28 October 2011

Scotland's economic future?

This is the first post in the entire history of this blog that I've ever tagged "economics". The absence is significant rather than incidental. While I have been exposed to micro-economic theory rather more substantially, I don't feel coy about admitting that I have hitherto only entertained profoundly banal views on macro-economic questions and policy. For this, I can partly blame the limits of my legal education and the suspicions of my subsequent sociological one, but like many Scottish nationalists as the referendum approaches, I'm starting to feel the pinch of my inadequacies.  One obvious implication of this is that my political nationalism is not driven by apprehensions of economic circumstance and possibility, but I accept without reserve that it is vital that supporters of independence are able to be literate exponents and critics of economic claims, if the Scottish people are to deliberate meaningfully on the nation's future.  

In this sense of inadequacy, I strongly suspect that I am not alone in the broadly pro-independence body of opinion. It is timely, then, that Reform Scotland have published a book edited by Professor John Kay on Scotland's Economic FutureWhile I haven't yet gnawed my way through the whole thing, I've found the first half to be intelligibly composed and already feel a mite better-primed for conversations with folk I encounter around Oxford, making more-or-less fair points about the economic possibilities and challenges facing an independent Scotland, or Scotland-within-the-Union. I did enjoy a partisan chortle at this barbed footnote from Professor David Simpson's piece:

"It was suggested by the Brown Government that Scotland should be grateful to it for having provided RBS and HBOS with capital and debt guarantees. This is rather like a driver responsible for a major road accident seeking credit for taking the survivors to hospital."

The other chapters in the book range across a number of topics, including the banking sector, the financial provisions of the Scotland Bill, the underpinnings of the Government Expenditure and Revenue Scotland reports, including...

  1. Professor Sir Donald Mackay: The framework, the authors and Home Rule
  2. Professor John Kay: Is recent economic history a help?
  3. Professor David Simpson: An environment for economic growth: is small still beautiful?
  4. Jim and Margaret Cuthbert: GERS: where now? 
  5. Professor Drew Scott: Scotland Bill: way forward or cul-de- sac?
  6. Professor David Bell: The Scottish economy: seeking an advantage?
  7. Professor Andrew Hughes Hallett: Optimal monetary arrangements for Scotland: adopt which money and why?
  8. Professor John Kay: What future for Scottish banking?
  9. Keith Skeoch: The Scottish financial services sector after the global financial crisis: Celtic eagle, sparrow, lion or hare?
  10. Professor Alex Kemp: The great North Sea oil saga:  all done or still unfinished?
  11. Ben Thomson: Is there a need for a Scottish Exchequer?
  12. Professor Sir Donald MacKay: What does Home Rule mean for economic policy?

Full text: Scotland's Economic Future.


  1. Much appreciated LPW.

    In this sense of inadequacy, I strongly suspect that I am not alone in the broadly pro-independence body of opinion.

    Pretty much sums it up. With a referendum policy on the horizon, this kind of information and knowledge is a must if we are to encourage open and fair debate.

    Ive been shamefully ignorant of this stuff in the past so thanks for sharing it.

    If it doesnt melt my brain, Ill be sure to spread the word. ;)

  2. LPW

    I am looking forward to reading this but would like to know if it is available in Kindle form?

    Does anyone know?


  3. You're dead right about nationalist ignorance on econonics. But economics don't matter if you have the faith, n'est ce pas?

  4. But what do you do when you have no faith and an economic track record whose highlight is always having left office with unemployment higher than when you entered? The Tories could save money by reusing this poster at every election.

  5. Angus the article is mooting an informed debate on the economic future of Scotland.
    Not hurling brickbats on the economic history of Britain.

    We all have our views.
    The experience of the Nordic countries, and the Baltic states, show what is possible under a broad consensus. This could serve as a starting point.

  6. '4.Jim and Margaret Cuthbert: GERS: where now?'

    Hopefully the third division.

  7. Many thanks for this LPW. You say

    'In this sense of inadequacy, I strongly suspect that I am not alone in the broadly pro-independence body of opinion.'

    Well I am broadly pro-unionist and I suspect my inadequacy has much deeper depths than thine or most of your readers, a situation not helped by the fact that much of the data on Scotland you see seems to me to be even more agenda-driven than formerly.

    Perhaps it's your calm approach or the site has been blessed by pixies but your threads are educational as well - much of what passes for cyber debate elsewhere on Scottish affairs is woeful.

  8. Lupus Incomitatus,

    Not being a kindler myself, I'm not sure how these things work, but I understand that somehow, one should be able to read pdf files - such as this document - on the devices.

  9. Under the present financial meltdown any debate on the quasi 'science' of economics will be well behind the curve of 'economic' developments.

    For an outline on what is possible from a policy position Jim & Margaret Cuthbert's article in the Scottish Left Review is worth reading.

    From my own position I consider economics has since 1945 divorced itself from any natural law or purpose. Choosing instead to follow a nurtural process favouring the few.

  10. Professor Simpson's 'barbed footnote' would be more quotable if it wasn't for the fact that the Nationalists had absolutely no criticism to offer regarding a) the size of the financial sector in the Scottish economy, nor b) the 'light hand on the tiller approach to non-regulation. Rather, they were too busy claiming RBS etc. as Scottish success stories. Then when everything went pear-shaped, they were of course British banks.

  11. Shuggy

    No argument from me on that score. My tagging it as partisan was intended to denote the tickle of the professor's imagery in a vivid phrase, rather than to make any serious point about the respective failures of the SNP & Labour on this. You are certainly right that the SNP entertained only banal idea on banking regulation. If Broon was the negligent car driver asking credit for taking his victims to A&E, it seems eminently fair to argue that the SNP politicians were only by luck spared from an accident of their own, only by dint of not having the keys to the motorcar. I've no qualms about accepting that.

  12. I think anything written or edited by John Kay will be deeply thought provoking, well-reasoned and entertaining. I shall look forward to reading this hugely.

    His 1993 book The Foundations of Corporate Success is one of the books that has been most influential on my thinking. Prof Kay would probably disagree with me here but I think a lot of the thinking in that book could be applied to making the case (or otherwise) for the prosperity of an independent Scotland.

    Another useful piece of theory is Michael Porter’s Competitive Diamond of Nations (or industries and firms in nations.) I would suggest that anyone who hasn’t read and understood Porter’s work on this really oughtn’t to be in any position of responsibility for the economy of our nation.

    I think that the debate about the economic foundation of an independent Scotland are actually likely to be a series of micro-economics discussions.

    If, over the long term, we make and do thing that other people want to buy and extract a sensible amount of that value for the common good then I think most of the macro stuff will take care of itself. So I would focus on questions such as…

    What industries will do well in Scotland? What tax revenues will spring from those successful industries? How can the Scottish people make sensible long-term investments in physical or human capital to support industry in Scotland? Is that a price worth paying? In short, what are we good at and how can we make it pay?

    And the key question for me on the economic aspects of independence is – are those questions above best asked and answered in Edinburgh or in London?

    I’m reasonably sanguine about Scotland’s long term economic prospects. We generally have a highly skilled workforce working in industries that are globally important and fairly diverse. We have a pretty generous natural endowment of natural resources. We are by and large a stable, honest, coherent, law abiding and peaceful place to live, work and do business. If we can’t make that pay then we’ve badly let ourselves down.

  13. Edwin,

    Meant to say earlier, I share your positive account of the comments in these parts. I appreciate people's contributions (particularly those vehemently dissenting from some argument I've advanced in an informed, skeptical manner).