Category Archives: Economy

Tackle China to tackle Climate Change

I do not write much about environmental issues for the simple reason that I am not an environmental scientist and, thus, know very little about them. That does not mean I do not think them important; it is simply that I prefer to choose subjects about which I am at least halfway informed.

However, there is one straightforward statistic about the share of global greenhouse emissions accounted for by each of the world’s three largest economies:

  • China 24%
  • United States 13%
  • European Union 9%

Of course, there are more people in China than in the United States and Europe combined – the United States in particular still emits more greenhouse gases per person than China does (although that is no longer true of the European Union). However, China’s economy is roughly the same size as the United States’ alone, or as Europe’s alone (i.e. all three are about equal size with each other), and yet China accounts for more harmful releases into our atmosphere than the United States and Europe combined. In other words, if China’s exponential economic growth continues and its (car-driving, factory-building, plane-flying middle class grows as expected by hundreds of millions), even its per capita emissions will come vastly to outstrip even those of the United States.

So the problem is not really ours, right? It is up to China to put its house in order?

Sort of. There is no doubt that China, and the Far East generally, will be much more dangerous to the environment than North America or Europe in decades to come. Any direct action taken by the West to limit climate change could be rendered almost irrelevant by Chinese growth. Yet it may still be decades before a burgeoning Chinese professional class is in a strong enough position both to recognise the problem and persuade compatriots to do something about it.

However, on what basis is the Chinese economy (and thus potential to damage the environment) growing? Well, by selling “stuff” to the West, in large part.

So, there is something quite obvious we in the West could do to protect the environment. We could stop buying this “stuff”. By doing so, we would limit the growth of the Chinese economy (thus giving more time to find a means to grow it without rapidly rising emissions from a country accounting for more people than North America and Europe combined), and we would even reduce transport costs.

That is a “win-win”, surely? Well, of course, it would mean the “stuff” we did buy would be made in Western countries with employee rights, health services and welfare systems as opposed to one where these basics do not exist. We would be doing our bit not just for the environment but also for human rights, but that “stuff” would, therefore, be considerably more expensive.

So, what about it…?


Perils of über-British/Irishness

An SDLP Councillor has a proposal for a civic dinner to be hosted by Belfast City Council for both Irish soccer teams upon qualification for the European Championship. Leaving aside the practicalities of running a £30/head dinner for lots of footballers during the season, this proposal, though dressed up as “inclusive” and “equal”, is actually bizarre.

This is the problem we run into with these two words. In fact, every single player in France next summer who is from the Belfast area and/or played for a youth team in the Belfast area will be playing for Northern Ireland. Belfast has a direct role – through funding and facilitating clubs and general development – in the success of probably more than half the Northern Ireland team, but only the Northern Ireland team. It is usual and practical for civic receptions to focus in an “inclusive” way on the area of the Council’s influence, and such a civic reception has already been held.

Even leaving that aside, the simple fact is that qualification (top of the group) by a team representing an area of 1.8 million people is a considerably more noteworthy accomplishment than qualification (through the playoff) by a team representing 4.5 million plus a significant diaspora (and much of whose team, unlike Northern Ireland’s, is actually drawn from that diaspora). Comparable countries to the Republic of Ireland, such as Croatia and Albania, qualified too – whereas only one of Northern Ireland’s size or smaller did so. So, for Northern Ireland, merely qualifying is an accomplishment of similar standing to winning the tournament would be for Germany, reaching the semis would be for England, or reaching the knock-out stages would be for the Republic of Ireland. The accomplishments, therefore, are not “equal” – and the Belfast proposal in terms of the Republic of Ireland team is vastly more lavish than any likely to be bestowed upon it by any council within the FAI’s jurisdiction.

(To be clear, because believe it or not there are politicians out there who like to misrepresent things, there would be no harm in some sort of joint event, nor in being creative about such things – a joint homecoming reception for both teams after a day’s joint training at the new Windsor Park next autumn would be a great message and befitting of the support both teams have within the city. The session could even be ticketed with proceeds allocated to a local charity. No such strong message would be sent out by a lavish dinner at ratepayers’ expense.)

