Robin McAlpine: Independence - to be taken seriously we must behave seriously

CommonSpace columnist and Common Weal director Robin McAlpine says that GERS shows that the independence movement needs to take economics seriously

I want to be as clear as I can be in this column; the independence movement's problems with the national current account and the public sector's fiscal position can be fixed – but not through propaganda. And they are likely to play an enormous part in determining whether Scotland will ever become an independent country.

Because it's yet another GERS day (oh how they come around...). The headline numbers in GERS are not ones that should make us feel comfortable. They do raise serious questions about the stability and economic health of the early days of Scottish independence. They're very far from being the full story – but they're not nothing.

So why do we keep behaving as if they're nothing? The Scottish Government seems determined to treat GERS as if it is a topic for the university debating society. So long as they can come up with a witty put-down or a bit of whataboutery – anything to get them through the day – that will count as a successful outcome.

The Scottish Government seems determined to treat GERS as if it is a topic for the university debating society.

I know many people are hoping to see a robust and meaningful response on this issue. It's hard to argue that more Project Fear stuff about Brexit is either meaningful or robust in this context, especially given the failure of previous scare stories to have come true.

Meanwhile there are two very real issues contained in GERS, only one of which we're talking about. So yes, there is a clear fiscal deficit and that deficit appears to be at a level which should cause real concern.

I've already written about a general approach which could address this in a previous column and have expanded further on this in my book. It's just that as far as I can tell nothing of this has been done – and not because something else is being done instead. It looks a bit like paralysis to me.

It's just that as far as I can tell nothing of this has been done – and not because something else is being done instead.

Indeed, so overwhelmingly frustrated have some of us at Common Weal become at the inactivity that we've started a very large programme of work to try and kickstart some proper thinking. For example, in the very near future we will publish a paper on Scotland's share of UK debt. In that paper we will show simply how even at the highest level of debt Scotland might inherit, a straightforward process of refinancing would save an independent Scotland a touch under £1bn.

We can save another £1bn from defence if we spend the proportion of GDP that a normal country does (without nukes) and we're confident that another billion or mibbe two can be trimmed from other UK government expenditure that an independent Scotland would not contribute to by taking an additive rather than a subtractive approach to producing a Scottish budget (explained in the column I linked to above).

Devising and modelling an efficient Scottish tax system will probably bring in another billion or more. We think a properly devised customs and excise system could raise perhaps another half billion. This sensible clutch of policy work ought to be able to remove perhaps a third of the deficit – not through jiggery-pokery or whataboutery but by rolling up our sleeves and engaging with the problem.

This sensible clutch of policy work ought to be able to remove perhaps a third of the deficit – not through jiggery-pokery or whataboutery but by rolling up our sleeves and engaging with the problem.

So our debt paper is in final draft, the customs and borders paper and the defence paper have been commissioned and the methodology for the biggest bit of work (the budget paper) is being developed. (We must turn our minds next to the tax issue). If you want to see this work done, please donate - we're under-resourced for the task.

This can start to address the fiscal balance problems. For those who aren't comfortable with the jargon, this is all about raising revenue for public services and is the only part of GERS that the unionists talk about.

But in some ways, over the long term, it may not be the biggest problem for an independent Scotland which comes out of GERS. The reason that the other problem isn't being highlighted by unionists is because the UK is in an even bigger mess. It's not the fiscal deficit but the current account or balance of trade deficit.

Put simply, the UK imports far too much and exports far too little.

Put simply, the UK imports far too much and exports far too little. This produces an effect which almost literally reduces the amount of money in the economy (in theory if every year you send more money abroad than comes back into your country eventually there is no money left unless you start printing it).

Interested in this article? Head over to CommonSocial for a discussion

This is one of the big scary issues that the UK doesn't talk about because it's big and scary and the last thing a ropey economy needs is people getting scared. But they should be scared (if you're interested have a read of this).

Because a country running a budget deficit is fine. But a country running both a budget and current account deficit for a long period isn't fine – because the cost of borrowing to cover one deficit will rise if the unsustainability of the other deficit spooks borrowers.

