Wales needs the economic powers to chart a middle course between ideological extremes

Joe Chucas

Wales currently stands at a crossroads between two economic ideologies, both of which will harm its economy.

One the one hand is Labour’s increasingly hard-left socialism and on the other, the crony-capitalism on the Tory party.

Neither is the answer to Wales’ economic problems, and if the economy is to improve Wales requires the economic levers to chart its own middle path.

First I’ll explain why these two choices would be damaging for Wales before explaining why a different path is needed.

Socialism

The track record of socialist countries (such as the USSR, Mao-era China, Ceausescu-era Romania and North Korea) to create prosperity has been pitiful.

A ‘command’ or centrally planned economy will never function as usefully as one where the individual has the fundamental right to make her own decisions, insofar as she does not harm anyone else.

The capitalist incentive of doing what is best for yourself and your family is undoubtedly the main driver of the innovation that brings new products, the competition that lowers price for consumers and the mass production that improves standards of living.

Socialism in the narrowest sense is as much of a danger to society as extreme laissez-faire governance.

In the (possibly misattributed) words of David Lloyd George; ‘a boy who is not a socialist doesn’t have a heart, a man who is a socialist doesn’t have a head.’

Crony capitalism

However, ultra-capitalism doesn’t work either. While individual self-interest is the engine that drives the economy, it also needs tempering and direction.

Economic growth is pointless if it doesn’t benefit the majority. In the US, GDP has doubled over the course of 30 years yet median household income has only increased by 16%.

Economic freedom is also worthless if you are faced with crimes from impoverished people, the whims of diseases hidden in your genes, poor job opportunities or dangerous air quality.

Allowing governance to be guided only by vested commercial interests creates countries that don’t work for its citizens. The UK’s woeful rail network and the US’ ineffective healthcare are good examples.

Crony capitalism is epitomized in the UK by more than £400 per person going towards fossil fuel sector subsidies, while disabled citizens see their benefits cut and the poorest families choose between heating and eating.

Sustainable Wales

A socialist economy is dysfunctional while an ultra-capitalist one is heartless. For Wales, the trick is not to pick between two extremes but to get the balance right.

Unfortunately, it stands at the periphery of a centralized UK economy and does not even have the economic levers to change course.

To change that, Wales must demand a Parliament with legislative and tax-varying powers.

This would allow Wales to create a positive environment for innovation and business operations.

Wales must attract scale-up businesses that can grow quickly to provide for more of its citizens with research and development tax credit.

This will create jobs and reverse the outflow of capital and labour, thereby producing technological spillovers and a feedback loop of employment prospects and capital accumulation.

State ownership works in some cases; where natural monopolies occur (such as rail), where more investment in human capital is needed (such as education) and where a safety net can encourage consumer spending and investment with greater confidence (such as healthcare).

Commercial expertise will always be valued for each, but the provision of effective public services is crucial for a well-functioning economy.

Our government should provide the level of spending required to adequately provide for citizens and ensure that those with the broadest shoulders bear the highest tax burden, and provide the renewable energy initiatives and right type of stimulative fiscal policy.

People-led (rather than ideological) governance driven by sound logic, evidence and empirical analysis will serve Wales far more effectively than blind adherence to market forces or state ownership.

It is the only way for Wales to truly prosper in the modern global economy.


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Dafydd Thomas
Guest
Dafydd Thomas

Scotland and the North of Ireland have economic measures which give competence to their governments, measures which we do not have such as Airport Duty and Corporation tax. Why?
The new economic plan by the Welsh Government has no targets, giving them a plan that can’t fail.
We need economic levers here in Wales so that we can have a competent government, and a government that does not pretend that it has a Plan when it cannot be shown to be successful with say an improvement in GVA.
We desperately need additional economic competences in Wales, it’s high time to end the incompetence.

Tudor Rees
Guest
Tudor Rees

Why? I think too many of our Welsh politicians have been seduced to become part of the South East Ehgland orientated establishment. e.g. George Thomas [read Martin Shipton book] and in an earlier era David Lloyd George and countless others. In modern-day parlance, as far as Wales is concerned, “They lost the plot!”

Gwilym ab Ioan
Guest

An excellent analysis based on acute, sensible observations Joe Chucas. These are the very primary concerns that we have singled out for our new party to focus on. It is the reason why we call ourselves a ‘syncretic’ party. We don’t adhere or subscribe to the old fashioned and defunct ‘right – centre – left’ paradigm. We certainly don’t subscribe to the dogmas and doctrines of either end of the spectrum. Our whole attention is on the welfare, and prosperity of Cymru as a sovereign nation and NOTHING else, apart from the preservation of our identity projected through our unique… Read more »

Susannah Avonside
Guest

And how is Alternatif i Gymru doing Gwylim bach?

