Category Archives: Economy

Scotland should vote for compromise and Currency Union – and thus vote “no”

Well this has been fascinating. The Scottish referendum has been lost by politicians, and won by democratic dialogue in the bars, allotments and social clubs of Scotland. It has taken twists and turns which no one – certainly not I – predicted.

Today is decision time. At its best, “Yes” puts forward a highly attractive argument that Scotland should stand on its own two feet; at its worst, it forgets that “independence” is a ridiculous and alarmingly parochial concept in a globalised world dominated by corporations, not states. At its best, “No” puts forward a highly attractive argument for maintaining a historically hugely successful and influential multinational liberal state (with none more influential within it than Scots); at its worst, it has resorted to nonsensical scare tactics which demean the obvious brilliance of the Scottish nation.

As it happens, given the fairly uninspirational nature of its campaign, if I were in Scotland I would be trudging along to vote “no”. Ironically, I would be doing so as it offers the best route to an option which satisfies the aspirations of the large majority of Scots (enhanced powers without the risks), and because of a case made by the “Yes” campaign!

The case is this: for all its talk about becoming Scandinavia or making its own choices, the “Yes” campaign argues nevertheless that it wishes to share the pound sterling, share the Bank of England, and share England’s monetary policy in their entirety because their economies are so inextricably linked. This is their case for a “currency union”. Yet this is also a case for a “political union”!

It is not just an economic point. It is also a political one – for there is something mischievous about essentially suggesting you can be independent and have everything bad change but everything good remain. We have to ask why Scotland wouldn’t have its own currency to be truly “independent” or why it would not join the Eurozone like Ireland? If the answer is that it is far more like the rest of the UK than elsewhere, then why on earth leave? If the answer is that using sterling is temporary, then why not be up front about it? All of this hints at an underlying uncertainty or even deviousness about what people are really being asked to vote for.

It is also divisive. The problem with referendums is that they are “Yes/No” and thus offer no means of compromise. The best compromise – the one the vast majority of Scots could easily tolerate – is enhanced powers without the risks of “independence” in an uncertain world. You don’t get that by voting “yes”; you probably do by voting “no”. It’s all a bit messy and last-minute, but then compromise often is.

In the end, therefore, I come down on the side of those who suggest that Scotland has more in common with the rest of the UK than anywhere else and should therefore share a currency with it. The easiest way to do that is by remaining in the UK! I accept Scotland has already psychologically left the UK but I would urge Scots therefore to vote “no” – and then let 63 million people rebuild a properly federal, progressive UK together.

Fetishisation of spending the root of all our ills

This is, perhaps, the single greatest article I’ve ever read about sport, or perhaps even anything!

Nominally, the article notes that “Transfer Deadline Day” has become a huge footballing event in its own right (rivalling Cup Finals and such like), even though actually all it is is the day which determines how much money various teams have spent. Supporters watch events unfold as if merely buying a player whose wages would pay for 140 nurses is the cure of all their ills. It is ludicrous. In fact it’s a moral crime, and not a victimless crime at that.

The article nailed my discomfort at “Transfer Deadline Day” perfectly. It was a discomfort I had never previously been able to nail (and thus never previously been able to put into writing). Yet I cannot help but feel it is the same discomfort I feel at Christmas.

For, when you think about it, Christmas is an awful lot like “Transfer Deadline Day”. Ultimately the objective is for people, predominantly children, to compare notes on how much their parents have spent, not unlike supporters comparing notes on how much their clubs have spent. Crudely, it is as if by buying loads of “stuff” we can deliver stability, love and affection; the same way that buying a £50 million player is supposed to guarantee trophies. In the same way managers don’t want to let supporters down by buying no one (even if there’s no one worth buying really), parents don’t like to let children down by not spending hundreds of pounds on a raft of Christmas presents (even if the child already has every X-box, iPhone and lego set going). The very term used in the article, the “fetishisation of spending”, sums it all up. It’s morally corrupt and it is the fundamental cause of all our economic (and arguably social) ills.

