Margaret Thatcher was known as the Iron Lady for her tough-guy politics, but as we say our final goodbyes to Britain's only female prime minister, we should remember that iron was only part of her reputation.
For the economic part of her fame, the mineral that should take the credit is not iron but crude oil.
The "iron" sobriquet was not a first for a British prime minister. Arthur Wellesley, Duke of Wellington, after which many Canadian streets are named, won the nickname the Iron Duke not for beating Napoleon, but for taking a hard line in his second career as Tory party leader and prime minister.
Thatcher was something of a Wellington herself. It was the Russians who gave her the Iron Lady label following a speech she gave as leader of the opposition.
The Labour government, she said, was "dismantling our defences at a moment when the strategic threat to Britain and her allies from an expansionist power is graver than at any moment since the end of the last war."
And that wasn't just sabre rattling.
After she took power, she was not one to back down from a fight or take a softer line. "The lady's not for turning," she said in a famous speech.
Iron-willed, she battered the coal miners' union into oblivion. Tough as nails, she sent the Royal Navy into a hot war with Argentina over the Falkland Islands. Her approval rating shot through the roof.
Answer to Reaganomics
Her iron nature also served peace. It was Thatcher's reputation for ideological intransigence that allowed her to reach out a hand to Soviet leader Mikhail Gorbachev, declaring that the Cold War was over.
Only half of Thatcher's reputation was built upon political and international iron. The other side was her economic and social agenda, called Thatcherism, credited for turning the British economy around.
U.S. President Ronald Reagan and British Prime Minister Margaret Thatcher wave from the door of 10 Downing Street in London on June 7, 1984. (Dave Caulken/Associated Press) Thatcherism was Britain's answer to Reaganomics. Thatcher and U.S. President Ronald Reagan shared the concept that what makes a country great is the private sector, business and low income taxes, not the namby-pamby socialism practised by the nanny states of northern Europe.
Thatcher's policies were the model for modern conservatism. The rich were no longer seen as leeches on the body politic, but creators of wealth.
Thatcher cut spending on social programs, the money spent instead on law and order. Her government cut income taxes on the rich from 83 per cent to 60 per cent and raised the so-called Value Added Tax (similar to Canada's GST), based on consumption, from eight to 15 per cent.
And lo and behold, the economy began to strengthen. After a sharp decline of more than two per cent just before Thatcher took power in 1979, by the mid-1980s, the British economy had hit an eight-year peak, growing at a rate of 2.4 per cent.
Although in some circles, Thatcher's reputation as an economic genius remains unsullied, there is another explanation for the British economic recovery.
By this analysis Thatcher's nickname, for the purposes of economic history at least, should be Oil Lady or Queen of Crude.
Crossing a magic line
Thatcher's election in 1979 was not the only significant event of that year. The collapse of the Iranian government was in the process of causing a second oil crisis, with global petroleum prices hitting peaks not seen since the first oil crisis in the early 1970s.
At the same time, stimulated by new technology and the high prices of the 1973 crisis, the North Sea oil industry had hit its stride.
Just as oil was hitting its new post-1979 peak, just as Thatcher was introducing the economic changes of Thatcherism, British oil production crossed a magic line.
While U.K. oil and gas consumption remained constant, U.K. production shot up to, and past, that level, turning Britain into an oil exporting country at the heart of Europe. While other countries paid exorbitant world prices for oil, Britain was selling it and raking in the dough.
BP and other North Sea oil producers went on an infrastructure and hiring binge, sending petroleum production to a new peak. When was that peak? In the mid- to late 1980s, just as Thatcherism was taking the credit for transforming the British economy.
But by then the bloom was off the rose. Since its peak around 1981, oil declined, first slowly, and then sharply with the global price plumetting by nearly three-quarters from peak to its 1986 trough. The industry was no longer in an expansion mode, nor were exports or Thatcher's economy.
Going to the poor
In a search for new cash to replace the country's oil income, with iron will, Thatcher went not to the rich but to the poor, with a "poll tax" or head tax on every adult, stimulating some of the worst riots in post-war British history.
By 1990, with Thatcher on the way out, the economy was once again shrinking and North Sea oil production would not reach its second peak until New Labour was taking power nearly 10 years later.
More than most politicians, Thatcher generated strong feelings. A friend of mine with neo-conservative leanings kept her picture on the wall. Others friends still hate her with a passion. But the argument over what caused Thatcher's economic boom goes beyond a political popularity contest.
Despite intervening years of Labour government, there is a strong argument that Thatcher's legacy continues today in privatized education and a wide income gap.
If Thatcherite policies make a country rich, it is important to know it so that we can imitate them. If those policies do nothing without the additional benefit of a resource windfall, the economics of Thatcherism stand discredited, and all that's left is the iron.
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