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Brexit and inequality [Update]

by Frank Schnittger Sat Jul 21st, 2018 at 01:37:03 PM EST

[Update] To my shock and amazement, the Irish Times has published my letter in full:Brexit a gift for Ireland?

David McWilliams is something of an Irish euro-sceptic but has an interesting article in the Irish Times. Riffing off Boris Johnson's "F*ck business" comment he argues that the Brexiteer led Tories have become an anti-business party and that that represents an opportunity for Ireland. I have drafted a letter to the editor as follows:

David McWilliams writes that "Economically, the real story is how the UK went from [being] the herald of free enterprise to "F**k business" in one generation."  (Opinion, 21st July). The irony is that the UK's economy was "the sick man of Europe" when it joined the EU in 1973, and it has done very well out of EU membership by expanding it's services sector massively and taking advantage of the single market.

The problem is that the de-industrialisation pursued since Margaret Thatcher and the globalisation enabled by the EU has also increased regional and social inequality massively, and this, more than anything, is what drove Brexit. The Eton/Oxbridge elite have also twigged that their sense of entitlement doesn't cut much ice in Brussels and so they have jumped on the bandwagon "to take back control".

There will be blood when the great unwashed of Sunderland realise they have been duped and that there will be even greater inequality and poverty under an Eton/Oxbridge led UK free of Brussels constraints. The Eton /Oxbridge crowd were never much interested in getting their hands dirty and actually making things - for them industry is a dirty word. Vulture capitalism, rent seeking, and ripping off other people's hard earnings is their thing.

So yes, Brexit, and especially a hard Brexit is an enormous opportunity for Ireland as the sole remaining larger English speaking member with a similar legal system and cultural outlook. But we should be beware of this creating even greater regional and social inequality in Ireland. A few banks and vulture funds relocating a few staff and a lot of paper financial assets to Dublin may do wonders for our already bloated GDP figures, but little for the plain people of Ireland.

We should focus on attracting a lot of smaller/medium sized UK industrial companies who need access to EU markets to smaller and medium towns in Ireland. These smaller companies typically don't have "corporate strategy" departments or foreign language capabilities. Moving a few miles across the Irish sea to an English speaking common law jurisdiction would be the easiest option for them.  100 jobs in Leitrim would mean a lot more to the local economy than a few financial whizz kids moving to Dublin.

Leo Varadker should appoint a full time Brexit minister dedicated to travelling the roads of north and Midlands England meeting small business leaders who never see a British government Minister and whose Brexit concerns are being ignored. Tariff and non-tariff barriers may make their EU exports unviable and threaten the future of their businesses. If Boris won't help them, perhaps we can.


The big missing in a lot of mainstream economic debate is the emergence of great wealth whilst a lot of people are still living in poverty. Public services have been eviscerated and most new jobs are relatively low paid. Ireland experienced 7% headline GDP growth last year, and unemployment is now down from a peak of 16% in 2012 to 5%.

However the national GDP figures are inflated by as much as 40% by the asset shifting activities of multi-nationals and real personal consumption is growing only slowly. The younger generation, in particular, is faced with lower pay rates, much higher housing costs, far longer commutes, and poor public services. Homelessness is a growing national crisis. Public health services are a melange of long waiting lists despite Ireland having the fourth highest per capita spend on healthcare in the EU.

Some of this is a hangover from the Great Recession and the public austerity policies which exacerbated it. There is a huge infra-structural deficit which is only very slowly being addressed. Investment in housing increased by 27% last year and pay rates are rising slowly as the economy approaches full employment.

However Brexit is the big cloud on the horizon. Already Irish exports to the UK have fallen by 8% this year despite a 5% rise in overall exports. The IMF warns that a no deal Brexit could cost Ireland 4% of GDP and 50,000 jobs. In that context, it would only be prudent for any Irish government to take what steps it can to offset the damage.

Ireland already suffers from Dublin expanding too rapidly for its infrastructural capacity while more rural parts of the country struggle. Financial firms moving from London to Dublin because of Brexit will only exacerbate that problem while many of the job loses caused by Brexit in the agri-food sector will effect rurally based jobs much more.

Areas outside Dublin have much lower housing costs and greater infrastructural capacity to accommodate more businesses and employees and the demands they create. Not everyone wants to be or has the aptitude to be a financial whizz kid so we also need to create more employment opportunities for manual, craft and technical workers and for those who wish to live in more rural areas.

However the government needs to get over its obsession with waiting for the "market" to respond to all unmet needs. It is low cost affordable housing which is most in deficit and yet the government is only slowly expanding public house building. There is a near private sector monopoly in the provision of Broadband, particularly to more rural areas which means performance is patchy and poor. Businesses can't locate to more rural areas without high performance affordable broadband and an upgraded transport network.

Hence my response to David McWilliam's article. The critical challenge facing the government is to ensure that Brexit doesn't exacerbate already excessive regional, social and inter-generational inequalities. Brexit may well represent an opportunity as well as a cost factor for the Irish economy, but it's most pernicious effect could be to increase inequality within Ireland.

Display:
Well said, constructive critique of the "state of play" for IE.

