Wednesday, September 1, 2010

From "Austerity" to "Prosperity" to...?

I fell out with The Economist a while, ago but over this summer I’ve been drawn back by a series of excellent articles on the barmies taking over right-wing politics in the US, central Europe’s increasingly economic and ethnic volatility and the UK government's developing radicalism.

Indirectly connected to the latter is this piece on the present position of Alex Salmond within the larger Union picture and how the looming "austerity" may alter it:
It is too soon to know just how austerity will play out in Scotland, and Mr Salmond’s ability to defy gravity should never be underrated. But he came to power to effect a revolution, to sweep Scotland, generous welfare state and all, to independence. That outcome, never more than possible, now looks highly improbable. Secession sentiment took a knock when Whitehall had to bail out Scotland’s big banks. Now budget cuts look set to erase much of the social spending that set Scotland proudly apart from the rest of Britain. In the resulting resentment Labour is likely to flourish, and Scotland to provide the party with a platform for national recovery, as it did in the 1980s. It remains to be seen whether Mr Salmond’s landing will be a soft one.

Labour’s (undeserved) Scottish renaissance has been a developing theme on here and other blogs but how the nationalist parties in not only Scotland, but also N.Ireland and Wales deal with that inevitable "austerity" which will follow the cuts in public services and bureaucracy is something that publicly they (the nats) are keeping quiet on.

The fundamental and uncomfortable truth is that the three economies (and to a lesser extent, that of a large part of N.England) are public-sector driven. Factor in "the pots of money" "thrown at public services" and their "supercharged welfare state", a second fundamental and uncomfortable truth is that economic dependence has made the separation of N.Ireland, Scotland or Wales from the Union a financial impossibility. Nationalists, paradoxically, have increased dependence on Westminster by pork-barrelling their own part of the United Kingdom.

Remove the pork-barrel and the SNP, Plaid Cymru, the SDLP and Sinn Fein are left in a quandary. Logically everyone knows that the public-sector and welfare dependency has stunted potential economic growth in Scotland, N.Ireland and Wales. Logically, everyone knows an attempt to change that state of affairs will cause a great deal of a short-term pain and unpopularity at the ballot box. Logically everyone (Unionist, nationalist and constitutional apathetic) knows that economies built on the minimum of state involvement are the long-term solution to building their own country’s prosperity, whether that country is within or without the United Kingdom

Dealing with the second truism has been taken out of the hands of the administrations in Belfast, Cardiff and Edinburgh. Their economies are going to be changed, whether they like it or not and Westminster, not they, will be taking the the blame. How the various nationalist parties react to this may determine the future road of the Union Debate.

Plaid Cymru and Sinn Fein, I suspect, will stick to their safe, ideological economic orthodoxies- it's the state's (not the wider economy's) job to provide, even if that state happens to be the hated British one. The SNP and SDLP, however, if they have the balls, can push their followers and the wider populace out of the comfort-zone and start looking to how economies such as Slovenia and Estonia have developed to their present position (clue: it wasn't by a top heavy public sector). Balls will be needed because it will involve re-education at a time when the more simplistic, populist approach followed by the Deficit Deniers of Labour and others will be reaping a higher electoral benefit. But long-term, if they are to have any hope whatsoever of convincing their respective electorate that independence/unity with Dublin would be feasible, they will need to be proactive in taking advantage of the restructuring brought about by "austerity".

If (against my expectations) they do and modern, entrepreneurial thrusting economies evolve where does that then leave Unionists in Scotland, Northern Ireland and Wales?

Having to greatly up their game. Relying on the fact that only the UK can guarantee pensions and other social benefits is the present effective, although defensive, strategy... but if that was no longer the case, then what?

9 comments:

kensei said...

Estonia!? What glue have you been sniffing:

http://krugman.blogs.nytimes.com/2010/05/14/they-have-made-a-desert/

The thing is, SF and Plaid have probably the luxury of having big public sector cuts imposed on them from Westminster, which they can oppose. So short term gain, if the effects work out right, long term gain. Strikes me as a win / win.

More inetrested in whatt he DUP does.

Chekov said...

The SNP is more complicated but it would mean a huge culture shift for the SDLP. The 'big state', whether you're talking about the overweening rights lobby or the 'not a penny' attitude to cuts are perhaps even more engrained in the younger SDLP representatives. Have a look at some of Connal McDevvit's utterances for instance. At least the party has done some thinking about the economy and at least it is prepared to think about it in a Northern Ireland context, but I'd be very surprised the SDLP starts pushing a realistic prospectus for an enterprise economy.

O'Neill said...

