Wednesday, 29 October 2014

Moving the money around


In the run-up to the Conservative conference, the leader of that party’s group in the Assembly set out his plans for the economy.  Now it might be argued that we don’t need to worry too much about what he has to say, since the probability of him ever being in a position to implement any of his policies is diminishingly small.  On the other hand, although he has perhaps set out his views more directly, there are elements of what he has to say which have, undeservedly, become part of the accepted political consensus amongst the parties.  For that reason, they deserve more scrutiny.
Take this one for instance: “It is the private sector in Wales that creates wealth and prosperity.  The public sector, as important as it is in delivering high quality public services for all, moves the same money around.” Now I’ve heard much the same thing said by politicians of different parties; ‘private sector good, public sector bad’ is the sort of conventional wisdom which increasingly underpins both government policy and opposition policy.  But is it true?
It probably depends on what is meant by the words “wealth and prosperity”.  If it means GDP (or GVA if you prefer), then it’s nonsense.  In essence, it really makes no difference at all to GDP whether a particular service is delivered from within the public or the private sector; it all gets counted. 
Perhaps wealth means the wealth of the individual employees.  But again, as long as they get the income every month and can pay the mortgage, whether the house (the main element of many people’s personal wealth) is paid for by a salary in the public sector or the private sector is neither here nor there.
And when those employees her money down to the shops and spend it, do the shopkeepers give a hoot whether their customers work in the public or the private sector?  Of course not; and it makes no difference at all to the retailers’ wealth and income either. 
There is one and only one sense in which I can think that the private sector “creates wealth” in a way that the public sector does not, and that is that the private sector generates profit which some individuals accumulate as private ‘wealth’.  In short, it makes those who own and control the capital ‘wealthy’.  But, and this is a point which people often seem not to understand, ‘making some people wealthier’ isn’t the same as ‘creating wealth’; in a very real sense it is just, to quote Davies in a different context, “moving the same money around” - in this case from the customers of an enterprise to the owners.
National wealth is usually defined as the total net value of all assets, goods and services owned by a nation; and in that definition, it really doesn’t matter at all whether ‘services’ such as education are owned and run by the state or by private individuals; they’re still counted as part of national wealth.  That total national wealth can still grow (which is what ‘wealth creation’ means to me), however those services are owned and run.  It is perfectly possible to have an economy where there is no private sector at all; such an economy would still generate wealth, it’s just that that wealth wouldn’t necessarily be concentrated in the hands of a few. 
(I’m not arguing here that we should adopt such an economy, merely that such an economy is a possibility.  If he’d argued that the private sector was a better way of increasing total national wealth, I’d have more trouble dismissing his argument; but he didn’t – he argued that it’s the only way.)
Whether services are run by the public or the private sector, they still need to be paid for.  And in the grand scheme of things, whether they’re paid for by taxing people or by charging at point of use is also irrelevant.  Both are merely “moving the same money around”; the idea that taxation somehow depends on there being a private sector making profits which can be taxed is another myth.
Ultimately, the idea that only the private sector creates wealth is nothing but ideological dogma which seeks to legitimise the redistribution of wealth from the many to the few.  Like so much in the allegedly ‘post-ideological’ age in which we live, it’s an ideology shared by politicians of many parties.  But there really is an alternative.

Tuesday, 28 October 2014

Slipping down the pecking order

I’ve long thought that it’s something of a tactical error for Wales to focus on seeking a Barnett consequential for the HS2 railway – not because Wales shouldn’t get its fair share of UK investment, but because I’d sooner have our share in the form of a High Speed line to Wales than in the form of cash to be spent on anything else.  Coincidentally, the amount involved in doing that might even turn out to be higher that a simplistic percentage share of HS2 expenditure as well.
I’d hoped that the next part of building the network, HS3, would be that line to the west, but in the absence of anyone attempting to make the case, it now looks as though the HS3 designation is allocated to the Trans-Pennine route.  I guess that means that the best we can hope for now is to be in there somewhere pitching for HS4, although I’m still seeing little sign of such a pitch.  HS5 anyone?

Monday, 27 October 2014

Strength in Union?

