Even the OECD has finally noticed. The Paris-based policy forum is normally always in favour of higher taxes and more government spending. But the Scottish parliament has clearly pushed even the left-leaning think tanks too far. The OECD has just recommended that MSPs be given training in financial literacy.
If the OECD gets its way, there could soon be a classroom outside the Holyrood building, and any MSPs who don’t do their prep will have to stay behind. As part of a review of the Scottish Fiscal Commission, it has recommended that the country’s politicians be trained in finance and economics. ‘Strengthening levels of fiscal literacy among members of the Scottish parliament will also enhance the impact of the SFC’s work and help it inform political debate across a broader range of spending areas’, it notes.
The OECD certainly has a point. Scotland’s political class is among the most economically illiterate in the world. It appears completely unaware, for example, that if you raise taxes and you have a completely open border with a neighbour, a fair few of your top earners will move (including even senior civil servants).
It is taken completely by surprise that higher levies and taxes may discourage investment or make it harder for businesses to expand. And it is shocked to discover that if you give stuff away for free – such as higher education, for example – demand goes through the roof and it has to be rationed. At times, it makes Juan Peron’s Argentina look like it was run by Friedrich Hayek, or Hugo Chavez’s Venezuela by Milton Friedman. The most basic principles of GCSE Economics are ignored.
In fairness, a little education, especially with remedial classes for the slow learners from the SNP, might help at the margins. But it is not going to fix the real problem. It is not just ignorance that is to blame. It is a devolution settlement that has allowed Scotland to spend lavishly, without having to raise taxes to pay for it all.
This creates perverse incentives, since Holyrood might as well spend as much as possible, since most of the bill will be passed onto the government in Westminster. Sure, there is ‘no such thing as a free lunch’ – that might be lesson four or five in the OECD course – but Scotland has come very close to it.
That is the real problem – and no amount of financial education will fix that.
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