Collectivist sales patter is not enough for the people of Scotland

Collectivist sales patter is not enough for the people of Scotland

by Eben Wilson
article from Monday 24, April, 2017

FRANK ZAPPA once said, “Politics is involved with salesmanship. Government is involved with statesmanship”. Scotland, struggling with what its leadership has decided to call a government does not seem to have got this; the rhetoric of salesman or saleswoman-ship abounds.

Zappa (pictured) also said that “government is the entertainment division of industry” – echoing a common concern in America about big corporates. A classical liberal Scot can adjust this to say our government is the entertainment division of tax-funded collectivists.

The wonderful thing about democracy is that much of the public instinctively recognise falsehoods. Can the left really expect us to believe and trust them more if they shout louder?  Ms Sturgeon gained kudos in early days by being sincere in her message delivery, many felt her to be genuinely concerned and capable of creating change for the better; but now?

Shrilling about “unprecedented levels of austerity” and “attacks on our social security system” in front of highly paid STUC delegates who have travelled many expensive miles to Aviemore is pure saleswomanship; to use another Americanism – “where’s the beef?”

Many are concerned about fake news; what about no news? We spend more than £70 million annually on Holyrood which increasingly is being seen to be without a policy engine. Rather it is being used as a diversionary decoy for politics without any intent to improve the state of the nation. 

The aphorism, “it’s the economy, stupid”, through time, trickles into the democratic consciousness as true.  There is a real problem here for the SNP Government; its stance on the economy is built on falsehoods that few but the party faithful would except as anything but fake. Here are five:

1 Scotland does not have any debts – they are British

Well, it does because Scotland is in Britain, but the £15billion [1] our local councils have borrowed (twice that per head as in England and Wales), and the projected £50 billion total debt by 2020 [2] both reported in The Guardian, plus any new borrowing released under the Smith Commission, is not exactly going to be taken on by the rest of the UK if Scotland achieves independence.  These debts are very much in Scotland’s accounts ledger with Audit Scotland repeatedly asking for more transparency form the Scottish Government in its accounting.

2 Scotland has a balance of payments surplus

True, for trade, but this has absolutely nothing to do with how successful an independent Scotland might be.  Subtract debt interest payments, take away Barnett consequentials, adjust for oil and nuclear decommissioning, network rail debt and many other contingent liabilities in public pensions and their demographic trends – and Scotland as is bankrupt as all other social democracies.

3 Scotland always balances its budget – GERS is false

Oh dear, all nations have to balance their budgets – that’s how those who fund their government bonds can be made to lend. It’s called an audit.  Yes, there are some unhelpful rules set by HM Treasury on overspends or underspends that deny Scotland certain liberties in its debt management and deficit reporting – but that’s because we are in Britain and central state borrowing is audited centrally.  If the implication is that a false GERS means that an independent Scotland could find a better route to higher borrowing then go and ask the markets for an interest rate. Last time I heard this question being asked was when oil was at $120 a barrel and the answer was four percent above the UK base rate.  That would be 5.04 per cent today, undoubtedly more with oil at $54, but even at that second worst in the EU to Greece (6.64 per cent).

4 Austerity is hammering working class families

Many people are struggling with the attempt to cut the total cost of the social security system – both those that receive benefits and those that pay the tax for those receiving.  But the UK as a whole is the same as other countries in its beneficence to those in need [3]. With Barnett adjustments, Scotland imports from rUK; as has been well documented.  As for who gets the benefit, median disposable income for the poorest fifth of households rose by £700 (5.1 per cent) between 2014/15 and 2015 /16; in contrast the income of the richest fifth of households fell by £1,000 (1.9 per cent) over the same period. [4] Of those in the lower middle, and working, the rise in the basic rate threshold has made a big difference; ask the car industry, thriving on personal contract purchase plans; people don’t spend if their incomes are falling.

5 The rich can pay for more re-distributions to help the poor

Well, define the rich. There are rather few to be fleeced in Scotland, and if we follow the Corbynite view that £70,000 salaries make you rich, we are talking about people who already pay about £20,000 more in tax and NIC[5] as their earnings rise by £45,000 from the average of £25,000 to their new status . When that £20,000 of tax revenue is taken, the money is now not used by those who have aspirations; houses, kitchens and bathrooms, cars, discretionary spending on quality products and so on; all local industries employing, on average, workers earning the average wage, and a lot of people on a lot less.  Instead these transfers go to highly paid civil servants, 45 per cent of it into overheads, with some direct transfers to those in real need.  The net return on capital invested? Scandinavian economists who know a thing or two about high tax rates have done a number of studies suggesting it is negative [6]. That is, higher tax means lower national wealth, and the poor suffer most.

Behind these examples of what are generally fake opinions are political posturings for political gain by the collective entertainers. The intent of their claims is simply to obtain power, and sadly their core offer is based on false promises.  Central to this is the false idea that spending on the poor will help expand the economy, self-justified on the political basis that offering to do this will provide them power to do it.  Such is how the road to impoverishment created.

Economics does not allow free lunches; if you are spending 30 per cent of national wealth on social support and you then double this, you might make a certain fraction of the people twice as affluent; for one year.  After that, you would have created a massive economic depression, huge unemployment and capital flight; ameliorated only by the proportion of the money going into the hands of those wealth creators exploiting the added consumption by the poor. Now, there’s a way to create real inequality.  

The policy distinction here is between money distribution and wealth extension. The former damages the latter; even if you have a 100 per cent state owned communist economy. Ask the Czechs, who had to live for forty years with vast wealth contraction following fake money distribution (it went to the party bureaucrats who bought baubles and built mansions).

Scotland does not deserve such falsehoods. The left cry out about Project Fear; none of the above is suggesting Scotland faces Armageddon; we are a wealthy nation and if the nation’s wealth were allowed to expand everyone would gain – especially the poorest. It is simply that our politicians are kidding the electorate that free lunches are on offer through more free lunch re-distributions. This is sales patter about a false product.

True social security is far wider than anything power hungry politicians can offer through their impossible tax-funded arithmetically nonsensical national schemes; it comes from the liberty to organise ourselves to deepen physical and intellectual capital across all levels of society. The value of liberty is that it releases us all to offer kindness and compassion to those less well-off than ourselves.  That’s where our politicians should be seeking to create new effective policy institutions; not carping about “the cuts” with fake, pointless and self-interested rage.  

[1]https://www.theguardian.com/news/datablog/2015/mar/05/why-local-government-debt-so-high-scotland

[2]https://www.theguardian.com/politics/2015/dec/15/scotland-debt-mountain-holyrood-borrowing-could-hit-50bn-by-2020

[3]http://www.oecd.org/els/soc/OECD2016-Social-Expenditure-Update.pdf

[4]https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyearending2016/pdf

[5] a tax rate of 40 per cent and NIC of 12 per cent on £70k-£25k=£45k gives a tax liability of £23.4K

[6]https://journalistsresource.org/wp-content/uploads/2011/08/Govt-Size-and-Growth.pdf

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