division: agreeing to a 50% write off of Puerto Rican and Newfoundland debt held by banks and a £5,000,000,000 Commonwealth bailout fund; in return, new capital requirements were introduced for Commonwealth banks and commitments extracted from Puerto Rico and Newfoundland regarding further austerity to cut their debts.
While the package agreed in October managed to satisfy the demands of the Big Four leaders at the time, it accidentally deepend the troubles facing the Commonwealth banking industry. The imposition of new capital requirements meant that every bank was forced to raise capital at the same time. With every bank trying to add to its balance sheet, it became very difficult to raise funds and so many banks began to cut down on loans and unload lagging assets as they worked to improve their capital ratios. Furthermore, the austerity policies that Puerto Rico and Newfoundland were required to take choked off demand in their countries and only caused further economic stagnation. Taken together, these two phenomena plunged the Commonwealth economy back into recession in the first two quarters of 1977.
A marathon emergency conference in August 1977 resulted in the Commonwealth agreeing the conditions for a second bailout. Once more, it was agreed that Puerto Rican and Newfoundland debt would take a further, nominal, haircut and a second bailout package, worth £14,000,000,000, was agreed. In theory this would bring Puerto Rico’s and Newfoundland’s debt down to under 100% of GDP by 1985. However, Puerto Rican demands for a more serious writing down of debt were rejected by the Big Four, mainly because they did not want to jeopardise the position of their banks, who held much of the national debt in question.
The new measures had a certain effect, drawing some countries out of recession (notably the Big Four) but leaving others further myred in it (notably Puerto Rico). The most overt expression of this ‘two-track Commonwealth’ was the increasing divergence in bond yield spreads between countries. By the end of 1977, the UK had not only climbed out of recession but was estimated to have made more than £1,000,000,000 out of the crisis as investors flocked to safer British government bonds. By July 1978 Canada, Australia and the Bahamas were also benefiting from zero or even negative interest rates. On short-term bonds (i.e. those with a maturity of less than a year), Pakistan and Ceylon were also amongst the beneficiaries.
The contrast with the two crisis countries was stark. Puerto Rico was particularly badly hit, its debt crisis exacerbated by a state infrastructure (particularly as regards tax-raising) that was weak and had been left to decay by successive governments, along with a spending policy that had relied on borrowed funds to cover up for tax raising failures (in this sense Joseph's comment about the country being over-taxed was not only harsh but flatly incorrect). Barrios’ New Progressive Party had come to power on the promise not only of a fairer management of the crisis but also a radical transformation of the Puerto Rican economy. But it looked as if his government had been, in effect, screwed over by the pure power politics of the Big Four. Over 1977, Puerto Rican GDP decreased by 8%, corporate bankruptcies increased by 27%, Puerto Rican purchasing power fell by 40% and unemployment hit 8% (with youth unemployment standing at 60% in January 1978). Newfoundland suffered, if anything, worse, even as its more compliant government was regarded by the Big Four as a ‘good debtor.’ GDP contracted by 7% in 1977 and unemployment rose to 15%.
With his government increasingly convinced of the impossibility of enacting the austerity agenda imposed by the Big Four, Barrios moved his government to more radical acts. When a June 1978 conference again produced only agreement on a further bailout without a meaningful haircut, Barrios called a national referendum on its terms, with he and the majority of his party campaigning for it to be rejected. When it was put to him in an interview that this would in practice mean that Puerto Rico would have to leave the sterling zone (and, effectively, the Commonwealth too) Barrios commented that this was a risk he was prepared to take in order to save his country. The referendum returned a decisive (61-39) result in favour of rejecting the terms of the bailout. In May 1979, Barrios' government formally delivered notice to the Commonwealth Assembly that he intended for Puerto Rico to leave the organisation in three years, furthering a sense of general decay.
This move immediately plunged the Commonwealth further into crisis, with currency speculators attacking the pound and lending facilities further drying up. This spread the crisis back to the Big Four and the UK returned to recession in the final two quarters of 1978. The size of the bailouts, historically unprecedented and now looking like they had been useless, also contributed to a spike in inflation, which peaked at 22% in 1979. The stage was set for a dramatic showdown between the Big Four, on the one hand, and the Bank of England on the other. In May 1979 a secret agreement between Joseph and John Howard (the Australian finance minister) allowed Britain and Australia to unilaterally seize control of interest rates and begin an aggressive attack on inflation heedless of the consequences for unemployment. As discussed above, the unusual legal structure of the Bank of England and the consensual way in which it had been managed previously meant that it was within the power of the British government to do this but it broke an unwritten rule that had previously given the Bank responsibility in this area.
