I’m an economist…let me through!

Friday, 03 January 2014 23:26

6 Comments

 By Derek Bateman

Some of Britain’s most respected economists have delivered a damning indictment on Alex Salmond’s plans for independence, I read in the papers. And quite right too, if that’s their view, delivered in the FT’s predictions poll for 2014.

You may not be overly surprised that 100 economists, none of them with any direct Scottish link I could see (bar one employed at RBS), and heavily concentrated in the City of London, should harbour doubts about the economic effects of independence.

It usually takes people with an unorthodox or even lateral thinking mentality to perceive opportunities in smaller, compact economies outside the Land of Giants in New York, Frankfurt and London.

But sometimes it’s worth doing the journalist’s job for them by asking just how respected some of these experts are and by whom.

Let’s start with Ruth Porter of the Policy Exchange, described as a British Conservative think tank loved by the Daily Telegraph as “the largest, but also the most influential think tank on the right” and David Cameron’s favourite. The Political Editor of the Evening Standard referred to it as “the intellectual boot camp of the Tory modernisers”.

Ruth’s quote is: “The raft of economically incoherent policies (which ones?) proposed by Alex Salmond would be disastrous for Scotland…” Well, so far they’ve kept Scotland in second place in output, employment and inward investment in the UK but I suppose they haven’t beaten the place that matters most  to Ruth, the beast that is London. Previously Ruth burnished her credentials at the Institute of Economic Affairs, said to be a natural feeder for the Tory Party and which refuses to publish its funding sources. The Guardian reported that it was sometimes paid by the tobacco lobby. Here are some of Ruth’s published ideas from the august think tank for tackling Britain’s economic problems.

Do not increase foreign aid to 0.7 per cent of GDP, stop ring fencing health, abolish the Department of Culture, Media and Sport, force families to move by reducing housing benefit, scrap free travel, TV licences and winter feul allowance for OAPs, ditch funding for low carbon technology and abolish the Green Investment Bank, limit early years education, end national pay bargaining and bin regional development.

Not sure how respected those views actually are here in the frozen north.

There is a sort of Scottish link here because for the last few years a “policy consultant” called Tom Miers moved to the Borders and operated as an opinion-former. (I filmed him myself for Newsnight). He worked for the same Institute of Economic Affairs and produced papers including the Devolution Distraction, arguing that we didn’t need all this constitutional tosh, just some good old market reforms.

Interestingly, Tom also worked for the tobacco industry and believes in a free society. He is now director of the Foundation for European Reform in Brussels which works for free enterprise, small government and individual freedom in Europe…you may recognize a few code words for right-wing nuttery in there. They really get about these think tank wonks, don’t they?

Another contributor from the IEA is Philip Booth who has no doubt what Scotland’s problem is….how to deal with debt of nearly 100 per cent of income. Funny that because the latest figures from the National Institute of Economic and Social Research puts it at 86% of national income, significantly lower than the 101% calculated for the rest of the UK. Luckily I’m not an economist like Philip.

But where did that debt come from, however large it is? Was it run up by Mr Salmond and his socialist band or was it run up by out-of-control Westminster Unionists of Labour and Tory colours?  And when asked about the sustainability of the recovery, he gives another side to this equation that Scots would do well to consider. “Though I do not expect the recovery to end in tears, I do not believe that there will be the rapid increase in living standards that we would normally expect after such a long period of slow growth.” Thank you, Philip. At least we can balance your two statements and think for ourselves.

Another contributor who gives independence the thumbs down is Erik Neilsen of  UniCredit. He says independence would cause massive uncertainty as the parties worked out how to separate assets and revenue streams. So is Erik very certain about the Unionist recovery? Eh, no. “Oh dear! – very lopsided recovery,” he says, “ driven predominantly by housing and household consumption, financed by lower savings. The current account deficit is now the largest in Europe and widening. There is a chance, of course, that the recovery spreads and becomes sustainable, but the odds are clearly suggesting an unpleasant end.” So again he sees a looming crisis in the UK but doesn’t connect it to Scotland’s situation.

One of the other experts quoted in the piece is Tony Dolphin of the Institute for Public Policy Research…makes you wonder what an institute actually is, doesn’t it?

IPPR of course is synonymous with New Labour and laid the ground work for Labour’s election victory in 1997. Tony Blair said of its social justice report: ‘it will provide the basis for a vital national debate about the future of work and welfare. It is essential reading for everyone who wants a new way forward for our country.”

As Wikipedia points out, the secretary of that commission was David Miliband, one of many distinguished alumni of IPPR, who also include former Labour cabinet minister Patricia Hewitt, whom you may remember from the Channel 4 Dispatches programme, in which she appeared to claim that she was paid £3,000 a day to help a client obtain a key seat on a Government advisory group. Along with Geoff Hoon and Stephen Byers she was suspended from the Parliamentary Labour Party over the allegations.

There’s not much doubt where Tony Dolphin’s constitutional loyalties reside. And I’m not sure he is balancing his opposition to independence with an overly optimistic vision of the UK’s economic future, thus: “We might be – in fact I’m sure we are – doing less well than we could in a long-run perspective (there must ultimately be a price to pay for selling UK assets and building up all those overseas debts) but we seem able to paper over the cracks for now. What would bring the house of cards tumbling down is a big fall in house prices – but until we start building a lot more of them, that’s very unlikely to happen.”

I offer these thumbnails as a brushstroke of perspective on those whose first reaction is to talk us down and assume we can’t possibly be as good as Britain, the same Britain they go on to express deep misgivings about. We must listen to all voices but not all voices are worth listening to.

Courtesy of Derek Bateman