Economics is the dismal science, we’re told, but it’s also the basis on which states are built. If a country isn’t built on a sound economic base, it’s in danger of collapse. Or, as in the case of our own little stateen, if it can’t get the money from elsewhere to prop it up.
Much of the talk about the viability or non-viability of a united Ireland comes back to this question: would it make economic sense? So here are a few questions to which I don’t know the answer and which are in my view crucial in any debate.
1. How big is the annual subvention the north receives from Britain? The easy answer is “Near to £11 billion”. But I’ve heard economists say that much of this money doesn’t actually find its way here but goes on other matters in England that have nothing to do with this place. Can this be true?
2. While we hear much talk of the money that comes to here from London, we rarely hear of the money that goes from here to London. I’m talking about income tax and all the other taxes that slice into our income. So does anybody know how much we give London?
3. A frequent argument in favour of Irish national unity is the duplication of services. We have two of everything – two health services (that is, if you see the south’s arrangements as a health service), two education systems (do the two education departments talk at all at all?), two transport systems, and Uncle Tom Cobleigh and all. So does anybody know – has any thorough-going, independent study been done – into what difference it would make economically if we had one integrated set of services for the entire island? You’ll probably know that Altnagelvin hospital in Derry serves people across the border and that child heart operations for the island are based now in Dublin. So if that’s true, how much are those saving, for starters?
4. Referring back to No 1 above: does it make sense to set up a state which clearly can’t begin to think of surviving without the economic life-support system supplied from London? Or is that the wrong way of thinking about the creation and maintenance of this state? Does the money not matter?
5. Finally, the cross-border bodies that were part of the Good Friday Agreement: have they worked together to provide examples of how a unified system would look and cost? Or are they window-dressing which, when they do come together, have no economic foundation or concern?
I know we all like to have answers rather than questions but I’m afraid I can’t provide answers on this one. If there was a weaker Maths student in St Columb’s, Derry during my stay there, I can’t think who he was. But that’s a distraction. Answers, please. You have twenty-four hours before exam papers are collected.
Very good analysis.Questions which no one will answer
Certainly not politicians because they do not understand
Picture Sammy or Simon working that out?
Perhaps if you had asked for an Irish dimension Nelson would have the answer right away!!!!
I have asked myself is this blog worth a reply… Why bother, how unfortunate it was for me to have been born in this God forsaken hole, with these God forsaken people. The same motley crew that have feasted and lived well under this so called state.
Oh if only I could have one wish I would make you all disappear (my husband and his family not included) it would be wonderful, I would deny the lot of you anything remotely BRITISH. You’s are a pain in the arse go away.
Norma, I was going to dump your comment but I like people who argue the opposite side. Unfortunately this comment is nothing but name-calling. I won’t put up another like it. Sorry
Aw Jude, how could you?
I can see your point of view, but where in the world would you get ‘logic’ like it?
Norma’s posts, I am sure, are compulsory reading in any psychiatry colleges in the country.
Many readers may find them objectionable, as I am sure Norma intends them to be, but I would ask you to consider giving her a special dispensation.
Because no other blogger would do so I’m sure you would feel the better for doing that as your good deed for the day.
Norma, the poverty of the working class in NI , both sides, was/is an embarassment to your beloved monarchy.
I quite agree, Jude that matters of a financial nature are of paramount importance. However, it is surely acceptable to count ideological interests as equally important when making a choice. Unfortunately, Unionists will tell us that including any sort of philosophical attraction to reunification is silly. However, the same tribe are allowed to proudly say that they would eat grass to remain in the Union, thereby ignoring economics when it doesn’t suit.
I’m in total agreement, Freddy. I’ve highlighted the economic argument because it appears to be the one that people speak of first when the question of a UI is raised. I’d like to get economic answers one way or the other. Personally, even if it did cost me, I’d still favour a UI for ‘philosophical’ reasons as you say. But the economic one should be answered first. If it’s a non-runner for nationalists, they should openly concede that and put forward other arguments. Likewise if it’s a non-runner for unionists, they should put forward their case for maintaining the union.
the Unionist case: I watched the run-up to the Scottish referendum, sat through all the sweet love-ins from Mr Cameron and quaked at Project Fear from the Cons/lab/Lib-dems
Nowhere could i find a rational case for maintaining the union
There must be one somewhere around!
