Some thoughts on the Economics of Unity.

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Within Republicanism I am definitely on what I call the Diana Ross wing of thinking which says ‘you can’t hurry love’ That is why I have consistently opposed Sinn Fein’s move for a border poll right now, as I have always thought Republicanism needs to move off the notion of territorial lines on a map and simply quoting events that happened a century ago.

It has long been a criticism of Irish nationalism that we lack a coherent economic argument for reunification. To the average punter why on earth would you want to leave the 7th largest economy in the world and throw your lot in with Southern Ireland? There are benefits to be sure of being part of the UK, this isn’t an issue of ‘what have the romans ever done for us?’ We receive a good health service, plenty of subsidies to fund our other needs from our brothers and sisters across the water.

However, I would just submit to you another proposition that I feel in the long run would be even more beneficial for our future and that’s economic unity with the Irish Republic.

One thing I have noticed about the debate surrounding this issue is the lack of knowledge that people on both sides have about the Irish economy. It always amazed me that in Northern Ireland; people still carry around this ‘blue skies of Ulster, Grey mists of the Republic’ mentality. There are a lot of myths going around about the Irish economy and the biggest one going is that Northern Ireland is better off than the Irish Republic.

Let’s take a look at some facts. 1) Job creation in the Irish Republic, despite one of the biggest economic crises to ever hit the Irish state is still better in the South than it is here. In fact, Southern Ireland now leads the OECD in job creation. Our leaders regularly go off to the United States in order to lure investment, yet the Irish Republic has successful put itself in the position where it receives more FDI from the USA than China, Russia, Brazil and India combined.

Irish workers typically earn more too, with the average worker taking home £8,000 more per year than someone in Northern Ireland. This figure is even more impressive when you consider that the cost of living in Ireland has fallen steadily since the recession began in 2008.

Now, it isn’t all on the up and there are problems, but when you hear the hysteria from some quarters up here, you could be forgiven for thinking that we were proposing an economic union with Zimbabwe, rather than Ireland.

The Irish Republic successfully lures the wealth creating jobs that will stand them in good stead for years and let their people get ahead. While we languish in Northern Ireland, waiting for the next call centre announcement, with wages that barely allow people to get by.

My argument is that we can do a lot better than this. An all island economy based on solid principles of investment and job creation would allow more of our people to enjoy a standard of living that we have for decades been denied through economic policies that are designed to suit the South-East of England, rather than our own needs. I also believe that like any new relationship, we have things to teach the Irish Republic in the areas of public service provision and maintenance of those services into the future.

In my view Republicanism is merely scoring own goals, with language like ‘failed state’ and ‘new republic.’ What we need to be focusing on is selling the country we have at the moment and how much better it can be if we were united. We need to drop the gimmicks and take the long view of articulating a reformed economy. For those who say it cannot be done I would urge them to look at New Zealand and Australia in the early 80s, two of the most closed economies in the OECD, both of whom within the space of 6 years opened up and liberalised their markets and who are now reaping the rewards of taking brave economic decisions.

I don’t take a black arm band view of my country, on the contrary, I am just fed up of being in a position where on Budget day we sit waiting for the next hand out from George and we simply have to make do with what is available. A united Ireland will not be a one way bet and yes, some people will lose out, we have to be upfront about that. Republicanism will go nowhere if it attempts to create a European version of Cuba with another bearded leader as El Presidente!

We need to take the economic arguments head on, accept the problems and highlight the positives.  I am not looking for a panacea or a fairytale ending, all I want is something better than the current ecomomic arrangements offer us. Yet it’s up to Republicanism to do the work and make the case. In writing this article I hope I am making a small contribution to this endeavour.

 

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  • Old Mortality

    P68
    Sorry for the belated response. I didn’t realise you were so well connected that you know “in fact” that the British establishment would effectively bribe the Irish to accept unification.
    If they really wanted to promote Irish unification they would be turning the screws on the block grant more vigorously than they are. Starve them out, to put it crudely.
    If social security benefits are more generous in the RoI at the point of unity, what could persuade the British government to subsidise the Irish to pay their erstwhile dependants more than they were paying them. It would be up to the RoI to decide whether they could afford them or not.
    On the other hand, if British social security benefits were higher than in the RoI and the British continued to subsidise them, how could the newly unified state possibly operate with a two-tier social security system?

  • Politico68

    Comrade, I think u are being deliberately obtuse for no good reason.

    You can find the relevant rates USC rates on the citizens advice site

    Standard rate of USC (2014)
    Rate Income band
    2% Up to €10,036
    4% Between €10,036 and €16,016
    7% Above €16,016

    So you are FACTUALLY INCORRECT here.