Gwilym ab Ioan
Guest

Ardderchog Susannah. Far better than anticipated in the short time we’ve been forming – out of the public gaze. I predict there will be many bulging eyeballs when we unveil what we’ve created – in the near future. We’re determined to get it right from the start, with no slip-ups, as has happened to most new parties in the past, who made the rudimentary mistake of trying to run before they could crawl, with lots of trumpeted hype and no substance. When we launch we will be fully prepared and not half-cocked. It will be with a full raft of… Read more »

Our country in our hands
Guest
Our country in our hands

Good luck Gwilym, putting the people of Wales first and seeking full, unfettered independence through a party untainted by Westminster is definitely needed.

Susannah Avonside
Guest

Glad to know that things are shaping up well. Despite my somewhat tongue in cheek comment, I am genuinely intrigued by this new party. I have to admit, as my comment may have indicated, that I was finding the deafening silence over the new party somewhat disconcerting – it’s one thing doing what you appear to be doing and wisely ‘keeping your powder dry’ and operating under complete obscurity. Despite my scepticism, I do realise that we badly need something new here in Cymru, as what passes for a national movement is sadly lacking, as we all know to our… Read more »

Eos Pengwern
Guest
Eos Pengwern

There’s a great deal of wisdom and sound sense in these words. Socialism (or even the misguided aspiration towards it) has done Wales’s economy and culture terrible damage over the past 150 years, and it is self-evident from comparing living standards in Wales to those elsewhere in the UK that the current iteration of Conservatism is not serving us well either. I would however want to take issue with a few of the ideological assumptions which the author seems to betray. One is the idea that what’s needed is somehow a middle way, or a balance, between socialism and capitalism.… Read more »

Alfyn
Guest
Alfyn

You must be reading some extremely conservative newspapers if you believe that Corbyn is about to introduce Soviet style communism. As far as I can see he is no more than a fairly normal social democrat advocating the same sort of mixed economy you favour. Given how extremely conservative the UK is and how entrenched the interests of the rich are it remains to be seen whether he will be allowed to actually implement any of his policies or even if he will be able to take power at all.

Rhydian
Guest
Rhydian

Good article and fully agree. Many in Plaid need to recognise that socialist policies would be toxic to a newly independent Wales, or Wales in general. Independence would mean a slimming down of the state and fiscal incentives to attract FDI, at least in the short to medium term. I can undestand using socialist rhetoric as a populist tool to win votes, but it needs to stay well clear of the policies themselves.

Liberals Cymru
Guest
Liberals Cymru

Joe Chucas, this attitude is exactly what we need.

Liberals Cymru is about disconnect for a while, and meditate upon what Humanistic Liberalism means. But if you contact us, we will get back to you by early March.

@libcymru – Twitter
libcymru@gmail.com

Gwilym ab Ioan
Guest

Do you honestly believe that the Liberals – of all people – are the ‘new kids on the block’ with anything new to offer in 2018? Any new ideas and a modus operadi that is different from a party formed in the 1850s from the Whigs and free-trade Peelites? I don’t think so. Time to ‘Rhoi’r ffidl yn y tô’ ffrind.

What was it that Einstein said?

“The definition of insanity is doing the same thing over and over again, but expecting different results”.

ERNEST
Guest
ERNEST

I think what LibCymru stands for is a Charles Kennedy style of social liberalism, where there is public ownership through individual share ownership rather than state ownership. This is a good article Joe Chusas.

Gwilym ab Ioan
Guest

Same horse – different jockey . . .

Graham John Hathaway
Guest
Graham John Hathaway

Useful if standard. Here is the slavish belief in either politics or no politics please. Is politics defined as a ‘way of life’ or the ‘practice of different ideologies’ that can never be measured. Or just different means of getting to the same place. In truth it’s simple. Those who believe in business, and those in workers rights. We overly complicate. Of course nothing works in the long run. One lever pulled, one lever jams, another leaver pulled, another lever jams. It’s cyclical. The powerful of either main parties seek to entrench their own ideologies, as protectionists of the status… Read more »

Trailorboy
Guest
Trailorboy

I cannot think of China as anything other than a command economy dressed up with a gloss if capitalistic pretence. I don’t view their economy as a failure – even if its not what I would wish for in Wales.

sibrydionmawr
Guest

Naive claptrap. Capitalism of any form is corrosive, and completely at odds with the interests of workers anywhere. It wouldn’t be so bad if your argument wasn’t based on a complete fallacy to begin with. your claim: “The track record of socialist countries (such as the USSR, Mao-era China, Ceausescu-era Romania and North Korea) to create prosperity has been pitiful.” is nothing but complete balderdash. The idea that the economic system in any of those countries you mention was in any way ‘socialist’ is risible. The economic systems running in those countries had more in common with monopolistic crony capitalism… Read more »

