Why is the Treasurer taking inspiration from Margaret Thatcher and Ronald Reagan?
6 min read
Remember 'Reaganomics' and the neoliberal policies of the Thatcher era? Why are they being invoked today?
Normal text size Larger text size Very large text size The coronavirus pandemic has brought the Australian economy to its knees and flung the federal budget into unchartered territory. Amid the chaos, the nation's Treasurer, Josh Frydenberg, has exhumed the memory of two former conservative world leaders as his source of "inspiration" for what is to come next. So what did Margaret Thatcher and Ronald Reagan actually do? Did it work? And why might their legacies be relevant today? US President Ronald Reagan sits with British Prime Minister Margaret Thatcher at 10 Downing Street, London in 1984. Credit:Getty Images What has Frydenberg said? In a National Press Club address on July 24, the Treasurer was asked by journalist Katharine Murphy about the government's future fiscal strategy, which will be further outlined in the October budget. In a wide-ranging answer, Frydenberg said his desired strategy was "not higher taxes", nor "to cut essential services" but to "create incentives". "I notice in The Australian Financial Review today, not everyone is a Keynesian and thinking about income support. It is important to go to the supply side. Thatcher, Reagan, that's an inspiration. Supply side can actually help create and strengthen the economy and that is what we are determined to do, provide boost to aggregate demand, where appropriate, but to encourage supply-side reform because that will be important to the recovery." Advertisement Frydenberg doubled down on the compliments for the duo in an interview on the ABC Insiders program on July 26, during which he argued Reagan and Thatcher "dealt very successfully with the challenges that they faced, particularly stagflation, high unemployment, high inflation". "The reality is that Thatcher and Reagan cut red tape, they cut taxes and they delivered stronger economies." What is 'supply-side' economics? Over centuries, ideological debates have raged between so-called "supply-side" and "demand-side" economists about what…