Jocks Away?

According to a recent poll, if achieving Brexit meant that Scotland left the UK, then 63percent of Conservative Party members would consider that a price worth paying. This is of course good news for independence. The Unionist narrative for the last decade has consistently been that Scotland lives off England’s £14bn annual subsidy, a fiction that GERS was designed to support. In that case, you might ask, why does the UK not just get rid of the scroungers and used the saved cash to paint another slogan on a bus? The reason is in The Answer That Dare Not Speak Its Name: that Scotland in fact contributes so much to the UK economy in natural resources and human skills that, without it, the UK Battleship Galactica would be holed below the waterline and bound for the deep glug-glug. A call to kick out the scrounging Jocks exposes this Unionist hypocrisy, and leaves Unionists with no message.

Wee Ginger Dug puts this far more forcefully than I can, so I give you his words:

What British nationalists thought was their greatest strength has turned into their greatest weakness. This poll is actually a victory for all those people who have been constantly producing graphs telling Scotland and the world that Scotland is a financial basket case which relies upon the goodwill and largesse of the rest of the UK in order to stop it turning into an even more impoverished form of Greece, only without the nice weather. It’s a victory for those who never question the methodology or politics of the annual GERS figures because they are eager to use those figures as a weapon. It’s a victory for those who think that the supposed financial and economic weakness of Scotland, a land blessed with an embarrassment of wealth, talent, and natural resources, is an argument for the UK instead of an indictment of generations of Westminster’s rapacious financial mismanagement. – Wee Ginger Dug, 19th June 2019.

Do read the rest of his post.

Yoon Truth

For those who haven’t heard of Kevin Hague and his rabidly anti-independence blog (What is he scared of? Why does he hate independence so much? Is he misinformed, or just greedy? And if greedy, what for?), this is a chilling post:

https://chokkablog.blogspot.co.uk/
28 August 2017 at 01:14
Comments to “Professor Murphy and the Deckchairs”

Anonymous Drew said…

Here’s a tricky one for anti-independence campaigners. While you want the Conservatives and/or Labour to win control of Holyrood in 2021, you wouldn’t want them doing too well.

There’s a danger for opponents of independence that if Scotland’s economy ever improves to the extent that tax revenues increase and spending on poverty, health and social problems decrease, then the situation with GERS might show Scotland could prosper with greater control over the economy.

This would risk doing the SNP’s job for it. The parties against independence need to be able to show that Scotland is economically weak enough to need the Union.

Lab/Cons would need the economy to do well enough in Scotland to remain in power at Holyrood but have a poor enough fiscal position through GERS to show that the economic case for independence remains in trouble.

That’s a bit of a Catch 22.

…and complete contempt for the well-being of 5.4m Scots.

Why GERS is a pile of pants

An open letter to Kevin Hague

Dear Kevin,

BloggerKevin Hague said…

yes – unclouded by anger and not troubled with supporting data that is an excellent summary, thank you

31 August 2017 at 07:24

I’m glad you agree that I gave (here) an excellent summary of your post about GERS on your blog. I summarised your post because I wanted to get behind your vituperation and your avalanche of data, and look at the merit of your arguments. I have to say I’m not impressed. Let’s take your five main points:-

1. Professor Murphy asks why the Scottish deficit is so much larger than that of the rest of the UK (the ‘deficit gap’). You reply that it’s because the difference between what Scotland spends on services and what it collects in revenue is larger that that of the rest of the UK. This answer is vapid: it doesn’t explain, it just restates the phenomenon. If you asked an employee of yours why they were late, and they said it was because they hadn’t arrived at the stated time, you wouldn’t think you’d been given an explanation, you’d think you’d been handed a bunch of insolence, and fire them on the spot. Your response to Professor Murphy is like that bunch of insolence.

2. Regarding non-identifiable expenditure, you say that Murphy’s claim is false, because non-identifiable expenditure is allocated fairly, by population. But Murphy doesn’t claim that it’s allocated unfairly: he claims that the revenue it generates is not allocated to Scotland.

3. You say that Murphy is wrong in saying that expenditure figures rely on estimates: expenditure, you say, is all supported by known data. But Murphy doesn’t claim that expenditure is estimated: he says that revenue is estimated (which you partly agree with).

4. You say that Murphy needs to consider why the Scottish spend is higher, and claim that there are two causes: (a) Scotland’s population is more spread out than in the rest of the UK, and (b) “slightly more” benefit claimants in Scotland suffer from long-term health problems. But the numbers here don’t support your case:

  • Two-thirds of Scotland’s population live in the Central Belt, which has normal density, and only one third is spread out. Scotland’s per-person spend is 12percent higher than in rUK, so for the low population density to account for the increase, every single service provided outside the Central Belt would have to cost 36% more than the norm, irrespective of its nature. I’m getting a futon bed delivered to Glasgow this week at a price of £130 + £10 delivery; your scenario says that if I lived in Dunoon, the whole bed would have to cost me £190. That’s nonsense.
  • You don’t say what “slightly more benefit claimants” amounts to, but let’s guess (unreasonably, in my view, but let’s start there) that the number of benefit claimants who suffer from from long-term ill health amounts to 10percent more of the population than in the rest of the UK. Here your scenario is even more implausible: every single service delivered to those people would have to cost 120% more than the norm (i.e. more than twice as much}. So if my auntie in Dunoon had dementia, she would have to pay £308 for the self-same futon bed as cost me £140.
  • Yes, I know I’ve accounted for the difference twice here, and the truth (if any) must lie somewhere between the two, but if you’re going to argue that these two features account for the higher Scottish spend, you’re going to have to provide some credible numbers. I put it to you that such numbers don’t exist.

