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Talent, not ‘natural resources’ is the yellow brick road to prosperity

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THOSE WHO FAVOUR secession often declare that “Scotland has the natural resources” to thrive as an independent nation. In fact, this declaration has almost become a mantra; I think it harks back to the days of peak oil and has been expanded to include wind energy, water, fish, forestry, food and drink by the SNP government.

It’s a telling argument about the SNP’s foundation beliefs, not only because it is precisely wrong, but because it hints to a canny pulling of wool over people’s eyes about the realities of the world we live in.

Economics students are disabused of the idea that natural resources are vital to a modern economy at an early stage in their courses.  It’s a helpful exercise used both to show the value of empirical observation and the importance of consumers’ perception of value, pricing; and the added production value that can incentivise producers.

The affluent Netherlands supports nearly 18 million people in one of the boggiest bits of Northern Europe with almost no resources.  Hong Kong and Singapore support more than 12 million on their original hills and swamps. Southern California has five times the population of Scotland living essentially in a desert.  Like Scotland, it had oil servicing a wider economy, but that production declined massively in the late twentieth century; a period in which it imported more than twice the population of Scotland within its borders and created a trillion dollar economy.

A relevant question here, also asked by economics tutors of their students, is to ask why a litre of bottled water (65p) costs more than a litre of petrol (circa 35p to 40p pre-tax).  A socialist might answer “corporate exploitation”, but we all know that that answer leads to rationing of everything through price and production controls.  The real answer is because people choose to accept to pay that price for bottled water and producers agree to produce it at that price. We don’t complain about this, unlike our distress about petrol prices where we are coerced by the state taking money from us in high fuel taxes for other purposes.

And that’s the problem with natural resources; they are only of value if people want them; and they only actually become valuable if producers have the incentive to make them valuable. For Scotland, this is a problem. England and France can build wind farms and nuclear power stations for energy, Scandinavia can grow forests, Argentina cheap beef, and the USA has cheap oil and gas. Yes, we have whisky, but Russia has Vodka and anyone can make gin – both of which are more popular globally. Fish is a declining resource, and don’t even suggest that we can export Scottish water – there’s enough rain in Northern England and our acidic supply would destroy Southern England’s water mains held together with chalk.

Of course, the narrow parochialism of many nativist Scots drives them not to care. We can live on our own resources, they claim.  We can’t; the 10 per cent of arable land in Scotland is at most two million acres. Human beings need at least 5 acres and more like 10 acres to sustain themselves. Modern urban societies like Scotland, where 70 per cent live in cities, feed themselves via external trade.

In short, Scotland has to compete for food and other comforts; but by doing what? Well, the answer to that is no-one knows, least of all a central government. We know that because every centrally commanded state in history has found it difficult to feed its people let alone make them affluent.  Collectivism is a dream until the nightmares of its real-life outcomes strike home. Ask a Czech pensioner.

And given that even a basic level of productive knowledge is simply not available to central state politicians to provide basics for the people of Scotland, it is fair to ask how much they should be doing, or can truthfully be doing, that might help us retain our level of relatively high affluence.

This is where the whole fairy tale of Scottish nationalism begins to get disturbing. A huge house of cards appears to have been built on the pretence that good ideas, well executed, by well-meaning people will make Scots wealthy.   This is dangerous nonsense; it allows politicians to strut their stage, doomed to failure, but equipped with taxpayer funded largesse that allows them to declare their success at everything they turn their hand to.

Given the shenanigans in Holyrood committees of the past few weeks, the very idea that Scotland is governed by people who have good ideas, well executed by those who are well-meaning is, well, like thinking that glaikit numpties hoaching  wi’ blether can bake guid bannocks (as my granny never quite said).

And as Scottish discourse folds inwards on itself about who did what to whom and why, and whether fair means or foul drove talk or action, half of Asia, Africa and the Americas are building new capital stock and productive capacity that Scottish industry would have serviced in the 19th century; learning from their customers and innovating and producing new “stuff” to make the lives of overseas customers and local Scots more comfortable.

Key to this success was a shared exchange of information among traders, along with enhanced formal and informal networks spinning out of a critical mass in technical skills. 

Here lie two lessons; the first is that it is not natural resources that make today’s economic success, but organisational talent and knowledge of a particular kind; largely technical. This is not the kind of knowledge one finds in the political classes, especially now that identity politics has taken over who can enter the unholy halls of our centralised state.

The second is that Scottish education matters. Scotland still has many people with technical skills – but we desperately need more.  Anecdotal reports that Scottish schoolchildren are being taught a prejudiced view about our national story are extremely worrying.

Even more worrying when international reports of comparative educational attainment are being withheld for what seem like political reasons. And this against a background where we know that attainment in STEM subjects has been poor.

Corrupting our most valuable national resource; talented children who can think logically and objectively, is definitively the short road to ruin. The fact that our education system is still producing semi-illiterate, non-functional thinkers is a disgrace. The figures are a minefield, but certain trends are known not to be good.

Nicola Sturgeon, along with John Swinney, has always promised that their government would put a strong focus on “education”.  They have floundered about with tediously bureaucratic re-organisations of educational practice, supported by a unionised and monolithic central educational quangocracy. And in speaking to front-line teachers, I have to wonder if this is yet more glaikit numpties hoachin’ wi’ well-meaning but empty rhetoric.  I am the grandson of the dominie of Govan High School, and I am pretty sure that he would have seen Scotland’s educational failures as being as much to do with poor parenting  and unproductive social choices as teaching quality.

To some extent this suits a government imbued with the politics of social justice involving multiple channels of supportive redistributions. They can proclaim their intent and actions within the Edinburgh bureaucracy across their middle class electorate in the educational establishment, while announcing succour to the poor huddled masses in Govan and other centres of urban deprivation.  This is a dual carburettor vote gathering machine for them, fuelled by higher tax rates on the businesses and workers they need to create revenues.

It’s a good way of exporting our most important national resource, well educated people; and it hurts everyone who stays, the old who need support from high-earning workers, the parents who rely on state educators to let them earn in advanced Scottish businesses, and the young whose earnings prospects in those businesses are restricted.

I put these losses in terms of earnings because for me, that’s what seems to have been forgotten in Scotland; that we have to make our own way in a competitive world.  To do that, we don’t need more government, we need less.  And we don’t need natural resources. They are nice to have, but they don’t offer high wage occupations.

I come back to Southern California – when the Oklahoma dustbowl pushed many thousands of small farmers west to the flat fruit and vegetable fields of the California plains, what government official would have known that the sunshine state would have created most of its new wealth from acting or aerospace?

And what would have happened if they had decided to subsidise those thousands to stay in agriculture?  Our world would have been a lot poorer place.

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An honours graduate in economics from the University of St Andrews, Eben Wilson has had three careers; initially in journalism and broadcasting (including Milton Friedman’s TV series “Free to Choose”), economics (as an associate Scholar of the ASI) and now business (founding various companies).

Photo of the Yellow Brick Road from The Wizard of Oz courtesy of MGM.

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