I note with interest, too, that independent.ie carried a clip of Varadker's "rainy day" public finance PR. In contrast to prepper PR in the UK tabloids, the proverbial" --wrapped in customs surveillance at the ports-- relates imminent catastrophe to the Panic of '08, subtext reviving the property "bubble," or "irrational exuberance," which preceded the credit crash.

Not glamorous but more pertinent agenda than blitz o'er over by a "third country" invader.

Diversity is the key to economic and political evolution.

by Cat on Sat Jul 21st, 2018 at 02:06:26 PM EST
blitz o'er Dover and London. May reportedly stated:
The economical and constitutional dislocation of a formal third country [wtf] customs border in our own country is something I will never accept and I believe no prime minister could ever accept.
So. If there were ever a time to diversify IE trade --rather than repair letters of credit with petty bourgeois merchants in the Midlands-- now would be it.

Diversity is the key to economic and political evolution.
by Cat on Sat Jul 21st, 2018 at 02:21:56 PM EST
[ Parent ]
That is already happening. The UK used to represent 70% of our external trade prior to joining the EU, and a main reason for us joining the EU was to reduce that dependency. Trade with the UK is now down to about 14% of our total trade and still declining - as witnessed by our most recent trade figures for this year - a 5% rise in overall exports despite an 8% decline in exports to the UK.

However, the UK as our nearest neighbour is always going to represent a natural trading partner for us with many similar consumer preferences and retail/wholesale networks. Trade with N. Ireland has actually been increasing, and this should be encouraged. Quite how the N. Ireland economy has managed to shrink while it's southern neighbour is growing by 7% gives you an idea of the scale of governmental mismanagement there.

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by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Jul 21st, 2018 at 02:35:54 PM EST
[ Parent ]
o rly.

What are the other 26 EU-member states and 160-odd nations in the world?

Diversity is the key to economic and political evolution.

by Cat on Sat Jul 21st, 2018 at 02:41:48 PM EST
[ Parent ]
Most trade in the world takes place between geographical contiguous regions...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Jul 21st, 2018 at 03:04:29 PM EST
[ Parent ]
to Vanauatu?

I see. Y'all have something in common.

Diversity is the key to economic and political evolution.

by Cat on Sat Jul 21st, 2018 at 03:47:24 PM EST
[ Parent ]
and the rest will follow.

Diversity is the key to economic and political evolution.
by Cat on Sat Jul 21st, 2018 at 02:27:39 PM EST
[ Parent ]
Well, Ireland WAS ruled by the British until 1922. How does Ireland come to need to "de-colonize' its mind? Because it speaks English?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Jul 22nd, 2018 at 05:10:55 PM EST
[ Parent ]
The effects of colonization upon indigenous peoples is not well-understood by the colonizers and ... permit me to rephrase... their co-dependents, enablers or collaborators.

Better?

Diversity is the key to economic and political evolution.

by Cat on Tue Jul 24th, 2018 at 04:01:12 PM EST
[ Parent ]
The default position in politics in Ireland when I was growing up was to blame the Brits for everything - to the point that it became a handy excuse whenever the current ruling elite was doing a lousy job.

The last 40 years - ever since Garret Fitzgerald became Taoiseach - have seen a gradual maturing of the body politic in Ireland as the UK and Ireland came to be treated as near equals around the Councils of the EU.

The Troubles in the North also taught the UK Government that they had to cooperate with the Irish Government if they wanted to stabilise the situation. It got to the point where even the Queen could be welcomed to Ireland - despite our rather difficult shared history - and even Sinn Fein was ok with that.

I am well aware of Franz Fanon and Paolo Freire's work on decolonising minds and education systems. Andre Gunder Frank also did pioneering work on criticising the role of comprador bourgeoisies in enabling continued repression in neo- and post colonial societies.

So please don't lecture us too much on dealing with post colonialism. We got this.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jul 24th, 2018 at 04:42:13 PM EST
[ Parent ]
m'k. I'll ignore the daily headlines then.

Diversity is the key to economic and political evolution.
by Cat on Tue Jul 24th, 2018 at 04:48:11 PM EST
[ Parent ]
Every time the Sun or some other UK redtop bashes Ireland or Leo Varadker it's worth a few thousand more votes to him...


Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jul 24th, 2018 at 05:04:35 PM EST
[ Parent ]
re: "post-colonialism"

familiar territory

Diversity is the key to economic and political evolution.

by Cat on Tue Jul 24th, 2018 at 05:21:40 PM EST
[ Parent ]
To my shock and amazement, the Irish Times has published my letter in full:

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jul 24th, 2018 at 11:17:39 AM EST
Don't be shocked: you have good arguments and your writing is articulate and easily readable. Everything which a Letter's editor would look to for publication.
by Bernard on Tue Jul 24th, 2018 at 06:39:02 PM EST
[ Parent ]
The IT publish perhaps one quarter of the letters I send them, and often not the ones I would consider the best. They also publish a lot of rubbish - stupid one liners etc. It's quite unusual for them to publish a longer letter from someone who is not a well known public figure or someone representing an important organisation.

So trying to make an actual argument in a few paragraphs is usually disqualifying. Of course it does depend on how topical the topic and how big the volume of correspondence they receive on that topic. But generally they seem to try to cater to a very wide audience which means little space is available for more specialised arguments. Hence my surprise.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jul 24th, 2018 at 08:56:10 PM EST
[ Parent ]


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