Jude,
The issues you raise are valid but it doesn’t address fundamental issues such as how does the money governments and its citizens spend come into existence.
The answer is 97% of all money in circulation is created by private banks out of thin air & lent to governments and its citizens as a debt with interest charges.
This is why we have so much debt – most money is created as debt in the first place.
So you have the crazy situation where the UK bailed out the banks with £375Billionin recent years. This money was created out of thin air by the bank of England & in effect given to the banks (EU are now doing the same). Yet the government continues to borrow from the banking sector. For example the UK pays around £90 billion annually in interest payments to private financial institutions. That a massive subsidy by the state to the private sector.
My point is: there is no reason why the state cannot create the money it needs to run the country without having to borrow from banks. The state already does this in a small way. All the cash in circulation – 3% of all money (the rest is digital money – digits on your computer screen for which no cash exists) – is created by the Bank of England and simply spent into circulation without interest payments.
http://www.positivemoney.org/our-proposals/video-reforming-the-monetary-system/
Jude, I’d like to think Sinn Féin has the answer to these questions which are the very points the party has been raising consistently for a number of years. We all remember how Michael Mc Dowell wiped the floor with Gerry Adams, a debate which cost the party dearly in the election in the South. Pearse Doherty has been much more convincing on the same subject but I’d love to know if Sinn Féin has provided robust evidence for their economic arguments. I haven’t seen them yet. Its easy to articulate the rhetoric of the benefits of a United or Agreed Ireland, whatever the difference is but with the battle field full of very able opponents to a new all Irish dispensation, we need to arm ourselves with more than a few bullet points! if we are to convince a diverse and dubious electorate North and South. Despite Sinn Féin’s weaknesses in economic literacy it is the only party with a strong base in both jurisdictions arguing for an United Ireland, and that should hopefully give Republicans a head start and make the dream a realistic goal.
Dan – I think there’s something in what you say. SF should produce a document detailing the economic implications of a united Ireland. That said, this thing about McDowell wiping the floor with GA: this has passed into accepted folklore. Listen to or watch the recording – McDowell is the stalwart of economic policies which led to the near-bankruptcy of the state a few years later, GA is arguing against the policies of the day. Which of them was the economic illiterate?
Cant help but agree with you Dan. Sinn Fein are very strong in many areas, their very good speakers, very good at debating, planning, etc even the Unionists accept that. But their biggest weakness is economics, that’s my perception anyway. If any shinner should debate the economics of a United Ireland in a TV studio, Radio, blog, etc I don’t think it should be any of the older politicians, that’s my opinion. I’m certainly not saying their stupid or whatever, I just think economics isn’t their strong point, leave it to a younger shinner who maybe studied economics or mathematics at University/College.
The correct answer to most of your questions is, níl a fhios againn, we do not have the knowledge to provide definitive answers. A financial expert Eamon Donaghy recently noted in the Belfast Telegraph:
“The running cost of Northern Ireland is £20 billion ($32 billion) a year of which we contribute about £9 billion ($15 billion) in taxes.” The thrust of your questions is correct, what are we paying to run? Are we getting value for money? Is the state based on a sound economic base? What are some of the facts?
The Finance Minister stated, “Northern Ireland spends £9.6 billion a year more than it raises in revenue. That’s a subvention of over £5,200 for every person in Northern Ireland annually.”
The World health report 2013 advocates the need for universal health coverage which means that everyone has access to quality health services that they need without risking financial hardship. This requires a strong, efficient, well-run health system; access to essential medicines and technologies; and sufficient, motivated health workers. What is the response from our politicians? They endorse welfare cuts and unemployment in the public sector. There is no question of MLA’s salaries or expenses being ‘reformed’, perish the thought.
The Northern Ireland Poverty Bulletin 2012 -2013 was published by the Analytical Services Unit in the Department for Social Development on 1 July 2014. It was round about the same time that a small fortune was being spent on the illegal disposal of tyres on bonfires.