As presented by the media and politicians, the apparent demand for an extra payment of £1.7bn to the EU seems almost calculated to boost the anti-EU wing of the Tory party and encourage Cameron to argue for the UK to leave the organisation.  However, given that at this stage it’s a proposal which will be subject to negotiation and agreement, the cynic in me wondered whether it was actually intended to do the opposite, by giving Cameron a chance to show how he can negotiate the figure down and claim a great victory.
Whichever, the issue raised two rather different questions in my mind.
The first is the approach of the UK Government to promises and agreements which it makes.  The famous ‘Vow’ given to Scotland isn’t the only example it seems – in the case of the EU, the government signed up to a set of rules and is now rejecting the outcome of their application.  His word appears not to be his bond.
The second is what it says about Cameron’s attitude towards redistribution.  The whole issue is presented as though the £1.7bn is simply going to be shovelled into a black hole in Brussels and used to pay fat cats and bureaucrats.  But the purpose of this particular budgetary adjustment is to ensure that payments in more closely match countries’ ability to pay.  That is, in essence, a redistributive approach – it’s not about penalising economic success as some have tried to present it.
There’s a parallel of sorts with the infamous Barnett formula, and with the recent referendum.  I seem to remember Cameron and others repeating ad nauseam that one of the great advantages of ‘the’ union is its ability to pool and share resources.  He didn’t really mean it then; and he certainly doesn’t mean it when it comes to the EU.

Friday, 24 October 2014

Half full or half empty?

Glyn Morris draws attention to the story about Plaid arguing that Wales isn’t ready, in economic terms, for independence.  It’s not a new statement of course; it repeats a statement which Plaid made about 18 months ago.  I didn’t agree then, and I don’t agree now – not because I think that there would not be problems, but because I don’t see the existing problems being resolved within existing structures and processes.  Quite the opposite, in fact – I’d argue that the problems that we face are a result of existing structures and policies, and a pre-condition that they be solved first is a recipe for indefinite delay of any discussion of independence.
But how poor is Wales, in reality?  One of the things that the Yes campaign did quite effectively in Scotland was to argue that Scotland’s GDP per head put the country amongst the league of the wealthiest, not the poorest.  Where would Wales sit in that table?
There are plenty of different rankings of countries to be found, and they show slightly different rankings for countries.  This Wikipedia page for instance shows several different ways of calculating relative wealth.  If we want an absolute measure, then which one we select becomes an important decision; but if we’re only after a relative measure, it really doesn’t matter a great deal which we choose.
Wales isn’t listed, naturally enough – it’s a list of sovereign states – but if we use as a rule of thumb the claim that Wales’ output per head is about 70% of that of the whole UK, it’s easy enough to work out where Wales would come on any one of the rankings here if we were listed separately.  The answer, depending on which list we choose, is around 30th. 
Yes, on a simplistic measure of GDP per head, Wales would be one of the 30 or so most prosperous countries in the world – with another 150 or more which are poorer than us, including such outposts of unsustainable independence as Russia.  Even within the EU, there are a basket of countries which are worse off than Wales would be – and, as far as I’m aware, no-one is arguing that they’re “too poor” to be independent member states.
We have, perhaps, become too accustomed to seeing the glass as half empty; comparing ourselves to the richest areas and finding ourselves wanting.  It’s an inevitable result of an approach which simply demands that we get our fair share, and given that we’re not getting our fair share now, it’s not a wholly unreasonable tactic.  It needs to be tempered though with a more positive message about what we can do, and about what Wales could be if we assumed responsibility ourselves.  And that’s the message which has been lacking for too long.
There’s more to economics than GDP, of course.  And the transition from where we are to where we could be will neither be quick nor easy.  But continuing to see ourselves as poverty-stricken victims is not the right starting place, when, for most of the world’s countries and population we look like a very wealthy country.  The question is about how we take control of the wealth we have and build on it by taking responsibility for our own future.  Arguing that we’re not ready to do that is simply perpetuating what we are.  We can do better than that.

Thursday, 23 October 2014

What does 'success' look like?