What is the point here? The point is that the wrong “inclusive” and “equal” comparison is being made. The comparison, at best, has to be with what other Irish City Councils are doing for the Republic of Ireland team. To do otherwise is to embark on an adventure in über-Irishness, where Northern Nationalists spend far more ratepayers’ money on celebrating Irish achievements than their compatriots in the Republic.

Über-Irishness and über-Britishness (putting flags everywhere, singing anthems inappropriately, moaning about how “Team GB” isn’t “Team UK” etc etc etc) are what define Northern Ireland. From across the border and across the Irish Sea they look on bewildered, knowing fine rightly there are better things to spend money on than lavish expressions of national identity. Perhaps it is time we worked that out too?

See you at the Homecoming Reception…




Let’s end this Black Friday madness

Black Friday was something I only became aware of in the UK last year. I had some notion of the tradition in the United States around Thanksgiving, but since Thanksgiving does not exist on this side of the Atlantic I, like most here, gave no more thought to it.

Then the terror started.

Jostling on Black Friday turned into worse in shops like Asda last year, leading the store to stop marking it.

Jostling on Black Friday turned into worse in shops like US-owned Asda last year, leading the store to stop marking it in the UK. 

There are two reasons I was appalled.

The first is economic. All this grabbing, barging, jostling and outright fighting was a mad consumerist binge for “stuff”, which has no rational justification whatsoever. It does not buy children’s love, it does not buy family happiness, it does not buy general social wellbeing. In fact, fuelled by debt as it inevitably is, it leads to certain economic disaster, financial anxiety and in some cases genuine poverty. Just such a calamity befell us in 2007/8, and for some reason, within easy memory of that, we wanted to repeat the lunacy. For what, precisely?

The second is arguably less serious but also noteworthy: it shows not only that we have no sense of value but also that we have no self-respect. Black Friday is clearly, without dispute, an American tradition. It has nothing whatsoever to do with the UK. So why on earth would we meekly import it? For all the criticism of Tony Blair being “America’s poodle”, now we are all at it! Is that not pretty pathetic?

(Americans have many fine traditions, by the way – but they are theirs, not ours. They have no meaning here and should not be imported just so multinationals can make a quick buck from the hard-pressed worker.)

Self-respect is perhaps what this is all about. We need to have more self-respect than to think we can buy love or happiness; we need to have more self-respect than to think retail binges constitute a serious economic plan; and we need to have more self-respect than to copy cultural traditions from elsewhere without any rational justification.

Americans can keep Black Friday. At least until they import Boxing Day…

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Another day, another SF fantasy…

Sinn Fein activists got excited last week at a report from academics which suggested that Irish unification could boost the Irish economy by €35.6 billion. Of course, that was the headline – like any headline, it was not a totally fair representation of what the report said. It also failed to mention exactly who was behind it.

The report says that if Northern Ireland were to be incorporated into the Republic of Ireland – taxes, benefits and all – it could find its productivity increase to a similar level (i.e. from roughly 90% of the EU average to 130% – taking GDP figures from Eurostat) in 15 years. I am doing it a slight disservice there by slightly overstating and simplifying the figures, but that is the basic premise of the report and the subsequent commentary.

To be clear, the report is not without merit. If Northern Ireland became more like the Republic – considerably less reliant on welfare and public spending, in other words – it would indeed become more entrepreneurial and, in all likelihood, its GDP would rise. This is indisputable, and has been argued frequently on these pages. There are three pretty hefty problems here, however.

The first problem is that, far from being “independent” and “academic”, the report was in fact commissioned by friends of Sinn Féin in California and has not been peer-reviewed. Put simply, it is therefore neither independent nor academic.

The second problem – one raised frequently on these pages – is that neither Sinn Fein nor the SDLP actually offer the favourable scenario it purports to offer! In fact, since they first attained Ministerial office, they have very specifically sought to make Northern Ireland more reliant on public spending on welfare (and so it has become). Only the other day, an SDLP Minister specifically opened a grant programme to include only not-for-profit organisations; Sinn Fein is busily trying to deny it is decreasing the size of Northern Ireland’s public sector and introducing a lower level of corporation (ahem, profits) tax. This is the precise opposite of the route recommended in the report to generate this extra “unification” bonus they were getting so excited about.

