The Economic Case for an Independent Scotland

[H_B]

Why would they? There's no point .

Yes there is.

" this transfer has a direct deleterious effect on the finances of the Government of Scotland in that no taxes or licence fees derived from activities in the illegally (ha) transferred area are credited to Scotland in the periodic Government Expenditures and Revenues Scotland (GERS) reports.

So, why haven't the Scottish government changed the border?

[HardyBamboo]

H_B & Reynard (& anybody else that is interested), maybe you could have a look at some of the links below to see how well the UK is actually doing at the moment, these aren't Scottish Government figures by the way;

1. http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
2. https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html?countryname=Sweden&countrycode=sw&regionCode=eur&rank=15#sw
3. http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt
4. http://www.nationaldebtclock.co.uk/

There are loads more like this

I dont share your confidence that the UK is an organisation to be part of.

[H_B]

The problem with the "TheUK is a pure terrible place so it is" is that New Scotland is a hypothetical place to live. It doesn't exist, which is really Yes' biggest problem and biggest strength all in one.

It's easy to promise "things would be a lot better if...." without having to prove it. But you also have people's natural views of "things are actually pretty good being part of the UK - why would I risk making things worse for myself?"

[H_B]

There is no positivie or economic reason to do so.

As noted above, there is.

"this transfer has a direct deleterious effect on the finances of the Government of Scotland in that no taxes or licence fees derived from activities in the illegally (ha)transferred area are credited to Scotland in the periodic Government Expenditures and Revenues Scotland (GERS) reports."

So, why haven't the Scottish government righted this wrong and moved the border?

[HardyBamboo]

The problem with the "TheUK is a pure terrible place so it is" is that New Scotland is a hypothetical place to live. It doesn't exist, which is really Yes' biggest problem and biggest strength all in one.

It's easy to promise "things would be a lot better if...." without having to prove it. But you also have people's natural views of "things are actually pretty good being part of the UK - why would I risk making things worse for myself?"

As my links above show, things aren't pretty good being a part of the UK, the "Debt Bomb" has a long fuse but it is getting ever shorter.

[stm]

H_B & Reynard (& anybody else that is interested), maybe you could have a look at some of the links below to see how well the UK is actually doing at the moment, these aren't Scottish Government figures by the way;

1. http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
2. https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html?countryname=Sweden&countrycode=sw&regionCode=eur&rank=15#sw
3. http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt
4. http://www.nationaldebtclock.co.uk/

There are loads more like this

I dont share your confidence that the UK is an organisation to be part of.

For a lot of economic data, it greatly depends on what you 'pick' Hardy. For example, if I was to choose places to live from link one table, I wouldn't fancy Luxembourg being the 8th most indebted nation. However, if we were basing it on GDP per capita I'd jump at the chance to live there.

A lot of the economic arguments, at first glance, comes down to presented figures. How the figures are formulated are the cautious things to reflect upon. Figures look impressive but we could present a range of documents that calculate spending/revenues in a different methodology which makes them significantly smaller or even worse.

[HardyBamboo]

For a lot of economic data, it greatly depends on what you 'pick' Hardy. For example, if I was to choose places to live from link one table, I wouldn't fancy Luxembourg being the 8th most indebted nation. However, if we were basing it on GDP per capita I'd jump at the chance to live there.

A lot of the economic arguments, at first glance, comes down to presented figures. How the figures are formulated are the cautious things to reflect upon. Figures look impressive but we could present a range of documents that calculate spending/revenues in a different methodology which makes them significantly smaller or even worse.

By that measure we are nothing startling in that chart either;

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html

ETA - compared to http://www.scotland.gov.uk/Resource/0041/00416075.pdf

[stm]

Not really my point Hardy. If (like a lot of points in the unknown future) the ridiculous scenario of Shetland & Orkney breaking away would place them higher, rUK would be above Scotland and the rest of Scotland would be well down the table.

Basing it on that one projection, it would make financial sense for the islands to declare their own breakaway. They would have the greatest estimated standard of living in economic history.

Each side of the debate will advance arguments using figures which suit that standpoint. Personally, my own vote currently stands at no due to uncertainty surrounding a few economic questions. I know I could base it on estimated projections, take a wee leap of faith, what's the worst that could happen etc...

In saying that, if concrete answers were given by both sides (which may come nearer to Sept 14), I would have little problem being swayed to the yes vote.

[HardyBamboo]

Not really my point Hardy. If (like a lot of points in the unknown future) the ridiculous scenario of Shetland & Orkney breaking away would place them higher, rUK would be above Scotland and the rest of Scotland would be well down the table.

Basing it on that one projection, it would make financial sense for the islands to declare their own breakaway. They would have the greatest estimated standard of living in economic history.

Each side of the debate will advance arguments using figures which suit that standpoint. Personally, my own vote currently stands at no due to uncertainty surrounding a few economic questions. I know I could base it on estimated projections, take a wee leap of faith, what's the worst that could happen etc...