When the then Tory government nationalised Rolls-Royce in 1971 because the company was in deep financial trouble, one wag penned some new words to the tune of “the Red Flag”.
The People’s Flag is deepest blue
We’re buying up Rolls-Royce for you
But if it makes a profit then
We’ll flog the b*****s back again
The Tories’ call for the privatisation of Cardiff Airport doesn’t even have the merit of being able to sell it as a successful profitable company.  It’s based instead on little more than blind faith – the assumption that, as they put it, selling it off would “encourage private sector investment”.  That is, of course, precisely what was not happening before it was nationalised, and unsurprisingly, they offer no evidence that the situation would change if the airport were to be returned to the private sector.
That’s not to argue that the Welsh Government’s strategy for the airport is any better – not least because there’s no obvious sign that they have one.  When they bought the airport, they claimed that we needed to have more scheduled flights on which business people and inward investors could fly direct to Cardiff.  The immediate motivation for the Tories’ latest call is the continued drop in numbers of passengers using the airport – which they brand as some sort of failure.  But there’s nothing inherently unsuccessful about a fall in total passenger numbers (from holiday flights, for instance) if there were more scheduled flights to key capitals, if that’s what they are trying to achieve.
An opposition approach which concentrated on the lack of any obvious strategy for the airport, let alone any way of monitoring the success of such a strategy, would be a start.  Even better would be an approach which started to ask some fundamental questions about whether we should be encouraging more flying, whether having direct flights actually makes much difference to the Welsh economy, and whether simply moving flights to Cardiff from other airports by reducing Air Passenger Duty is worthwhile (all of which seem to be taken as read by the political consensus) would be even better.  These are open goals left by a government which seems not to know what ‘success’ might look like.
Simply arguing that success is measured in terms of total passenger numbers, accompanied by an expression of blind faith that that number would increase if only the airport were in private hands, is completing missing the point and resorting to dogma.  It’s certainly not constructive opposition.

Tuesday, 21 October 2014

A visit from the imperial capital

I suppose that the agreement of the UK Government that the Welsh Government can issue bonds to fund its borrowing is better than a refusal.  But given that it makes no change to the total borrowing allowed nor to the fact that the money borrowed can only be used to fund the UK Government’s pet project, it doesn’t really justify the coverage given to it, with the Western Mail rolling out one of their favourite words (‘historic’) to describe it.
It was of more interest to note that the decision was taken by a meeting of a new body, called the “Wales Joint Exchequer Committee”.  I’m not clear what other powers this body has, but its composition is three UK ministers and one Welsh Minister.  That alone is enough to tell us where the real power sits and will remain.
Fair play, though, they did make the trek down to Cardiff for the meeting, and they allowed the sole representative of the Welsh Government to chair the meeting.  As long as the Chair remains neutral in the event of any disagreement between Cardiff and London, I’m sure that’s an arrangement which will be allowed to continue indefinitely.

Monday, 20 October 2014

Tackling inequality, not immigration

The 19th-century French radical Alexandre Ledru-Rollin probably never said “There go my people. I must find out where they are going, so that I can lead them”.  Many of the best quotes turn out to be less than entirely accurate.  But that doesn’t reduce their value – and in the case of this one it seems a good description of the approach of many contemporary politicians.  The question is not what they believe (even they seem not to know that) but what they think they have to say to get elected.  And in pursuit of that utterly unprincipled aim many of them are prepared to do and say almost anything.
It’s hard to think of a single political issue which better illustrates the point than immigration.  Politicians seem to be falling over themselves to demonstrate that they will be tougher on immigration.  Are they doing it because they believe is right?  I doubt it; it’s more a case of following opinion than of leading at.  But the net effect is to reinforce rather than challenge prejudice.
All of the discussion around immigration seems to start from the perspective that migration is, or should be, a privilege granted only to a few.  And the competition between parties and politicians is about who can keep that number the lowest and set the highest bar for qualification for that privilege.  But what would happen if we stand the principle on its head?  Why not start from the perspective that freedom of movement and residence is not a privilege for a few, but a right for all?  On that basis the the question becomes not to whom the privilege should be granted – which is all the UK’s parties seem able to discuss - but from whom the freedom should be withheld, and on what basis.
There’s a danger of oversimplifying the reasons for migration.  Of course people have different reasons for seeking to move from one country to another, and I wouldn’t want to understate the impact of conflict and famine for instance.  But the one single cause which has the greatest influence on the movement of people is economic inequality; in essence people believe that they can have a better life, a better quality of life, in a country other than their native country.  And responding to that by raising barriers is not only managing the symptoms rather than the cause, it’s also an attempt to embed and perpetuate inequality rather than reduce it.
Freedom of movement as a starting point is hardly populist, although it strikes me that there are plenty of people who, when pressed, believe that they should be free to move and that it’s only other people’s freedom which should be restricted.  But being popular isn’t the same as being honest or principled, and prejudiced opinion can only be changed by challenging it, not by pandering to it.
We live in a world of finite resources.  The world’s population is growing and that population aspires to the living standards of the richest.  There are two possible policy responses to this – the first is to accept that resources need to be shared more fairly, and the second is to create fortresses to protect the haves from the have nots.  Much of the debate about immigration owes more to that second policy position than the first.  But only the first is tenable in the long term.  It is delusional to believe that current levels of inequality can be sustained for the indefinite future, and even more so to believe that it can be sustained by building barriers.