Key facts from the report include:
• Average incomes remain comparatively low.
• Approximately one fifth of the population remain in relative poverty.
• 96,000 children (22%) were in absolute poverty.
• There were approximately 209,000 (21%) working-age adults in absolute poverty.
• 63,000 (21%) pensioners were in absolute poverty.
Much has been published about health indicators in the north of Ireland. The evidence indicates major challenges in relation to self-harm, suicide, the abuse of alcohol, tobacco, and other drugs. Medical professionals remain concerned about a range of health indicators however, one thing is evident,the body politic is in need of radical surgery.
It may not be possible to provide definitive answers to the questions posed in today’s blog but that does not imply we cease to look for answers based on evidence. To quote the late Mr Lennon, imagine, a country in which burning issues meant dealing with social and economic challenges that impact on standards of living instead of tyres on bonfires, flags used as icons for mutually agreed priorities concerning social policies and parades were for walking on at the end of a working day.
There is nothing wrong in aspiring to a United Ireland.
The question is does any party FF FG SF SDLP really want it? Not once have they put down on paper how much unity will cost the tax payers of the Republic and since nobody wants to raise taxes coming into an election they probably never will do.
Was in Dublin yesterday meeting some business acquaintances and we started talking about the rise of SF and their response intrigued me the first thing they will do if they get into power is to raise taxes on us which means we wont be able to reinvest in our businesses almost to a man they said which gives you a very clear insight to the type of voters SF is attractive to, the real question is do SF have to prove economic competence before anybody trusts their plans for a united Ireland?
I heaved a sigh of relief with your first sentence, neill – good to know UI people are not breaking the law. Re really want it, I think you can count out two if not three of the above. I’d say SF do want a UI, although the timing may be up for discussion. But you’re quite right – the economic cost/benefit of a UI really does need to be laid out in figures and by people that the public can trust – so take a hike, British and Irish govs. Re your business friends – I’d imagine it would depend on how much loot they’re managing to stash away. One of them wasn’t called Denis, was he? As I understand SF tax plans, they would if in a position of power tax at a higher rate those earner higher salaries/income. Sounds reasonable to me.
As I understand SF tax plans, they would if in a position of power tax at a higher rate those earner higher salaries/income. Sounds reasonable to me.
If you tax wealth creators you hurt the economy in two ways;
1 Less tax take
2 Less employment and reinvestment in their businesses which then has the knock on effect on job creation.
If i could make aspiration to a united ireland into a criminal offence i would….; )
So you wouldnt trust the Irish or British govs so who would you trust the EU the American govt. or dare i say it an economics professor….?
You’re a right laff, neill, I’ll grant you that – and clearly irrepressible…I don’t myself subscribe to the trickle-down theory of economics – it’s been seen to fail again and again. During boom time the gap between rich and poor gets bigger, during down times the rich stay above the pain line, the poor are plunged deeper down. I’m not at all opposed to individual initiative or job creation, but I’ve never quite understood why the boss has to earn five/ten/a hundred times more than the guy who works for him. As to who I’d trust: I’d trust an independent, respected accountancy firm agreed to by both unionists and nationalists/republicans. Seems a no-brainer…
Neill, the “Wealth Creators” were the ones who plunged the World into the economic crisis we have been living in for the past 6 years……and the one before that…..and the one before that……
I use to subscribe to that nonsense theory of “low tax on businesses/rich people/etc, they create jobs, pay more tax, etc”. Its nonsense, as we have clearly seen the top businesses/corporations in the UK, Europe, USA, etc do everything in their power to avoid tax and hide their money. In the UK alone last year corporations avoided paying over £100 billion in Tax. And if you watched BBC Panorama this week you will see major banks such as HSBC actively broke the law and helped their clients avoid paying tax and many of those key people who helped people avoid being tax (illegally, remember) were later hired to work with the British Government!. If the average Joe on £30,000 a year failed to pay their tax the British Government would come down on him like a ton of bricks, no mercy would be shown but if a business man/woman making millions a year illegally dodges tax then a blind eye is turned.