The third problem is that we cannot know what the outcome of the adoption of the Republic’s economic and financial policies in Northern Ireland would be, but we can say with reasonable certainty it would not be as pretty as the report suggests (and indeed, even the authors say “could”, not “would”). The report is remarkably reliant on the suggestion that Northern Ireland would gain from adopting the apparently weaker (and actually less stable) euro currency, when in practice we have no idea what the medium-term exchange rates would be or how useful they are. We should also not forget that the tax regime it proposes this would actually mean:

  • abolition of a Health Service free at point of access (as it would no longer be affordable from the lower tax take);
  • additional to that, introduction of various other charges to align with the Republic (for roads, bins, fire call outs, etc);
  • lower income tax bands (thus the average earner and average professional would pay more income tax);
  • higher VAT (by three points, on current levels);
  • 100,000 public sector job losses…

Hold on, 100,000…?!

Well, of course. The Republic of Ireland employs around 280,000 public sector workers for a population of 4.5 million; Northern Ireland currently has 210,000 for 1.8 million. Proportionately, therefore, Northern Ireland has almost twice as many as it would have when matching the Republic’s policies as the scenario presented in the report suggests it would – and that is before you get to potential additional job losses or transfers to Dublin (the capital, presumably) and of course the alleged efficiency savings of doing things on an all-island basis (if those exist at all and are to be realised, they must involve the removal of bureaucracy and, thus, of bureaucrats – public sector workers, in other words).

On top of this, we have the obvious problem with the assumption that adoption of the same policies purely on the financial/economic side would immediately have the same outcome despite differing educational systems and training priorities (and historical government structures, and legacy of conflict, and infrastructure…). Even if it magically did, we then have to ask where the global companies are which are going to invest in Northern Ireland because it has adopted the same policies as the Republic of Ireland, but have not already invested in the Republic of Ireland. And then we have to recognise that if Northern Ireland wished to reach the same GDP/head levels as the Republic of Ireland, from the date of unification it would not just need a fair share of that investment on to the island, but in fact the comfortable majority (to make up the gap with the likes of Google, Intel and Apple already safely ensconced in the Republic). So for “could”, we should probably read “could theoretically in miraculous circumstances”…

That is not to say Sinn Fein activists should ignore what is, in effect, their own think tank’s report. On the contrary, they should read it carefully. It says what I have always said – the practical case for a United Ireland can only be made from the economic Right, not the Left.

But Sinn Fein, of course, isn’t really serious about a United Ireland. Indeed, the very first thing Sinn Fein said after the “Fresh Start” deal was that it did not commit them to supporting lower corporation tax. The very first thing the report says is that the generation of extra wealth for Northern Ireland depends on, er, lowering corporation tax. I don’t quite buy that myself. But then, I wasn’t the one commissioning a report and then getting excited about it on the pretence it was independent…

Subvention denial (and why GDP is a terrible metric)

The Nevin Economic Research Institute (NERI), not known for its right-wing leanings by any means, recently put forward this very helpful piece.

It is particularly helpful in taking on subvention denial, which is the latest game being undertaken by the Nationalist Left, most obviously Sinn Fein. It is odd how they are obsessed by numbers around £700 million. Having previously had their figure of “£750 million out of the economy due to welfare reform” demolished (no one mentions it any more, and it would be good to hear people apologise for having put it about so carelessly), they are now trying to suggest Northern Ireland’s subvention is less than that, at only around £700 million. This is garbage.

This does, of course, lead us on to a real issue of what the “subvention” actually is. There, NERI is particularly useful, by defining something different but very relevant – the “net fiscal transfer”. It is in fact this which most people are calculating when they refer to the “subvention”, namely the gap (broadly) between what Northern Ireland raises in tax revenue and what Northern Ireland spends on public services and welfare – a gap which would have to be covered in extra expenditure by the rest of Ireland in the event of Irish unity, in order for Ireland to maintain a budget surplus (as the Republic currently does).