The Osborne solution was text book neoliberal Tory trickery. If you sell public assets to overseas owners or build new public assets with overseas finance, on the books this looks like an export.

The Osborne solution was text book neoliberal Tory trickery. If you sell public assets to overseas owners or build new public assets with overseas finance, on the books this looks like an export. It is completely unsustainable (sell an asset one year and your deficit is back where it was the next year – and you have less and less capital owned in country), but it'll get you through the day.

This is why Britain is considering paying an insane amount for electricity generated by a nuclear power station built by the French and financed by the Chinese. It's a budget wheeze designed not to alter the failure to create an exporting economy but to disguise it temporarily (at long-term cost).

So I'm sure you'll imagine my unease at the whole Scottish Government/China Railway No. 3 Engineering Group deal. To me it just looks like a sub-Osborne wheeze to make the trade deficit look better for a wee while – at the expense of the long-term health of the Scottish economy.

But it is also fundamental to the wellbeing of an independent Scotland and will very substantially influence issues like our credit rating and borrowing capacity in the early years.

You might well ask why bother with this if the unionists aren't throwing it in our faces. My answer is that this is a fundamental part of the overall GERS problem (if our balance of trade was better we could expect our fiscal balance to be better too). But it is also fundamental to the wellbeing of an independent Scotland and will very substantially influence issues like our credit rating and borrowing capacity in the early years.

Sometimes people dismiss things I write with the assumption that 'oh, he's just a leftie'. But this is unfair – I have argued consistently that if we don't get the basics right, the moves we might take to tackle inequality are unlikely to work. There is no such thing as a progressive tax system until there is a carefully-planned, efficiently devised tax collection system.

There is no innovative monetary policy unless there is a stable, properly designed central bank. There is no transformative policy agenda until there is a reliable, functioning civil service.

I have argued consistently that if we don't get the basics right, the moves we might take to tackle inequality are unlikely to work.

There is no just economy if we keep turning a blind eye to the current account deficit. And there is a real chance that there is no Scottish independence until we give soft No voters the clear sense that we're taking these things seriously.

I'd hoped to have space to discuss a strategy for balance of trade but I'm very concious of trying to cover too much here. Suffice to say, as well as a range of export and industrial development strategies we've outlined in our industrial policy paper, we need to look at an import substitution strategy.

As James Meadway explains in this excellent blog the belief that exports can rapidly be expanded is probably exaggerated and in fact a large part of the solution must be to stimulate more domestic production not for export but for consumption. The more we make and consume domestically, the less we import and the better our balance of trade gets. Food is absolutely crucial here.

The more we make and consume domestically, the less we import and the better our balance of trade gets. Food is absolutely crucial here.

But then of course the Scottish economy is woefully under-studied and this whole issue is undermined by the fact that we don't actually have a proper balance of trade calculation. Yup, that's right, we don't even know Scotland's balance of trade. If we want to be a serious independent country, we're going to have to take economic measuring and data collection more seriously.

In fact, if we want independence I believe we're going to have to start taking an awful lot of things more seriously. I saw an infographic last night which implied that because the onshore economy had grown more than the offshore economy shrunk since the last GERS, the deficit is a myth. I really could weep when I see this kind of thing – if we're not taking real challenges seriously, why should anyone else take us seriously?

Increasingly I feel that this is a 'fork in the road' moment for us. We can keep rattling on with our debating tricks, talking points, distracting tactics and 'it'll be fine' assurances. Or we can take the issues seriously and invest time and effort into addressing them.

I really could weep when I see this kind of thing – if we're not taking real challenges seriously, why should anyone else take us seriously?

The latter position is certainly not where we are. Not only is there not a team in Scotland employed to work on independence and the details of a new nation, there doesn't seem to be even a single person who is dedicated to the task. This total lack of action is really starting to show.

Because in the end the growing frustration shared by many independence supporters is not that these problems can't be solved. It's that they really can be solved – if someone would just try. This would be a good time to give ourselves a shake.

Picture courtesy of Thomas's Pics

Check out what people are saying about how important CommonSpace is. Pledge your support today.