Alan Grant critiques the Reid Foundation’s vision for an independent, but statist-socialist Scotland.
This column very rarely begins with a compliment being paid to that side of our constitutional debate which seeks to wrench Scotland from the United Kingdom: but every once in a while, every commentator must pick up their knife and fork to tuck in to some lukewarm humble pie.
Up until now, the vision provided by the Yes side has been vague at best: but now one of its constituent parts has stepped up and provided a (slightly) more concrete vision of what an independent Scotland would look like. The Jimmy Reid Foundation, a left-wing think-tank which has provided opposition to this commentator on a previous occasion at a debate, have outlined their ‘common weal‘ standpoint for an independent Scotland, and while it has not been officially endorsed by the Yes Campaign but has received a ringing endorsement from those on the side of separation as if it is a novel idea, it is in fact purely the same, old, dangerous, statist ideas passed through a meaningless social democratic filter.
Regular readers may wonder why I have chosen not to comment instead on the resurgence of the issue of oil in our ongoing national dialogue, and the contrast between First Minister Alex Salmond’s claim that it would be worth £300,000 for every man, woman and child north of Berwick (incidentally, this commentator requests half of his £300,000 in gold bullion and half in a banker’s draft, First Minister) and the reality of such a volatile resource as framed by experts in the industry. Suffice it to say that this issue has been covered before by multiple outlets and to add more analysis would be to pour additional petrol on top of the smouldering rubble of the First Minister’s and his Party’s credibility on energy policy.
The Backbencher is kind enough to provide me one column a week for this particular perspective on Scottish politics and economics; to squander valuable word space in such a way would do nothing but provide an interesting reflection of the economic policy embodied in the ‘common weal’ itself.
The Reid Foundation have, in their finest Orwellian doubletalk, helpfully divided their vision for an independent Scotland into six different ‘transitions’ which they seek for an independent Scotland: so, rather than providing an overall criticism of their general aims to inflate the state, raise taxes, encourage state dependency (as if Scotland does not suffer from those particular ills to a crippling extent already) and make Scotland, in their own words, ‘more Nordic’, it would be more useful to dissect each of their ‘transitions’ individually.
The first wish of the ‘common weal’ is to tackle tax reform and inequality. The Reid Foundation suggests that Scotland needs to take a larger share of GDP in the form of taxation and to target ‘wealth inequality’, which presumably requires this increase in tax revenue to be taken in an increasingly ‘progressive’ manner.
While such a claim is unsurprising, it betrays an economic misunderstanding which permeates the rest of their vision. To grow an economy in a stable way, and to shield it against the inevitable shocks which are a matter of scarcity rather than the market which the Foundation seems to abhor so much, requires savings. Those savings are then invested in either labour or capital by those who have the knowledge of their own particular business situations. If the state removes that percentage of income which would otherwise be reserved for savings, then this targeted investment does not take place and stagnation is inevitable. The proponents of the ‘common weal’ would surely point to the Keynesian ‘proofs’ on which their approach is based, and at that point they would have tacitly conceded the fatuousness of their economic view.
Following neatly from their desire to see a larger percentage of resources handled by the state comes the second ‘transition’ envisioned by the ‘common weal’; an increase in the size of the welfare state. The ‘common weal’ seeks to redefine how Scotland handles welfare and couches such a vision in the handy, flowery language of ‘a contract between the people themselves, delivered through the state’.
While the language is of the usual stomach-churning, social-democrat variety, there is a deeper problem with this ‘transition’. There is a pretence towards common ownership of resources when the connection between higher taxes and a bigger welfare state is clear to see; the Reid Foundation are arguing for redistribution of resources and the usual theft from the successful, in order to give to the feckless or the unfortunate, the latter of which would be better served by allowing the optimum conditions for employment and market prices and wages. An increased welfare state stifles those who do not need it and indirectly harms those who do. The economics do not back up the fantasy.
As if in an attempt to compile a full list of cliched, left-wing, economic falsehoods, the third ‘transition’ sets forward a deluded vision of financial services. It would appear that the Jimmy Reid Foundation seriously dislike financial services and harbour the stock leftist visions of ‘the bankers’ and their bonuses; essentially they may have watched ‘Wall Street’ too many times. Their proposal amounts to reforming financial services towards a ‘community owned’ perspective, and increased state involvement in investment banking.
However, the demonisation of financial services is their main crime. They cite the economic difficulties of recent years as being the sole responsibility of the financial sector, yet such an view is simplistic and wrong. The global financial crisis has its roots in a spread of credit taken up by individuals who did not manage their private finances well enough, and those people are also to blame. However, the modern culture or not blaming people for their own mistakes is so prevalent that the left would rather blame the gun shop owner for selling the gun which the world used to shoot itself in the foot, rather than blame the one with their finger on the trigger. With this misunderstanding as a starting point how else could the ‘common weal’ have gone other than in this, wrong, direction?
‘Transitions’ number four and five are essentially the same point, and can be dismissed in the same way. They call for a return to the nationalisation of industry in an independent Scotland and a diversification of industry with an increased focus on medium sized business. The latter point is, paradoxically, an excellent one: Scotland does need more medium sized business and has a tradition of allowing such enterprises to thrive. However, the reintroduction of monopolising, cumbersome, state-run industry which would intrinsically be able to dictate prices and be subject to the usual forms of corruption would hardly seem like the kind of environment which would allow medium-sized businesses to thrive. Regardless, cutting off the economic nose to spite the economic face seems not to bother the Scottish left wing, and the Reid Foundation and their fellow drinkers of the ‘common weal’ Kool-Aid seem not to mind.
Because it is impossible for anyone to be completely wrong, ‘transition’ six actually shows a glimmer of hope for the ‘common weal’. The document appeals for an increase in democracy, particularly on a local level, and such a call ought to be amplified by all. Our local government is a shambles, precisely because of its perceived lack of relevance and its levels of impotence bordering on castration. However, quite how the ‘common weal’ brigade can reconcile their desire for a more democratic, localised Scotland with their belief in excessive regulation, restrictive attitude towards individual economic liberty, and belief in nationalising industry is beyond me. Contorting oneself into such a pretzel must be a cause of perpetual back pain around the Reid Foundation offices. Perhaps a Scottish nationalised pharmaceutical industry could provide the required amounts of pain-relief.
Scotland is a country where the gulf between the politicos and the ordinary voter has never been higher. Many of our non-politicos reap the benefits of our tradition of liberal thought and capitalistic spirit. Thousands of Scots remember the dark days of nationalised industries, strikes, high taxes and extreme scarcity caused by state inefficiency, and embracing the economics of the ‘common weal’ would herald a return to those dark days.
Of course, under such circumstances, the political elites are able to insulate themselves inside such systems from their malign effects, and do so in their trademark pious and sanctimonious way. But, make no mistake, the Scottish politicos have this vision in mind for an independent Scotland, and the only way to stop them and ensure even the possibility of a free-market, prosperous and pro-liberty future for Scotland is to reject this vision and return to our liberal tradition. Our nation counts Adam Smith among its sons: it’s time to return to his vision.