Sunday, January 17, 2010

The spendthrift Scotsman

Scotland is predominantly governed by a devolved administration run from Edinburgh. This administration receives most of its funds from Westminster, and its government is led by a coalition dominated by the Scottish National Party (SNP) - a socialist party dedicated to Scotland becoming an independent nationstate (no relation to the neo-fascist British National Party).

It has faced a bit of a fiscal crisis along with the rest of the UK, but unlike the debate on the UK budget, Scottish First Minister, Alex Salmond, is pretending there isn't a problem. He is blaming a lack of money for Scotland on Westminster. He is either an economic illiterate (for which there is some evidence) or simply a nasty little nationalist who happens to be a socialist, pretending that the enormous budget deficit of the UK has nothing to do with Scotland.

He faces a budget cut in real terms of £35 billion, but is blaming Labour and by implication England, for him being unable to meet his spending promises according to Alastair Darling.

Scotland already has a GDP of which over half is generated by government - in other words it's like Hungary before the fall of communism. Scottish voters voted for the SNP because it offered the best chance to remove Labour, but the SNP has shown itself to simply be old Labour with nationalist drag. Sadly most Scots are so wedded to Nanny State, that even though the SNP is disappointing, and they are fed up with Labour, they wont dare vote for parties that ask them to take more responsibility for their lives.

You see the Scots who believed that have mostly long ago emigrated!


Richard Thomson said...

1. Scotland does not face a budget cut of £35bn - it faces a cut in a near £35bn devolved budget. There's a difference.

2. Public spending as a share of GDP is not 'over half' in Scotland. You can only get a 50%-plus figure by leaving out the 80% oil and gas revenues.

It's an easy mistake to make, though, given that the UK government has long excluded these revenues from Scotland's total in the UK regional accounts.

3. Given that Salmond was the RBS oil economist before being elected as an MP in 1987 and is a visiting professor of economics at Strathclyde University, your charge of 'economic illiteracy' is rather ill-founded.

Libertyscott said...


1. Yes, in part because Scotland received an advance for capital spending. Doesn't take away from the point. Scotland should be expected to undertake the same austerity as the rest of the country.

2. You can't reasonably argue that the people of Scotland "generate" the oil and gas revenues, anymore than the Emirati generate them in Abu Dhabi. Scotland still has a predominantly state sector economy. Besides, it is in substantial decline.

3. Salmond's public pronouncements on economics don't stand close scrutiny. For starters this is a man who lauded Ireland and Iceland as economic marvels for Scotland to follow.
He has failed to acknowledge that an independent Scotland could never have bailed out the RBS. He has long led a party which believes in higher taxation, a strong state sector and more socialism for Scotland. He is now proclaiming that the UK government should borrow more and more so he can continue to run Scotland like a people's republic that doesn't pay the price of the profligacy both her and the Westminster government have undertaken for many years.

It's hardly economic genius, whether it is his politics over his economics or his own economics being less than stellar.

Let Scotland be independent, let it tax itself, let it take its per capita share of North Sea oil and gas production. Then those south of the "border" might not have to put up with the moans and groans of those who feel they are entitled to taxpayer funded services well above and beyond similarly deprived parts of the country.

Scotland needs a generation of self inflicted socialism and stagnation to finally knock the inane nanny state stupidity on its head, and bring back the respect for entrepreneurship, hard work and self reliance that decades of the Labour Party and now the SNP have treated as secondary to the "government will fix things" approach.

Richard Thomson said...

1. Capital advance or not, it detracts substantially from the point that Scotland is facing a £35bn cut :-)

2. I can reasonably argue that all economic output should be taken into consideration when calculating public spending as a share of GDP. To do otherwise is to perpetuate a distorted picture of the economy - by no stretch of the imagination can Scotland be described as having a *predominately* state sector economy.

Re the North Sea being in decline: extraction rates are certainly down, as happens when fields mature. However, government estimates suggest that there are as many recoverable barrels of oil left as have been extracted to date.

It is a truism to say that it's a finite resource. However, to say it is 'in decline' tells us very little on its own.

3. I think you should revisit your understanding of the comparisons actually made with Iceland and Ireland. It also takes some chutzpah to argue that following a catastrophic failure of the UK regulatory system, that this serves in any way as an argument against Scottish independence.

Anyway, with these clarifications out of the way, I can certainly agree with you that Scotland should be independent and responsible for taxation and expenditure. It removes at a stroke any scope for grievance, whatever side of the border it comes from.

Libertyscott said...

1. Indeed, though the effect is the same surely?
2. Your argument depends on assuming all North Sea oil and gas is linked to Scotland, rather than proportionately to the entire population of the UK. If you want to link it to Scotland, then London ought to get all of its taxes too (unlike many capitals it is also the dominant business centre). Given the EEZ in part exists due to the armed forces of the UK, I think it is more complicated than is said.

3. We will differ on what happened in the banking sector, which was primarily due to the overinflation of the economy with cheap fiat money by a central bank which was driven by consumer price inflation not asset inflation. Bear in mind an independent Scotland with the Euro would be less export competitive than it is today.

However we can share agreement about Scotland's independence, sad though it may be. Although I suspect the ones who will be most upset are member of the Labour Party, who face a very different electoral map when not dependent on Scottish seats!

Richard Thomson said...

1. The way I read your initial post, it was to the effect that Scotland has a budget of 'x', which is about to become a budget of 'x minus £35bn'. Clearly, that's not the case.

2. Your argument depends on assuming all North Sea oil and gas is linked to Scotland, rather than proportionately to the entire population of the UK.

No. Around 84% of revenues would accrue to Scotland on a division of the UK Continental Shelf based on equidistance - which is how maritime boundaries customarily are settled in a legal sense.

It's got nothing to do with military prowess - as the equal east/west division of the North Sea between the UK and Norway, Denmark, The Netherlands and Belgium demonstrates.

3. You certainly hit the nail on the head here as regards the impact on Labour's prospects, at least under a non-proportional electoral system!