Friday, January 06, 2006


It's the economy, stupid

Time for northerners to experience this I've been meaning to write a post about this article by David McWilliams which featured in the Sunday Business Post.

In it, David McWilliams makes a very interesting and exciting case for an all-Ireland economy.

Permit me to take some of the more interesting extracts from the piece. It's quite long but if you believe a United Ireland is the way forward then you will be impressed by the article...

"The solution to Ireland's economic dilemmas - like congestion, queues, rip-offs and not being able to find a good plumber - lies just up the road.

"Northern Ireland is probably the greatest untapped economic resource on the island, but politics - or at least the incessant "whataboutery" that passes for sectarian politics - has ensured that we cannot see this.

"Anyone who spends any time in the North will realise the logic of an all-Ireland economy, not from the narrow triumphalist view of nationalist politics, but from the pure common sense of geography. Everything is cheaper in the North, and the place is on our doorstep. To understand why we could all benefit by sharing the Republic's ferocious economic appetite, it is important to establish why the North is so much cheaper.

"The main reason prices have risen so fast here is because they could. Up North, there is a lot less money sloshing around, which in turn ensures that prices have not risen so rapidly.This is a result of numerous factors.

"First, the population structure is different.Northern Ireland's baby boom peaked in 1970, ours in 1980. So the key spending component of the economy is ten years older in the North than here.

"Second, those who are spending are spending less. The easy caricature to explain this is the image of the parsimonious Prod versus the feckless Fenian, but a much more telling explanation lies in economics.

"We are spending more because our incomes are growing much more quickly.

"Job creation has been dramatic - unlike the North where it has been average. This year, the Republic - with a population barely three and half times bigger than the North - will create nine times more jobs.

"Without taking into account the usual 100,000 of us who will change jobs next year, the Republic will absorb 11,000 immigrants a month in 2006. This is more than the entire increase in employment forecast for the North for the whole of this year.

"Wages in the Republic are substantially higher, not because we are nice to our workers, but because productivity here is significantly higher. This productivity gap is largely explained by multinational investment, which has driven the economy here but has been almost absent in the North. For example, 95 per cent of the increase in Irish exports came from new multinational investment, propelling this country forward in the 1990s. In the North, however, multinational investment actually fell in the 1990s.

"Tellingly, this multinational investment gave a positive boost to local suppliers of these new firms, which reinforced the uplift in productivity. This process did not occur up North.

"A third factor has been the wealth effect associated with house prices. Although house prices have been rising in the North, they have not been anywhere near the spiralling nonsense down south. The average cost of a house in the North is €153,000,while down here it is €271,000.

"The wealth effect of this divergence, driven by equity releases, has amplified the amount of credit in the Republic's system, thus pushing house prices up further.

"Finally, because the public service accounts for almost half of all employees in the North, as opposed to 18 per cent here, there is less dynamism and innovation in the workforce, and arguably a lack of risk-taking, which itself affects the overall feeling of economic sterility. This, again, is reinforced by figures published last year in the European Journal of Social and Regional Studies, showing that, proportionately, there are twice as many self-employed people in the Republic as there are in the North.

"It is still suffering a brain drain to Britain - particularly by young middle-class Protestants - and, as Peter Hain stated quite obviously, the Northern economy is not sustainable in its present form. By this, he was referring to the annual subvention the North receives from the British exchequer.

"To put this figure into an all-Ireland context, the North, with its much smaller population, gets more subsidies in anyone year from Britain than the Republic did from the EU throughout the entire 1990s.

"At some stage, the North must at least make some moves towards self-reliance.

"We can help them in this process and, in turn, they can ease some of our congestion problems.

"Belfast is the closest city to Dublin on the island of Ireland. It is the only one that has sufficient mass to act as a counterweight to the capital. It has the people, and they need our types of jobs. By 2007, with the completion of the final stretch of the Dundalk-Newry motorway, it will be only two hours away by car.

"Geography demands that we wake up to the resource that is the North. We should help them to agitate Westminster for corporate tax breaks like ours, so that they can compete properly. They should be part of our sales pitch, not least because as we get too expensive, cheaper workers and better infrastructure in the North will become part of our unique selling point.

"Reading all the antediluvian stuff about the North in the 1975 government papers over the past few days, one can't help but feel that the best way to condemn that nonsense to history is indeed to join hands and jump together - in economics, if not in politics. They need us and we need them. Now that we can afford it, it is time for us to be both far-sighted and generous."

This man knows his sums
Let's share the moolah

I have covered the economic argument for an all-Ireland unit before on United Irelander here, here and here.

Clearly economics is no longer a problem when one considers the prospect of Irish reunification. Top economists are now urging us to look at the potential of an all-Ireland economy and more importantly than that, the British Secretary of State Peter Hain is urging us to look at the potential of an all-Ireland economy.

It is the way forward and it suits both sides of the island. It is time for all of us, north and south, to advocate an all-Ireland economy for the greater good of the people.

Let's see it happen.


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