5. Your last point is that the yearly revisions of GERS, which present amended figures for earlier years, consistently show that the earlier deficit was in fact higher than was first reported, and this, you say, demonstrates that there can no hidden agenda to overstate the deficit. This doesn’t make a lot of sense to me. Your creditor says to you, “Bad news. You owe me thirty grand,” but you suspect he’s lying, you don’t owe him that much. A month later he comes along and says, “I’m sorry, I got the figures wrong. You owe me thirty-one grand,” and you conclude from that that he can’t have been lying the first time. Really? How exactly does that work? You must let me know some time.

So let’s look again at your five-point rebuttal of Murphy. On the first point, that the deficit gap is baffling, you say that it’s not baffling, the reason for the deficit gap is that there’s a gap in the deficit. On the second point, that non-identifiable revenue does not accrue to Scotland, you say that non-identifiable expenditure is allocated fairly. On the third point, that revenue is estimated, you say that expenditure is not estimated. On the fourth point, that Scottish spend is necessarily higher, there is no credible way in which Scotland’s different circumstances could skew spending by the amount you say it does. And your last point, that the yearly GERS revisions show that there is no hidden aim of overstating the deficit, don’t show anything of the sort.

If I were feeling generous, I would call your alleged rebuttal of Murphy a pile of pants, and I’m sure you’re bright enough to see that. I therefore assume you wrote it in a tearing hurry. However, early intervention of this sort makes the Union side look panicky, as though it knows it’s losing the debate and has no more shots in its locker. Indies are already saying that Unionists no longer believe in their own economic case, they just jump up and down and scream when it’s challenged, and I’m sure you’re bright enough to see that too. It will be interesting to see how you deal with it as the debate unfolds.

Look forward to hearing from you.

Best regards,

Derek

Why GERS is right

GERS, as readers will know, is the “Government Expenditure and Revenue for Scotland”, and is published yearly. The report for 2016-2017 came out recently, and economist Richard Murphy questioned its accuracy, voicing his early suspicions that these books had been cooked. His claim elicited a vigorous rebuttal from Scottish entrepreneur Kevin Hague, blogging as chokka blog.

In my view, Hague’s rebuttal, which you can read here, should have used more moderate and factual language, which would surely have made it more persuasive. Instead, he wrote a sarcastic and emotional attack on Richard Murphy’s competence, and also included a welter of raw data. This made the thread of Hague’s argument difficult to follow, and in the end (in my view) weakened his case.

I’ve therefore re-presented his argument below, leaving out the emotive language and the overly detailed data, in order to make his argument clearer. This is what I think he should have written:

Professor Murphy and Deckchairs

Professor Richard Murphy claims that GERS tells us nothing. This is not the case. GERS tells us that Scotland’s finances are weaker than the UK’s because we spend far more per person on public services than the rest of the UK. And this would still be the case if Scotland became independent.

Over the last thirteen years or so, Scotland’s public spending, per person per year, has exceeded that of the rest of the UK by about £1500. But over the same period, Scotland has generated in taxes about £350 *less* per person per year than has the rest of the UK. (This excludes taxes from North Sea oil, which latterly have fallen to virtually nil.) So Scotland’s deficit – the excess of public spending over the tax take – is about £1850 larger, per person per year, than the deficit of the rest of the UK. Prof Murphy says that he’s bemused by this £1850 difference, but it isn’t in fact baffling. A small part of the reason for it is that we generate less revenue, but a larger part of the reason is that we spend more.

So we need to understand why we do this – why Scotland spends more per capita on public services.

Prof Murphy offers two possible reasons for why the Scottish deficit is proportionally larger than the UK’s: that ‘non-identifiable expenditure’ is allocated disproportionately to Scotland, and that the figures are unreliable because they come from estimates or surveys. He also says that the difference is surprising. However, none of these three claims is true:

a. ‘Non-identifiable expenditure’ – that is, expenditure that benefits the whole of the UK equally, rather than one part of it – is allocated to Scotland strictly in proportion to population.

b. The figures for Scottish expenditure do not come from estimates or surveys; they are based on data and are not disputed. (Some of the figures for Scottish revenue are estimates, however.)

c. Scotland needs to spend more because of its population is more spread out, and slightly more subject to long-term ill health, than the rest of the UK. So it’s no surprise that it spends more on health, education and economic development. These last three items account for about one-third of the additional spend.

It follows that Prof Murphy should not be doubting the GERS figures, which are easy to understand. They tell us that the reason Scotland’s deficit is larger than that of the rest of the UK is that we spend more per person. Murphy should be asking why it is that that we spend more and whether it’s justified by need, and he should also acknowledge that savings are almost impossible to find. He should not be saying – as he does – that the GERS figures overstate the Scottish deficit. GERS figures for a given year are revised later year by year, and over the last few years each revision has shown that the true figure for the Scottish deficit is worse than that shown in the earlier versions. This demonstrates that there is no hidden intention to overstate the deficit.

The conclusion must be that GERS is accurate, it shows us that the reason for the deficit is that we spend more than we raise in taxes, and this higher spend is necessary given the problems that are endemic to our country. The mystery is not why we have a deficit, but why Prof Murphy does not understand it. His picking at the details of allocation is like moving the deckchairs on the Titanic to see if it was that that made it sink.

Does this make it clearer? What do you think?