Mr Blue Sky wrote:Jantra wrote:The top ten on that list are either oil economies or tax havens, save for Luxembourg which uses its geography to its advantage
If Ireland and Switzerland have become tax havens then so could Wales......eventually.
The operative word here is "eventually". Ireland struggled for 50 years. Switzerland had been independent, mercantalist and a bit "beggar-thy-neighbour" for hundreds of years: literally providing soldiers for others wars, while staying above the fray itself!
When Ireland became independent, there was effectively no welfare state. That meant it didn't lose too much in the way of fiscal transfers from the rest of the UK when it seceded.
Now those fiscal transfers are much much bigger: Wales is running a budget deficit equivalent to around 24% of GDP in 2014-15 (compared to about 5% for the UK as a whole in the same year) - another way of putting this is that Wales was responsible for 1/6 of the UK's deficit, despite being 1/21 of the population.
(
http://sites.cardiff.ac.uk/wgc/gerw/)
That allows Wales to have household incomes around 90% of the UK average, despite GDP per capita about 72% of the UK average. It allows public spending around 8% higher than the UK average despite tax revenues being 25% lower.
Now you can argue that these big transfers are not leading to the rejuvination of the Welsh economy - allowing it to catch up economically. Its true. But they are massively supporting living standards and public services, allowing the Welsh to effectively live substantially beyond their own means.
For the Welsh people to be better off than now, the Welsh economy would have to close virtually the entirity of the gap between Welsh GDP per head and UK GDP per head. Even if Wales improved from say 72% to 85%, the Welsh people would be worse off because the growth would not offset the lost transfers from the rest of the UK.
And I think with such a big fall in living standards on independence (down about 20%), it would be just as likely for something of a downward spiral to start: the young, more educated, etc. would leave to live and work in England (or Australia, etc.). Tax revenues would be further depressed.
And even if that did not happen, there'd be years of austerity, pay cuts, tax rises, etc, for the hope of eventual sunny uplands. That is hardly going to assuage the anger felt in places that voted Brexit as a protest about being ignored, their livelihoods becoming more precarious, etc.
My view is that Wales can only really have a chance of being a successful country if it is able to do a lot of the catching up within the UK first. I'd still be against it (the Union is more than an economic calculation to me). Whats the solution to that? Not 100% sure but I know where I'd start: education, both basic and higher (focused on technical subjects). Wales performance really is atrocious on learning outcomes.