Privatization in Northern Ireland; N. Elliott

359 Privatization in Northern Ireland Making Politics Normal by Nick Elliott F or most of us, party politics may be a dubi . ous blessing, but for Northern Ireland it seems to be just what is needed. While in mainland Britain, strenuous debates have been fought about government intervention in the economy, Northern Ireland has been excluded. Not only would market reforms boost the North ern Ireland economy; they also would improve its politics. Ever since the partition of Northern Ireland, the political parties there have been sectarian. The largely Protestant Ulster Unionists and Democratic Unionists want to maintain the union with the mainland. The SDLP (Social Democrat ic and Liberal Party) and Sinn Fein are mainly Catholic and advocate amalgamation with the South. The two main parties in mainland Britain, the Conservatives and Labour, do not stand can didates in Northern Ireland.

There are, no doubt, conservative Catholics who would support the Conservative Party, given the chance. And there undoubtedly are socialists who support the Unionists, but who would prefer to have a Labour Party to support. The parties in Northern Ireland do not represent the diversity of opinion existing there. The great issues that have fueled debate in Britain over the last 10 years-essentially about government involve ment in the economy-have yet to be introduced to Ulster. Of all the provinces of Britain, Northern Ire land has been least touched by privatization and deregulation. The British government has done Nick Elliott is a British freelance writer and press con sultant. little to reduce the $5 billion annual subsidy that it sends from the mainland to Ulster. Northern Ireland has been excluded from much of the free market legislation affectingthe rest of Britain. Recently, however, the government has an nounced that Short Brothers, the aircraft manu facturer, and the Harland & Wolfshipyard are to be privatized. These plans have provoked contro versy, and what is most interesting is that all of the sectarian parties have come out in opposition.

The only indigenous group to support the plans is the recently formed North Down Conservative Association. This is possibly an encouraging first step to ward making Northern Ireland politics normal. If the people in Northern Ireland were allowed to argue about the same things that people do in the rest of Britain, then politics would lose much of its sectarian nature. There are plenty of suitable targets for market reforms. Northern Ireland has an unusually large public sector, which provides 42 percent of all employment. One of the most encouraging trends in Britain over the past decade has been the growth in self-employment-many more peo ple now own their own businesses.The trend has yet to spread to Northern Ireland. It has a com paratively low start-up rate for new businesses, and the mainstays of the Northern Ireland econo my are still staple industries such as shipbuilding, textiles, and agriculture. Little attempt has been made to stimulate local enterprise.

Part of the problem has been a conditioned re liance of Northern Ireland business upon subsi dies from the British government. Subsidies to the manufacturing sector for 1986-87were equiv360 THE FREEMAN • SEPTEMBER 1989 alent to $64 per week per employee. (Average earnings in Northern Ireland are $300 per week.) Between 1976 and 1985, over half of the subsi dized firms received two or more grants-which is a worrying sign of dependency. Preservingthe Past at the Expenseof the Future While employment in the rest of Britain has moved out of industry and manufacturing into services, and while the mainland economy has become far more dynamic, the past has been pre served in Northern Ireland. The Northern Ire land economy has failed to bring the same pros perity that has been enjoyed in the rest of Britain; unemployment has remained at 17 percent, while it has fallen in the rest of the country to 9 per cent.

Subsidies have distorted the Northern Ireland economy, keeping jobs and capital in trades where there is no longer any comparative advan tage, and keeping resources out of potential new enterprises. It is also likely that government fund ing has "crowded out" more efficient investment by the private sector. During 1984-87, govern ment grants to industry amounted to 75 percent of all industrial investment. Politically,it isn't good for Northern Ireland to be so dependent upon the British government as an outside benefactor. Rather than resulting from impartial economic decisions, jobs and invest ments take on political overtones. Even when civil servants try to be scrupulously impartial, their decisions appear to have political implica tions for those rewarded or disappointed. The government has laid itself open to charges of Protestant bias by heavily subsidizing the Protes tant company Shorts. By contrast, profit-seeking decisions taken by firms in the market are not seen as a vote for one side or the other.

The politics of Northern Ireland would benefit from a climate of enterprise. In addition to reduc ing subsidies, the government might encourage employee share ownership in Northern Ireland companies. Workers would feel less reliant on the British government for livelihood, and these steps would help to develop an enterprise culture as an alternative to the political culture. Market reforms would bring other political benefits. Northern Ireland has been excluded from the radical reforms of secondary education being implemented in the rest of Britain. These reforms put parents in charge of running schools, allow them to opt for financial independence from government, and fund schools according to the number of pupils they attract. In England, Wales, and Scotland these reforms will introduce competition and raise the standards of education, but in Northern Ireland the reforms could foster political improvement as well.

Many of the funded schools in Northern Ire land have a strong religious bias. Parents have no choice but to send their children to these schools, even if they would prefer a secular or non-de nominational education. Greater choice in educa tion, as engendered in the mainland reforms, would allow more parents to avoid sending their children to sectarian schools. A freer economy also would reduce the impor tance of sectarian politics to consumers and work ers. As is true the world over, when you pick a product off a shelf, there is usually no way of knowing if it was made by someone who is black, white, or yellow. Trade crosses many boundaries, including sectarian divisions. Northern Ireland would benefit if business became more important, because the dominance of politics would diminish. British politicians often have maintained that their Keynesian policies are necessary to "keep Northern Ireland afloat." They never seem to con sider that subsidies may just prolong inefficiency and dependency.They also have been unwillingto stir things up with radical policy changes, because they hold a cautious suspicionof Northern Ireland politics. British leaders could do nothing better than to upset the stale politicsof Northern Ireland by shiftingthe focusof debate. D 361 Israel:The Road from SocialisDl by Macabee Dean I n the last decade, Israel has undergone a great change in its thinking about state owned companies. Most Israelis, including a ·large percentage of the socialists who for merly backed state-owned companies, now re gard these firms as a drain on the nation's re sources.