Today’s Chat With Dave is all very well and good but Alex Salmond’s speech to the LSE last night was just as significant. Much of the wrangling about Scottish independence has, for respectable reasons, concentrated on matters of process leaving the substance of what an independent Scotland might actually be like for another day. This too is reasonable since so much is speculative at this stage and, in any case, one should not necessarily presume that the SNP would dominate post-independence politics.
Nevertheless, it is useful to have an idea of what Alex Salmond considers important. What he emphasises now is the best available guide to what might be emphasised in a best-case scenario in the future. So Salmond’s LSE address, which should be seen as a companion piece to his Hugo Young lecture last month, is of some interest. His Hugo Young lecture went large – too large for my liking – on the idea of “progressive Scotland” as some kind of beacon for the remaining parts of the United Kingdom not blessed to live north of the Tweed; his LSE speech, by contrast, reveals a different Salmond: one with a more than passing interest in supply-side economics.
Though he was at pains to stress his Keynesian credentials in the present economic climate that should not overwhelm the fact that Salmond appreciates that an independent Scotland, unavoidably located on the periphery of europe and a shortish train ride from europe’s most econmically-dynamic city, must be a place open for business. As he put it:
Quite so. We should remember that Scottish Labour are currently busy attacking Salmond precisely because he’s keen to cut business taxes. In Labour’s view this is “a race to the bottom” (whether they support common tax rates across all of europe is something someone should ask them!) And it is another reminder that the longer-term Axis of Interest in Scottish politics allies the Conservatives with the SNP against Labour and, perhaps, the Liberal Democrats.Small countries, and regional economies, need a fiscal edge to encourage decision-making centres to settle. Those headquarters and decision-making centres in turn create prosperity.
We may also discern this in Salmond’s enthusiasm for a Scottish Oil Fund. Granted, establishing such a fund is not – as Douglas Fraser points out – quite as easy as Salmond suggests since it would demand greater discipline on the part of Scottish politicians than we may have reason to expect but, at least in theory, such a fund is wholly compatible with traditional Tory ideas about investment and prudence and saving. It was not, I think, just a coincidence that Salmond last night implicitly suggested Harold Macmillan might approve of his idea.
Ruth Porter’s article in todays Wall Street Journal Europe goes even further, arguing that Scotland could, if it lessened its dependence upon the state, thrive more than it presently does. Salmond does not often talk about this and there are canny political reasons for his silence on this subject. Nevertheless, I suspect that, privately, he would consider this a long-term problem even if, like so much else, he would add that it’s independence and control of the full range of fiscal levers that could create the conditions for ameliorating this situation.
There is, granted, an element of “picking winners” – energy production, computer games, biosciences and the like – in Salmond’s vision for the future. Part of that is a reflection of the realities of scale: an independent Scotland would need to pick its battles (and its investments) carefully. It couldn’t do everything or compete in every sector.
Could it thrive however? The irony, which might be grist for Unionist milling, is that Scotland is already doing reasonably well. Not as well as it might but better than much of the United Kingdom. As Salmond said last night:
Our on-shore economy is approximately 8% of the UK’s – broadly equivalent to the size of the entire UK financial sector- and even excluding our oil and gas output, we’re the third richest part of the UK outside London and the South East.
Some people say a currency union could prevent an independent Scotland from using its fiscal powers. We would undoubtedly need to demonstrate fiscal responsibility – as any sensible nation does. But Scotland is easily prosperous enough to stand on its own two feet.
[…] Scotland would therefore be able to meet any fiscal obligations of a currency union. In addition, Scotland and the rest of the UK are very similar economies in terms of prosperity levels. Even in the non-oil economy, Scottish productivity is virtually identical to the UK average. Therefore a currency zone for Scotland and the rest of the UK would be a very, very different creature from the Eurozone, which covers territories from the Ruhr in Germany to Kalamata in the Pelopponese.
This probably has the merit of being true. But if Scotland is doing quite well within the UK – as Salmond boasts it is – and if the Scottish economy is, by many statistical measures, uncannily close to the United Kingdom average (itself a reflection, mind you, of how dominant London and the south-east are) then is independence really necessary?
Obviously Salmond would say it is since after an (unacknowledged) tricky period of adjustment Scotland would be well-placed to thrive providing, that is, it did not attempt to turn itself into an unsustainable socialist backwater. That’s not Salmond’s ambition, however: yes to social solidarity, no to socialist economics. Whether the great bulk of the Scottish people are quite on board with this is, mind you, a different matter. And it’s that uncertainty that leaves many Scots who might otherwise agree with Salmond that “The people best placed to act in Scotland’s best interests are those who choose to live and work in Scotland” unsure whether our compatriots can be trusted not to make a hash of things after independence.
Comments