Autonomous Thinking
In what was a busy and varied working day in the life of RR, yesterday also saw me attending the lunchtime launch of a new academic paper on the subject of fiscal autonomy for Scotland. The paper is written by two senior economists – Ronnie MacDonald and Paul Hallwood – and tackles the subject of fiscal autonomy for Scotland from an entirely economic perspective. Knowing, as I do, just how excited some of the Bond’s readership gets over matters appertaining to Scotland’s economic and political relationship with the Union, I felt it incumbent on me to bring to your attention the publication of this important paper.
It is a fairly easy read, and comes to the very firm conclusion that complete fiscal autonomy for Scotland would be likely to raise economic welfare in Scotland. The reasoning is straightforward. Transferring responsibility for raising the (tax) revenue that finances Scottish public spending from London to Edinburgh will carry with it incentives for Scottish politicians of whatever hew to manage public spending more efficiently. That is, to minimise the tax burden and (under one view) thereby to unlock greater economic energy from which all benefit. The present mechanism for financing Scotland’s public spending (the Barnett formula) by contrast, provides no such incentive. In this set up not only is the Scottish Executive free from responsibility for raising the revenue it spends (this arriving as the bloc grant from London), but even if the Scottish Executive manages the economy well, and Scotland’s rate of economic growth rises as a consequence, the rewards from this success accrue to the UK Government (via higher tax revenues flowing from Scotland) and not to the government that engineered the success. So why bother too hard? Ergo – the incentives to improve Scotland’s economic (and social) performance under the status quo are bad, while the incentives under fiscal autonomy are good. It’s a neat little paper and worthy of close consideration. There are still some details that worry me (e.g. why, in economic terms, retain the Union at all?), but this paper is a good place to begin to address them. And what about the remainder of the UK? Well, the Barnett largesse (sic) coming to Scotland vanishes. This is, presumably, good – particularly for some of our readership (and you who I’m talking about, don’t you?). Ah, but under full fiscal autonomy the Petroleum Revenue Tax largess flowing the opposite direction also, at least in principle, vanishes too.
I don’t know Paul Hallwood personally, but I do know Ronnie MacDonald very well, he and I being close friends in, and graduates of, the same degree programme long ago in the 1970s. And let me tell you – not only is he a pretty damned smart economist, he was one hell of a guitar player back then. And I mean seriously good. Indeed good enough to be invited to re-locate to London and become a career session guitarist! Oh – and a great landscape photographer to boot. And a really nice guy. Anyway, go have a read at this paper. It’s a good contribution to an important topic. Let’s hope it generates a discussion worthy of its analysis!
It is a fairly easy read, and comes to the very firm conclusion that complete fiscal autonomy for Scotland would be likely to raise economic welfare in Scotland. The reasoning is straightforward. Transferring responsibility for raising the (tax) revenue that finances Scottish public spending from London to Edinburgh will carry with it incentives for Scottish politicians of whatever hew to manage public spending more efficiently. That is, to minimise the tax burden and (under one view) thereby to unlock greater economic energy from which all benefit. The present mechanism for financing Scotland’s public spending (the Barnett formula) by contrast, provides no such incentive. In this set up not only is the Scottish Executive free from responsibility for raising the revenue it spends (this arriving as the bloc grant from London), but even if the Scottish Executive manages the economy well, and Scotland’s rate of economic growth rises as a consequence, the rewards from this success accrue to the UK Government (via higher tax revenues flowing from Scotland) and not to the government that engineered the success. So why bother too hard? Ergo – the incentives to improve Scotland’s economic (and social) performance under the status quo are bad, while the incentives under fiscal autonomy are good. It’s a neat little paper and worthy of close consideration. There are still some details that worry me (e.g. why, in economic terms, retain the Union at all?), but this paper is a good place to begin to address them. And what about the remainder of the UK? Well, the Barnett largesse (sic) coming to Scotland vanishes. This is, presumably, good – particularly for some of our readership (and you who I’m talking about, don’t you?). Ah, but under full fiscal autonomy the Petroleum Revenue Tax largess flowing the opposite direction also, at least in principle, vanishes too.
I don’t know Paul Hallwood personally, but I do know Ronnie MacDonald very well, he and I being close friends in, and graduates of, the same degree programme long ago in the 1970s. And let me tell you – not only is he a pretty damned smart economist, he was one hell of a guitar player back then. And I mean seriously good. Indeed good enough to be invited to re-locate to London and become a career session guitarist! Oh – and a great landscape photographer to boot. And a really nice guy. Anyway, go have a read at this paper. It’s a good contribution to an important topic. Let’s hope it generates a discussion worthy of its analysis!
posted by Anonymous at 10:14 am
1 Comments:
V-O-R - there's nothing wrong with your posting "rights" apart from your own inability to work out how to do it. This can be demonstrated - but like most things in life for a fee. Cheeky bugger. Trying to saying yer rights is being infringed... I ask you. Whatever next.
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