The Arc of Prosperity

Watching the Conservative Party conference is a hardly a pleasant task; but someone has to do it, and there are one or two laughs to relieve the tedium.

One of them was in their debate on the future of the UK, in which Cheryl Gillan was first up. After the usual Labour bashing, she spoke of her fears about Plaid Cymru, especially because in our own conference a few weeks ago we made our aim of independence for Wales more explicit.

     

As I'm sure most of us will remember, the Arc of Prosperity was a phrase used by Alex Salmond in 2006 to include Ireland, Iceland and Norway, which were at that time among the six richest nations in the world on a per capita basis. Norway has managed to stay near the top, but both Ireland and Iceland's economies suffered badly as a result of the banking crash.

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But it so happens that the latest CIA World Factbook came out only a few days ago, including a list of countries (and a few sub-national entities like Bermuda, Jersey and Hong Kong) ranked on a GDP per capita basis. Norway was seventh, Iceland had slipped down to 25th and Ireland to 27th.

But where is the UK? Sadly, it's floundering at 37th.

And the CIA factbook is not alone in that assessment. The latest figures from the IMF, World Bank and OECD tell a very similar story.

CIA World Factbook

Norway ... 7th
Iceland ... 25th
Ireland ... 27th
United Kingdom ... 37th

International Monetary Fund

Norway ... 4th
Ireland ... 13th
Iceland ... 17th
United Kingdom ... 22nd

World Bank

Norway ... 5th
Ireland ... 13th
United Kingdom ... 22nd
Iceland ... 24th

OECD

Norway ... 2nd
Ireland ... 8th
Iceland ... 15th
United Kingdom ... 16th

Both Ireland and Iceland might have suffered, but they are still more prosperous countries than the UK. The figures show that we'd be fools to gloss over the enormous fall in the UK's own prosperity, which is largely accounted for by the fact that the Pound fell from a level of around $2 in 2008 to a level of around $1.60 now.

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So I hate to burst your bubble, Cheryl, but we in Plaid Cymru are very happy to talk about the Arc of Prosperity. For even though a couple of the countries in it have taken a bashing, they still remain richer per head than the UK.

The economies of small, independent countries can do better than those of the large, slow to manoeuvre "oil tankers" not because they don't suffer in times of economic crisis, but because they tend to bounce back faster. That's one of the conclusions of the Flotilla Effect.

So why is Cheryl Gillan still clinging to the idea that:

"Wales doesn't need independence to prosper, it needs the interdependence of the four nations [of the UK] to provide strength and security during these difficult times."

The hard evidence shows that the UK is far from being a lifebelt, it's more like a block of concrete tied round our necks. As part of the UK, Ireland used to be poor. Independence is what allowed it to become and remain more prosperous than the UK.

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20 comments:

Anonymous said...

According to Dominic Lawson in the Sunday Times regarding British QE: "The only country tackling the problem sensibly is Ireland, with it's many savings packages and competitive Corporation Tax. Its GDP growth rate now outstrips the rest of the eurozone. Will others follow? Unlikely. "Count on more inflation and design your bunker accordingly." "

Cibwr said...

Yet again we have the mantra independence=separatism=isolationism... this is rich coming from a party whose members seem to favour a withdrawal from the EU....

Anonymous said...

It's painfully obvious to everyone that Sheryl Gillan is an English woman, living in England, defending the English interest.

Tory success in Wales is down to the high levels of immigrants in Pembrokeshire, the Vale, Monmouthshire and the Northern coast. They may as well rename themselves English Voice.

Anonymous said...

You forgott Ceredigion and Carmarthenshire.

Anonymous said...

True but most of the immigrants in Ceredigion are middle class students & hippies who until recently voted Lib Dem. Recent events will split the English vote, allowing Plaid to take the seat.

MH said...

I think I'd go along with that, Anon 14:06. Although the Tories would have us believe that dealing with the UK's debt can only be done by making cuts in public services, their actions show that the cuts are being made as much for ideological reasons. That's why they've also cut taxes. But the "hidden" methods they're using to reduce the debt are more insidious: to devalue the currency and to increase inflation (and devaluation will tend to increase inflation even more because so much of what we consume is imported), which will simply push the UK even further down the table.

They just hope that people will be so consumed with the news about what's happening elsewhere that we'll not notice.

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I wouldn't worry about those labels, Cibwr. It is just a mantra, and no-one takes it seriously. We do ourselves down if we are afraid to call ourselves what we are just because others will misrepresent it as something else. That's why Plaid got into so much of a mess when it refused to use the word independence before.

But you're right. Why do the Tories want us to cling onto interdependence in the United Kingdom when we could and would form our own relations with every other country in the world if we became independent?

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I wouldn't blame the rise of the Tory vote on immigration. It is much more simple and much more basic than that. Every society will have some people who advocate political policies that are more right wing than left. Up until 1999, Wales had no national political arena of its own; we were just a corner of the UK arena that could afford to be predominantly left because other parts were predominantly right. Polarization. The rise of the Tory vote in Wales is probably more a reflexion of the fact that we are developing left/right politics in our own arena, and the Tories are the only electable party of the right (though of course the LibDems are now shifting to that side). But of course left/right is only one of the dimensions.

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As for Ceredigion, don't just think about Westminster. That's a long way off. The battle right now is to take control of the Council in May. With the inevitable collapse of the LibDem vote and the realization that many independents are Tories in all but name, Plaid Cymru should take control.