Inflation fell below 10% by the beginning of 1980 but UK unemployment rose to 9.5% over the same period, a level not seen since the 1930s. Unemployment was particularly bad in Ireland, where nearly 20% of the adult population was out of work. Over the spring and summer of 1980, a wave of rioting broke out across the island, leading to Thatcher taking the extraordinary decision to declare a state of emergency and deploy the army in an attempt to enforce order. Defence Secretary Charles Haughey was fully behind the move and threatened the TUC with an extension of the state of emergency to cover the entirety of the UK if they embarked on widespread sympathy strikes.
Pierre Trudeau’s Liberals lost the 1979 Canadian elections to the Progressive Conservatives of Flora Macdonald. With recession, rioting and governmental changes now rampant across the Commonwealth, the Chinese Premier Deng Xiaoping described it as “the sick man of the Security Council” in 1980. The winter of 1980-81 was a gloomy one in the UK: dominated by industrial unrest and government failures, it soon came to be known as the ‘Winter of Discontent.’
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What the strength of Irish nationalism at this point? I assume there would be a growth in calls to secede from the Union (but probs staying in the commonwealth) from this even if it means Sinn Fein (or equivalent) wins one or two by-elections.
Irish republicanism was really killed off by a combination of home rule and land reform in the late 19th century, along with the failure of the Dublin rising during the Great War. Sinn Fein has kind of reinvented itself post 1945 effectively as a Gaelic cultural movement. It has had some success in electorally (whenever the seat numbers for the Conservatives, Liberals and Labour don’t fully add up that’s because the other seats were taken by various Irish, Scottish or Welsh nationalists) but nothing to seriously effect national politics as of yet. They’re a good deal less radical TTL (think OTL Plaid Cymru) and, for example, they’re happy to swear the oath of allegiance to take their seats in Parliament.
Well, you ask for austerity, you get it. And of course, it doesn't work.
Capitalist crises are crises of investor confidence. Solving them by cutting tax is like pouring oil on the fire. And of course cutting social services means people have less money to spend back in the economy. The only people austerity serves is the creditors. Here, this takes an additional national element, as the creditors hold debt of nations the British have control over.
Let's hope this causes the Liberals to fall after that, and cause enough reforms to ensure the bank can't be used that way again. Though there's a risk the economy pick back up in time for next elections if they hold onto it.
Of course the state of emergency against their own people is looking pretty bad too. Maybe the TUC will find its spine? I imagine it's thoroughly moderate and focused on Labour and keeping it elected though?
Capitalist crises are crises of investor confidence. Solving them by cutting tax is like pouring oil on the fire. And of course cutting social services means people have less money to spend back in the economy. The only people austerity serves is the creditors. Here, this takes an additional national element, as the creditors hold debt of nations the British have control over.
Let's hope this causes the Liberals to fall after that, and cause enough reforms to ensure the bank can't be used that way again. Though there's a risk the economy pick back up in time for next elections if they hold onto it.
Of course the state of emergency against their own people is looking pretty bad too. Maybe the TUC will find its spine? I imagine it's thoroughly moderate and focused on Labour and keeping it elected though?
While this is an interesting question (and I certainly have my views on it) let's try and keep the discussion of actual history off this board, except where it relates to the TL specifically...
Not much, to be honest. The fact is that the US already has good relationships with Spain/Cuba and Mexico in the Caribbean and doesn't really need another strategic partner in the region. The fact is that Puerto Rico's notice to withdraw is basically a threat that has got out of hand and, while there are certain members of the political elite in that country who do want to leave (it's not as if they've been treated well by that organisation in the past decade and as a Hispanophone country many people do feel culturally quite distinct from the rest of the Commonwealth) I think most of the political leaders are hoping that something comes up which means they can back out the whole process. Remember that the actual referendum wasn't explicitly one about leaving the Commonwealth as such.
The TL is continuing to offer a good storyline. Considering that they"ll have to organise an election in june 1981, there is little to almost no time for liberals to recover public trust after the winter of discontent. Even if a a scandal erupts in the labour party, i think that it is impossible for the liberals to stay in power after the next elections