Eos Pengwern
Guest
Eos Pengwern

Yet whenever and wherever socialism is tried out, it always seems to end in the same way… I actually agree with you that “only a system where workers control the economy is desirable, as it’s only the workers who create wealth” – the problem with socialism is that it always ends up conflating “the workers” with “the State”, and that’s where things go awry. When “the workers” really means “the workers” – individuals who own the equity in the enterprises that they work for and trade with – then you have something much more akin to Classical Liberalism, or even… Read more »

sibrydionmawr
Guest

The kind of socialism that Plaid Cymru is currently following isn’t exactly the kind of socialism I would advocate, it’s too akin to what has passed, and failed in the past, but mostly it suffers from the shortcomings that you pointed out – it is far too statist. I don’t describe myself as a socialist, but as an individualist anarchist with strong collective leanings. For many, community socialism is the only real kind of socialism, and really is the only possible form of democratic, libertarian socialism possible. Indeed, it’s not too far removed from anarchism, another widely misunderstood and feared,… Read more »

Eos Pengwern
Guest
Eos Pengwern

Sibrydionmawr, I know we lock horns here from time to time but it looks like we agree on more than you’d expect. I wouldn’t go so far as to call myself an anarchist, but I believe that government should be small – ‘small but strong’ as Simon G F eloquently puts it below. It’s not the government’s job to try to redistribute wealth or tell people how they should live and think: its role is to provide defence against attack from other countries, enforce the rule of Law (though with as few Laws as possible: personally I think 10 should… Read more »

Simon G F
Guest

Labels such as Socialism and Capitalism confuse people more than clarify. Take Socialism for example. Late 19th century socialism is more akin to Free-market Capitalism in its pure form. The aim was to remove the wealth-extracting middlemen, mainly large landowners, from the equation allowing prosperty to flow to the people as autonomus agents and producers. Late 20th early 21st century Socialism is an entirely different beast. It promotes bloated intrusive governments both controlling the economy and social engineering to suit its ideological flavour. The modern definition of Socialism stands in stark contradistinction to its origins. The same can be said… Read more »

Gwilym ab Ioan
Guest

Thank you both for your kind words, it’s much appreciated. I guessed your comment was slightly ‘tongue in cheek’ Susannah – you little tease you! It’s shaping up nicely. Yesterday we had quite a famous councillor from the Pontypridd area registering as an interested person and pledging his support – despite currently representing another party (who shall remain nameless), followed today by yet another councillor who currently represents a different ward and a different party but in the same area. Also today we had an ex-pat living in Finland who pledged support and promised donations. It’s quite ‘heady’ really, and… Read more »

Gwilym ab Ioan
Guest

This blog site is desperately in need of having the ‘edit’ function activated on it. I’ve just commented in the wrong place – it should have been a reply to ‘Our country in our hands’ & ‘Susannah Avonside’s comments and appeared below them. DOH! Now I can’t do anything about it. Don’t you just hate it when that happens?

Susannah Avonside
Guest

Yes indeed people are awakening all over the world, but I hope that the new movement in Cymru will remain untainted by the rather sinister qualities such as that which is affecting political parties in Germany, Poland and Hungary, as well as Slovakia. We have the excellent example of Cymuned upon which to deal with the kinds of migration we experience here in Cymru, and I was greatly encouraged when I discovered that there was nothing in that movement that based itself on the denigration of any part of humanity. And yes, the lack of an edit function is a… Read more »

Sarah McIver
Guest

As long as the system remains the same, it doesn’t matter which side you choose. What’s needed is an entirely new system. Look into this, seriously: http://www.freeworldcharter.org (signing this takes you to a landing page where you’ll get a free ebook called Into The Open Economy, an eye-opener talking about a much better system, which is actually happening to a certain extent in the form of Freeworlder.com) 🙂

Davydh Trethewey (@MawKernewek)
Guest

I seem to remember that the Liberal Democrats’ disastrous 2015 election campaign boiled down to splitting the difference between the other two parties. This party political broadcast: https://www.youtube.com/watch?v=20oZiM4kBw8 reveals they had no ideas of their own.
What’s needed is original thinking beyond just finding a midpoint between supposed extremes of right and left.

Gwilym ab Ioan
Guest

You are absolutely right Davydh Trethewey. It’s been the game since the 19th century up to our present day – just more of the same. Regardless of what they call themselves or where they say they stand on the political spectrum. THAT’S why we’ve been crying out for a syncretic party that doesn’t follow ANY of those old patterns of politics. A party that thinks outside of the box with totally new ideas copied from no one. Fashioned purely for the needs of Cymru. A lateral thinking party who’s ONLY goal is the welfare and freedom of our country and… Read more »

Graham John Hathaway
Guest
Graham John Hathaway

The idea of a Wales that rids itself from the tidal throes of a fixed 2 party dominance where only the old plastic flotsam becomes the identifying tidal mark, the better. The depth of concern about a federal Europe, aloof, unelected, omnipotent, has caused Brexit. There are lessons that even now are not recognised. Populism is rampant across Europe. The strictures placed on the Brexit negotiations in Brussels gives testament to the grip of control, and fear of a proliferation of small states waiting to be born. The question, is Wales prepared to be re born, and if so it… Read more »