It is worth adding, however, one area where NERI is a little careless (although not strictly inaccurate). It bands around words like “poorer” based solely on GDP. It is far from unique in this – the European Union does likewise. To be fair, NERI itself warns that it is focusing on figures only.

Based on GDP, Northern Ireland is indeed considerably “poorer” than the Republic of Ireland. Northern Ireland’s GDP per head is around 10% below the European Union average; the Republic’s, on the other hand, is around 35% above. It is equally dodgy to equate the term “living standards” to GDP levels, as many do.

However, here is a pecular thing: despite GDP levels, household spending in the Republic of Ireland is in fact below the European Union average; whereas household spending in Northern Ireland is nearly 20% above the European Union average. This would explain why visitors to both parts of Ireland – on one side of the border there are more BMWs (and indeed cars generally) sold, more money spent on eating out and more money spent on household goods, and yet it is not the side of the border you would expect according to the GDP figures. So the word “poorer” requires care – it would be better to specify “lower GDP per capita”.

The problem with GDP is threefold. Firstly, it only measures product, not outcome – for example, it is surely beneficial if you have a neighbour who fixes your pipe (rather than a plumber) or a family member who looks after your kids (rather than a paid child minder), and yet these “benefits” will reduce GDP because they do not contribute towards an overall product in any calculable way (whereas an expensive plumber or child minder would increase GDP because they do). Secondly, albeit linked to this, it only measures product within the country at point of production, which is why the Republic of Ireland has such a marked differential between GDP (measured at point of production, a figure which for the past decade or so has been typically around 20% higher than the UK’s) and GNI (measured effectively at end of production – a figure which in recent years has typically been almost identical to the UK’s) – for example, if Apple produces lots of value in Cork this goes on to Irish GDP, but the profits in terms both of research value and straightforward money gained will still make their way back to the California where the company is based and thus be added to GNI in the United States, not Ireland). Thirdly, GDP is designed to be used at a national rather than a regional level – in fact, the UK’s Office of National Statistics does not even assess GDP at a regional level because it is too complex and almost redundant (for example, if someone buys something from Tesco in Northern Ireland, it is arguable whether that should be assessed as beneficial in Northern Ireland or where Tesco is based in London; if it is the latter, regions with lots of nominal company headquarters within them, not least national capitals, will almost always gain ludicrously on the statistics charts). The simple fact is also that most countries have a system of internal transfers designed roughly to equalise the actual living standards experienced across the country (although whether they do this perfectly is contested, of course); indeed, the nonsense of regional GDP is that it at once suggests Northern Ireland is the “poorest” region of the UK, but Belfast is the third “richest” city – neither of those can seriously be right, and as ever the truth in terms of the actual living standards experienced is somewhere in between.

None of this, however, makes life any easier for people trying to wish away Northern Ireland’s fiscal imbalance, evened up as it is each year by the UK Treasury to the tune of (now) nearly £10 billion – the “net fiscal transfer”. This is made up of current public spending by the devolved departments (health, education, justice etc. – currently typically just over £10 billion), current infrastructure spending by the devolved departments (construction and upkeep of roads, hospitals, schools etc – just over £1 billion), social welfare spending (pensions, housing benefit, jobseeker’s allowance, etc.; in theory devolved by in practice from the UK Government – currently nearly £8 billion although by nature in varies from year to year), and UK-wide “non-regional” spending (defence, diplomacy, debt repayments, some Treasury spending such as tax credits, etc. – over £4 billion to Northern Ireland if assigned roughly equally across the UK) minus the tax revenue received from Northern Ireland (around £10 billion directly plus roughly another £3 billion in UK-wide tax take – this latter figure in particular is tricky to assign given individuals/companies operating across the UK, the nature of online purchases and even tax payments, etc.). This gives around £23 billion minus around £13 billion as a best guess (including £19 billion minus £10 billion in clearly regionally assigned expenditure and revenue).