    Voluntary Health Insurance (VHI) Is a state run PRIVATE HEALTH INSURANCE company. Similar to any private Health Insurance Company, it only pays for the healthcare of its MEMBERS, i.e. those that contribute to it.

    The Irish Public Health Service Exectutive (HSE) is funded by the taxpayer through TAXATION and PRSI contributions.

    So you are FACTUALLY INCORRECT again.

    In fact the only thing you have said that is factually correct was at 12.22pm Line four in parentesis.

  • Politico68

    Old Mortality,

    It remains to be seen to what extent the British would be willing to contribute towards the cost of Unification and for what period of time. We can ‘if’ till we are blue in the face but that really gets us nowhere. I am simply pointing out that on the research I have done it is clear that an arrangement is most likely. However, time will tell.

    The over-riding point in all of this that I am trying to get across is that the ‘Block Grant’ as we know it will not in effect block Unification because much of it can be either eradicated, cut or funded from elswhere – Britain, EU grants etc. The economics of the situation in terms of the points I have highlighted earlier in my original post, are favourable to unity. When if comes down to it of course, people will want detailed information on how it might affect their household budget specifically and on that basis it appears at least that little will change except to say that as we stand now, the South is on average slightly more finacially favourable concerning incomes, allowances, welfare, taxation and overall cost of living according to every credible independent International measure.

    People can choose accept that or not. If not, please take it up with the organisations directly; World Bank the OECD the CIA etc. etc. I have no inlfuence with any of them so I cant get them to skew their numbers in your favour.

  • Old Mortality

    P68
    Well figures once told the Irish they were the richest people in Europe which was absurd to anyone who had ever visited any number of EU countries.
    Anyhow, on the subject of health insurance, I am pretty certain that before the recession hit the RoI, more than half the population had private health insurance through VHI and other smaller health insurers. I’d guess that the proportion is still north of 40% so it’s a bit naughty to characterise it as an option for just a small affluent minority as it is in the UK.

  • Politico68

    Absurd because you don’t want to believe does not make the absurd. A weekend break in Prague in hardly sufficient to make a comprehensive wealth comparison between nations. What nonsense ! 20% of UK citizens have private insurance as opposed to 49% of Irish, simply because the Irish have higher spending power per capita as outlined above to exhaustion.

  • Politico68
  • Old Mortality

    P68
    It sounds as if you, like more ignorant souls, have confused income with wealth.
    If I have been earning more than you for 20 years and haven’t blown the lot, it’s unlikely that you’ll have more wealth than me simply because you have earned more for the next couple of years.
    And please, a little less patronising, on the matter of travel. Like most Irish people you seem to prefer the comfort of an English-speaking environment.
    However, limited my own expeditions abroad, I’m pretty sure there’s nowhere as grim as Granard, Co. Longford to be found in many western European countries

  • Politico68

    I lived in Japan for five yrs and speak fluent jpnz

  • PaddyReilly

    関連性?

  • Comrade Stalin

    You’re being disingenuous P68. VHI isn’t some sort of luxury system; if so then why did the government move a few years ago to require other insurance providers to pay risk equalization costs ?

    Of course we know why – it’s because anyone with any sense in the RoI gets health insurance to ensure you don’t get hit with out-of-control or unexpected hospital/medical/drugs bills. I’d wager that as you go further up the age bracket you find the proportion of people registered with VHI rises significantly.

    The 20% quoted for health insurance in the UK sounds high. Anecdotally, the number of people I know with private health insurance is substantially lower than 20%. On the other hand quite a few people take out policies that cover eye tests and pay costs towards dental checkups. I wonder if that is included in your 20%.

    As for purchasing power in the RoI being higher .. I just don’t see it. Everything is more expensive down there and there are many more charges – healthcare, bank charges, vehicle tax charges, childcare charges etc etc as well as taxes to be paid. This is the cost of being a small economy which is geared in the way that government policy has been shaping it since the early 1980s.

    Regarding the tax argument, I’m not being obtuse – although I could have misread the tax allowances on the website. But just to be clear, I took a few sample salaries for you and calculated the take home pay in Euros, using the UK tax calculator at http://www.listentotaxman.com/, the Irish one at http://ie.thesalarycalculator.co.uk/, and http://www.xe.net to convert the currency at the mid-market rate in both directions. I’m standardizing on Euros. Once a single person goes above about €35K you will pay more tax.

    Salary => ROI take home ::: UK take home

    €30,000 => ROI €24,681.20 ::: UK €23,985.745
    €40,000 => ROI €30,069.20 ::: UK €30,785.83
    €50,000 => ROI €34,869.20 ::: UK €37,586.35
    €70,000 => ROI €44,469.20 ::: UK €49,265.65

    Chew on that.

