Thatcher was now one of the most powerful women in the world. She rejected the economic theories of John Maynard Keynes, who advocated deficit spending during periods of high unemployment, instead preferring the monetarist approach of Chicago economist Milton Friedman. At her first conference speech, she chastised the Labour Party on economic grounds, saying, “A man’s right to work as he will, to spend what he earns, to own property, to have the state as servant and not as master—these are the British inheritance.” Soon after, she attacked the Soviet Union as “bent on world dominance.” A Soviet army newspaper responded by calling her “the Iron Lady,” a nickname she immediately embraced.
The Conservatives, helped out by a “winter of discontent” in which numerous unions went on strike, won the 1979 election, and Thatcher became prime minister. During her first term, the government lowered direct taxes while increasing taxes on spending, sold off public housing, put in austerity measures and made other reforms, even as rising inflation and unemployment caused Thatcher’s popularity to temporarily wane. In April 1982 Argentina invaded the Falkland Islands, a sparsely populated British colony located 300 miles from Argentina and 8,000 miles from the United Kingdom. Thatcher dispatched troops to the area. On May 2, a British submarine controversially sank an Argentine cruiser that was outside of an official exclusion zone, killing over 300 people on board. Later in the month, British troops landed near San Carlos Bay in East Falkland and, despite persistent air attacks, were able to capture the capital of Port Stanley and end the fighting.
The war and an improving economy propelled Thatcher to a second term in 1983. This time around, her government took on the trade unions, requiring them to hold a secret ballot before any work stoppage and refusing to make any concessions during a yearlong miners’ strike. In what became a key part of her legacy, Thatcher also privatized British Telecom, British Gas, British Airways, Rolls-Royce and a number of other state-owned companies.
On the foreign policy front, Thatcher often found herself allied with U.S. President Ronald Reagan, whom she later described as “the supreme architect of the West’s Cold War victory.” Her relationship with her own continent’s leaders was more complicated, particularly since she believed the Europe Union should be a free-trade area rather than a political endeavor. “That such an unnecessary and irrational project as building a European superstate was ever embarked upon will seem in future years to be perhaps the greatest folly of the modern era,” she wrote in her 2002 book “Statecraft.” In Asia, meanwhile, she negotiated the eventual transfer of Hong Kong to the Chinese. In Africa she had a mixed record, facilitating the end of white minority rule in Zimbabwe but opposing sanctions against apartheid South Africa.