Again, the article on “Transfer Deadline Day” makes the point that clubs are recklessly spending our money – the money we spend at the turnstiles, on the shirts, or on the TV subscriptions (at least I have abandoned the latter in disgust, though not yet the first two I confess); and the money we lavish on the advertisers who keep it all going (not least at Christmas). Likewise at Christmas, the billions spent are mostly wasted – a huge proportion on “stuff” children never needed and never subsequently touch – when they could be put to far better use in our health service, in our schools or in assisting job creation. But let’s be clear: we choose this madness!

It is a madness which is grossly unfair too, of course. Clubs such as Leeds have gone bust trying to keep up with Manchester United despite lacking its resources; much more seriously, thousands of families across the British Isles go bust every year buying “stuff” for Christmas trying to keep up with people who earn considerably more than they do. Yet again, those at the poorer end of the spectrum suffer most.

It would be interesting to set up a movement, as happens in one edition of Family Guy of all things, to buy just one Christmas present per person. This would have the benefit of limiting peer pressure and ensuring people could remain within their means without feeling that they are somehow letting their children down. Who knows, it may even lead us recognise that there is more to Christmas, and indeed life, than “getting stuff”!

What we do about football is where I have no ideas – but it is a somewhat lesser concern, and we could start by remembering that too!

Myths about Scottish independence

There are some unbelievable myths being peddled about “Scottish independence”. It is worth nailing a few of them – if only so that those repeating them can be placed on the list of “those too lazy to do their own research who should probably never be paid as commentators”…

1. England would always elect Conservative governments.

The Labour Party “would die” according to one Sky News commentator. Utter codswallop! In England alone (even excluding Wales), Tony Blair would have headed a Labour-led administration for each of the three elections from 1997 just as he did; just as David Cameron would be Prime Minister now. Yes, Mr Blair would have needed a coalition in 2005 (though including Wales even then he had a majority) and David Cameron would not need one now, but it would still have been the same party’s Prime Minister in Number 10. Some “death”!

In any case, Labour would merely move slightly to the right to re-align politics marginally – just as it had to after the “Longest suicide note in history” election of 1983.

2. Scots would be “foreigners”.

This is lovely and emotive and maybe strictly true, but are the Irish “foreigners”? Actually current UK citizenship law views Irish nationals as having the same rights and responsibilities as UK nationals within the UK almost without exception; and it is already the case that any EU national can use consular services of any EU member state. Thus, with the safe assumption that UK citizenship law treats Scots the same way and the fairly safe assumption that Scotland becomes an EU member state, it would be much the same. Unless the Continuing UK is idiotic enough to leave the EU, of course…

This is also not unlike arrangements between the Nordic Countries or between the Czech Republic and Slovakia or Australia and New Zealand. In each case, people from the other state are not really “foreign”, as they possess all the same rights and responsibilities.

3. Scotland would move to a Scandinavian model.

I’ll return to this, but in fact there is no evidence it would. All proponents of a “yes” vote talk of reducing taxes, not increasing them; the SNP in office has centralised power and engaged in middle-class giveaways; and an iScotland would be dominated by oil, finance and drinks sectors none of whom would allow such a dramatic change of economic and social model. If anything, the evidence is an iScotland would be more Liberal in many ways, including economically.

4. Scotland could not use the pound.

Of course Scotland could use the pound. Actually no one with any authority has said otherwise.

What it could not do is retain influence on the pound – including on interest rates, revaluations or whatever. There may also be some difficulty with joining the EU; although this could probably be solved by setting up Scotland’s own currency which happened, initially, to be pegged to the pound.

5. Independence is the only way to save the NHS in Scotland.

On the contrary, independence is the only thing which puts it in any danger.

The difficulty here is that increasing moves towards private care provision are being referred to as “privatisation” by some – an utterly misleading term as that provision is still funded from the public purse.