Wednesday, 15 October 2014

Greeks bearing gifts

Just over a month ago, three not-very-wise men took themselves off to Scotland and made a solemn promise.  Neither they nor those to whom they made said promise had much clue about what was actually contained in the promise, and it has become increasingly clear that whilst three of them were signing up to it, they were all signing up to something different.  And none of them bothered to consult their disciples in advance either.
The result, fairly inevitably, is a good deal of chaos within the unionist camp as they try and work out what it is that they’re going to deliver, and how to manage the fallout elsewhere.  In this context, further devolution to Wales – something about which they are all endeavouring to appear enthusiastic, despite standing previous policy positions on their head in the process – is little more than collateral damage for the great union.
And the result of that is a haphazard process which has more to do with getting the situation back under control and saving the skins of the not-so-wise than it does with working out what the best interests of Wales are, and how they should be met.  The work of thoughtful commissions which spent time researching and analysing before producing their conclusions has become nothing more than an ‘input’ to the backroom discussions being orchestrated by a Secretary of State who is showing all the signs of having forgotten everything he believed passionately just a few short weeks ago.
I share the concern expressed by Gareth Hughes about a bunch of men in suits cooking up an ad hoc deal in a backroom in London.  Sadly however Wales is not Scotland.  Whilst the future of Scotland is now being driven by her people, re-energised and re-engaged in politics by an exciting campaign, the future of Wales is still being managed where it has been managed for centuries.  Whilst I might wish that Wales had had the sort of recent history which has drawn people into debate about the future, it simply isn’t so.  Without a clear policy drive towards independence as Scotland has had, there is little prospect of Wales reaching that point any time soon.
So a deal of some sort is as good as it gets.  I might prefer that such a deal was hatched up in Cardiff rather than in London, but after seeing the joint statement by the party leaders from the Assembly, I’m not exactly confident that we won’t get more from panicking unionists in London than the sort of timid response which is all that Labour and the Tories in Cardiff are ever going to agree on.
The question which strikes me is about the role of nationalists in all this.  Given that the unionists are falling over themselves to stitch up a deal on which they can all agree, is it best for nationalists to be falling in with them and assisting their efforts to save the union, not to mention their leaders’ skins, or would it be better to seize the opportunity to put some real clear difference between the nationalist and unionist positions by spelling out the sort of alternative which Scotland was offered by its leaders? 
For me, one would have to believe that a nationalist input could make a significant difference to the final stitch-up to adopt the first approach, and to be blunt, I simply don’t believe that to be the case.  They will decide what they will decide.  And that decision will be driven by their electoral considerations, in England, then in Scotland, and as an afterthought, in Wales.  For nationalists to simply fall in with a unionist consensus to which they have contributed nothing would be a huge missed opportunity.

