Additionally, the high unemployment rates were a direct consequence of misguided government policies. Thatcher’s initial embrace of monetarism and austerity policies led to higher interest rates and a higher exchange rate for sterling, which was already rising because of the discovery of North Sea oil. An overvalued pound rendered large swaths of British industry uncompetitive with foreign suppliers, and export industries such as steel, shipbuilding, and engineering were decimated. Many towns and cities, particularly in the north, never properly recovered from the Thatcher-era deindustrialization, which is one of the reasons she is still very unpopular in many areas.

In other regions and industries, particularly in the deregulated financial sector, some people did very well. Consequently, income inequality rose sharply. In the nineteen-seventies, the Gini co-efficient, a common measure of this gap between rich and poor, averaged 24.3 placing Britain near the bottom of the economic inequality league table. By the mid-nineties, the Gini had jumped to 32.4, moving Britain well up the table, and since then it has continued to rise. Indeed, by this measure, Britain is now the most economically unequal big country in Europe. (It still lags behind the U.S., though.) Adopting the commonsense value judgment that an additional dollar of income is worth more to a poor person than a rich one, economists sometimes adjust G.D.P. and productivity figures to account for changes in inequality. In his 1997 study, Crafts did just this, and he concluded: “The resulting change in the British growth rate is large and makes British performance look relatively and absolutely much less attractive—on this methodology the U.K. goes to the bottom of the league table.”

The Class System

Mrs. Thatcher’s defenders sometimes claim that she destroyed, or seriously undermined, the British class system: opening up the professions, enabling the working class to buy their own homes, and removing some of the privileges of the toffs. It’s an appealing story that doesn’t match the facts. Another way of saying a society is classless is to say it exhibits a lot of social mobility. But studies show that since Mrs. Thatcher came to power, in 1979, social mobility has gone down rather than up. Far from becoming more classless, Britain has gotten even more class bound. Some of the progress that was made during the post-war years has been reversed.

The seminal paper in this area was published about ten years ago by four British economists (Jo Blanden, Stephen Machin, Alissa Goodman, and Paul Gregg) who analyzed the incomes of one group of Britons born in 1958 (the pre-Thatcher cohort) and one born in 1970 (the post-Thatcher cohort). Specifically, the researchers looked at how closely correlated each person’s income was with the income of their parents. If the correlation co-efficient is high, it means economic status is passed down the generations, which is happens in a class-ridden society. Here is the conclusion of the study: “Even though these cohorts are only twelve years different in age we see sharp falls in cross-generation mobility of economic status between the cohorts. The economic status of the 1970 cohort is much more strongly connected to parental economic status than the 1958 cohort.”

In an article published in 2005, Blanden, Gregg, and Machin summarized their findings and related them to the broader debate about rising inequality:

The rapid increase in UK income inequality that began in 1979 is sometimes justified by the argument that society is now more meritocratic so that it is easier for the poor to become richer if they are willing and able to work hard. In fact, our research shows that the opposite has occurred—there has actually been a fall in the degree of social mobility over recent decades. Children born to poor families are now less likely to break free of their background and fulfill their potential than they were in the past.

More recent studies have produced similar results, and even some members of the Conservative Party have acknowledged the reality. An all-party parliamentary study that was published last year concluded, “British social mobility is low by international standards and does not appear to be improving.” Among the factoids contained in the report: more than a third of M.P.s, more than half of C.E.O.s at top British companies, and seventy per cent of high-court judges had attended exclusive private schools—the traditional means by which the British ruling class reproduces itself. Of course, Mrs. Thatcher isn’t solely responsible for this sorry state of affairs. (Blanden et al. suggest that, ironically enough, some of the blame lies with reforms during the nineteen-nineties that were intended to broaden access to higher education but which ended up being focussed on young people with richer parents.) Still, the data is pretty clear: the decline in social mobility began during her premiership.

Education and Innovation

The reference to education brings me to another drawback with Thatcherism. From the beginning, it exhibited a hostility to investing in education, particularly higher education, which has undermined Britain’s long-term competitiveness. By slashing the education budget and holding down the salaries of teachers and academics, Mrs. Thatcher drove away many able educators, some of whom came to the United States, where salaries and research budgets were more generous. An Oxford-trained chemist, she even cut the research budget for sciences like chemistry, biology, and medicine—a policy that earned her rebukes from senior executives at Glaxo and I.C.I,. which were then Britain’s biggest drug company and chemicals company respectively. If there’s one thing most economists can agree on, it’s that in advanced countries economic progress depends on fostering scientific research and an educated workforce, two things Thatcherism failed to do.