Monday, June 18, 2012

The Economic Question Revisited

During a recent BBC television debate programme on Scotland's future, one young lady asked the question whether we will be better off or worse after independence. On the surface this seemed a reasonable enough question and, given the amount of time the panel spent debating the issue, it seems that it is something that concerns a great many of us.

Yet, the reality is that it is entirely the wrong sort of question we should be asking. Indeed, we’d be as well asking what the weather will be like after independence as its simply not possible to predict the future economy of any nation, regardless of  whether they are independent or not. Patrick Harvie MSP, co-convenor of the Scottish Green Party and a supporter of independence was perhaps the most candid when he said that we simply don’t  know what the Scottish economy will be like after independence. It could be said that it was not an answer that the majority in the audience were looking for, yet the truth is that he was just giving an honest response to what is essentially an impossible question to answer.

Yet perhaps the most redundant aspect to the question asked on the programme was that it failed to include a time frame – i.e. it failed to ask when and for how long Scotland would be better (or worse) off after independence. There is simply no point in asking whether Scotland would be better off after independence without being specific as to exactly what period of time you are concerned with. Immediately after independence? Or maybe perhaps after ten years of independence?  

Of course, even with the clarification of a time frame, its simply not possible to predict Scotland’s economic future, whether as part of the United Kingdom or as an independent nation state. Moreover, even if we were somehow able to see into some specific point in the future, the results could very easily be misinterpreted. For example, what if an independent Scotland was worse off in 10 years time, but it had been better off in all of the nine years prior to this and it was just that particular year which had been somewhat economically challenging? Equally, what if in ten years time the entire global economy was in a much worse state than it is now, yet Scotland was better off as an independent nation in terms of GDP than England, but still worse off than it was ten years previously as a member of the United Kingdom?

Even with the benefit of a crystal ball, there are simply too many variables for this type of question to be answered seriously. Yet, as Nicola Sturgeon stated on the programme, we would at least have a great deal more economic levers under independence than we do now. Moreover, our economic future would clearly be dealt with best by a government and parliament that serves us directly and not as a mere subsidiary of another nation. When you have a population of 5 million and your southern neighbour has 50 million, who really takes priority?

The simple truth is that it is beginning to seem more and more likely that the world economy will not return to the level of growth that we have become accustomed to in previous years. Finite and ever depleting energy resources, especially oil resources, are hampering Western society’s abilty to return to economic growth. Peak oil, the point at which oil production reaches its highest point and after which starts to decline, is either on the verge of occuring or has happened already (it is only possible to ascertain its exact date of occurrence some years after the event itself). The result of all of this is that there will be ever increasing costs for producers and ever increasing costs for consumers, something that will make it ever harder to return to the levels of growth we have seen in the past. Indeed, many commentators, especially Richard Heinberg argue that Western society is now entering a new phase in its economy and one in which the notion of economic growth on a global scale, at least, will be impossible to return to.

Being part of the UK did protect Scotland from the current economic turmoil, nor will it protect Scotland from future economic downturns. And, if it seems likely that the world economy is set for some turbulent times ahead then what we really need to ask ourselves is this: when the shit really hits the fan who are the British government going to look after first? The 50 million people of the country in which the UK parliament sits, or a bunch of 5 million whingers north of the border?

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