How Thatcher defeated Mitterrand: lessons from the late prime minister's decisive victory in the war of economic ideas.

• Author: Welch, Matt
• Position: From the Top - Margaret Thatcher and Francois Mitterrand - Editorial

AS FAR AS lousy years go, 1979 ranks right down there with the terror-mangled annus horribulus of 2001 and the Nixonian nadir of 1973.

The calendar of woe began with the January-February Islamic revolution in Iran, ushering in the modern global era of atavistic Muslim theocracy. On Iran's west flank, Saddam Hussein formally consolidated his power that July with a brutal televised witch hunt of accused spies within his government. To its east in December, the Soviet Union invaded Afghanistan.

The United States was embroiled in all of these unhappy spasms of violence. The revolution (which deposed a CIA-installed shah, who then was controversially welcomed into U.S. exile) triggered an oil shock, producing long gas lines and every-other-day rationing. The revolutionaries took 53 Americans hostage at the U.S. embassy in Tehran, plunging the remainder of Carter's presidency into impotent despair. Washington funded the anti-Soviet (and protheocratic) Mujahedeen in Afghanistan, and organized a buzz-killing boycott of the 1980 Summer Olympics in Moscow.

And if anything, the news on the economic front was worse. Inflation in the U.S., which had been the number one public policy concern of Americans in every annual Gallup poll since 1973, zoomed north of II percent. GDP growth began plunging, from 6.5 percent in the first quarter of '79 to 1.3 percent in the fourth, and unemployment increased throughout the year.

Similar stories were being told throughout the Western world: over 10 percent inflation in France, 13 percent in the United Kingdom, 14 percent in Italy, 15 percent in Spain, 19 percent in Greece. England, which had just suffered through a 1978-79 "Winter of Discontent" featuring widespread public-sector strikes and rage against inflation, had grown accustomed to being described as "the sick man in Europe" at a time when Europe itself didn't seem so healthy.

One reason that Jimmy carter's "malaise" speech of July 1979 (which actually never used that term) is so enduringly famous is that it so perfectly encapsulated the West's sapped morale. "The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America," Carter warned. "For the first time in the history of our country a majority of our people believe that the next five years will be worse than the past five years."

And yet people didn't believe anything of the sort five years later, and five years after that humanity experienced...