Kensei,

Unemployment rates are important but not the only important guide to the strength of an economy:

Estonia, pre crisis:

http://www.iea.org.uk/record.jsp?type=pressArticle&ID=182

http://www.theglobeandmail.com/report-on-business/commentary/neil-reynolds/economic-freedom-and-the-end-of-poverty/article1691877/
nat debt 3% of gdp

Estonia post crisis:

http://balticbusinessnews.com/article/2010/08/25/Finance_ministry_improves_Estonia_s_economic_outlook_for_this_year

I think I would be more optimistic about my future being unemployed there, Spain, Greece or even Latvia.

So short term gain, if the effects work out right, long term gain. Strikes me as a win / win.

SF and PC need NI to be economically viable as much as anyone else. So if the cuts are made and the gaps left by the decline of the public sector are not filled, independence/Irish Unity remains a pipedream.

The DUP have had their main trump card removed with the collapse of UCUNF. But Is it in their interest either to worry too much if the status quo, albeit at a lower level, remains?

O'Neill said...

Should read:

"I think I would be more optimistic about my future being unemployed there rather than Spain, Greece or even Latvia."

O'Neill said...

"Have a look at some of Connal McDevvit's utterances for instance"

The all-Ireland post service which would have resulted in us paying more for posting within NI was a classic. Curiously enough his other life is in PR are marketing isn't it?

"At least the party has done some thinking about the economy and at least it is prepared to think about it in a Northern Ireland context, but I'd be very surprised the SDLP starts pushing a realistic prospectus for an enterprise economy."

Ritchie's speech at that conference at the weekend was an interesting one re the economics. Also positively welcoming the Unionists who voted SDLP was courageous.

kensei said...

If you are defending a twenty percent unemployment rate you are on crack. At a minimum you have no idea of the devastation of depression unemployment. I'm sure plenty of right wingers are praising Estonia. Theyve cheered Ireland all the way to worse bond rates than Greece.
The irony here is you basically want republic policy with a few tweaks. Can be arranged......

tony said...

This stuff is probably from the years that probably wouldn't place you so high on any blog awards ma man;

>>..a second fundamental and uncomfortable truth is that economic dependence has made the separation of N.Ireland, Scotland or Wales from the Union a financial impossibility. Nationalists, paradoxically, have increased dependence on Westminster by pork-barrelling their own part of the United Kingdom.<<

Wow! Let me get this straight are you alleging with your "fundamental and uncomfortable truth" that Scotland would find it impossible to cope with independence? If so I would second Kensei's "are you sniffing glue" question. I would refer you to Scotlands GERS returns(no not those who frequent castle greyskull) and remember that we do not get the luxury of our own oil and gas receits attributed to us. If, since most of Scotland's trade is with England, more specifically exports........ it is that you are suggesting will cease post independence? Of course it won't ffs and if even relented somewhat well we are in Europe, so we can just export there.

Whichever way I cut it it is palpably nonsense.

>>Dealing with the second truism...<<

ROFL! Just because you have made up the "truism" as part of your argument doesn't make it so. I also reject your last point utterly regarding Scotland. Indeed in the present circumstances an independent Scotland would be immune to most of the austerity cuts that under the stewardship of the British are so obviously needed.

Apart from the usual case for Scotland that I often put here Oneill I would suggest that perhaps, just perhaps that our public sector only looks overblown because the private sector is utterly strangled by the practice of the British government of running her economy for the city of London and the S.E. of England. Imagine we actually had a Scottish government fiscally responsible who were able to steer our economy for the benefit of Scotland.

Imagine that...........eh?

As for who wins politically.

I have heard much muttering all over the place from people angry that so many of us voted labour at the last election, believing the oft mentioned lies regarding vote labour to keep the tories out. If truth be told when in company it is only from people who would not vote labour anyway and noticeably the potential labour voters keep shtum. Are people going to repeat the same mistakes at Holyrood? It looks likely..........but are we as a nation really that stupid? I'm afraid of the answer if I'm honest.

O'Neill said...

“Unemployment rates are important but not the only important guide to the strength of an economy”

That’s hardly a statement “defending” unemployment. Spain has higher u/e rate, yet with a decidely non-Roi/Estonian economic policy and in terms of at least of being able to sort myself out in the medium-term future, like I said, I would rather be u/e in Estonia (or Slovenia) than Spain.

O'Neill said...

"Apart from the usual case for Scotland that I often put here Oneill I would suggest that perhaps, just perhaps that our public sector only looks overblown because the private sector is utterly strangled by the practice of the British government of running her economy for the city of London and the S.E. of England."

But that makes the point- whoever "strangles" it the fact remains it is weak private sector and "if" that were to (or forced to) change then you would have a much stronger case to say that an independent Scotland would also be an economically successful one.