In saying that, if concrete answers were given by both sides (which may come nearer to Sept 14), I would have little problem being swayed to the yes vote.

Back to the balance of probabilities again STM, I dont see numbers supporting the Union anyplace, (& I do look), one thing is for sure though - the debt aint going away! As far as I know the Islands couldnt break away even if they wanted to, (which they dont).

[Burma]

Let's see these figures.

Same document posted twice in error.

00418131-1.pdf

00418131-1.pdf

[stm]

It's likely to be more difficult to find projected figures supporting status quo. This is mainly due to many witnesses agreeing that we are likely to achieve a geographical share of assets (whichever line is formally agreed). It's easy to find research/studies which pose questions about economic implications that an independent Scotland would face. Unsurprisingly not all of them paint the rosiest of pictures.

Likewise, it's very easy to find figures which show a different historical scenario to those produced by GERS. Remember a lot of the GERS figures are historical projections which assume that for time periods involved we include the 90% plus geographical share. Consequently, it's also assuming the Scottish government would have made certain policy decisions (before someone jumps in to say PROVE IT in true internet fashion, unsurprisingly Treasury stats will, on occassion and due to different methodologies used, contradict Scottish government data about how things used to be and will be).

Estimated data always has a range of variances and variables. Statistics projected from both sides of the debate will be the best case scenario for the YES and worst case scenario for NO camp. Ultimately, everyone voter will be casting their decision on the balance of probabilities but I hope particular areas of uncertainty will be made clearer closer to September referendum.

[bunkmedal]

Estimated data always has a range of variances and variables. Statistics projected from both sides of the debate will be the best case scenario for the YES and worst case scenario for NO camp. Ultimately, everyone voter will be casting their decision on the balance of probabilities but I hope particular areas of uncertainty will be made clearer closer to September referendum.

Agree with this, although I would also say that the fact projections are so fundamentally uncertain allows both sides to spin them in their own favour. There are issues which really can't be clarified, but could radically alter whether independence is in our interest or not. The rate of interest we pay on servicing our share of the debt, for instance, depends largely on the markets and nobody can second guess that years before the fact. They certainly can't do it when we still don't know what our currency arrangements will actually entail or whether the rest of the UK will agree to guarantee our debts through the Bank of England.

Another issue which has been largely ignored in the campaign is transition costs. Robert Young had a good piece at the LSE blog which shows pretty conclusively that even in a situation where independence would make us better off by a set percentage of GDP every year, the benefits could be put off for 30+ years by a short period in which we have to pay for the transition to independence - separating joint administrative structures, creating new institutions, and so on. Again nobody can really give an accurate estimate of that because it depends to a large extent on how we negotiatie our exit from the UK.

So for the most part the economic argument has been overly simplistic given all of the factors at stake. You can't just point at current tax revenue relative to public spending and claim it would translate into a situation in which independence would make us better/worse off. It would arguably be better if the economic case was overlooked altogether and voters made their decision on the broader issues (identity, democracy and so on) because at least we can make concrete statements about those issues. Any economic projection, given the inherent uncertainty involved, is just a shot in the dark, no matter how strongly some Yes/No supporters try to make the case.

[HardyBamboo]

Agree with this, although I would also say that the fact projections are so fundamentally uncertain allows both sides to spin them in their own favour. There are issues which really can't be clarified, but could radically alter whether independence is in our interest or not. The rate of interest we pay on servicing our share of the debt, for instance, depends largely on the markets and nobody can second guess that years before the fact. They certainly can't do it when we still don't know what our currency arrangements will actually entail or whether the rest of the UK will agree to guarantee our debts through the Bank of England.

Another issue which has been largely ignored in the campaign is transition costs. Robert Young had a good piece at the LSE blog which shows pretty conclusively that even in a situation where independence would make us better off by a set percentage of GDP every year, the benefits could be put off for 30+ years by a short period in which we have to pay for the transition to independence - separating joint administrative structures, creating new institutions, and so on. Again nobody can really give an accurate estimate of that because it depends to a large extent on how we negotiatie our exit from the UK.

So for the most part the economic argument has been overly simplistic given all of the factors at stake. You can't just point at current tax revenue relative to public spending and claim it would translate into a situation in which independence would make us better/worse off. It would arguably be better if the economic case was overlooked altogether and voters made their decision on the broader issues (identity, democracy and so on) because at least we can make concrete statements about those issues. Any economic projection, given the inherent uncertainty involved, is just a shot in the dark, no matter how strongly some Yes/No supporters try to make the case.

1. Aye, the future by definition cant be 100% certain, (whether we are in or out of the UK), so you have to make your mind up based on what you think is most likely to happen, FWIW I think the SG should be playing hardball on the currency issue with the WG.
2. This, as far as I can see is really Quebec focused, I am not familiar with their situation as far as "institutions" are concerned, but we already have our own legal system, education system, health service etc. so I think this would be less costly & time consuming for Scotland compared to other countries.
3. I see your point but think the economic case, for me at least, is central to the argument.