That’s right wing economics for you.
Who creates jobs Ryan go on guess who why yes its the wealth creators!
Who creates a countries wealth guess who why yes wealth creators!
Tax avoidance isn’t illegal.
Businesses who create jobs help with extra tax yield.
Tax the rich and aspiring rich more and they wont invest in jobs and they will look for ways to avoid paying tax.
Recession follows boom which follows recession then boom etc that is how economies have always worked don’t blame wealth creators for that!
Jude, i believe it is not within the interests of the British establishment to make transparent the economics of your questions – so much for freedom of information! The British make plenty of bones about what they give us, but quite keen to ensure we are unaware what we contribute. What have they to hide in censoring this information? I feel this is the problem Sinn Fein have in providing any blueprint as to what a new Ireland would look like. Proposals for same would be inappropriate without the figures to justify. Its always interesting to hear Unionist arguments in favour of the union. Up around the top is the wonderful NHS we have. Up there also is the great deal we get from the block grant. Again, without knowledge of all the figures, how do they know we are getting a great deal? One thing’s for sure with the cuts imposed by the Conservatives – would Unionists still agree we get a great deal from Westminster?
Jude, you referred to the Cross-Border Bodies. I doubt if one person in a hundred even knows the name of more than two of them or even how many of them there are (I thought there were six of them) So as a template for a UI they have their limits. The problem of SF’s programme for a UI is they do not have one. Ironically the Blueshirt ex-Sticky coalition may do more to deliver an Ireland of Equals than generations of FF or Shinners if they achieve a single tier health service “free at point of delivery” as young Varadkar has promised. This might end the horror stories we constantly hear on Joe Duffy of terminally or chronically ill children being deprived of medical cards. With that out of the way maybe they will explain how they will tackle cars that cost 30 per cent more and many hundreds of Euro to tax. Not important to me or (I suspect) Jude , but explain that to the boy racer, the young couple in hot pursuit of the Joneses or a family living just above the poverty line. In fact virtually everything in the public service seems to cost money. People queueing up to buy schoolbooks for their children in August. 100 euro to visit A&E 50 euro to visit your GP. A story on Joe Duffy of a farmer charged 2000 euro when a well-meaning neighbour called out the fire brigade to a fire in a shed which the farmer himself put out before the brigade could arrive.
I blame FF who in 1977 abolished rates as an election ploy. Imagine the revenue lost to successive governments since. If every household in the Republic had contributed the contemporary equivalent of 1000 euro over the last 30 years it would have transformed the infrastructure and public services. But who would have the courage to suggest even 300 Euro as rates, household charges , call it what you like, in the present climate. Ironically it is the most deprived sections of northern nationalism, those whose health and education would be most at risk under the Blueshirts or Fianna Fail. who have remained most steadfast to the Republican ideal. But even their patience, stoicism and courage are not unlimited. SF wants an early referendum on the border. I say’Be careful what you wish for lest your wish be granted.’
Did not know you were an ex St Columb’s student. My old school as wellalthough our eras may be a far a part.
I disliked maths but now love economics and the theory – Keynes believer
Beleaguered legal aid lawyer now- watch the irish news letters page!
I’m afraid I don’t buy the IN/VO since they lost their best columnist…If you show me your years of incarceration I’ll show you mine..,
How careless of the Irish News to lose their best columnist!!Modesty must have been one of his other characteristics as well!
Why thank you, Argenta. I’d forgotten about that quality. Very very very modest, me…
This comment has reminded me that I neglected to go back and finish my review of that excellent book, “Booing the Bishop” by Jude Collins. I have just done so and recommend the book highly to any of you who haven’t read it yet.
What a superb and classy woman you are, Mary Jo…I hope others will learn to hold in the high esteem I do – and that they will follow your example…
From the remoteness of Warbeck Towers it is difficult, on one’s own, to cultivate anything other than a macro view of the Four Green Fields which are purportedly in the capable hands of Macro na Feirme (macro being economic for macroeconomics).