Thus, the retention of public funding for all aspects of the Health Service means there is and remains exactly the same amount available for Health in Scotland (actually more per person, as Scotland’s public spending per head is higher within the UK). In fact, interestingly, the SNP has chosen to take money away from the NHS for other departments. Health accounts for 22% of public spending in England but just 20% in Scotland – a differential which has opened up under the SNP administration.

With the trend already being towards comparatively lower Health spending by advocates of independence themselves, and uncertainty over future oil revenues (plus inevitable costs of setting up a new military, a new diplomatic service and so on), it is clear objectively that the strain on the NHS would come with independence, not without it.

6. Scotland would remain in the EU.

This isn’t the worst myth but it is not straightforward and we should be clear about that. To be in the EU, you have to be a member state. An independent Scotland would have opted to leave a member state, and thus to leave the EU. It may of course then apply to become a member state and I would hope everyone would see the sense in fast-tracking the process prior to the date of independence – but it may not be possible to conclude this by March 2016.

This is similar to the nonsense that the pound is “also Scotland’s currency”. No it isn’t – it is the currency of the UK governed by the UK’s Central Bank. Scotland would leave the UK and thus no longer have that Central Bank, nor therefore its currency. As noted above, it could peg its own currency to Sterling or try to negotiate a Sterling Zone similar to the Eurozone – but as of March 2016 it would, failing the latter, cease to have the UK currency as its currency for the simple reason that it would have left the UK.

It is somewhat bizarre that those in favour of “independence” are so wary of being clear about what leaving the UK means!

7. Alex Salmond is a Social Democrat.

Just because you don’t like Margaret Thatcher doesn’t make you a Social Democrat!

Which is the crux of the issue, really, isn’t it?!

Northern Ireland vastly better than 20 years ago

One correspondent joked that I should be “more definite” in my blog pieces, so here’s another one: the notion that Northern Ireland isn’t multi-fold better (and more cohesive) than it was 20 years ago is complete drivel!

In the Northern Ireland of 20 years ago, with freakish exceptions, you never saw a different coloured face and you never heard a foreign language. No one wanted to come and live here; actually, no one wanted to come and holiday here. You did see plenty of army (and other) checkpoints; you did take ages crossing the border; you did face restrictions to where you went and when. And murders were more common than road fatalities are now.

Host a major music awards ceremony, or the start of a Great Cycling Tour, or a major golf championship? The notion would have had you in hospital laughing! This is a better country.

Promote an Irish language job freely in East Antrim, or park a car with a ‘GB’ sticker in Andersonstown, stroll into a political event in the Felons Club to mention your dad was in the Army in open discussion? That would have been cause for genuine concern. This is a more cohesive country.

The Troubles. What were the Troubles? People who will soon be driving and voting actually ask that. My 11-year-old stepdaughter condemned sectarian slaughter in Iraq on the grounds that “I mean, we have Protestants and Catholics but we don’t go around doing that”. To grow up in, this is pretty much a normal country!

Find the second highest and fastest growing identity here is “Northern Irish”? You know what, this is actually a country!

I suspect those who forget the obvious, vast advances are those who were anticipating something different. The notion of “peace” had perhaps always been of a “peace” solely on our own terms. We find one which is a mushy compromise a bit disconcerting – yet it is the only one available. And it is one which has improved things so immeasurably, that sometimes we forget to try measuring.

Is it imperfect? Look around the world and tell me somewhere that isn’t.

NI Corporation Tax reduction can’t happen

I was astounded to see media reports suggesting the UK Prime Minister is about to reduce Corporation Tax in Northern Ireland. This shows a basic misunderstanding of devolution – and of politics.

The UK Government has never claimed to have the power to reduce Corporation Tax in Northern Ireland. What is being considered is the devolution of Corporation Tax to the Northern Ireland Assembly. It would be for the Northern Ireland Assembly (Executive, in practice) to reduce Corporation Tax, not the UK Government.

