Alex Massie: Forging the fiscal future . D-Day: The present constitutional arrangements may put a brake on Scottish aspiration. . Published on Friday 29 March 2013 00:00 . Building a sound Scotland in case of independence may require embracing neoliberalism, suggests Alex Massie
Now that Scotland has its “date with destiny” we can be sure of only one thing: the phoney war is over. The battle for independence has entered a new phase. It is one in which realism is replacing fantasy and in which stubborn facts have a chance of supplanting wishful thinking and self-delusion. About time too, you may say.
The first of these awkward truths is that the age of easy money has ended. Austerity bites and independence offers no real alternative to continuing austerity. An independent Scotland would still have to bear the combined consequences of New Labour’s profligacy and the costs of the great economic crash of 2008. As a result of this it seems unlikely there will be any Tartan Social Democratic revolution after independence. Instead, Scotland is likely to be a small, low-tax, outpost of neoliberalism perched on the periphery of Europe.
For understandable reasons the SNP does not like to focus attention on this thrawn reality. It may not have sunk in just how difficult Scotland’s position might be after independence. John Swinney’s ballyhooed “secret paper” advising his Cabinet colleagues about some of the fundamental uncertainties that must inevitably follow independence revealed the true picture.
True to form, Swinney’s paper was encouragingly, admirably clear-headed and sober. Independence might indeed give birth to a new era of liberty and long-term economic opportunity, but the initial years would be difficult and, quite possibly, even painful.
There would be little room for increased public spending while deficit reduction and reducing long-term public debt would require difficult choices to be made. Moreover, any increase to the state pension would necessarily come at the expense of other government programmes.
Since, according to Eurostat, British government spending amounted to 49 per cent of GDP in 2011, it seems evident that the opportunities for increasing overall spending in Scotland after independence are severely limited. There is no free lunch and no magic money tree. Jam is rationed now and there will be no immediate increase in jam provision after independence either. This is not an argument against independence, per se, merely reality. Much of the pro-independence Left remains in denial about this. Protecting Scotland from the present Westminster government’s predations cannot obscure the fact that an independent Scotland would be confronted by many of the same difficulties that are making George Osborne’s tenure at the Treasury so uncomfortable.
AS CRAWFORD Beveridge, chair of the Scottish Government’s Fiscal Commission, observed drily: “An independent Scotland will need to establish its credibility on international financial markets to minimise its borrowing costs. This could be achieved by adopting a strategy for reducing public sector debt, and an effective budget constraint for the public finances.” External pressures, whether from London or the money markets, will have an impact on Edinburgh.
This hardly dents the core SNP argument that decisions for Scotland should be taken by Scots in Scotland, but it does remind us that these decisions might reflect a greater continuity with the past than is sometimes assumed. The warning by Andrew Goudie, a former Scottish Government economic adviser, that many of the assumptions pointing to a rosy future are little more than guesses adds weight to this suspicion too.
The Scottish Government’s own figures, however, make it clear that Scotland cannot tax its way to prosperity. According to the latest Government Expenditure and Revenue Scotland figures, Scotland contributes 9 per cent of UK corporation tax receipts but only 7.4 per cent of income tax revenues. Given the ease of both corporate and personal flight after independence, tax increases would be a “brave” or “bold” move. That is, they would prove disastrous.
Not everyone takes this view. Writing in these pages earlier this week Robin McAlpine, director of the Jimmy Reid Foundation, argued that “if people can be persuaded of the transformational effect of taxation, they will accept tax rises”. There is little evidence to support the idea, much-cherished on the Scottish Left, that the people actually wish to be persuaded that higher taxes are a good thing. Some 75 per cent of voters, for instance, oppose council tax increases.
Nevertheless, according to the latest Social Attitudes Survey, 57 per cent of Scots suspect independence will lead to higher taxes. By comparison, just 19 per cent expect an independent Scotland to reduce the gap between rich and poor. A plurality doubt independence will make any substantial difference to “inequality”.
In their collective wisdom the people are ahead of the politicians. For far too long Scottish politics has been a game of inputs, not of outputs. That is, the splendour of any given policy is measured by its munificence not by whether it actually achieves its stated goals. Money remains the root of all solutions even when experience demonstrates this is not actually the case. It is a mentality that sees high welfare spending as a mark of pride rather than evidence of terrible failure. No-one proposes eliminating the safety-net; celebrating the number of people it supports is a different matter.
But as the Social Attitudes Survey’s findings suggest, the people are not so sure. They may dislike inequality but they do not expect it to be reduced by higher taxes. Moreover, it is hard to avoid concluding that the expectation an independent Scotland will be taxed more punitively restrains the people’s enthusiasm for independence. The people are more neoliberal than they think they are.
The SNP leadership is aware of this. Alex Salmond’s charm offensive in Scottish boardrooms has long been buttressed by a promise that reducing corporation tax would be an immediate priority following independence. Last month, John Swinney went one better, telling the BBC he does not “envisage increases in personal income taxation” post-independence. If this is “Tartan Toryism” then let’s have more of it.
We are where we are. And we are not a Nordic country. In some respects this is regrettable. For all their supposed social democratic bona fides, countries such as Sweden and Denmark do not recoil in horror from the word “private”. Indeed, if Scotland is to absorb lessons from Scandinavia, these should be that welfare dependency and high taxation sap prosperity.