  • Politico68

    Not great on the kanji, but I could cheat and google it :)

  • Politico68

    It was in response to this comment from Old Mort

    ‘Like most Irish people you seem to prefer the comfort of an English-speaking environment.’

    ….and i didnt get the relevence of that either

  • Charles_Gould

    Sinn Féin itself has made clear that the health system in the south is lamentably poor – and as a “two tier” system horribly unfair.

    As it its tax system horribly generous to the rich and to capitalists.

    There is a lack of a strong left in Dublin – a major shortcoming.

  • Charles_Gould

    ” many more charges – healthcare, bank charges, vehicle tax charges, childcare charges etc etc as well as taxes to be paid”

    VAT (which is high in the south) and these charges you mention (plus road charges) are *regressive* they take a lower proportion of income from the same from the super-rich as from the middle income earner.

    There is a weak “left” in the south; many of their commentators sound as though they think a public sector is a bad thing.

  • Politico68

    Comrade, Your figures are wrong but I can only assume that you are not calculating properly.
    VHI is optional private healthcare.
    You dont know enuff of the UK population to make a determination of what proportion has private healthcare.
    Purchasing power is based on disposable income and incomes are higher in the south..

    Plus we get tax credits on top of our basic credits to get relief on many costs, but you are having trouble understanding that too.

    Charles according to comrade above the richer one is in the UK the less tax you pay, I wish you guys would make up your minds.

    I suggest maybe you guys should just go ahead and apply to the world bank or some other international org that compiles these figures and offer to go work for them because quite clearly you are doing a great job, God help us !

  • Comrade Stalin

    Politico68,

    You can see my figures if you go to the websites I linked. I did not calculate them. The tax credits are included in those calculations.

    Show me your alternative calculation for the tax paid on a salary of €40,000. If mine is wrong then let’s understand where I made the error.

    If VHI is optional then why do 41% (your number) go to the trouble of taking it out ? Why did the government require risk equalization if it is some sort of optional luxury ?

  • Politico68

    Comrade, I have a life so this is the last time I am going to comment;

    Single person earning 40,000 euro in Ireland.
    32,800 @ 20% = 6560
    7,200 @ 41% =2952
    Tax Due = 9512
    less Single Tax Credit of 1,650 / PAYE Tax Credit of 1650 /rent – mortgate tax credit 780(minimum) Job Type Credit 220 (minimum).
    All this amounts to tax due of 5212.
    Now USC due on Gross pay. .
    @ 2% of 10,000 = 200
    @4% of 6,000 = 240
    @ 7% of 14,000 = 980
    Total USC due = 1420
    Now PRSI due on Gross Pay
    @ 7% 0F 21696 = 1,519
    PRSI 1519 + USC 1420 + PAYE 5212 = Total Tax take of 8,151 from Gross Pay of 40,000 gives net pay of 1, 849.

    Chew On That Mo Fo

  • Politico68

    LOL – 31, 849

  • Politico68

    Comrade, Apologies, I forgot to give the UK comparison to the above based on Revenue site info and todays exchange rate.

    UK employee earning equivalent of 40,000 euro
    32,840 (10,000 tax free) so
    22,840@20% = 6,568
    Nat Ins payable on income above 7,956 -
    24884 @12% = 2,986
    Income Tax + Nat Insurance = 9,554 subtract from Gross pay of 32,840 = take Home pay of 23,286 sterling : which is the equivalent of 28,362 EURO.

  • Charles_Gould

    Politco – that’s it?

  • Politico68
  • Reader

    Politico68. What’s 20% of 22,840?

  • Comrade Stalin

    Politico68,

    Ah you moved the goalposts by adding in job type and mortgage relief tax credit.

    There is no reference to the “job type credit” on the Revenue website here. What’s this you’re talking about ?

    Furthermore, mortgage interest relief doesn’t apply to any loan taken out ten or more years ago, or to any loan taken out after the end of 2013. I accept that qualifying homeowners will pay less tax as a consequence (depending on their income) but it sounds like the majority of homeowners are ineligible.

    You’re shuffling the numbers to make them fit at this point.

  • Politico68

    Sorry reader, I was in a hurry ! Mea culpa

  • Politico68

    Comrade, credits are easily found on the website, no need to shuffle numbers , I admit the credits are tricky to understand but they are an important part of our tax calculation and can be frustrating as the cover everything, there is even a bin charge tax credit !! The point stands, the traditional view that taxation in the South is higher than the North, is simply false.