It should be noted this is not all strictly “subvention” – despite “austerity” (or because, unlike in the Republic of Ireland, “austerity” has not been implemented anything like fully in Northern Ireland), the UK Government still spends more on public services and welfare than it receives in tax revenue, to the extent that all four countries of the UK actually receive a “net fiscal transfer” and thus the whole of the UK has a “subvention” from borrowed money. Welfare is also tricky because it is not budgeted, and is spent on the basis of need rather than prior calculation (the crux of the Conservatives’ current problems having specifically pledged to reduce it).

The truth around GDP only makes matters worse for Northern Ireland were it to leave the UK, because its low GDP figure is converted into a relatively high public consumption (household spending) figure by that net fiscal transfer – most obviously in the form of lots of extra public-funded jobs (not just in the civil service but also including the likes of most construction workers, most professional consultants, half of the voluntary/community sector) which would simply not exist without it, and thus whose salaries would not exist either. Even community grants, sports sponsorship and other types of aid are sought almost entirely in Northern Ireland from “the government” (or “the council”, or whatever) rather than from the private corporate sector as would be the norm elsewhere in the UK and (notably for the purposes of this comparison) Ireland. Thus Northern Ireland’s whole financial culture is abnormal and dependent on the net fiscal transfer which is itself dependent on remaining in the UK.

Northern Ireland is nowhere near paying its way, and that is what defines it economically and socially. Plainly, it is that which has to be resolved before any serious debate about its constitutional status can ensue. Subvention denial is not going to cut it.

And by the way, quite frankly, Northern Ireland needs more public spending the same way an alcoholic needs more drink. Those who seek to change its status should be the first to see that…

Cross-border relations continue to improve – yes, really

Nolan has his faults, but his direct question to Irish Government Minister Jimmy Deenihan, as to whether the Republic could afford to take on Northern Ireland given its annual fiscal deficit of £9.8b, was a master stroke. As was the Minister’s response – straightforwardly and honestly he said “Well no, really”.

Over on Slugger this response was written off by some Nationalists as a mistake or even a setback for cross-border relations. It was neither. Straightforward confirmation that a “United Ireland” is not on the table in the short to medium term, and will never really be until Northern Ireland pays its way, was exactly what Northerners needed to hear. The task now is to make sure they heard.

Firstly, Unionists can no longer get away with raising the immediate notion that a certain course of action will herald a “United Ireland”. No course of action (apart from, ironically, the UK leaving the EU) could possibly lead to a “United Ireland” in any remotely foreseeable timeframe. There should be no more bogey man – it is time to play our part in the UK while maximising our relations and trade with our next-door neighbour.

Secondly, Nationalists need to get over the notion that being an economic basket case somehow makes a “United Ireland” inevitable. Actually, it makes it impossible. And, by the way, if their core argument is that partition leads to duplication of services, they can start leading by example and removing duplication within Northern Ireland itself – starting with pointlessly and expensively divided teacher training facilities. They may also care to note that their fellow citizens in the South do not think profit is a dirty word, do not think mass welfare is a serious economic strategy for the future, and do not believe in running government deficits. Bloody Tories the lot of them…

It has long been obvious to any rational thinker that the only short and medium term priority for Unionist, Nationalist and “progressive” alike is to make Northern Ireland work economically. These mean a radical departure from the stale politics of endless government intervention and being scared of actual export-based wealth creation. After all, it is precisely that which makes us so different from our neighbours… yes, really.

Corbyn’s “simple questions” do not justice to complex world

This day last week Jeremy Corbyn had his best performance at Prime Minister’s Questions, demanding six times whether “Karen”, the real person who had been in correspondence with him and whom he used as an example, would be “worse off” under the tax credits changes. The Prime Minister squirmed.

“All I want is a simple answer to a simple question”, said the Leader of the Opposition.

However, that is the very problem with Mr Corbyn. Because, in fact, it is not a simple question at all.


There is an alarming tendency among politicians, especially as they become ever more populist among electorates increasingly unwilling to compromise, to present “simple questions” and, most of all, to present the world as if it is controlled by politicians. To some extent, it is a comforting thought – we prefer the thought that we live in a world controlled by someone rather than the chaotic reality (as I have explained before).

