Saturday, 9 May 2015

Call the SNP's bluff

Just in case you were not following the British elections, a small earthquake happened. The Tories won, the Lib Dems were wiped out, Labour performed poorly, and UKIP performed well but got no rewards. The bigger earthquake happened north of the border where the Scottish Nationalist party (SNP) won all seats bar three in a landslide, essentially running on a plank of Scottish independence.

This blog is a politics free zone and this blogger does not comment on political matters although he has (obviously !) strong views on every matter under the sun including Scottish independence :) But he can and will argue a point of view on the economics of the issue of Scotland's secession.

Scotland runs a much higher level of expenditure as compared to the income it generates. If it were a separate nation, it will be running a deficit of 8% of GDP, as against the UK's 4%. The SNP is even more to the left than Labour and wants to spend more. In the cuckooland of irresponsibility that all opposition parties operate in, this is all very possible. 

Scotland's economy is tiny and is heavily influenced, even now, by oil. With the current low prices of crude, Scotland's already iffy finances would be in dire straits if it was an independent country. But thankfully it is not and is currently being bailed out by the English tax payer.

When the referendum was held last year (and Scotland voted to narrowly stay in the UK), it was promised to the Scots that the powers to tax and spend would be devolved to the Scottish parliament. What the SNP wants is the power to tax and spend, but continue to get the bailout by the English tax payer. For a period of transition this is acceptable, but this is not a sustainable proposition. What the Tory government would probably do is to immediately devolve the powers to tax and spend, but set a graded target of deficit reduction to the UK average over , say a five year period. That is enough to turn the squeeze on any government in Scotland. Independence would start to look an increasingly unattractive proposition.

The issue of independence will never be settled on economic grounds. Everywhere in the world it is settled on emotional and political grounds, even when it is blindingly obvious that it would be a case of economic suicide. It is for the electorate to decide, although every Anglophile, including this blogger, has a view. But one thing is certain. If the UK called the bluff and handed over the management of finances to a Scottish parliament, in an election five years later, whether Scotland is an independent nation by then or not, there is no chance that the SNP will win 56 seats. Its time to make the SNP accountable.


Sriram Khé said...

Boy, true to your Anglophile colors, here you are ready to defend the Queen and her empire. I suppose you don't want the UK to be reduced further to a lonely and irrelevant island!!! ;)

Life ain't all about business and economics, my friend. To some--and I tend to support them--a collective self-identity and self-rule is far more important than worrying about their per capita income going down.

Could the politicians in Scotland whipping up this political issue for their own good more than the collective good? Of course, yes. That's what politicians anywhere always do, and so does the Queen! ;)

Ramesh said...

I knew you would say this. Only you can say that collective self identity and self rule is far more important than per capita income.

The Scots have been hoodwinked by the SNP who have managed to convince them that self rule would miraculously make them all richer. The specious argument that with self rule, austerity can be thrown to the winds has been swallowed hook line and sinker by many Scots.

They will face the sobering reality with time. The real issue is whether they would have burned their boats before that. For, if they do, there is no going back.

As for your first comment, of course I am defending Her Majesty's realm. It may be a lonely and irrelevant island already, but one that is utterly charming and that stands for all that is "cricket" !!!!!

Sriram Khé said...

Well ... you will find excellent company in this Ross Douthat column in the NY Times:

Ramesh said...

Yes, these days I read the NYT every day and had seen this piece.

As an aside, I believe every country should listen to well wishers from outside the country as well . The outsiders bring a perspective that insiders who are too consumed by the passions of the debate don't see. It is exactly for this reason that I believe we should listen to you on India, for example.

gils said...

Is the cost of freedom economics?? braveheart mel Gibson would have screamed freedom few times more before tossing in his hollywoodish grave :D

TheMillionMiler said...

Some of the problems that the United Kingdom faces today (I shall not name them except mention that it is related to ghettoization) unfortunately impact on the Scots as well because of namby pamby Politically Correct spineless policy makers in Whitehall and Westminster. (Alas you see some of it in A-NZ the two that still clutch on to mother England's coat tail) Much as what Shriram Khe says, it is not about GDPs and deficits, but also about the sense of identity. Bring on the republic of the long white cloud. As my Aussie friends often say, all good with the monarchy but all bets are off once the current monarch kicks the bucket. Will we get to see the Republic or Oztrayia or Republic of Aotearoa? Much the same with independent Scotland!

Ramesh said...

Well, it would be very tough to argue that the Scots are not free right now.

Ramesh said...

All of what you say is a problem in England; not Scotland. What is the benefit in going as a separate nation - they already have a Scottish parliament; they already have lots of powers devolved - so what is the argument other than economics ? Nobody likes austerity, but that's what the entire UK has been forced to swallow. The Scots somehow have been seduced into believing that austerity will go away if they secede. Fat chance.

Actually where do we stop if we carry on like this. Why only Aotearoa; why not North Island becoming a separate country. And then Auckland. And then Takapuna :):)

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