Thursday, October 18, 2007

Change is coming

When the world was far younger, Malcolm started to point out the bleeding obvious.

He observed, like many others, that the Northern Ireland economy, as presently constituted, underwritten and subsidized, was completely unsustainable in the New Dispensation.
There is nothing original in that point of view.

Only two things have kept the thing going:
  • the sheer gritty determination of Westminster (under both Tory and Labour Administrations) not to give up on a basket case; and
  • the ineffable insouciance of the English (yes, English) tax-payer about all things Irish.
The Economist (Gawd bless it!) came on board last May:
Over the 40 years of the troubles, the place has become a subsidy junkie that receives from Westminster £5 billion ($10 billion) more than is raised locally by taxation. More than a third of the 770,000 people in jobs are directly employed by the public sector (which accounts for nearly two-thirds of economic output), while half a million are officially classified as inactive. Part of the problem is the scarcity of private-sector investment, which is crowded out both by the omnipresent state and the large black economy that “peaceful” paramilitaries on both sides of the religious divide hold sway over.
Even the ranks of Tuscany...

Now even the
Belfast Telegraph is recognising the inevitable. Barry White was doing a useful piece, All you need is, er, lots of State cash, in Tuesday's edition. He was reading the runes in the pre-Budget statement:

The Times had an interesting table last Thursday... Headed 'state spending as a proportion of national or regional income, 2007 estimates', it had Northern Ireland far and away the winner - or loser - with 70.5%.

That means that £7 out of every £10 in the tills of every shop or supermarket originated from the taxes or borrowings of the UK government, meaning the British people. Wales was next, with 64.3%, the North-East with 64.3% and Scotland was fourth with 55.6%.

In the UK as a whole, the percentage was 44.1%, the same as Germany, which represents a rise of one-fifth under new Labour, and that's lower than France, 53.2%, Sweden, 52.4%, Denmark 50.1% and Italy 50%. But it's way ahead of Spain 38.5%, Japan 38.4%, USA 34.9% and Ireland 34.1%.

Malcolm has mentioned before his historian daughter's definition that a happening becomes an "historical fact" only when a quantum of recognised historians have cited it (and the corollary is that n=4). Similarly, the trigger for, at last, recognising the mendicant status of Northern Ireland is the magic number of £10 billion a year.

It may be that the most significant moment in Chancellor Darling's statement last week was:

Mr Speaker, I can also set out the total settlements of the devolved administrations in Scotland, Wales and Northern Ireland giving them their full entitlement:

Scotland rising to £30 billion in 2010;

Wales rising to £16 billion; and

Northern Ireland rising to £10 billion.

This is in addition to spending in Scotland, Wales and Northern Ireland that is not devolved – like defence, tax credits and pensions – that benefit all parts of the United Kingdom.

Here begins the real debate on devolution.

This time, it may be the English 83.8% evaluating the worth of the 8.4% Scots, 4.9% Welsh and 2.9% Northern Irish in this mystic Union. Just as (and Malcolm thanks Bob Mitchell for this one) it was the dollar-a-day Irish immigrant who rendered the "peculiar institution" of slavery uneconomic, so it could be the reluctance of the English taxpayer to continue financing the Union which brings about the end of the Saxon Empire. In the circumstances, Malcolm would not recommend this as the moment for too loudly asserting "Scotland's oil": be careful lest you are granted your wish.