Thus, Mr Corbyn presents a world in which politicians change things and everything else remains the same – there are no other, independent, actors. As ever, unfortunately, Mr Corbyn’s world is not even reminiscent of the real one in which people do strive, people do aspire, and people do adapt to political decisions.

The image above sums up the issue, usually presented with regard to management of the Health Service. Too often, Health policy is presented as something which politicians and administrators create to manage patients, who have no independent thoughts of their own and will always respond in the same predictable way to any intervention. In rare cases, this is true – someone admitted to hospital with a sudden, serious injury, for example, is in no position to act independently and their care is therefore 100% in the hands of the hospital (at least initially, until family and friends arrive). Just as with learning to throw a stone at a target, practise for long enough and you will perfect this.

However, most cases are not like that. Diagnose a patient with diabetes, for example, and in fact most of that patient’s care is in their own hands. You can advise on diet, medication and other responses, and you can even cajole, but in the end the patient will decide. That is the equivalent of trying to direct a bird, rather than a stone, at a target – you can learn to set it off in the right direction, but in the end it will decide where it goes. Most public policy is, in fact, like that.

This can lead to dramatically different outcomes from those expected, even with vast amounts of public money in play. In the late 1980s, for example, the UK Government wanted to link the new M25 London Orbital Motorway to the Channel Ports, most obviously at Dover. It had two options – upgrade the existing main road, the A2 (which, unbelievably, was still single carriageway on some stretches); or build an entirely new motorway either side of the Medway, the M20. Expert studies showed that, although it was the far more expensive option, the M20 would attract 80% of traffic between the M25 and the Channel Ports if constructed. So the M20 was constructed and London (indeed Cardiff, Liverpool and soon even Glasgow and Newcastle) were finally linked to the Continent by motorway – but for the first decade of its existence, barely 50% of the M25-Channel Ports traffic opted to use it. The Government intervened, gave people the better road, yet still half the people ignored it. There is just no accounting for this.

So, what about “Karen”? The reason the Prime Minister was squirming was of course that, all things being equal, “Karen” will be considerably worse off, at least over the rest of this decade. But he was also squirming because he knows all things are not equal. “Karen” may or may not have time to find a better job and raise her income; she may or may not have time to take on an extra part-time job (say, running a class once a week for £50/evening or helping out with the local cruise firm bringing passengers to or from her local city centre for £100/day); she may redouble her efforts at getting the money she is due from her child’s father; she may even look more closely at her entitlements and realise she’s not receiving all the allowances to which she is entitled. Any of these, far from leaving her £1100 worse off, could see her at least that much or more better off – albeit with the time sacrifice involved; or they may not see her break about even, because she has to even up the gain by paying for childcare or losing an allowance if she works more hours or is allocated more money from whatever source; or they may simply be practically impossible because her circumstances genuinely don’t allow any flexibility and she is already receiving all she is due. We just don’t know. Why do we not know? Because it’s not that simple!

Politicians can act; but so can the public in response. Always beware anyone in the business of government demanding a “simple answer to a simple question” – because it’s a complex world out there.

NI economy in better shape that figures indicate

Headlines last week indicated that the Northern Ireland economy had contracted over the last quarter, with initial estimates indicating economic output had contracted 0.1%.

I am not an economist, but something strikes me as wrong with that. My impression, in business myself, is that discretionary spending is rising in NI, despite the obvious uncertainty of closures in the retail sector and inevitable (and frankly necessary) public sector job losses.

A few thoughts on what may be wrong.

Firstly, the quarter concerned was the first which saw significant exits from the public sector (and, in any case, incorporated part of the summer break when many people are away), thus reducing the overall “output” figure via what is, in fact, a particular (and, in the long term, wise) adjustment.

Secondly, the figure is a comparison with a previous quarter in which areas such as transport equipment were astonishingly strong. It is to be predicted that such strength would not be repeated.

Thirdly, there is a geographical problem. At the moment, construction in the UK is skewed towards the London area, and any construction work there goes on to the London area figure – even if carried out by a Northern Irish firm which will “repatriate” the profits and by Northern Irish workers who will bring most of the money earned there home.