This is important because, of course, that couldn’t possibly currently happen. For all their talk of lower business taxes (DUP) and all-island tax harmonisation (SF), the fact is the DUP and SF have brought the Executive to the brink of collapse over immediate spending reductions (necessitated by maintaining the current broken Welfare system) and ongoing real-terms spending reductions (necessitated by the UK Government’s determination to reduce the deficit). The idea that they would double this burden by adding hundreds of millions to the “savings” already having to be made to take a punt on the long-term benefits of a Corporation Tax reduction is laughable. Reduction of Corporation Tax, even if it were devolved, would merely go into the pot with all the other issues upon which the DUP and Sinn Féin are gridlocked – from the single education authority to the Maze.

A Corporation Tax reduction can’t and won’t happen any time soon. Don’t trust anyone telling you otherwise.

A “United Ireland” won’t happen. Ever.

I am pleased to see, over on Slugger, at least the hint of a real debate about a “United Ireland”. Most of the basic sentiments – that we need some economic reality and that Northern Ireland has to work for all its citizens – are spot on and conveniently are necessary to any constitutional preference. This is why my own politics were always based on those sentiments.

I have put forward various thoughts on how a United Ireland could operate – most obviously, like Australia (a federation with the current Monarch as Head of State). However, I have done so primarily to demonstrate that “Nationalists” are either so biased that they find this unacceptable, or so disinterested that they find this irrelevant. It is no surprise to me that the only threat to the UK comes from Scotland, not Northern Ireland.

The truth is this: a Unitied Ireland is not going to happen.

Why not? Let us go back to the Covenant. One of the main aspects of that document in September 1912 was the economic argument that splitting Belfast – its shipbuilders, rope makers, linen weavers and so on – from the rest of the UK would see tariffs imposed and thus create costs to exporting to the UK which would render them unable to compete with the West of Scotland and the North West of England in those key industrial areas. The point here is that in an era where there were tariffs imposed on trade between any two countries, it made sense to belong to a large country. There were two prime reasons for this: first, it gave you the biggest possible free trading zone; and second, it gave you the clout of a powerful government to negotiate trade deals with other large countries on your behalf. That is why the map of Europe at the outbreak of World War One consisted of a unitary British Isles, a larger single Germany, a huge Austro-Hungarian realm, a newly united Italy and large Russian and Ottoman Empires – alongside France. Spain and not much else (even Sweden and Norway had broken apart only in the previous decade).

A century later and we live in a vastly different Europe, where tariffs and many other trade restrictions between countries have been abolished. This makes it no longer necessary or even beneficial to belong to a large country. With the benefit of free trade, countries such as France and Germany are the exception in Europe – which contains a raft of countries at around 7-11 million (Belgium, Portugal, Switzerland, Austria, Hungary, Czech Republic. Serbia, Bulgaria, Greece, Sweden etc), another set at around 4-5 million (Ireland, Denmark, Norway, Finland. Slovakia, Croatia etc) and another lot at around 2 million (Slovenia, Latvia and Estonia). This is vastly different from what went before, but it is enabled by free and peaceful trade, and thus the pressure is for more break-up – perhaps in Catalonia, Venice or Scotland to give some obvious examples. After all, if Brussels is already handling everything from foreign trade to social regulations; and you are already handling domestic policies and laws, what role precisely do Madrid, Rome or London play?

Therefore it is no coincidence that, aside from Germany, there really is no precedent for uniting a country in modern Europe – the movement is all the other way.

Germany itself is not a useful precedent either. It consisted, legally and practically, of the dissolution of the German Democratic Republic (what the English-speaking world but not the German-speaking world referred to as “East Germany”) and the expansion of the Federal Republic of Germany (“West Germany”) to incorporate its territory. The equivalent would be the dissolution of Northern Ireland and the expansion of the current Republic of Ireland to include 32 counties not 26. Overnight, the Northern (NHS-style) Health system would be abolished, its laws would be replaced (e.g. the Rules of the Road would change) or repealed (e.g. laws on equality or animal cruelty, which are often markedly lacking in the Republic), and rafts of people would be out of work (most civil servants would be unnecessary; all lawyers now unqualified; and so on). This would be much more dramatic in fact than it was in Germany, where some “Eastern” systems were maintained by the new States (in their own policies and laws; unlike Ireland, Germany is a federation) and “Easterners” gladly underwent training in new “Western” systems accepting from the outset that they were inherently better. This is why no one seriously advocates such a method of unification for Ireland.

