“There are strong economic arguments against
independence. No serious economist has
yet published a convincing case on how a nation which spends more than it
raises in tax could adapt to going it alone in a world heading towards more
interdependence not less.”
I’ve rarely read
such nonsense. As far as I’m aware, no ‘serious economist’ has ever argued that
a country which is ‘spending more than it
raises in taxes’ is therefore unable to enjoy the same degree of
independence as any other country. It’s
simply not true. Indeed, if it were
true, then the UK, the USA, and any
number of other countries would have to be added to the list of failed states.
Lots of countries
spend more than they raise in taxes, and some do so year after year after year. Running a deficit per se does not make Wales unviable, any more than it makes the UK or the US unviable.
The issue for Wales
isn’t the fact of a deficit; it’s the size and duration of that deficit. But even then, there are no hard and fast
rules. The proportion of GDP which the
national debt represents doesn’t have some magic number below which all is well
and above which states fail. Nor is
there any set period beyond which a debt cannot continue. These things are matters of judgement;
judgement by the government setting tax and spending levels, and judgement by
those lending the money as to the likelihood of them getting it back.
But more
importantly, is the fact that Wales
has a high current account deficit which is persistent over the long term an
argument against independence, or is it an argument for? At first sight, it’s very easy to see it as
an argument against, but that’s a simplistic response. The questions we should be asking are: “What is the means by which we bring tax
and spending into balance, and what is the decision-making structure most likely
to achieve that?”
In theory, the
argument that the best way out is through membership of a larger union where
the government actively follows redistributive policies, and ensures that GDP
is more equal across the ‘regions’ is a powerful one. It is, I think, the argument which supporters
of the union are trying to make, albeit not very well. The reason that they’re not very good at
making the argument is obvious - in practice, it just hasn’t happened, and
still isn’t happening. The theory is at
odds with the practice.
Without an
effective redistributive economic policy, all Wales gains from the union in
financial terms is a handout; and all we can ever do is ask for a bigger
one. That simply is not where I want to
see Wales,
and I don’t understand why anyone else would.
I’m convinced that the best way (even if not the only way) of getting
Wales’ GDP to the level it needs to be to bring taxes and spending into line is
by taking the decisions ourselves, here in Wales.
The much-vaunted
deficit is a double-edged sword – for me, the fact that current structures and
approaches are not reducing it is a reason to support change, not oppose
it. A government solely focused on Wales stands a better chance of taking the right
decisions for Wales than one
for which Wales
is peripheral. If supporters of the UK want to use
economic arguments, they’ll need to do better than this.
Posts
7 comments:
Clearly and succinctly put.
As mentioned in my new blog (blatant plug) the people of Wales want further powers for Wales. This is proven by last years referendum, the recent ITV poll and of course Carwyns constant moaning about the lack of powers he has.
The question is why people who appear to want more power in the Senedd elect a Labour party that also want more powers but also elect Labour MPs to Westminster that don't want to give us those powers.
In fact more English Tory MPs (4) voted yes in Jonathon Edwards' recent bill than Labour MPs in Wales (1).
Well done though to the PC, DUP, SNP and LD (yep that's right Lib Dem!) MPs that voted yes.
Wales needs a wake up call. Either people want more powers or they don't, you cant have both.
John - Have you written a letter to the WM detailing your analysis? The deficit argument is often put by the small minded 'little englanders' who think, like thatcher, that a country is best managed like a corner shop. But as you say, the UK would not be viable as a state if that were true - mind the way the tories are wrecking the economy with policies born of just that sort of mindset, it won't be long before the balifs are called (in the form of the IMF.
And the truth is that nobody really knows the shape of Wales's balance sheet. Our natural resources are never evaluated. cross-border taxation is only guessed at - far too many unknowns to be dogmatic like the WM is keen to be.
By the way, big hurrah for Paul Flynn - he is in the wrong party!
The fact is the Unionists have made hay by making us justify our views on Independence. In-so-doing they have avoided having to defend their abysmal record of running the Welsh economy into the ground.
A recent report from the New York Times showed Wales with a GDP lower than Greece. Terrible though that news is we should use it to highlight how inept/Corrupt Wasteminster is and why we need Independence.
The Unionists have used the accusation that Wales is "Subsidised" by England as a weapon against Welsh Nationalists, we should turn those rants against them.
The WM is deploying SOD – Slave Owner`s Defence.
Wilberforce was calling for freedom and their response was that it would be an economic disaster for the black people, as they are uneducated and ignorant on how to run their lives; furthermore, they provided shelter, lifetime employment and food to which they should be grateful.
I get the same kind of themes when talking to my English chums who state that we are “better together”. On asking them if the English need the Welsh to help them run things, they say No!!. If the question is reversed you get the answer “of course you do”, so there you have it, we are just plain stupid.
John - I had this published as the lead letter in the WM this AM. Thanks for the inspiration.
"We’ve had enough of London’s crumbs
SIR – Your Leader column (Feb 3) suggests that “There are strong economic arguments against independence. No serious economist has yet published a convincing case on how a nation which spends more than it raises in tax could adapt to going it alone.”
In that case, perhaps you could explain how countries like, say, the UK, manage to go it alone? Or the USA, say? or any one of a number of OECD countries running a deficit?
The leader also says: “...in a world heading towards more interdependence not less.”
I must have missed the massive movement towards unification of independent countries that you refer to, reversing the opposite trend since the war, which has seen 50 member states of the UN grow to 200.
I think you mean a world moving to greater co-operation between independent nations rather than interdependence.
In fact the converse of independence is not interdependence, it is dependence, and while it is true that Wales is currently completely dependent on the crumbs it gets thrown from the London table, that is not a situation that I or an increasing number of my countrymen are comfortable with.
They used to say that the idea of an independent Malta was laughable – but now it is a viable modern state, despite lacking any of the natural resources that Wales possesses, and having a population one sixth of the size.
SIÔN JONES
Abertawe"
Read More HERE
Stuart - to add a link to your blog, ue the a tag - the syntax iis described HERE
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