That final point also ties to a further reality that rising property prices often see a rise in confidence and spending which has no basis in reality. Those rising property prices are much more marked in the rest of the UK. This is a good thing. If there is one thing more important to an economy than confidence, it is stability – so Northern Ireland would be best to avoid this boom and bust cycle, although time will tell if it does so in the long run.

Northern Ireland is fairly well positioned economically with rising confidence in both Great Britain and Ireland (the main export markets), strong foreign direct investment and sensible property prices. Its main problem is political instability, which inevitably delays or even blocks investment leading to jobs. Now there’s a thought…

If devolved nations haven’t enough to spend, they should raise it themselves

The three “Celtic” Finance Ministers are perfectly at liberty to work together (indeed, they should) and to oppose UK Government policy in an open manner (as they have, for example, here). This does raise two other problems, however.

Firstly, in a set-up where the vast majority of the overall budget setting is done at a “federal” level, there is a clear advantage for devolved parties to move “left” on financial matters because they can always blame someone else. They might consider, however, that this advantage is reversed at “federal” level where they begin to look irresponsible. An inevitable outcome, in a lopsided or consociational devolved system, is that the “centre” (say England in the UK, or even Flanders in Belgium) moves semi-permanently “right”, and the “regions” (say Scotland or Wallonia) move “left”, putting the whole future of the federation itself at risk. In other words, it is easy to be “left” if you do not have to raise your own revenue; and arguably somewhat easy to be “right” if the emphasis is on tax levels and apparently lucky outlying regions.

Secondly, however, the media are allowing the devolved regions away with the implication that they cannot affect the level of public spending (or, put another way, raise taxes). Actually, if they think the level of public spending they have is too low, they are perfectly free to raise revenue from within their own jurisdiction.

The obvious example is that the SNP (and previously Labour) had the power to raise the basic rate of income tax either way by three points. They also have power over the rate of household taxes at local level. (This is before we get to giveaways like free personal care or no tuition fees which are not enjoyed elsewhere, but which do in effect reduce their spending levels on other things.)

Most markedly hypocritical is, of course, the DUP. The DUP opposes any further revenue raising (except taxing the sick by charging for prescriptions), yet also believes that public spending levels are too low. Those cannot both reasonably be said to be true, not least since DUP Finance Ministers have already maxed out borrowing for infrastructure. If the DUP really believes, as it says in the letter, that public spending in Northern Ireland is too low, it could easily introduce water charges, advocate increased tuition fees, put up the Regional Rate to match GB Council Tax levels and so on; it could also stop Northern Ireland having the most generous concessionary fare scheme on public transport and such like, and that is before the millions we waste on segregation and other general inefficiency (like training teachers we don’t need in a segregated environment).

In the end, the quality of devolved government suffers because too much time is wasted on shirking the blame for one’s own inefficiencies and unwillingness to raise taxes. This is yet another reason that tax powers should be devolved as quickly and as far as possible – at devolved level, the “right” should be able to make the case for efficiency and low tax; and at “federal” level the “left” should be able to make the case for higher overall spending and the value of fair (if higher) taxation.

In the end we cannot escape reality: if we want more public spending here, we will have to raise more tax here. Only once we deal in that reality can we have a proper debate.

We are still too reliant on debt

This superb article from the Washington Post about the need the “change the debt dialogue” speaks for itself and requires no further comment.

We still have an obsession with debt. It is seen as an absolute necessity, an accepted norm, even a good thing, when it comes to further education, property ownership or business start-up. It even drifts into “good thing” territory with reference to mobile phones, vehicles or even furniture.

It really isn’t. Eventually any Ponzi scheme is bound to collapse like a stack of dominoes. Fall far enough, and they’ll even break the table!

Countries like Germany manage perfectly well without stacking up such debt. People work as they are educated, rent until they can more easily afford to buy, and use investment for business. It is a more austere world, but also a more stable one – and one in which the very notion of things like “store credit” is alien. What is more, it is a more equal society and the wealth is not all stacked up in one corner while everyone else subsists on credit.

We need to change our entire attitude to debt. I do not know where we start, but it is clear we should.


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