So there is no precedent. In fact, most Nationalists who think about it come to suggest that Northern Ireland would continue to exist, with its own separate laws, education system, accounting methods and so on. But that takes us back to the above question – if Belfast continues to manage the domestic policies and laws, and Brussels does the foreign stuff, what exactly would Dublin be doing? The answer to that, hypothetically, is it would be working out what to do with its new security headache and how it was to manage a mammoth subvention to Northern Ireland – a subvention to a place with half the population but the same number of public servants, for some reason. Hypothetically… it wouldn’t be daft enough to do it in reality, of course.

Even without that headache, the simple fact is the “United Ireland” thus created would consist of a legally separate unit, with its own laws, institutions, heritage and identities. That has been tried, of course – in 1707, when the Kingdom of Scotland was united with the Kingdom of England. How’s that one working out in the modern context explained above?!

So no, a United Ireland is not “closer than it’s ever been”. There was one chance of it ever happening outside the UK, and it was wasted at Easter 1916. Towards 2016, all the trends across Europe tell us there was more chance of a sovereign Northern Ireland than a sovereign United Ireland some time this century. What was that about making Northern Ireland economically viable and a fair home to all, Irish, British and neither…?!

Being “against austerity” is nonsense

I was linked in to a graph at the weekend showing another version of a point I have made for a long time on this blog. The graph noted that UK GDP is 16% lower than it would have been if 1990-2008 growth rates had been maintained during the 2008-13 period.

It reminded me of a phrase I see frequently – people claiming to be “against austerity”. This is nonsense to start with – all successful countries are austere; one man’s austerity is another man’s efficiency, after all. It is particularly ludicrous for those on the “left” to oppose austerity – the opposite of austerity is rampant consumerism inevitably dominated by a few big multi-nationals. Austerity is a good thing – indeed, it is absolutely necessary if we aspire to live in a country where people prioritise the interests of society as a whole and not just the crazed individualism which has seen the English-speaking world become ever more selfish, ever more unequal and ever more bust. You’d think those on the “left” would care about this, but apparently we should not seek to be austere and should just continue spending stacks of money we don’t have and never earned on things no one needs and few really want…

As it happens, austerity is also necessary when it turns out you are 16% worse off than you thought – for that is what the above figure really means. It is not our current economic position which is false; the false one was the 2008 one fuelled (particularly in the British Isles) by a mad property binge which was obviously unsustainable at the time only no one thought to admit it.

So you can’t be “against austerity” any more than you can be against the grass being green. It is time we stopped this completely false argument otherwise.

Belfast Pride needs proper status

Honestly, going on parades of any kind just isn’t my thing – in the same way rock concerts or road racing aren’t. However, the Twelfth is clearly a significant event and television coverage reflects this; events such as Tennents Vital are well trailed; and the just past North West 200 and upcoming Ulster GP are given appropriate “major event” status by the Tourist Board.

This weekend another well-established and huge gathering takes place in Northern Ireland – a day of fun and frolics to be attended by thousands. Indeed, there is potential in future for it to grow, one year, into Europe’s showpiece event in a not dissimilar way to the MTV Awards or Giro Grande Partenza. I speak, of course, of Belfast Pride.

Much is made of this politically, and rightly so; but much could also be made of it socially and economically. It attracts people to Belfast. It brings people into shops, leisure facilities and cafés they would not otherwise frequent. Hotels can be booked out. In short, it is a significant boost to the city centre and its traders.