Liberal economics reach the Belfast Telegraph

White's article continues with a just comment on relative "success" in the local economies. He borrows the free-market economist view (which he ascribes specifically to the Times, but no matter):
the less reliance there is on government intervention, the better regions and nations perform.
Wherever the best salaries and security are to be found in publicly-funded employment, and the state picks up the tab, the rest of the economy will struggle to compete.
Then he brings the issue home in a powerful way:
we have to devote far more of our effort not only to devising incentives to businesses big and small, but to cut the public sector down to a size more appropriate to a small region. The trouble with devolution is that although it means politicians taking on more responsibility, it also encourages them to spend, spend, spend on unnecessary administration and projects that make them feel more important.
He makes two further points:
  • an Assembly of 108 members, of whom nearly half qualify for extra payments, 11 departments (which become a round dozen when justice and policing is added) and 26 councils represent far too much government even for a divided Northern Ireland. We can't afford to duplicate everything, like Belfast's leisure centres, so that politicians get elected.
  • It's up to the Executive - which has issued just two statements, on flooding and foot and mouth, in six months - to reach difficult conclusions, soon.
There's the end of any Stormont honeymoon, then.

It's a hard life, being a well-paid politician

It's the delegated duty of the political leader to go from heroic champion to national scapegoat in one easy stride. We elect them because we need both the leader and the whipping-boy, and it saves time to combine the two rĂ´les. Similarly, it is the chosen duty of the tabloid press to mark the moment of transition from one state to the other.

That, of course, disguises the true matter.
It isn't just the administrative structures which are over-engineered to our needs. Freeing-up the economy is a "big bang", not a political squib.

White is wrong to make the simplistic parallel:
the comparison between Northern Ireland and the Republic is staggering - 70% compared to 34%, as bad as the differential in corporation tax paid by successful companies, 30% here and 12.5% in the South. No wonder all the economists, and politicians, are adamant that the only way to achieve the 'step-change' in our prospects was to find a way of closing this gap.
That ignores the other parts of the tax equation: VAT at 21% for example, and missing ingredients like the cost of health insurance.

Again, be careful what you wish: you may get it.

Malcolm would want to take the debate a stage further.

The second law of thermo-dynamics

The danger for Northern Irish politics and political economy is a drift into entropy. Indeed, that is the consummation devoutly wished by most: a dissipation of energy from the centre into ineffectual generality.

We have had too much excitement in the last generation:
  • We now want a normal "quiet" life.
  • We have an octogenarian First Minister who, naturally, wants a measured, orderly and respected end to his glittering career.
  • We have a Secretary of State who is competent but unscintillating.
  • The poraille of Assembly members is still amazed at ascending to such respectability and glory.
There is a general lack of initiative, a sense of walking on egg-shells. Play it straight; play it quietly; play it long. Things can only get better. Enjoy the moment. Every day, in every way, I'm feeling better and better.



Into the mix we have to toss Peter Robinson's well-trailed speech to "former colleagues on Castlereagh Council". That in itself rings a bell. When Malcolm, in his days as a Parliamentary Candidate, needed an instant press release, he would declaim his prejudices to his long-suffering lady-love across the dinner table. In the interests of truth and weekly journalism, this automatically qualified as "Speaking to a meeting in X Ward ..."

Robinson seems to be hitting the right buttons:
an economy that creates wealth not merely one that consumes public spending... The system of Government in Northern Ireland also needs reform... it may be necessary to build confidence in the process before more radical changes can be delivered [but] I hope that change will not be too long delayed.

And, cryptic, but most noticed and most significant:

A four party mandatory coalition with no effective opposition is not in the best interests of decision making in Northern Ireland.

Malcolm is aware that Robinson sees himself as the coming man, perhaps even a man who has waited too long already. At this moment Malcolm is averse to commenting here on the subsequent CTI kerfuffle, which is not relevant to the wider issue (and is constantly developing). However, all in all, we are left with queries about Robinson's speech: why? why now?

An unkind answer is provided by Margaret Ritchie (note caveat above):

Miss Ritchie ... said that Mr Robinson seemed to think he personally ran the Assembly.

That should achieve Robinson's presumed ambition; to be number one in a two-party parliament: just like that other nice bigot, James Craig.

Time for tea

For the moment, the questions and answers to any debate on Northern Irish development rest in the six counties. That will not last long.

In short order, we can expect further (and, for Northern Irish politicians, unwelcome) interventions from outsiders, those 83.8% of the people who foot that £10 billion bill.

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