Alf's Oafishness

There are many aspects to the copy that the Herald’s Oaf Young has been writing ever since a SNP victory began to look likely that are deeply irritating. Perhaps the most irritating is the intensely anti-intellectual stance he adopts over the matter of addressing Scotland’s contemporary economic performance (although a close second is his primordial west-of-Scotland Labour sectarianism). There are two aspects in today’s Herald piece that demonstrate what I mean.

First, the attempt to entirely undermine the new Council of Economic Advisors some 2 weeks ahead of its first meeting as reflected in the utterly contemptible comment that its composition “…gives independence an inbuilt majority on the 11-strong group” – this because Messrs Mathewson and Beveridge have come out in favour of independence; Professors Hughes Hallett and Kay “…avowedly favour Scottish independence”, and Professors Kydland and Ruane “…would not be minded to deprive Scotland of what their own countries have so long enjoyed”. Oh - and do you really think the CEA will decide on the basis of a vote for goodness sake?

Let’s look a bit more closely at our Council. Both Mathewson and Beveridge worked at various times in very senior public sector positions to improve the economic performance of Scotland. Both have concluded that Scotland lacks the necessary economic powers to achieve this – a conclusion also reached at by Robert Crawford, another former Chief Executive of Scottish Enterprise. RRR knows none of these individuals, but he’d be most reluctant to cast aspersions on their analytical abilities. RRR does, however, know the next two – Professors Hughes Hallett and Kay – and can assure Oaf that neither has an overtly political bone in his body. Both – and for entirely different reasons – have come to conclude that Scotland’s economic situation can be improved under a changed constitutional arrangement. Of the two, Hughes Hallett is driven by some heavy-lifting economic analysis. In a number of peer reviewed articles he has shown why Scotland’s economic performance is likely to be improved under an assignment of more economic powers to her government - it is the prevailing (mis-)assignment of economic policies, rather than independence per se, that is his starting position). Can this body of work simply be dismissed out of hand – or has Oaf read these and found the flaw in the underlying economic reasoning that other economists have missed? If so he’s keeping remarkably quiet about it. And as for his speculations on the independence-minded psychological state of the other two whom he seems not to have encountered (Kydland, because he's Finnish, and Ruane, ditto Irish, one of whom won the Nobel prize in Economics)…well, utterly pathetic really. One can only speculate why the remaining 3 economists – Jim Mirlees, Francis Cairncross and Alex Kemp – escape adverse comment, although if the afore-mentioned seditious-six are to get there divisive way they have to negotiate around these three…has Oaf ever met Jim Mirlees?…not something I’d be tempted to try).

The serious point of course is that Oaf is systematically aiming to throw doubt on the integrity of some highly eminent individuals (who, unlike Oaf, have reached the very top of their respective professions) by implying they have reached their professional conclusions on the underlying causes for Scotland’s relative economic performance as a consequence of a political predisposition towards the SNP, rather than (if at all) the other way round. This is the very epitome of the ‘old’, bitter and ugly politics of Scotland, and demonstrates why Oaf is no longer fit for purpose. (Though RRR is willing to wager a large sum that Oaf would be entirely sycophantic and grovelling to every one of them if ever he met them…)

The second irritating aspect of today’s piece is the oh-so-clever-clogs bit about the quality of the economic data on which any advice made by the CEA will be based. Here Oaf invokes the recent study by McLaren and Harris which raises a few very well founded doubts about the quality of the current economic data in Scotland, and which attracted intelligent comment yesterday from Gavin McCrone. But rather than criticising the quality of data produced by a string of previous occupants of New St Andrews House (most of whom were the political brethren of Oaf), he opts instead to try and be clever with words. I’ve lost count of the number of economists who have pleaded with officials to improve the quality of Scottish economic data. To set achieving this as an acid test by which the CEA will or will not be judged is simply bonkers. Statisticians in the Scottish Government will need to develop a range of new survey/sample methodologies to deliver a comprehensively solid set of economic data for Scotland, and I doubt this will be done before 21 September. I don't think this will prevent the Council from having an informed and useful debate.