So you are left to wonder – why no “major event” status? Why so little trailing well in advance by the mainstream? I trust an evening’s coverage is being planned by BBC NI as I write? I ask these questions genuinely – but they do need answers. I wouldn’t like to think a Pride event would not be treated even-handedly…

Labour wisely accepts ‘anti-cuts’ rhetoric nonsensical

British Labour’s biggest problem going into the next election is that its own Leader looks as weird and out-of-touch as the incumbent Prime Minister. Perhaps his most awkward intervention before the bacon sandwich debacle was his appearance at an ‘anti-cuts’ Union rally when he tried to pretend he was with the crowd. His party confirmed at the weekend that he really isn’t – and rightly not.

 

Labour now accepts it was talking nonsense about the ‘Squeezed Middle’ and would in fact tax those on middle incomes more; and it also now accepts opposition to the Coalition’s spending plans (which see public spending rising in absolute terms but falling in real terms) is nonsense. This makes Labour a vaguely credible government – and it marginalises the ‘anti-cuts’ brigade who are, quite simply, wrong.

They are wrong because public spending isn’t actually falling in absolute terms; they are wrong because public spending reductions are not the same as ‘cuts’ (they may simply mean doing things more efficiently – to be supported, surely); and they are wrong because, as everyone now accepts, you cannot simply keep public spending ballooning when revenues are vastly lower than expected. Be very clear – anyone opposed to this is denying reality and not to be trusted.

It is worth repeating why revenues (at least over this parliament) have been so much lower than they were and, more relevantly, than they were projected to be. It is quite simply that the UK is a significantly poorer country than it was or, more accurately, than we thought it was in about 2007. Within three years of the run on Northern Rock, the UK Treasury’s revenues had fallen to 14% below where they were projected to be three years previously – the equivalent figure almost everywhere else in the West (aside from Southern Europe and Ireland, understandably) was around 5-6%.

In other words, the UK is 14% poorer than we reckoned. To sort that, we need to invest in skills, technology and innovation particularly where export-focused – as, in many cases, we are. But let’s be very clear, we cannot just spend money no one’s actually gone out and earned.

Real German lesson: say yes to austerity!

It is an incredible thing – and indicative of how it has become entirely confused – that the “Left” repeatedly used the word “austerity” and does so with the supposedly automatic contention that it is a bad thing.

This is the same “Left” of course, which rightly argues against “excess”. It is indeed an outrage that City Execs get paid 180 times the average wage; that entertainers get such ludicrous recompense on the licence payer or the commercial viewer; or even in some cases that senior quangocrats get so much. Here’s the thing – the opposite of “excess” is, er, “austerity”.

Germany doesn’t get everything right by any means, but it is hard to dispute its recent sporting and economic success. Such success is not down to chance. One of the prime reasons for it is that Germany is a vastly more austere country and society than the UK, France or Spain.

Even in football this shows. The BBC and ITV both had a main presenter, a stadium presenter, a main commentator, a co-commentator, three studio pundits and usually also a stadium pundit – eight, in total. German TV tends to make do with one presenter, one pundit and one commentator – three!

Another obvious area is supermarkets. The big Tesco or Carrefour superstores of the UK and France are replaced in Germany by Lidl, Aldi and others very similar – based on the recognition that it is pointless to pay, in effect, to pay for the privilege of looking at products you’re not going to buy in the name of “choice”. It is the austere German version which is now coming to the fore in the UK and France, not he other way around.

The same applies to housing. While the social housing argument centres around the age at which children should not share a room in the UK, even the children of German professionals often share into their teens; thirtysomething Germans may still live in single-room flats; ownership in the exception in Germany, not the norm.

This austerity works, therefore. Underlying the German social model is the notion of what suffices, not what shows off. As a result, there’s rather more to go around – because, as a direct result of the promotion of austerity as a good thing, outrageous excess is frowned upon. Even successful businesses or indeed football clubs are absolutely expected to maintain community links and loyalty.

This is of course a consequence to a large degree of German history, particularly the lessons of the last War and its immediate aftermath, in which social and economic ruin was the prospect. Whatever about that, the simple fact remains in 2024 that all of these things are good and admirable – and austere. Austerity is a good thing. In this of all weeks, there is a German lesson we can all learn.

 

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