“But the policies that small business have actually called for…”

Back to economics again, and in particular to the Irish Times economics editor, Marc Coleman, who’s been looking [subs req] at some of Sinn Féin’s stated policy objectives – beyond harmonising corporation tax at 17.5% – to what the party has in mind to support the small business sector. In the Republic he says, “According to the Small Business Forum, some 250,000 small businesses in the Republic support almost 800,000 jobs”… and he argues that what small businesses have actually called for are not on the SF agenda.From the Irish Times [subs req]

Sinn Féin is careful to recognise the crucial role of small businesses in creating employment, especially in rural isolated areas. According to the Small Business Forum, some 250,000 small businesses in the Republic support almost 800,000 jobs.

Sinn Féin is not short of proposals to support the sector. Whether the sector will welcome the type of support the party proposes is another matter. In a novel idea Sinn Féin proposes the establishment of a “co-ordinated and comprehensive social economy strategy” on an all-Ireland and state-funded basis.

Under it, a social economy development agency, state-funded of course, would develop, guide and advise small community-owned enterprise units or small businesses trying to achieve altruistic objectives.

And in a reference that would warm the heart of any old-style socialist, Sinn Féin calls for the “further development of the Irish worker co-operatives” to make the co-operative sector a cornerstone of Irish economic and enterprise policy.

But the policies that small business have actually called for – curbing local authority expenditure and achieving more competition in the public sector – seem far from Sinn Féin’s agenda. The party’s defence of the state’s role in government brings us to the core problem of the North’s economy and, perhaps, the irony of ironies regarding Sinn Féin’s entire economic strategy. Whereas the Southern economy is 70 per cent private sector and 30 per cent public sector, the economy of the North is the exact opposite.

A vast public sector, together with a generous disability benefit regime, are the two things that keep the North’s unemployment rate from rising to crisis levels. Underpinning that vast public sector and benefit regime is an almost complete financial dependency on London, something that ought to be anathema to Sinn Féin. If Ireland were to be reunited, the North’s public sector would have to shrink significantly to avoid it becoming a crippling burden.

As well as developing indigenous industry, reducing that dependency would also require a policy of aggressively attracting foreign direct investment from multinationals, at least at the initial stages. Not just small, but also medium-sized and large indigenous enterprises would need encouragement.

It would also require a rationalisation of the North’s public services. Sinn Féin’s policy is to “defend public services”, not to mention expanding the apparatus of the state by the creation of new state and semi-state bodies.

The willingness of UK taxpayers to fund statist largesse in the North is waning. A majority in the South probably still supports reunification. And, as even some unionists can accept, a closer economic integration of the 32 counties – aside from the issue of political unification – could on its own be to everybody’s benefit. But would Sinn Féin’s statist policies help or hinder those benefits?

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  • kensei

    While the point about their being a mismatch between what small business is calling for and SF policy is decent, the actual article is a little light on the precise detail of the policy and seems to use the word “Stalinist” a little too much for comfort. There isn’t anything inherently wrong with state support for SMEs or supporting co-operatives; I’d be happy to see more of the latter in particular as a compliment rather than a substitute.

    What got me though was:

    “The party’s defence of the state’s role in government”

    Waaaaa!?

  • Pete Baker

    Ken

    If the writer has mis-interpreted the SF policy on economic issues for small businesses.. then explain where he has got it wrong.

    Alternatively, by all means, advocate that party policy if you wish.

    Regardless of what the small businesses actually say.

  • kensei

    “If the writer has mis-interpreted the SF policy on economic issues for small businesses.. then explain where he has got it wrong”

    I didn’t say he misinterpreted it, as I honestly don’t know a wild lot about it. I said it is light on detail, which it hard to judge, and uses the word “Stalinist” frequently, which sets off alarm bells by pure gut instinct.

    “Alternatively, by all means, advocate that party policy if you wish.

    Regardless of what the small businesses actually say. ”

    Simply because a particular sector demands something doesn’t necessarily mean it is a good idea, or the goals are actually tallying with the goals of the policy proposed. For example, SMEs might prefer not to have cooperatives about, but it necesarily doesn’t make it a bad idea. They might want safety regulation slashed, and that might not be a good idea. They could equally be good ideas. I don’t have enough detail to hand, and it’s too late to start looking stuff up.

    State guidance to SMEs I can take or leave, but I do think co-operatives should be encouraged as an another avenue for SMEs. In theory they could allow less risk and a more substantial share of success for more people. That could attract a different kind of person (or people) than one who is prepared to take high risks in a normal startup. That to me would be a good thing.

    I have little doubt SFs policy in the area could do with an overhaul though there is probably some nice left wing stuff there to keep. But it is also clear this article is as much about associating a bogeyman with them (or more importantly, any left wing alternative) than discussing the relative merits. If you want a decent example of the latter type of article, there have been some excellent blogs on various topics in business/economics issues on the Beeb here:

    http://www.bbc.co.uk/blogs/thereporters/robertpeston/

    and here:

    http://www.bbc.co.uk/blogs/thereporters/evandavis/

    I really just wanted to highlight the insane comment about the state’s role in government.

    Night.

  • I think all parties will say they will ‘defend public services’, It’s like being for sliced bread and the like.

    the folly of relying on foreign investment is displayed by the ongoing outward flood of jobs from Ireland to Eastern Europe as multi nationals relocate jobs there, having got the investment and exhausted the tac breaks.

    Coleman’s analysis is, as Kensei points out, heavy on the bogeyman and attempts to paint SF as a party that is not business supportive. It has a few different ideas which should be tried – like the co-operatives in order to encourage the enterprise culture. Coleman’s ideal would have us overrun by Gordon Gekkos – that being the opposite of Stalinist – but notice how he doesn’t descibe the PDS as a Gekkoist party!

    I too think that the economic policy of SF needs work – but their priority at the moment is to achieve power and a United Ireland. My opinion is that a tweaking of their policies would ease that road but let that aside for a moment.

    The kernel of Coleman’s thesis is partitionism is good for the 26 counties as they don’t want the burden of supporting an economy heavily dependent on subvention, an idle workforce which is supported by: A vast public sector, together with a generous disability benefit regime, are the two things that keep the North’s unemployment rate from rising to crisis levels,.

    This the bogey man which Coleman wants to plant in the minds of the southern electorate. It of course is only a partially accurate depiction of the northern economy. One of the main problems in the north is Invest NI who are still using sectarian yardsticks to determine where they will locate industry and where the culture of supporting indigenous industry is still in its infancy.

    And of course the elephant in the corner which Coleman fails to mention is that the vast bulk of public service expenditure in the north is on ‘security’. I personally wouldn’t mind those jobs going to Eastern Europe…..

    There’s a strong bias in Coleman’s ‘analysis’ which is against a United Ireland, pro BIG business and further right than McDowell ‘Inequality is good’. A more objective analysis would have served his readers better.

  • Aaron McDaid

    State-subsidised cooperatives will discourage enterprise, not encourage it. The real entrepreneurs will not be able to go up against the state subsidised cooperative and therefore won’t bother. Then the economy really is screwed.

    We have that same problem in NI today. InvestNI hand out loads of money (which doesn’t grow on trees) to those who deliver nice shiny presentations and fill in nice grant forms; resulting in real entrepreneurs having no chance. We want to encourage the people with the best ideas, and the investors who can tell a good idea from a bad one, and to do that we need a level playing field by simply cutting taxes. We could probably pay for it simply by scrapping the monster that is InvestNI.

    A succesful economy is more about the market killing off bad ideas than it is about encouraging good ideas.