Tuesday, 3 September 2019

Is the question valid in the first place?

An article on Nation.Cymru this morning suggests that Wales should impose a tax on water transferred from reservoirs in Wales to consumers over the border.  It’s an idea which, in one form or another, has been around for many decades, and it’s difficult to argue with the proposition that, in a market-driven economic system, a country which has a wealth of a particular resource (in this case, water) should be able to capitalise on that resource for the benefit of its citizens.  Whether ‘market forces’ are the right mechanism for determining how essentials should be shared is a wider question, but as long as it remains the case, then Wales should be able to benefit.
There are complications, of course: there are questions about the ownership of the assets and infrastructure involved; and imposing a unilateral tax on one commodity going in one direction leaves open the possibility of unilateral taxes being imposed by the other party (in this case, England) on one or more commodities going in the opposite direction.  These are details which don’t detract from the principle but which do need to be thought through and resolved before acting.
My bigger concern about the proposition is that there is a danger of falling into the conventional economic narrative about the wealth of a country being determined by its natural resources.  One of the criticisms often thrown at independentistas is that Wales cannot afford to be independent because we have no natural resources.  ‘Water’ is a partial and useful answer to that, as is the fact that Wales has become a net exporter of electricity.  The ability to generate more electricity than we use (and to do so from renewable sources if we put our minds to it) in a world increasingly dependent on the availability of energy in that form is no small matter.  I wonder, though, whether in trying to find a ready response to the question we are not legitimising a question which is based on an essentially invalid assumption that the wealth of a country depends on what natural resources it possesses.  That is not to say that possession of a resource which is in great demand (oil, for instance) doesn’t help the economic viability of a country, but it’s a big leap from saying that to creating a dependency.  (I’ve often wondered whether the way in which Scotland’s oil has been used to answer the same question might have been counter-productive overall).
Where is the evidence that possession of ‘natural resources’ determines the wealth of a country?  One of the ‘wealthiest’ countries in the world is Luxembourg – can anyone list the ‘natural resources’ which make it so?  Sometimes, we need to do more than find an answer to a question – we also need to challenge the whole basis of the question.

1 comment:

Jonathan said...

Of course natural resources determines the wealth of a country. History shows this, endlessly. Like you, I am uneasy about selling water or electricity for profit. Less so if its a State body doing it perhaps. But then one needs to think about the definition of 'natural resources'.
These surely include location. Big net plus for Ireland, Luxembourg, big minus for Wales. But the really important natural resource is the people. Very poor States can compensate for poor water/coal/location etc if they put people at the top of the list. Interesting what happens when meritocratic Education is homegrown and important, and when the State neglects it. Wales used to value this and now doesn't in the same way. Strong Statehood and not being a colony is all in the mind.