Same in Sir Gâr. The current ruling Labour/Independent alliance is probably best described as a desperate Labour/Tory coalition with the sole aim of keeping Plaid, by far the largest party, out. Plaid has seen a huge increase in seats over the past three elections at the expense of Labour. One more push should be enough to finally gain control.

Cibwr said...

The hypocrisy of the Tories knows no bounds on this. Plaid is internationalist, "stop the world we want to get on" - its calls for the repeal of the Human Rights Act, withdrawal from the ECHR and from the EU that is isolationist. We can't ignore these taunts, we have to meet them head on and expose their hypocrisy.

Anonymous said...

The Tory economic vision is bankrupt. Record borrowing at a time of deficit reduction equals a bankrupt ideology.

Anonymous said...

The LibDem vote in Ceredigion has absolutely nothing to do with a vote for Liberal Democracy. It's a combination of the old Liberal vote; anti-Welshie Labour; rate-payers party; Tories and green. And of course, he's Dai Jones's son, my husband's counsin, so he's family vote.

The Coalition govt will have no effect on the local election in Ceredigion. I'd be surprised if Plaid won - and I'm Plaid!

Neilyn said...

Sounds to me like "our Cheryl's" beginning to feel the heat. Good!

It'll be interesting to see whether Ireland and Iceland are able to increase their prosperity relative to the UK over the next 2 to 3 years. Let's hope so. A bit perverted I know, but it could prove to be a decisive factor in the coming Scotland referendum and Wales constitutional arguments.....

Anonymous said...

I don't think Mark Williams is anybody in Ceredigion's cousin.

Anonymous said...

Except that Iceland went bust. And so did Ireland.

Anonymous said...

Iceland doesn't look very bust at the moment. "Bust" for the bankers maybe, but wages, living standards are all doing well. Unemployment at 8% last year and reportedly down to 6.7% this August. We all know that the Tories are the party of the bankers, but its about who is going to pay for the crisis.

Iestyn said...

I liked the Hungarian finance minister's comment during the 2008 crisis in the country (sorry, I don;t have a reference). He basically said that Hungary were so used to financial crises that they'd just deal with this one and start again a little bit more experienced and a little bit stronger.

Imagine that kind of attitude in the government of a large (Oil-tanker!) nation...

Anonymous said...

"Iceland doesn't look very bust at the moment"

That's because it declined to repay much of the money it owed.

Welsh Ramblings said...

I can feel the annoyance in Anon 09:55's comments. Iceland held a national referendum, I recall. The people did not accept they were to blame for the mistakes of their banks. That's democracy! How annoying if it gets in the way of the laws of finance and capital.

MH said...

Iceland hasn't "declined" to pay any money it owes. They refused the terms of repayment that the governments of UK and the Netherlands wanted. Essentially, Iceland is going to repay the loans from its growth in GDP after 2017. It has not defaulted.

It still remains open to the UK and Netherlands to take legal action if they are unhappy. But I think they're very unlikely to in view of the Greek default and the possibiity of defaults in other countries. The courts might well decide that Iceland as a country is not responsible, or has only limited responsibility, for the actions of its private banks; and the UK and Netherlands would therefore lose out. If they don't take such action they're fairly certain of getting all the money back eventually.

Anonymous said...

MH- Would appreciate it if you further developed the points made about Iceland. We are told above the country is "bust". Does that mean anything in human and social terms? Are people in Iceland losing their homes, sleeping in the streets, not eating? Are there welfare payments? Does business still function? The right (and parts of Labour too) like to talk down about Iceland but i'm sure they are doing better than here.

MH said...

"Bust" is not really a technical term. However, if we take it as meaning that it a country is unable to pay its debts, then Iceland isn't bust. Greece, on the other hand, is bust.

Iceland's particular problem related to its banks, and of protecting the deposits of those who invested in them particularly in the UK and Netherlands. What has happened is that both these countries have "loaned" Iceland enough money to protect the savings of those who had deposited money in Icelandic banks, and it is only the terms of that repayment that are in dispute.

So Iceland is no more "bust" than the UK is. For both countries are now in a very great deal of debt, but both countries should be able to pay the interest on their borrowing, and even pay off the debt in the long term. The only real difference is that Iceland borrowed from the IMF, whereas the UK is continuing to borrow on the financial markets. However, when the IMF does intervene in such circumstances, it does so on condition that the country concerned takes steps to reduce its deficit, and in that respect the UK is only trying to do what the IMF would insist it does anyway ... so there is no practical difference. However it should be noted that reducing a deficit does not have to be done in the way the current ConDem coalition is doing it. Raising taxes (especially for those who can afford to pay them) is another way in which the deficit can be reduced.

Now I won't say that the situation in Iceland isn't very bad. But the point of this post was to show that they are still a richer country in terms of GDP per head than the UK is. They also have a generally Scandinavian approach to welfare, so people aren't going to go hungry or not have a roof over their heads. But Icelanders have tended to go out and see more of the world than most (it's such a small place that you have to) so quite a few, especially younger people, have left to find work elsewhere until things get better. The question is how quickly that will happen.

As I read it, they are bouncing back. Only last week the Icelandic Finance Minsiter forecast that the annual deficit would become a surplus in 2012. It will be a very long time before that happens in the UK. In fact it probably won't ever happen, because the basic economic premise of all UK governments has been to run a deficit economy, but hope that growth would always outpace it to enable them to pay the interest on the debt.

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