Does Wealth Trickle Down?

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Speaking in relation to loyalist paramilitary decommissioning, First Minister, Peter Robinson, stated recently that devolution should benefit working class loyalist communities as much as it does the ‘business community’.

According to Mr Robinson “Devolution isn’t there to help the business community alone. It’s there to help every section of our society.” (Newsletter, 19th June) How does Mr Robinson hope to bring these benefits to the (Protestant) working class?


Government-led regeneration could rebuild these areas create jobs and stimulate the economy simply as a result of workers having some money in their pockets. Is this what Mr Robinson proposes? Not quite.
Instead of government-led development the First Minister says that, “there is always a trickle-down effect and I know I have talked to colleagues in here (Stormont) about how we can move forward with schemes that will ensure areas with real hardship get significantly more help than they have been getting to date.”
The trickle-down effect is the idea that as the rich get richer, the poor will get a larger proportion of the crumbs from the table. History has shown that this trickle-down effect does not exist. Up until the recent crisis, as the rich got richer the poor were living on credit and second mortgages as their share of the pie declined.  According to the OECD, the wage gap between rich and poor in the UK widened by 20% between 1985 and 2008 and social mobility has been almost non-existent.

Behind Mr Robinson’s claim lies the idea that most of us have seen a period of great economic and social well-being as a result of the peace process – a kind of ‘peace dividend’. Undoubtedly, the end of wide-scale murder and mayhem has brought great benefits to everyone here (except the gangster element which thrives in violent times.) However, there has been little evidence of a social and economic dividend.

Stromont politicians of all shades and backgrounds have sought to create wealth by convincing Transnational Corporations (TNCs) to set up here. Have the policies which the government has implemented brought jobs and wealth to Northern Ireland? QUB academic, Denis O’Hearn has shown that this policy has been a failure. (‘How has Peace Changed the Northern Irish Political Economy?’ Ethnopolitics, March 2008)

He shows that between 2002 and 2005:

  • Pharmaceuticals employment fell from 2,851 to 2,400
  • Electrical/optical/computers employment fell from 9,335 to 8,011
  • More traditional clothing/textile sector employment fell from 8,396 to 4,329
  • Manufacturing as a whole employment fell from 68,616 to 62,390
  • Business and financial services employment rose slightly from 7,848 to 8,491
  • Software and computer services: employment rose from 4,115 to 4,967
  • TNCs: six openings and 19 closures, leaving 138 companies; employment fell from 41,943 to 38,397
  • Knowledge-based companies: 31 openings and 31 closures, leaving 442 companies; employment fell from 40,000 to 37,926
  • Manufacturing employment fell by 16.5% since 2000 while service employment rose by 15% but from a much lower base
  • Employment has grown in Northern Ireland in the last decade (as it has in the UK as a whole) but not, it seems, as a result the neo-liberal project imposed by the Stormont government parties

For all his words of concern for (Protestant) working class communities, Mr Robinson indicates that he intends to continue with this failed policy in which government money is spent on wooing TNCs instead of on government-led investment in jobs and infrastructure, which would really benefit workers.

As well as being in thrall to this failed economic policy, the Stormont coalition parties find themselves constrained by policies imposed from Westminster. The head of a major inquiry into proposed government charges in Northern Ireland told Denis O’Hearn that ‘the main problem with public policy is that everything is restrained by Treasury Rules; every property has to be accounted in such a way that privatization takes precedence over public use, even those that crucially need to be maintained in public ownership for the public interest.’

Just as the current Stormont regime has sectarianism built into its DNA, it seems as if any social democratic policy urges will be severely constrained by the privatising agenda of the UK Treasury. And nothing will trickle down to the working class.

 

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