[PaulIsclosed]

Another issue which has been largely ignored in the campaign is transition costs. Robert Young had a good piece at the LSE blog which shows pretty conclusively that even in a situation where independence would make us better off by a set percentage of GDP every year, the benefits could be put off for 30+ years by a short period in which we have to pay for the transition to independence - separating joint administrative structures, creating new institutions, and so on. Again nobody can really give an accurate estimate of that because it depends to a large extent on how we negotiatie our exit from the UK.

The piece in question does not address Scotland directly, instead it discusses the costs of transition of an artificial succeeding state in order to make a point. In my opinion the the assumptions upon which he arrives at the 30+ year figure are substantively poor and as such invalid. Assuming that there were substantive costs to succession and Scotland does enter a period of recession where GDP falls by 3%-5%, it is absurd to suggest that the following 3-4 years would be periods of stagnation where no growth occurs. This goes against all precedent, indeed he mentions the Czech-Slovak case, yet ignores the fact that Slovakia did not enter recession and whilst Czech Republic did suffer a sharp deep recession where GDP fell by 25%, it then proceeded to grow at over 15% for the next 6 years. In fact on entering recession the Czech economy was smaller than Hungry, Romania and Ukraine, 20 years later it now has a GDP that is much bigger than those countries.

[printer]

H_B playing a blinder on this thread.

Respect, mate.

[H_B]

H_B playing a blinder on this thread.

Respect, mate.

It's actually quite easy - as it's a topic I know a lot about and most people here don't. Only Ad Lib really.

I don't actually mind the likes of Hardy Bamboo who is pleasant and seems genuinely curious and with the ability to change his viewpoint when he hears evidence.

The NCC are a lost cause though. There is literally no point educating them.

[Baxter Parp]

 

It's actually quite easy - as it's a topic I know a lot about and most people here don't. Only Ad Lib really.

 

I don't actually mind the likes of Hardy Bamboo who is pleasant and seems genuinely curious and with the ability to change his viewpoint when he hears evidence.

 

The NCC are a lost cause though. There is literally no point educating them.

I think he's being sarcastic. And you know f**k all about anything.

[bunkmedal]

The piece in question does not address Scotland directly, instead it discusses the costs of transition of an artificial succeeding state in order to make a point. In my opinion the the assumptions upon which he arrives at the 30+ year figure are substantively poor and as such invalid. Assuming that there were substantive costs to succession and Scotland does enter a period of recession where GDP falls by 3%-5%, it is absurd to suggest that the following 3-4 years would be periods of stagnation where no growth occurs. This goes against all precedent, indeed he mentions the Czech-Slovak case, yet ignores the fact that Slovakia did not enter recession and whilst Czech Republic did suffer a sharp deep recession where GDP fell by 25%, it then proceeded to grow at over 15% for the next 6 years. In fact on entering recession the Czech economy was smaller than Hungry, Romania and Ukraine, 20 years later it now has a GDP that is much bigger than those countries.

It's a theoretical argument - the point isn't that GDP will fall by x amount, the point is that transition costs are important and even a relatively short period in which you have to pay for them can put off the benefits for decades. I would imagine the average person, for instance, probably thinks that two years of a small drop in GDP would be wiped out quickly by the increased benefits after the transition, but because we're talking about percentage increases it takes much longer to wipe out the damage. Whatever percentage we come up with, nobody can argue that there won't be transition costs and that they won't have an important impact on our short-term gains from independence. We can't just sweep it under the carpet because it's inconvenient.

For what it's worth, I think using Czechoslovakia is a particularly poor way to draw a precedent. We're talking about two states that over the same period were continuing their transition from Communism to democracy and a market economy (ultimately joining the EU's single market). Whatever happens post-independence, we're not going to radically alter the structure of our economy in the same way.

[H_B]

It's a theoretical argument - the point isn't that GDP will fall by x amount, the point is that transition costs are important and even a relatively short period in which you have to pay for them can put off the benefits for decades. I would imagine the average person, for instance, probably thinks that two years of a small drop in GDP would be wiped out quickly by the increased benefits after the transition, but because we're talking about percentage increases it takes much longer to wipe out the damage. Whatever percentage we come up with, nobody can argue that there won't be transition costs and that they won't have an important impact on our short-term gains from independence. We can't just sweep it under the carpet because it's inconvenient.

For what it's worth, I think using Czechoslovakia is a particularly poor way to draw a precedent. We're talking about two states that over the same period were continuing their transition from Communism to democracy and a market economy (ultimately joining the EU's single market). Whatever happens post-independence, we're not going to radically alter the structure of our economy in the same way.

There's also the question of this "rainy day" oil fund that has been suggested. Any deposits in the savings account will have to be taken from the current account.

[Burma]

It's actually quite easy - as it's a topic I know a lot about and most people here don't.

Whoosh and no you dont but thanks for the lols.

Still no response from you on why you feel that voting no due to fears if a large expensive public sector is a valid argument, but no concern that the Union has a higher public expenditure than Scotland.

Fuzzy thinking.