Tuesday, 14 October 2014

Federalism brings more problems than the obvious one

It’s clear that an increasing number of people are beginning to see a federal UK as a way out of the constitutional nightmare which has been created by a poorly thought-out and asymmetrical approach to devolution to those parts of the UK where there was a demand.  It’s also been clear to me for many years that not a few of those who sometimes call themselves nationalists would be, on the whole, content with such a proposal.  Like Home Rule, however, it’s a term whose meaning depends on who is using it.
Plenty of others have already drawn attention to the biggest problem with a federal UK – unless England is broken down into ‘regions’, a federation in which one member comprises 85% of the whole is unlikely to pay much regard to the views of the 15% if they happen to differ.  And whilst I instinctively favour a more local approach to government, I feel disinclined to try and insist that England should break itself up into regions with which there seems to be little natural identity or affinity, let alone demand for more local power.
Certainly some of England’s larger cities can see advantages in having more powers, but unless the country is carved up into regions based on those cities and their hinterlands, what happens to the more rural areas in between them?  London could certainly make out a good case for becoming a self-governing city state, and its mayor has already hinted at such a suggestion.  (Although going even further, and removing London from the UK might be more of a blessing to the rest of us than many realise.)
There is another aspect of federalism though which has received rather less attention.  Historically, federation has usually been much more about bringing diverse ‘countries’ or ‘nations’ together than about separating them.  It’s been more to do with convergence than divergence.  And the history of federal states has often been marked by a tendency for the centre to take on more powers whilst the components see their powers reduced.  It’s a danger which is likely to be even more acute in a federation dominated by one part.
It would be interesting to see how it might pan out in practice, and how strong the safeguards for the smaller parts might be.  I don’t think there’s much chance of it actually happening though.  One thing which would have to be absolutely clear in any federal approach is that the federal parliament and government would have to be separate from the English parliament and government.  I see no sign that any of the politicians and parties wedded to Westminster are even understanding that, let alone being ready to contemplate it.

Monday, 13 October 2014

I am not a nationalist

Well, apparently not – according to the Lib Dems’ president anyway.  Last week he told us that “Patriots love their country; nationalists hate their neighbours”, and I simply don’t meet his criterion.
That’s not to say that I haven’t met people over the years who do hate their ‘neighbours’, sometimes with a passion which is incomprehensible to me.  And that doesn’t simply apply to Wales and England; I’ve canvassed many who hate all Germans (mostly this applies to people of a certain generation, which makes it at least explicable, even if not entirely rational and understandable), or (rather less explicably) ‘the French’. 
Whether all the people hating their neighbours would consider themselves to be ‘nationalists’ is another question entirely, however.  To the extent that they are, they’re more British nationalists than Welsh ones (although that’s a term that I generally prefer to avoid because it’s another of those labels which avoids debate).
But what’s at work here has nothing to do with rational debate; it is, rather, an attempt to do two things.  And whilst I’m picking on Farron in this case, I do so only because he’s put what many other UK politicians have been saying into one pithy sentence.  (Although there is something very illiberal about claiming that anyone who takes a particular view on the future of his country hates his neighbours.)  It doesn’t only apply to the question of Welsh and Scottish nationalism; they do the same thing in other contexts as well.
The first thing they’re trying to do is to take a word, and insist that it has the meaning which they ascribe to it, and that no other meaning is allowable or conceivable.  Once they’ve done that, from that point on, the debate is framed in their terms. 
It leads to a situation where people who clearly do support the idea of Welsh or Scottish independence (which is all I mean when I say that I’m a nationalist) become so afraid of the connotations put on the word by others that they end up being frightened to use the word themselves.  I can certainly think of individuals who regularly proclaim that they are not nationalists, despite supporting independence.  There is a danger that this reluctance to embrace a word succeeds only in strengthening the narrative of their opponents.
The second thing that they are trying to do is to avoid debate by the simple expedient of branding people with the negative label which they have created.  After all, there’s nothing to be gained by debating with people once you have defined them as having an irrational hatred of others, is there?
This isn’t a one-sided process either, sadly – over the years, I’ve seen attempts to label those who oppose independence as unpatriotic or worse, but I see nothing treacherous or unpatriotic about a belief that Wales is better off as things are than being independent, even if it’s not a view with which I agree.
Labelling is no substitute for debate, and the future is too important to be left in the hands of simplistic sloganeers.