Wendy (Shreek) Alexander clearly is trying to begin the long process of returning Scottish Labour to the position in which it has policies that the public want to vote for. And RRR wishes her every success in that quest. Everyone benefits from having a credible opposition. But the type of political carping that has become Alf Young’s stock in trade will not help. This is a throw back to the era in which political bigotry ruled the roost; the “better dead than SNP” type of politics so characteristic of the deeper recesses of West of Scotland labourism. It is the same mind set that delivers the religious bigotry that has come to scar our national sport week in. week out. Alf Young clearly despises the SNP as Rangers "fans" despise Celtic "fans" and vice versa. RRR would like to see that this form of deep-seated journalistic sectarianism rooted out and exposed for what it is.

The Sad Tale of Dr Jones and Mister Brankin

Is Peter Jones losing it? In today’s Scotsman this formerly balanced reporter is trailing a new conspiracy theory as follows:

Is it part of the SNPs plan to deprive Scotland of the kind of big improvements that are eminently achievable now so that we become convinced that we must have independence in order to get them? In other words, is the SNP taking our toys away from us now and saying we’ll only get them back if we do as we’re told?

What has prompted this bizarre outburst is a “contradiction” which Mister Groaner Brankin has detected “at the heart of SNP’s programme”. He argues that because the SNP accepts the proposition that better transport infrastructure will improve Scotland's economic growth rate, it is acting in a contradictory (read "conspiratorial") manner in axing the Edinburgh Airport (vanity) rail project.

Upon interrogation on this by our redoubtable reporter, Enterprise Minister Jim Mather is quoted as having two responses explaining the Government’s position: first the Government needs control over income as well as expenditure if they are to embark on such huge capital spending programmes; second that the project is too risky under the current constitutional settlement. Mister Brankin finds neither explanation acceptable – on the basis that he sees no reason why this decision should have a “constitutional” dimension – and this leads him to his conspiracy theory as set out above.

Let’s just unpick the conundrum which leads him along the false trail towards his conspiracy story. Both of Jim Mather’s responses are easily understood in fairly basic economic terms;

(i) Controlling income as well as expenditure gives a government access to the full range of taxes (including - and this is crucial - future taxation) in order to fund capital spending programmes that are characterised by long pay-back periods (which is why the private sector won’t step in). Under the present fiscal arrangements the ‘block grant’ is set in London with scope for raising additional funds in Scotland solely via higher income tax (the ‘tartan tax’). Is Peter J suggesting that income tax in Scotland should be increased now to pay for a project for whom the main beneficiaries will be future generations? As matters stand the Scottish government’s task is to select spending priorities subject to the ceiling set by Whitehall. They cannot breach this ceiling – their budget has to balance. The Government has to select spending priorities within that ceiling, and the SNP made no secret of the fact that the rail project was not a priority. Other wealth-enhancing projects are of course being prioritised:

(ii) Under the current arrangements a Scottish government has no scope to raise revenue by borrowing (i.e. by issuing government debt). The bailiff’s golden rule when at the Treasury permits the UK government to borrow to finance capital spending (e.g. railway projects) – which it does – but not current spending. (Does PJ really believe that the 3 billion Euro he reports the Irish government will spend on a rail link to Dublin airport is coming out of the current spending account?) Scotland is unable to operate a golden rule, and so is further handicapped when it comes to funding expensive investment programmes, even where these are deemed desirable. Independence would enable a Scottish government to borrow in international capital markets and close this gap. In other words it can borrow now against higher revenues accruing in the future:

(iii) “Risk” is a complex issue, and every investment carries with it some element of risk. Indeed, it is the existence of risk that requires governments to step in and invest where the private sector will not – because a private company will be spreading the risk over a small number of current shareholders while a government can spread the risk over the current and (crucially) future tax payers as a whole. If there was no risk then there would be no obstacle to the rail link being provided privately (the channel tunnel is a good example of what I’m driving at!). When we consider “risk” in this way it is clear that the degree of “risk” attaching to capital investment spending by a government indeed is directly linked to the constitutional situation. At present the risk attaching to the rail link falls entirely on this government and this Scottish population. The government cannot borrow against benefits accruing from the project in the future. This changes fundamentally if Scotland was to become independent.

The type of conspiracy theory being pedalled by Peter Jones is feeble and reflects poorly on him. As someone who once worked for the Economist, one might have hoped he’d be better versed in elementary economics. But maybe Peter Jones is gone, and all we're left with is Mister Brankin? I really hope not...