Thus, even as one’s aristocratic gaze imperiously sweeps south from Moneypoint in the County Clare to the far north of Ballymoney in the County Antrim one cannot help but notice that the landscape in between is brushed with Forty Shades of Johnny Cash-flow greenbacks, and wonder.
How it is that the pockets of the peasantry are empty. The evidence is there, plain to see for those cursed with microeconomic vision. That would be the Paddy Stinks and the Mickey Muds who make up the grateful domestic staff of Warbeck Towers and who report to their benevolently despotic employer on a quarterly basis.
Their muck -spreading sheets make for grim reading: piggy banks lie vanquished on their sides on draining boards in dwellings the l. and breadth of the island. Dwellings from artisan terraces to thatched cottages to tower blocks to pre-fab Georgian maisonettes in gated communities.. And most puzzling of all in (gulp) ghost estates.
Piggy banks of all shapes and material. Vinyl piggy banks with their rubber underplug cast to one side. Ceramic piggy banks with their removable rubber noses for easy coin access, erm, removed. Plastic piggy banks with their entrance slot on the pig’s back hacked out of shape by the breadknife which lies discarded at its side.
And most tellingly of all some porcelain piggy banks shattered to pieces by the very hammer which lies ensconsed and unashamed within the smithereens. (These are obviously the possession of amateur rugga players who play at club level)
A durable phrase in the leprechaun like ‘ar mhuin na muice’ has been excised from such deflationary dictionaries as those of Dineen, De Bhaldraithe agus DarbyO’Gill.
Such is the hand over fiscal havoc wrought by the A.T.M. culture which has gained traction for so long on both sides of the Black Piggy Bank’s Dyke since the Millennium and before: Acting the Maggot.
But this is not the time for gloom: booming optimism is the only way forward, going forward.. And so Perkie’s inner Strauss-Kahn would like to throw in his tuppence worth of financial advice, as a counterpoint to the Group Think of the Prudential Establishment. The same kind of blinkered thinking which prefers solo bankers to listen to the Stochausian theories of supply and dominance in the privacy of their own gnomes.
In a phrase, ‘Quantitative Easing ‘ as the actress purred to the rather rotund bishop who took the hint and promptly rolled over. Purred, not booed.
Or specifically, the actress who played the part of Miss Moneypenny in all those James Bondholder disaster movies.
As the only character who knew how to stand up, lie down, eyeball and turn around to those Robber Barons who disdained the use of rubber, she is the only female person who has the necessary nous to fill the crocodile shoes of the Orange Free Stateen’s Minister of Moola. She knows not only how to stir but – crucially – how to shake the Bondholders.
She will become, in one bound, her former boss, M. It will bring a new dimension next year to the gombeenerations of M 16.
She will have the right to retain as her office pet the current incumbent: Simon ‘Pet Rabbit’ Harris. Which, as well number crunching in the confines of his corner cage, doubles as a 24/7 office answering machine.
Is feidir linn: we Kahn.
Jude, I heard an economist speaking on this issue a few years ago (I can’t remember his name, but I remember he was from London) and he had a different take on things. He estimates that the British government takes more revenue out of here than they put in. He also pointed out another interesting fact, that the British treasury have consistently refused to publicize the figures relating to the tax revenues for the 6 counties. So I think you’re questions are very relevant, we need to have all these things costed. I have a feeling they might make some interesting reading.
Jude, I’ve been wondering for a very long time why Sinn Fein, the largest nationalist party and the most forceful in wanting a United Ireland, hasn’t researched the economic merits of a United Ireland and publically used the positives of that research in their pursuit of Irish Unity.
I seem to remember the Nolan TV show sometime last year or maybe the year before where SF’s Alex Maskey and DUP’s Arlene Foster was debating a border poll. Nolan challenged Maskey to convince Arlene of the benefits of a United Ireland economically, socially, etc and he just dodged the question, he clearly wasn’t prepared for the challenge which I feel he should have been.
I don’t know whether its neglect on Sinn Feins part or not but it seems a pretty obvious mistake not to research the economic/social benefits of a United Ireland and actively promote it because if you don’t your going to find a lot of Sinn Fein politicians caught like rabbits in the headlights on TV shows like Nolan, UTV Live, etc when asked questions about a United Ireland and the benefits for Unionists.