As Anders Borg, Sweden’s pony-tailed finance minister, warned last year, it is “problematic if you drive out entrepreneurs from your country because they are the source of job creation”. Excessive welfare, he argues, encourages “emigration from the labour market”. The result is permanent and crippling “social exclusion”.
Neoliberalism is, I think, often considered an insult in Scotland but an independent Scotland may well prove to be an admirably neoliberal country. The Institute for Fiscal Studies suggested last year that though the short-term outlook for an independent Scotland might be “no more uncomfortable” than that facing the UK as it is but that “in the longer term, the choices may be starker”. Oil revenues help provide a cushion but prudent planning suggests they should not be relied upon to any heroically optimistic degree.
Ironically, then, building a fiscally-sound house after independence might require Scotland to embrace rather than reject neoliberalism. Perversely, those right-of-centre Scots most concerned by independence may have as much to gain as their independence-supporting left-wing compatriots have to lose. If this is the case, then the present constitutional arrangements may indeed put a brake on Scottish aspiration but not, perhaps, in quite the way many supporters of independence imagine them to do.
'Scotland on Sunday' - pathetic apologist for the Union Sunday, 07 April 2013
By Prin Tshit, Our Media Correspondent
BBC Scotlandshire executives have condemned the article in Scotland on Sunday's This Week which suggests an association between those wanting an independent Scotland and extreme right wing fascist activists.
"They have no right to take our glorious British values, and hand them to the Nats", said Director General Kenny McQuarrel. "We Brits invented concentration and labour camps to control Africans, and continued that up until the 1950s.
"Many Brits have supported Nazism - even the Royal Family and much of the Tory and Labour Parties who, at the time, thought Hitler was 'a jolly good chap' who put workers and dissidents 'in their place' - which was extermination and labour camps. A model that IDS should follow today."
The real danger of separation is Union He continued, "Johnston Press are simply gifting Salmond an ace card in the referendum. While he claims to have 'no territorial ambitions in Britain' at present, that's not how totalitarian regimes work. Gifted the fascist card by Sarwar and miscellaneous Borderers, Dictator Eck would start with a separate Scotlandshire, but would undoubtedly use Trident to force his rule on England too. Then he would need to adopt the true colours of Fascist Britain.
"Obviously he would then ethnically cleanse the country so that no one who was unable to prove their direct lineage from the first lichen to colonise Scotlandshire after the Ice Age would be allowed to be free."
Controversy sells books Scotland on Sunday's photo was inspired by an article in the paper by Gavin Bowd publicising his new book. Bowd is an expert in Scottish history and politics, due to his teaching French at an obscure Scotch college in Fife. He is also a poet, fiction writer, journalist and translator.
Born in Galashiels in 1966, Bowd was clearly influenced by the momentous triumph in that year when England won the World Cup on behalf of the UK. Co-incidentally, Gala is only 18 miles from Jedburgh, where Ian Davidson MP, Nazi hunter extrordinaire and Chairchoob of the Scottish Select Committee for Identifying German Untermenschen Afraid of Nationalists in Alba, was born.
While Bowd's book appears to be a good account of the polarised politics in Scotlandshire in the inter war years (we at BBC Scotlandshire don't actually read books), he foolishly courts controversy in his puff piece, by associating the SNP along with the ethnic BNP in the "nationalist family". Further he writes of Scottish "nationalism, which has often taken on an ethnic rather than civic hue, with its paramilitary Seed of the Gael, Settler Watch and anti-English Braveheart hysteria."
However, it is no good Wee Eck the Dictator trying to put in a claim on fascism, it has been in the bloodline of the Union for generations, as is shown by Captain Archibald Maule Ramsay, Scottish Unionist MP for Peebles and founder of the fiercely patriotic 'Right Club'. Rabidly anti-semitic, Ramsay was the only MP interned during the war.
Fortunately, his spirit lives on, on both sides at Westminster. For every Fascist associated with Scottish Nationalism, British Nationalism can produce a hundred times as many! We will not be beaten! Indeed, since there are insufficient Scottish Braveheart fanatics around, we have started importing them. Paolo di Canio used to keep his Lazio roommates awake all night by repeatedly playing the Braveheart DVD. Some foreigners (not many) are good foreigners, if they are our kind of foreigners, though they must be taught to associate Braveheart only with wide eyed dreaming, and not the serious business of keeping power in the hands of those of us who know how to use it properly.
We have long urged that all right wing British Nationalists like ourselves and our friends in UKOK should use the Braveheart analogy as often and irrelevantly as possible. That Bowd follows our advice gives us hope and succour in these most difficult times when the well worn tactic of negativity, scaremongering and smearing seems to be losing its effect. Our final victory will be assured when the last SNP minister is strangled with the latest edition of the Sunday Post.
Sharing your scoops to your social media accounts is a must to distribute your curated content. Not only will it drive traffic and leads through your content, but it will help show your expertise with your followers.
How to integrate my topics' content to my website?
Integrating your curated content to your website or blog will allow you to increase your website visitors’ engagement, boost SEO and acquire new visitors. By redirecting your social media traffic to your website, Scoop.it will also help you generate more qualified traffic and leads from your curation work.
Distributing your curated content through a newsletter is a great way to nurture and engage your email subscribers will developing your traffic and visibility.
Creating engaging newsletters with your curated content is really easy.