As for the money that goes to London from the 6 counties, I believe we pay a lot more to the British Treasury than what we’re being told. Its strange how we cant get a simple straight answer to that question when asked. We’re constantly told we get lots of money from London, more per head of population than England, Scotland or Wales. It certainly doesn’t feel like it. Many areas of the north are rated the worst for poverty in the UK (mostly Catholic/Nationalist areas), our hospitals are in chaos, tens of thousands of jobs are being cut, benefits are being cut for the most vulnerable and disabled, etc.
We’re told by Unionist politicians that we’re “better off” as part of the UK. Well yes, I would feel better off too if I lived in a large house in North Down and was getting Tory tax cuts.
I have to admit that I’ve stayed aloof from this one .Economics and maths…!! To tell the truth they have always been a black hole for me ..Since school with algebra and all the rest , unfortunately my eyes glazed over somewhat.. That’s not to say i don’t respect the logic of pure maths .I do but to me it is something quite abstract…a language like an artform.. That’s why I and people like me need to see the economic facts laid out like something that can be easily understood. People can have very romantic ideas about uniting their country socially. Some are near- mad in that they’d plainly eat grass rather than unite the place …some would eat grass rather than be part of Britain . Somewhere in the middle of all that there is an economic truth that the likes of Sinn Fein need to properly formulate.They are good at many things but now they will be tested on how much they know about economics.They need to have someone who can explain that to people like me without boring me rigid.Accountants, unfortunately are not valued for their imaginations…only the bottom line..
The Northern ‘state’ is unique in the economic world of states. Britain never demanded that it be even remotely self- sufficient. So conventional economic norms never applied to it. It was permitted to exist on the supply of financial subventions from London, and on a permanent public sector engaged mainly in policing and security. Nobody in the Britiish establishment echelons ever questioned this approach, mainly because of the excessive influence held by those with imperialist leanings and attachment to political unionism. And so it has continued even after direct rule, Now threats are being made to reduce the block grant. Arguments about whether, in the absence or reduction of the block grant, the North can be self-supporting, and, based on that the leconomic prospects for a United Ireland , are misplaced and irrelevant. Any data or figures produced by the British government in relation to the North must reflect the state of economic paralysis which the creation of the Northern state, and the manner in which it was operated financially,enjoined. As such, they cannot provide any meaningful indicator of the area’s true economic potential, and, even less so, of the prospects for an all Ireland economy.
I’m not sure if David McWilliams has ever waded into this debate, but I would be interested to read his thoughts on the matter. I seem to recall him giving a fairly well reasoned argument on the economic advantages for a Scottish ‘Yes’ vote in the recent referendum. His blog is always worth a read, so I hope he does not feel too indentured to his paymasters at the Times and the Indo to be able to pass comment on this issue.
The regular Unionist ‘the South can’t afford us’ mantra always strikes me as a particularly odd one. So much for being proud sons of Ulster, when part of that pride appears to stem from ‘Ulster’ being an economic basket case. What a peculiar thing to take pride in.
The truth of it is that none of us know. What we do know is that the Tories are nothing if not ruthless when it comes to economic matters. If our wee sectarian statelet was the drain on resources many claim it to be, I should imagine that they would be making moves to divest themselves of their failed investment. That they are not is perhaps indicative of something.
Sinn Féin could roll out every top economist in the world to argue the positive economic benefits a United Ireland would bring, and still it would be derided as Republican propaganda. So who best to come up with a green paper on the economics of Irish Unity? The EU and the IMF have bigger fish to fry at the moment, but we are living in tumultuous times. The mooted UK/EU referendum, an ongoing Eurozone crisis and the long term issue of Irish bank debt are all far from over.
‘Events, dear boy, events’ may eventually answer this question once and for all.
Friends in the states are still waiting for the benefits from Reagans 1984 ‘trickle down economics”. That ship has sailed.
There is an Excel spreadsheet for this, your questions that is.